EXHIBIT 10.5
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MASTER LOAN AND SECURITY AGREEMENT
_____________________________
Dated as of June 23, 1999
______________________________
NC CAPITAL CORPORATION
as Borrower
and
GREENWICH CAPITAL FINANCIAL PRODUCTS, INC.
as Lender
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Table of Contents
Page
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SECTION 1 Definitions and Accounting Matters 1
1.01 Certain Defined Terms 1
1.02 Accounting Terms and Determinations 14
SECTION 2 Advances, Note and Prepayments 14
2.01 Advances 14
2.02 Notes 14
2.03 Procedure for Borrowing 15
2.04 Repayment of Advances; Interest 15
2.05 Limitation on Types of Advances; Illegality 16
2.06 Determination of Borrowing Base; Mandatory Prepayments or Pledge 16
2.07 Optional Prepayments 17
2.08 Requirements of Law 17
2.09 Purpose of Advances 18
2.10 Taxes 18
2.11 Extension of Termination Date 20
SECTION 3 Payments; Computations; Etc 20
3.01 Payments 20
3.02 Computations 20
3.03 Non-Utilization Fee 20
SECTION 4 Collateral Security 21
4.01 Collateral; Security Interest 21
4.02 Further Documentation 22
4.03 Changes in Locations, Name, etc 22
4.04 Lender's Appointment as Attorney-in-Fact 22
4.05 Performance by Lender of Borrower's Obligations 23
4.06 Proceeds 23
4.07 Remedies 24
4.08 Limitation on Duties Regarding Presentation of Collateral 24
4.09 Powers Coupled with an Interest 24
4.10 Release of Security Interest 25
SECTION 5 Conditions Precedent 25
5.01 Initial Advance 25
5.02 Initial and Subsequent Advances 27
SECTION 6 Representations and Warranties 29
6.01 Financial Condition 29
6.02 No Change 29
6.03 Corporate Existence; Compliance with Law 29
6.04 Corporate Power; Authorization; Enforceable Obligations 29
6.05 No Legal Bar 30
6.06 No Material Litigation 30
6.07 No Default 30
6.08 Collateral; Collateral Security 30
6.09 Chief Executive Office 31
6.10 Location of Books and Records 31
6.11 No Burdensome Restrictions 31
6.12 Taxes 31
6.13 Margin Regulations 31
6.14 Investment Company Act; Other Regulations 31
6.15 Subsidiaries 31
6.16 Origination and Acquisition of Mortgage Loans 31
6.17 No Adverse Selection 32
6.18 Loan Party Solvent; Fraudulent Conveyance 32
6.19 ERISA 32
6.20 True and Complete Disclosure 32
6.21 Relevant States 32
6.22 True Sales 32
6.23 No Breach 33
6.24 Tangible Net Worth; Liquidity 33
6.25 Reserved 33
6.26 Year 2000 Compliance 33
SECTION 7 Covenants of the Borrower 33
7.01 Financial Statements 33
7.02 Existence, Etc 34
7.03 Maintenance of Property; Insurance 35
7.04 Notices 35
7.05 Other Information 35
7.06 Further Identification of Collateral 35
7.07 Mortgage Loan Determined to be Defective 36
7.08 Monthly Reporting 36
7.09 Financial Condition Covenants 36
7.10 Borrowing Base Deficiency 36
7.11 Prohibition on Fundamental Changes 36
7.12 Limitation on Liens on Collateral 37
7.13 Limitation on Sale or Other Disposition of Collateral 37
7.14 Limitation on Transactions with Affiliates 37
7.15 Underwriting Guidelines 38
7.16 Limitations on Modifications, Waivers and Extensions of Mortgage Loans 38
7.17 Servicing 38
7.18 Limitation on Distributions 38
7.19 Use of Proceeds 38
7.20 Restricted Payments 38
7.21 Year 2000 Compliance 38
7.22 Certificate of a Responsible Officer 38
SECTION 8 Events of Default 39
SECTION 9 Remedies Upon Default 41
SECTION 10 No Duty of Lender 42
SECTION 11 Miscellaneous 42
11.01 Waiver 42
11.02 Notices 42
11.03 Indemnification and Expenses 42
11.04 Amendments 43
11.05 Successors and Assigns 43
11.06 Survival 43
11.07 Captions 44
11.08 Counterparts 44
11.09 GOVERNING LAW; ETC 44
11.10 SUBMISSION TO JURISDICTION; WAIVERS 44
11.11 WAIVER OF JURY TRIAL 44
11.12 Acknowledgments 45
11.13 Hypothecation and Pledge of Collateral 45
11.14 Assignments; Participations 45
11.15 Servicing 46
11.16 Periodic Due Diligence Review 47
11.17 Set-Off 47
11.18 Intent 48
11.19 Confidential Information 48
SCHEDULES
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SCHEDULE 1 Representations and Warranties re: Mortgage Loans
SCHEDULE 2 Filing Jurisdictions and Offices
SCHEDULE 3 Subsidiaries
SCHEDULE 4 Litigation
SCHEDULE 5 Relevant States
EXHIBITS
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EXHIBIT A Form of Promissory Note
EXHIBIT B Form of Custodial Agreement
EXHIBIT C Form of Opinion of Counsel to Borrower
EXHIBIT D Form of Notice of Borrowing and Pledge
EXHIBIT E Underwriting Guidelines
EXHIBIT F Reserved
EXHIBIT G Form of Data Edit Sheet (Funding Date)
EXHIBIT H Form of Borrowing Base Certificate
EXHIBIT I Form of Remittance Report
MASTER LOAN AND SECURITY AGREEMENT
MASTER LOAN AND SECURITY AGREEMENT, dated as of June 23, 1999, between NC
CAPITAL CORPORATION, a California corporation (the "Borrower"), and GREENWICH
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CAPITAL FINANCIAL PRODUCTS, INC., a Delaware corporation (the "Lender").
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RECITALS
The Borrower wishes to obtain financing from time to time to provide
interim funding for the origination and acquisition of certain Mortgage Loans
(as defined herein), which Mortgage Loans are to be sold or contributed by the
Borrower to one or more trusts or other entities to be sponsored by the Borrower
or an Affiliate (as defined herein) thereof, or to third-parties with the
consent of the Lender, and which Mortgage Loans shall secure Advances (as
defined herein) to be made by the Lender hereunder.
The Lender has agreed, subject to the terms and conditions of this Loan
Agreement (as defined herein), to provide such financing to the Borrower, with a
portion of the proceeds of the sale of all mortgage-backed securities issued by
any such trust or other entity, together with a portion of the proceeds of any
permitted whole loan sales, together with other funds of the Borrower, if
necessary, being used to repay any Advances made hereunder as more particularly
described herein.
Accordingly, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
SECTION 1 Definitions and Accounting Matters.
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1.01 Certain Defined Terms. As used herein, the following terms shall have
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the following meanings (all terms defined in this Section 1.01 or in other
provisions of this Loan Agreement in the singular to have the same meanings when
used in the plural and vice versa):
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"Accepted Servicing Practices" shall have the meaning assigned thereto in
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Section 11.15(a) hereof.
"Advance" shall mean any Committed Advance or Uncommitted Advance, as
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applicable, and collectively, "Advance" shall mean the sum of all Committed
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Advances and Uncommitted Advances.
"Affiliate" means, with respect to any Person, any other Person which,
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directly or indirectly, controls, is controlled by, or is under common control
with, such Person. For purposes of this definition, "control" (together with
the correlative meanings of "controlled by" and "under common control with")
means possession, directly or indirectly, of the power (a) to vote 10% or more
of the securities (on a fully diluted basis) having ordinary voting power for
the directors or managing general partners (or their equivalent) of such Person,
or (b) to direct or cause the direction of the management or policies of such
Person, whether through the ownership of voting securities, by contract, or
otherwise.
"Affiliate Guaranty" shall mean that certain Affiliate Guaranty dated as of
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the date hereof, made by the Guarantors in favor of the Lender, as amended from
time to time.
"Applicable Margin" shall mean 1.25% per annum.
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"Appraised Value" shall mean the value set forth in an appraisal made in
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connection with the origination of the related Mortgage Loan as the value of the
Mortgaged Property.
"Assignment of Mortgage" shall mean, with respect to any Mortgage, an
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assignment of the Mortgage, notice of transfer or equivalent instrument in
recordable form, sufficient under the laws of the jurisdiction wherein the
related Mortgaged Property is located to reflect the assignment and pledge of
the Mortgage.
"Attorney Bailee Letter" shall have the meaning assigned to such term in
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the Custodial Agreement.
"Bankruptcy Code" shall mean the United States Bankruptcy Code of 1978, as
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amended from time to time.
"Borrower" shall have the meaning provided in the heading hereof.
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"Borrowing Base" shall mean the aggregate Collateral Value of all Eligible
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Mortgage Loans that have been, and remain, pledged to the Lender hereunder.
"Borrowing Base Deficiency" shall have the meaning provided in Section 2.06
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hereof.
"Business Day" shall mean any day other than (i) a Saturday or Sunday or
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(ii) a day on which the New York Stock Exchange, the Federal Reserve Bank of New
York, the Lender or the Custodian is authorized or obligated by law or executive
order to be closed.
"Cash Equivalents" shall mean (a) securities with maturities of 90 days or
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less from the date of acquisition issued or fully guaranteed or insured by the
United States Government or any agency thereof, (b) certificates of deposit and
eurodollar time deposits with maturities of 90 days or less from the date of
acquisition and overnight bank deposits of any commercial bank having capital
and surplus in excess of $500,000,000, (c) repurchase obligations of any
commercial bank satisfying the requirements of clause (b) of this definition,
having a term of not more than seven days with respect to securities issued or
fully guaranteed or insured by the United States Government, (d) commercial
paper of a domestic issuer rated at least A-1 or the equivalent thereof by
Standard and Poor's Ratings Group ("S&P") or P-1 or the equivalent thereof by
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Xxxxx'x Investors Service, Inc. ("Moody's") and in either case maturing within
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90 days after the day of acquisition, (e) securities with maturities of 90 days
or less from the date of acquisition issued or fully guaranteed by any state,
commonwealth or territory of the United States, by any political subdivision or
taxing authority of any such state, commonwealth or territory or by any foreign
government, the securities of which state, commonwealth, territory, political
subdivision, taxing authority or foreign government (as the case may be) are
rated at least A by S&P or A by Moody's, (f) securities with maturities of 90
days or less from the date of acquisition backed by standby letters of credit
issued by any commercial bank satisfying the requirements of clause (b) of this
definition or (g) shares of money market mutual or similar funds which invest
exclusively in assets satisfying the requirements of clauses (a) through (f) of
this definition.
"Change of Control" shall mean the acquisition by any Person, or two or
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more Persons acting in concert, of beneficial ownership (within the meaning of
Rule 13d-3 of the Securities Exchange Act of 1934) of outstanding shares of
voting stock of the Borrower at any time if after giving effect to such
acquisition (i) such Person or Persons owns twenty percent (20%) or more of such
outstanding voting
stock or (ii) the Guarantors do not own more than fifty percent (50%) of such
outstanding shares of voting stock.
"Code" shall mean the Internal Revenue Code of 1986, as amended from time
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to time.
"Collateral" shall have the meaning provided in Section 4.01(b) hereof.
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"Collateral Value" shall mean with respect to each Eligible Mortgage Loan
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that is:
(a) 0 to 59 days delinquent with respect to scheduled payments of
principal and interest, the lesser of (i) 97% of the Market Value of such
Mortgage Loan and (ii) 100% of the Stated Principal Balance of such
Mortgage Loan;
(b) 60 to 89 days delinquent with respect to scheduled payments of
principal and interest, the lesser of (i) 97% of the Market Value of such
Mortgage Loan and (ii) 85% of the Stated Principal Balance of such Mortgage
Loan;
(c) 90 to 119 days delinquent with respect to scheduled payments of
principal and interest, the lesser of (i) 97% of the Market Value of such
Mortgage Loan and (ii) 65% of the Stated Principal Balance of such Mortgage
Loan; and
(d) 120 to 180 days delinquent with respect to scheduled payments of
principal and interest, the lesser of (i) 97% of the Market Value of such
Mortgage Loan and (ii) 45% of the Stated Principal Balance of such Mortgage
Loan.
Provided that, in all events the following additional limitations on Collateral
Value set forth below shall apply:
(i) the aggregate Collateral Value of Mortgage Loans which are 60 to
180 days delinquent with respect to scheduled payments of principal and
interest may not at any one time exceed the lesser of (a) $14,000,000 and
(b) 7% of the aggregate amount of outstanding Advances made to the Borrower
hereunder;
(ii) the aggregate Collateral Value of Mortgage Loans for which the
Borrower has provided the Lender with a Lost Note Affidavit may not at any
one time exceed the lesser of (a) $1,000,000 and (b) 1% of the aggregate
amount of outstanding Advances made to the Borrower hereunder;
(iii) the aggregate Collateral Value of Mortgage Loans that are
Second Lien Mortgage Loans may not at any one time exceed the lesser of (a)
$2,500,000 and (b) 2.5% of the aggregate amount of Advances made to the
Borrower hereunder;
(iv) the Collateral Value shall be zero for each Eligible Mortgage
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Loan:
(A) which is more than seventy-five (75) days delinquent in
respect of the first Monthly Payment;
(B) which was originated or purchased by the Borrower pursuant
to the Underwriting Guidelines more than 60 days prior to the initial
Funding Date;
(C) in respect of which 180 days or more have passed since such
Eligible Mortgage Loan was first pledged to the Lender hereunder;
(D) which has been released from the possession of the Custodian
under Section 5(a) of the Custodial Agreement to any Person other than
the Lender or its bailee for a period in excess of fifteen (15)
calendar days;
(E) which has been released from the possession of the Custodian
(i) under Section 5(b) of the Custodial Agreement under any
Transmittal Letter in excess of the time period stated in such
Transmittal Letter for release, or (ii) under Section 5(c) of the
Custodial Agreement under an Attorney Bailee Letter, from and after
the date such Attorney's Bailee Letter is terminated or ceases to be
in full force and effect;
(F) in respect of which the related Mortgage Note has been
extinguished under relevant state law in connection with a judgment of
foreclosure or foreclosure sale or otherwise;
(G) as to which (i) the related Mortgage Note or the related
Mortgage is not genuine or is not the legal, valid, binding and
enforceable obligation of the maker thereof, subject to no right of
rescission, set-off, counterclaim or defense, or (ii) such Mortgage,
is not a valid, subsisting, enforceable and perfected first or second
lien on the Mortgaged Property;
(H) which the Lender determines, in its reasonable discretion,
that such Eligible Mortgage Loan is not eligible for sale in the
secondary market or for securitization without unreasonable credit
enhancement;
(I) which is more than 180 days delinquent with respect to
scheduled payments of principal and interest;
(J) which has a Material Exception with respect thereto which
has not been expressly waived by Lender;
(K) in respect of which the related Mortgagor is the subject of
a bankruptcy proceeding;
(L) if the inclusion of such Mortgage Loan hereunder would
result in the limitations in subparagraphs (i), (ii) or (iii), above,
being violated; or
(M) which is in excess of 60 days delinquent with respect to
scheduled payments of principal and interest during the period in
which the Borrower has not satisfied the obligations of the Borrower
set forth in Section 11.15(b)(ii).
"CLTV" means with respect to any Mortgage Loan, the ratio of (i) the
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original outstanding principal amount of the Mortgage Loan and any other
mortgage loan which is secured by a lien on the related Mortgaged Property to
(ii) the lesser of (a) the Appraised Value of the Mortgaged Property at
origination or (b) if the Mortgaged Property was purchased within 6 months of
the origination of the Mortgage Loan, the purchase price of the Mortgaged
Property.
"Committed Advance" shall have the meaning provided in Section 2.01(a)
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hereof.
"Commonly Controlled Entity" shall mean an entity, whether or not
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incorporated, which is under common control with the Borrower within the meaning
of Section 4001 of ERISA or is part of a group which includes the Borrower and
which is treated as a single employer under Section 414 of the Code.
"Contractual Obligation" shall mean as to any Person, any provision of
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any agreement, instrument or other undertaking to which such Person is a party
or by which it or any of its property is bound or any provision of any security
issued by such Person.
"Custodial Agreement" shall mean the Custodial Agreement, dated as of
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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
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and in effect from time to time.
"Custodian" shall mean U.S. Bank National Association, as custodian
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under the Custodial Agreement, and its successors and permitted assigns
thereunder.
"Data Edit Sheet" shall mean a Data Edit Sheet in the form attached as
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Exhibit G.
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"Default" shall mean an Event of Default or an event that with notice
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or lapse of time or both would become an Event of Default.
"Dollars" and "$" shall mean lawful money of the United States of
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America.
"Due Date" shall mean the day of the month on which the Monthly
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Payment is due on a Mortgage Loan, exclusive of any days of grace.
"Due Diligence Review" shall mean the performance by the Lender of any
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or all of the reviews permitted under Section 11.16 hereof with respect to any
or all of the Mortgage Loans or the Borrower or related parties, as desired by
the Lender from time to time.
"Effective Date" shall mean the date upon which the conditions
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precedent set forth in Section 5.01 shall have been satisfied.
"Eligible Mortgage Loan" shall mean a First Lien Mortgage Loan or a
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Second Lien Mortgage Loan (as reflected on the Mortgage Loan Schedule) of not
less than"sub-prime credit quality" on a one- to four-family residential
property and as to which (i) the representations and warranties set forth on
Schedule 1 hereof are correct, (ii) was originated or acquired by the Borrower
in accordance with the Borrower's Underwriting Guidelines, (iii) contains all
required Mortgage Loan Documents without Material Exceptions unless otherwise
waived by Lender and (iv) such other customary criteria for eligibility
determined by the Lender shall have been satisfied.
"ERISA" shall mean the Employee Retirement Income Security Act of
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1974, as amended from time to time.
"ERISA Affiliate" shall mean any corporation or trade or business that
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is a member of any group of organizations (i) described in Section 414(b) or (c)
of the Code of which either Loan Party
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 either Loan Party is a member.
"Escrow Payments" shall mean with respect to any Mortgage Loan, the
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amounts constituting ground rents, taxes, assessments, water rates, sewer rents,
municipal charges, fire and hazard insurance premiums, condominium charges, and
any other payments required to be escrowed by the Mortgagor with the mortgagee
pursuant to the Mortgage or any other related document.
"Event of Default" shall have the meaning provided in Section 8
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hereof.
"Exception" shall have the meaning assigned thereto in the Custodial
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Agreement.
"Exception Report" shall mean the exception report prepared by the
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Custodian pursuant to the Custodial Agreement.
"Federal Funds Rate" shall mean, for any day, the weighted average of
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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.
"First Lien" shall mean with respect to each Mortgaged Property, the
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lien of the mortgage, deed of trust or other instrument securing a Mortgage Note
which creates a first lien on the Mortgaged Property.
"First Lien Mortgage Loan" shall mean an Eligible Mortgage Loan
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secured by the lien on the Mortgaged Property, subject to no prior liens on such
Mortgaged Property other than Permitted Exceptions.
"Funding Date" shall mean the date on which an Advance is made
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hereunder.
"GAAP" shall mean generally accepted accounting principles as in
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effect from time to time in the United States of America.
"Governmental Authority" shall mean any nation or government, any
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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 any Loan
Party, any of its Subsidiaries or any of its properties.
"Guarantee Obligation" as to any Person (the "guaranteeing person"),
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shall mean any obligation of (a) the guaranteeing person or (b) another Person
(including, without limitation, any bank under any letter of credit) with
respect to which the guaranteeing person has issued a reimbursement,
counterindemnity or similar obligation, in either case guaranteeing or in effect
guaranteeing any Indebtedness, leases, dividends or other obligations (the
"primary obligations") of any other third Person (the "primary obligor") in any
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manner, whether directly or indirectly, including, without limitation, any
obligation of such guaranteeing person, whether or not contingent, (i) to
purchase any such primary obligation or any property constituting direct or
indirect security therefor, (ii) to advance
or supply funds (1) for the purchase or payment of any such primary obligation
or (2) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency of the primary obligor, (iii) to
purchase property, securities or services primarily for the purpose of assuring
the owner of any such primary obligation of the ability of the primary obligor
to make payment of such primary obligation or (iv) otherwise to assure or hold
harmless the owner of any such primary obligation against loss in respect
thereof; provided, however, that the term Guarantee Obligation shall not include
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endorsements of instruments for deposit or collection in the ordinary course of
business. The terms "Guarantee" and "Guaranteed" used as a verb shall have a
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correlative meaning. The amount of any Guarantee Obligation of any guaranteeing
person shall be deemed to be the lower of (a) an amount equal to the stated or
determinable amount of the primary obligation in respect of which such Guarantee
Obligation is made and (b) the maximum amount for which such guaranteeing person
may be liable pursuant to the terms of the instrument embodying such Guarantee
Obligation, unless such primary obligation and the maximum amount for which such
guaranteeing person may be liable are not stated or determinable, in which case
the amount of such Guarantee Obligation shall be such guaranteeing person's
maximum reasonably anticipated liability in respect thereof as determined by the
Loan Party in good faith.
"Guarantor" shall mean, collectively, New Century Mortgage Corporation
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and New Century Financial Corporation.
"HUD" shall mean the Department of Housing and Urban Development, or
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any federal agency or official thereof which may from time to time succeed to
the functions thereof.
"Indebtedness" shall mean, of any Person at any date, without
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duplication, (a) all indebtedness of such Person for borrowed money (whether by
loan or the issuance and sale of debt securities) or for the deferred purchase
price of property or services (other than current trade liabilities incurred in
the ordinary course of business and payable in accordance with customary
practices), (b) any other indebtedness of such Person which is evidenced by a
note, bond, debenture or similar instrument, (c) all obligations of such Person
under financing leases, (d) all obligations of such Person in respect of letters
of credit, acceptances or similar instruments issued or created for the account
of such Person and (e) all liabilities secured by any Lien on any property owned
by such Person even though such Person has not assumed or otherwise become
liable for the payment thereof.
"Indemnified Party" shall have the meaning provided in Section 11.03
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hereof.
"Interest Period" shall mean, with respect to any Advance, (i)
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initially, the period commencing on the Funding Date with respect to such
Advance and ending on the calendar day prior to the Payment Date of the next
succeeding month, and (ii) thereafter, each period commencing on the Payment
Date of a month and ending on the calendar day prior to the Payment Date of the
next succeeding month. Notwithstanding the foregoing, no Interest Period may
end after the Termination Date.
"Investment Company Act" shall mean the Investment Company Act of
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1940, as amended.
"Lender" shall have the meaning provided in the heading hereof.
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"LIBO Base Rate" shall mean for any Advance, with respect to each day
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during each Interest Period pertaining to such Advance, the rate per annum
equal to the rate appearing at
page 3750 of the Telerate Screen as one-month LIBOR on the first day of
such Interest Period, and if such rate shall not be so quoted, the rate per
annum at which the Lender is offered Dollar deposits at or about 11:00
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 Advances are then being conducted for delivery
on such day for a period of one month, and in an amount comparable to the
amount of the Advances to be outstanding on such day.
"LIBO Rate" shall mean with respect to each day during each Interest
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Period pertaining to an Advance, a rate per annum determined by the Lender in
accordance with the following formula (rounded upwards to the nearest 1/100th of
one percent), which rate as determined by the Lender shall be conclusive absent
manifest error by the Lender:
LIBO Base Rate
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1.00 - LIBO Reserve Requirements
"LIBO Reserve Requirements" shall mean for any Interest Period for any
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Advance, the aggregate (without duplication) of the rates (expressed as a
decimal fraction) of reserve requirements in effect on such day or during such
Interest Period, as applicable (including, without limitation, basic,
supplemental, marginal and emergency reserves under any regulations of the Board
of Governors of the Federal Reserve System or other Governmental Authority
having jurisdiction with respect thereto), dealing with reserve requirements
prescribed for eurocurrency funding (currently referred to as "Eurocurrency
Liabilities" in Regulation D of such Board) maintained by a member bank of such
Governmental Authority. As of the Effective Date, the LIBO Reserve Requirements
shall be deemed to be zero.
"Lien" shall mean any mortgage, lien, pledge, charge, security
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interest or similar encumbrance.
"Loan Agreement" shall mean this Master Loan and Security Agreement,
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as the same may be amended, supplemented or otherwise modified from time to
time.
"Loan Documents" shall mean, collectively, this Loan Agreement, the
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Note, the Custodial Agreement, and the Affiliate Guaranty.
"Loan Party" shall mean the collective reference to the Borrower and
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the Guarantors.
"Loan-to-Value Ratio" or "LTV" shall mean with respect to any Mortgage
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Loan, the ratio of (a) the Stated Principal Balance of the Mortgage Loan as of
the date of origination (unless otherwise indicated) to (b) the Appraised Value
of the Mortgaged Property or if the Mortgage Loan was made in connection with
the purchase of the related Mortgaged Property, the lesser of the Appraised
Value and the sales price of such property.
"Lost Note Affidavit" shall mean with respect to each Mortgage Loan
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for which the original Mortgage Note has not been delivered to the Lender or the
Custodian, a lost note affidavit in a form acceptable to the Lender certified by
a Responsible Officer of the Borrower stating that the related Mortgage Note, a
copy of which shall be attached to such lost note affidavit, has been lost,
misplaced or destroyed.
"Market Value" shall mean the value, determined by the Lender in its
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sole reasonable discretion, of the Mortgage Loans if sold in their entirety to a
single third-party purchaser. In determining Market Value, the Lender may take
into account (a) customary factors, including, but not limited to current market
conditions and the fact that the Mortgage Loans may be sold under circumstances
in which the Borrower, as originator of the Mortgage Loans, is in default under
the Loan Agreement, and (b) firm take-out commitments from investment grade
purchasers in favor of the Borrower covering the Mortgage Loans or mortgage
loans substantially similar to the Mortgage Loans to the extent recently
obtained and during similar market conditions. The Lender's determination of
Market Value shall be conclusive upon the parties, absent manifest error on the
part of the Lender. The Lender shall have the right to xxxx to market the
Mortgage Loans on a daily basis which Market Value may be determined to be zero.
The Borrower acknowledges that the Lender's determination of Market Value is for
the limited purpose of determining Collateral Value for lending purposes
hereunder without the ability to perform customary purchaser's due diligence and
is not necessarily equivalent to a determination of the fair market value of the
Mortgage Loans achieved by obtaining competing bids in an orderly market in
which the Borrower is not in default and the bidders have adequate opportunity
to perform customary loan and servicing due diligence.
"Material Adverse Effect" shall mean a material adverse effect on (a)
-----------------------
the business, assets, property, business, condition (financial or otherwise) or
prospects of either Loan Party, (b) the ability of either Loan Party 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 Advances or other amounts payable in
connection therewith or (f) the Collateral taken as a whole.
"Material Exception" shall mean, with respect to any Mortgage Loan,
------------------
any Exception listed on the Exception Report consisting of the absence from the
Mortgage File, or deficiency in respect of, any of the Mortgage Loan Documents
set forth in Section [2(I)(a), 2(I)(c), 2(I)(d), 2(I)(e), 2(I)(f), or 2(I)(g) of
the Custodial Agreement].
"Maximum Committed Amount" shall mean $200,000,000; provided, however
------------------------
that for the period commencing December 1, 1999 through January 10, 2000, the
Maximum Committed Amount shall be reduced to $50,000,000; provided, further that
the Maximum Committed Amount shall return to $200,000,000 for the period
commencing January 11, 2000 through the Termination Date.
"Maximum Credit: shall mean the sum of the Maximum Committed Amount
--------------
and the Maximum Uncommitted Amount.
"Maximum Uncommitted Amount" shall mean $100,000,000; provided,
--------------------------
however that for the period commencing December 1, 1999 through January 10,
2000, the Maximum Uncommitted Amount shall be increased to $250,000,000;
provided, further that the Maximum Uncommitted Amount shall return to
$100,000,000 for the period commencing January 11, 2000 through the Termination
Date.
"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" shall mean the mortgage, deed of trust or other instrument
--------
securing a Mortgage Note, which creates a first or second lien on the fee simple
in real property securing the Mortgage Note.
"Mortgage File" shall have the meaning assigned thereto in the
-------------
Custodial Agreement.
"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 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 (i) a Mortgage Note and related
Mortgage and (ii) all right, title and interest of the Borrower in and to the
Mortgaged Property covered by such 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 mean a schedule of Mortgage Loans
----------------------
containing the following information with respect to each Mortgage Loan, to be
delivered by the Borrower to the Lender pursuant to Section 2.03(a) hereof: (i)
the Borrower's Mortgage Loan number; (ii) the Mortgagor's name and the street
address; (iii) the current principal balance; (iv) the original principal amount
with respect to any Mortgage Loan originated by the Borrower and the principal
amount purchased by the Borrower with respect to a Mortgage Loan acquired by the
Borrower subsequent to its origination; (v) the CLTV as of the date of the
origination of the related Mortgage Loan; (vi) the paid through date; (vii) the
mortgage interest rate; (viii) the final maturity date under the Mortgage Note;
(ix) the Monthly Payment; (x) whether such Mortgage Loan is a First Lien
Mortgage Loan or a Second Lien Mortgage Loan; (xi) such other information as
shall be mutually agreed upon by Borrower and Lender; and (xii) the Qualified
Originator that originated the Mortgage Loan.
"Mortgage Loan Tape" shall mean a computer-readable magnetic tape
------------------
containing the information with respect to each Mortgage Loan, to be delivered
by the Borrower to the Lender pursuant to Section 2.03(a) hereof.
"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.
"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.
---------
"Multiemployer Plan" shall mean a Plan which is a multiemployer plan
------------------
as defined in Section 4001(a)(3) of ERISA.
"Net Worth" shall mean, with respect to any Person, the excess of
---------
total assets of such Person, over total liabilities of such Person, determined
in accordance with GAAP.
"New Century" shall mean New Century Mortgage Corporation, a
-----------
California corporation.
"Non-Excluded Taxes" shall have the meaning provided in Section 2.09
------------------
hereof.
"Note" shall mean the promissory note provided for by Section 2.02(a)
----
hereof for Advances and any promissory note delivered in substitution or
exchange therefor, in each case as the same shall be modified and supplemented
and in effect from time to time.
"Notice of Borrowing and Pledge" shall have the meaning provided in
------------------------------
Section 2.03(a) hereof.
"PaineWebber Financing Documents: shall mean the Master Loan and
-------------------------------
Security Agreement by and between the Loan Parties and PaineWebber Real Estate
Securities, Inc. substantially in the form provided to the Lender prior to the
date of this Loan Agreement.
"Participants" shall have the meaning set forth in Section 11.14(b)
------------
hereof.
"Payment Date" shall mean the tenth day of each calendar month, or if
------------
such day is not a Business Day, the next succeeding Business Day.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any
----
entity succeeding to any or all of its functions under ERISA.
"Permitted Exceptions" shall mean the exceptions to lien priority
--------------------
including but not limited to: (i) the lien of current real property taxes and
assessments not yet due and payable; (ii) covenants, conditions and
restrictions, rights of way, easements and other matters of the public record as
of the date of recording acceptable to 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 to otherwise
considered in the appraisal (if any) 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; (iii) 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; and (iv) in
the case of a Second Lien Mortgage Loan, a First Lien on the Mortgaged Property.
"Person" shall mean any individual, corporation, company, voluntary
------
association, partnership, joint venture, limited liability company, trust,
unincorporated association, government (or any agency, instrumentality or
political subdivision thereof) or any other entity of whatever nature.
"Plan" shall mean at a particular time, any employee benefit plan
----
which is covered by ERISA and in respect of which either Loan Party or a
Commonly Controlled Entity is (or, if such plan were terminated at such time,
would under Section 4069 of ERISA be deemed to be) an "employer" as defined in
Section 3(5) of ERISA.
"Post-Default Rate" shall mean, in respect of any principal of any
-----------------
Advance 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 2% per
annum plus (a) the interest rate otherwise applicable to such Advance or other
----
amount, or (b) if no interest rate is otherwise applicable, the LIBO Rate plus
the Applicable Margin.
"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.
"Qualified Originator" shall mean (a) the Borrower and (b) any other
--------------------
originator of Mortgage Loans acceptable to the Lender.
"Regulations G, T, U and X" shall mean Regulations G, 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.
"Relevant States" shall have the meaning provided in Section 6.21
---------------
hereof.
"Reportable Event" shall mean any of the events set forth in Section
----------------
4043(b) of ERISA, other than those events as to which the thirty day notice
period is waived under subsections .13, .14, .16, .18, .19 or .20 of PBGC Reg.
(S) 2615.
"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; provided, that in the event any such officer is
--------
unavailable at any time he or she is required to take any action hereunder,
Responsible Officer shall mean any officer authorized to act on such officer's
behalf as demonstrated to the Lender to its reasonable satisfaction.
"Restricted Payments" shall mean with respect to any Person,
--------------------
collectively, all dividends or other distributions of any nature (cash,
securities, assets or otherwise), and all payments, by virtue of redemption or
otherwise, on any class of equity securities (including, without limitation,
warrants, options or rights therefor) issued by such Person, whether such
securities are now or may hereafter be authorized or outstanding and any
distribution in respect of any of the foregoing, whether directly or indirectly.
"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.
"Second Lien Mortgage Loan" shall mean an Eligible Mortgage Loan
-------------------------
secured by the lien on the Mortgaged Property, subject to one prior lien on such
Mortgaged Property securing financing obtained by the related Mortgagor and to
Permitted Exceptions.
"Secured Obligations" shall mean the unpaid principal amount of, and
-------------------
interest on the Advances, and all other obligations and liabilities of the
Borrower to the Lender, whether direct or indirect, absolute or contingent, due
or to become due, or now existing or hereafter incurred, which may arise under,
out of or in connection with this Loan Agreement, the Note, any other Loan
Document and any other document made, delivered or given in connection herewith
or therewith, whether on account of principal, interest, reimbursement
obligations, fees, indemnities, costs, expenses (including, without
limitation, all reasonable fees and disbursements of counsel to the Lender that
are required to be paid by the Borrower pursuant to the terms hereof or thereof)
or otherwise. For purposes hereof, "interest" shall include, without limitation,
interest accruing after the maturity of the Advances and interest accruing after
the filing of any petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to the Borrower, whether or not a
claim for post-filing or post-petition interest is allowed in such proceeding.
"Securitization Letter" shall mean that certain letter agreement by
---------------------
and among Borrower, Lender, and Greenwich Capital Markets, Inc., dated the date
hereof, outlining rights and obligations with respect to subsequent
securitizations of Mortgage Loans subject to this Loan Agreement from time to
time.
"Servicer" shall mean New Century Mortgage Corporation.
--------
"Servicing Agreement" shall mean any servicing agreement governing the
-------------------
servicing and administration of the Mortgage Loans.
"Servicing Records" shall have the meaning provided in Section
-----------------
11.15(b) hereof.
"Single Employer Plan" shall mean any Plan which is covered by Title
--------------------
IV of ERISA, but which is not a Multiemployer Plan.
"Stated Principal Balance" shall mean as to each Mortgage Loan, the
------------------------
principal balance of the Mortgage Loan at the date of determination.
"Subsidiary" shall mean, with respect to any Person, any other Person
----------
of which at least a majority of the securities or other ownership interests
having by the terms thereof ordinary voting power to elect a majority of the
board of directors or other persons performing similar functions of such
corporation, partnership or other entity (irrespective of whether or not at the
time securities or other ownership interests of any other class or classes of
such corporation, partnership or other entity shall have or might have voting
power by reason of the happening of any contingency) is at the time directly or
indirectly owned or controlled by such Person or one or more Subsidiaries of
such Person or by such Person and one or more Subsidiaries of such Person.
"Tangible Net Worth" shall mean, with respect to any Person, as of any
------------------
date of determination, the consolidated Net Worth of such Person and its
Subsidiaries, less the consolidated net book value of all assets of such Person
and its Subsidiaries (to the extent reflected as an asset in the balance sheet
of such Person or any Subsidiary at such date) which will be treated as
intangibles under GAAP, including, without limitation, such items as deferred
financing expenses, net leasehold improvements, good will, trademarks, trade
names, service marks, copyrights, patents, licenses and unamortized debt
discount and expense; provided, that residual securities held by such Person or
its Subsidiaries shall not be treated as intangibles for purposes of this
definition.
"Termination Date" shall mean 364 days following the Effective Date of
----------------
this Loan Agreement, or such earlier date on which this Loan Agreement shall
terminate in accordance with the provisions hereof or by operation of law, as
same may be extended in accordance with Section 2.11 hereof.
"Transmittal Letter" shall have the meaning assigned to such term in
------------------
the Custodial Agreement.
"Trust Receipt" shall have the meaning assigned to such term in the
-------------
Custodial Agreement.
"Underwriting Guidelines" shall mean the underwriting guidelines
-----------------------
attached as Exhibit E hereto, as amended from time to time in accordance with
---------
Section 7.15.
"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.
"U.S. Bank Financing Documents" shall mean the Fourth Amended and
-----------------------------
Restated Credit Agreement, dated as of May 26, 1999, by and between New Century
and U.S. Bank National Association and all other documents or agreements
executed in connection therewith.
1.02 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.
SECTION 2 Advances, Note and Prepayments.
------------------------------
2.01 Advances. (a) Subject to the fulfillment of the conditions
--------
precedent set forth in Sections 5.01 and 5.02 hereof, and provided no Default
shall have occurred and be continuing hereunder, the Lender agrees to make loans
(individually, a "Committed Advance"; collectively, the "Committed Advances") to
----------------- ------------------
the Borrower in Dollars, from time to time, on the terms and conditions of this
Loan Agreement, on any Business Day from and including the Effective Date to but
excluding the Termination Date, in an aggregate principal amount at any one time
outstanding up to but not exceeding the lesser of (i) the Maximum Committed
Amount (which shall be further subject to the limitations in the definition of
Collateral Value), and (ii) the Borrowing Base at such time.
(b) In addition to the foregoing, subject to fulfillment of the
conditions precedent set forth in Sections 5.01 and 5.02 hereof, and provided
that no Default shall have occurred and be continuing hereunder, the Lender may
from time to time in its sole discretion, on the terms and conditions of this
Loan Agreement, make loans (individually, an "Uncommitted Advance";
-------------------
collectively, the "Uncommitted Advances") to the Borrower in Dollars, on any
--------------------
Business Day from and including the Effective Date to but excluding the
Termination Date in an aggregate principal amount at any one time outstanding up
to but not exceeding the lesser of (i) the Maximum Uncommitted Amount (which
shall be further subject to the limitations in the definition of Collateral
Value) and (ii) the Borrowing Base at such time. Unless otherwise agreed by the
parties, in determining whether Advances secured by Eligible Mortgage Loans are
Committed Advances or Uncommitted Advances, such Advances shall first be deemed
Committed Advances up to the Maximum Committed Amount, and then the remainder
shall be deemed Uncommitted Advances.
(c) Subject to the terms and conditions of this Loan Agreement,
during such period the Borrower may borrow, repay and reborrow hereunder.
(d) In no event shall an Advance be made when any Default or
Event of Default has occurred and is continuing.
2.02 Notes.
-----
(a) The Advances 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 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 Advance 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 Advances.
2.03 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 the Termination
Date, by delivering to the Lender, with a copy to the Custodian, a Mortgage Loan
Tape, and an irrevocable written Notice of Borrowing and Pledge substantially in
the form of Exhibit D hereto (a "Notice of Borrowing and Pledge"), appropriately
--------- ------------------------------
completed, which Notice of Borrowing and Pledge must be received by the Lender,
with a copy to the Custodian, no later than 5:00 p.m., New York City time, at
least two (2) Business Days prior to the requested Funding Date; provided that
the Lender shall be under no obligation to make an Advance more than once in any
given week. Such Notice of Borrowing and Pledge shall (i) contain the amount of
the requested Advance, which shall in all events be at least equal to
$1,000,000, to be made on such Funding Date (setting forth the amount of the
Advance allocable to each Mortgage Loan set forth on the attached Mortgage Loan
Schedule), (ii) specify the requested Funding Date, which shall be not earlier
than the second Business Day following the date of such Notice of Borrowing and
Pledge, and (iii) contain (by attachment) such other information reasonably
requested by the Lender from time to time.
(b) The Borrower shall deliver (or cause to be delivered) and
release to the Custodian no later than 5:00 p.m., New York City time, two (2)
Business Days prior to the requested Funding Date, a complete 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.
(c) Pursuant to the Custodial Agreement, the Custodian shall deliver
to the Lender and the Borrower, no later than 3:00 p.m., New York City time, on
a Funding Date, a Trust Receipt in respect of all Mortgage Loans pledged to the
Lender on such Funding Date and an Exception Report in respect of all Mortgage
Loans so pledged to the Lender. Subject to Section 5 hereof, such Advance will
then be made available to the Borrower by the Lender transferring, via wire
transfer (pursuant to wire
transfer instructions provided by the Borrower on or prior to such Funding Date)
the aggregate amount of such Advance in immediately available funds.
2.04 Repayment of Advances; Interest.
-------------------------------
(a) The Borrower hereby promises to repay in full on the Termination
Date the then aggregate outstanding principal amount of the Advances.
(b) The Borrower hereby promises to pay to the Lender interest on
the unpaid principal amount of each Advance for the period from and including
the Funding Date of such Advance to but excluding the date such Advance shall be
paid in full, at a rate per annum equal to the LIBO Rate plus the Applicable
----
Margin. Notwithstanding the foregoing, the Borrower hereby promises to pay to
the Lender interest at the applicable Post-Default Rate on any principal of any
Advance 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. Accrued interest on each Advance shall be payable monthly on each Payment
Date and on the Termination Date. Notwithstanding the foregoing, interest
accruing at the Post-Default Rate shall be payable to the Lender on demand.
Promptly after the determination of any interest rate provided for herein or any
change therein, the Lender shall give notice thereof to the Borrower.
2.05 Limitation on Types of Advances; Illegality. Anything herein to
-------------------------------------------
the contrary notwithstanding, if, on or prior to the determination of any LIBO
Base Rate:
(a) the Lender reasonably determines, which determination shall be
conclusive, that quotations of interest rates for the relevant deposits
referred to in the definition of "LIBO Base Rate" in Section 1.01 hereof
are not being provided in the relevant amounts or for the relevant
maturities for purposes of determining rates of interest for Advances as
provided herein; or
(b) the Lender reasonably determines, which determination shall be
conclusive, that the Applicable Margin plus the relevant rate of interest
referred to in the definition of "LIBO Base Rate" in Section 1.01 hereof
upon the basis of which the rate of interest for Advances is to be
determined is not likely adequately to cover the cost to the Lender of
making or maintaining Advances; or
(c) it becomes unlawful for the Lender to honor its obligation to
make or maintain Advances hereunder using a LIBO 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 Advances, and the Borrower shall, at its option, either prepay
all such Advances as may be outstanding or pay interest on such Advances at a
rate per annum as determined by the Lender by the Lender taking into account the
increased cost to the Lender of making the Advances; provided, however that in
the case of clause (b) above, if the Borrower decides to pay interest on such
Advances at the new rate, the Advances shall accrue interest at the prior rate
until five (5) days after the Borrower receives notice from the Lender of such
new interest rate.
2.06 Determination of Borrowing Base; Mandatory Prepayments or
---------------------------------------------------------
Pledge.
------
(a) If at any time the aggregate outstanding principal amount of
Advances exceeds the Borrowing Base (a "Borrowing Base Deficiency"), as
-------------------------
determined by the Lender and notified to the
Borrower on any Business Day, the Borrower shall no later than one (1) Business
Day after receipt of such notice, at the option of the Borrower, either prepay
the Advances in part or in whole or pledge additional Eligible Mortgage Loans to
the Lender (which shall be in all respects acceptable to the Lender), such that
after giving effect to such prepayment or pledge the aggregate outstanding
principal amount of the Advances does not exceed the Borrowing Base.
(b) On the ninth day of each month (or if such day is not a Business
Day, the next succeeding Business Day), the Lender (or the Borrower if the
Borrower and the Lender shall mutually agree) shall calculate and deliver a
Borrowing Base Certificate in the form attached hereto as Exhibit H, such
---------
certificate to be based on the principal balance of the Mortgage Loans as of the
later of the Funding Date and the last calendar day of the prior month. In the
event that such Borrowing Base Certificate indicates that a Borrowing Base
Deficiency exists, the Borrower shall on the Payment Date either prepay the
Advances in part or in whole or pledge additional Eligible Mortgage Loans to the
Lender (which shall be in all respects acceptable to the Lender), such that
after giving effect to such prepayment or pledge the aggregate outstanding
principal amount of the Advances does not exceed the Borrowing Base.
2.07 Optional Prepayments.
--------------------
(a) The Advances are prepayable without premium or penalty, in whole
or in part on each Payment Date. The Advances are prepayable at any other time,
in whole or in part, in accordance herewith and subject to clause (b) below.
Any amounts prepaid shall be applied to repay the outstanding principal amount
of any Advances (together with interest thereon) until paid in full. Amounts
repaid may be reborrowed in accordance with the terms of this Loan Agreement.
If the Borrower intends to prepay a Advance in whole or in part from any source,
the Borrower shall give five (5) Business Days' prior written notice thereof to
the Lender. If such notice is given, the amount specified in such notice shall
be due and payable on the date specified therein, together with accrued interest
to such date on the amount prepaid. Partial prepayments shall be in an
aggregate principal amount of at least $100,000.
(b) If the Borrower makes a prepayment of the Advances on any day
which is not a Payment Date, the Borrower shall indemnify the Lender and hold
the Lender harmless from any actual loss or expense which the Lender may sustain
or incur arising from (a) the deployment of funds obtained by the Lender to
maintain the Advances hereunder or from (b) fees payable to terminate the
deposits from which such funds were obtained, in either case, which actual loss
or expense shall be equal to an amount equal to the excess, as reasonably
determined by the Lender, of (i) its cost of obtaining funds for such Advances
for the period from the date of such payment to the last day of the Interest
Period(s) then in effect for such Advances over (ii) the amount of interest
likely to be realized by such Lender in redeploying the funds not utilized by
reason of such payment for such period. This Section 2.07 shall survive
termination of this Loan Agreement and payment of the Note.
2.08 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:
(i) shall subject the Lender to any tax of any kind whatsoever with
respect to this Loan Agreement, the Note or any Advance 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 Advance or similar requirement against assets held by,
deposits or other liabilities in or for the account of, advances, Advances
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 LIBO Base Rate hereunder;
(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 Advance or to reduce any amount receivable 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, commencing five (5) days following receipt of
notice thereof from the Lender.
(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 (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 subsection, 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 subsection submitted by the Lender
to the Borrower shall be conclusive in the absence of manifest error.
2.09 Purpose of Advances. Each Advance shall be used by the Borrower
-------------------
to originate, acquire, fund, manage and service Mortgage Loans or otherwise in
connection with the conduct of its business as currently conducted.
2.10 Taxes.
-----
(a) All payments made by the Borrower under this Loan Agreement and
the Note shall be made free and clear of, and without deduction or withholding
for or on account of, any present or future income, stamp or other taxes,
levies, imposts, duties, charges, fees, deductions or withholdings, now or
hereafter imposed, levied, collected, withheld or assessed by any Governmental
Authority, excluding net income taxes and franchise taxes (imposed in lieu of
net income taxes) imposed on the Lender as a result of a present or former
connection between the Lender and the jurisdiction of the Governmental Authority
imposing such tax or any political subdivision or taxing authority thereof or
therein (other than any such connection arising solely from the Lender having
executed, delivered or performed its obligations or received a payment under, or
enforced, this Loan Agreement or any Note). If any such non-excluded taxes,
levies, imposts, duties, charges, fees deductions or withholdings ("Non-Excluded
------------
Taxes") are required to be withheld from any amounts payable to the Lender
-----
hereunder or under the Note, the amounts so payable to the Lender shall be
increased to the extent necessary to yield to the Lender (after payment of all
Non-Excluded Taxes) interest or any such other amounts payable hereunder at the
rates or in the amounts specified in this Loan Agreement; provided, however,
-------- -------
that the Borrower shall not be required to increase any such amounts payable to
the Lender that is not organized under the laws of the United States of America
or a state thereof if the Lender fails to comply with the requirements of clause
(b) of this Section. Whenever any Non-Excluded Taxes are payable by the
Borrower, as promptly as possible thereafter the Borrower shall send to the
Lender, as the case may be, a certified copy of an original official receipt
received by the Borrower showing payment thereof. If the Borrower fails to pay
any Non-Excluded Taxes when due to the appropriate taxing authority or fails to
remit to the Lender the required receipts or other required documentary
evidence, the Borrower shall indemnify the Lender for any incremental taxes,
interest or penalties that may become payable by the Lender as a result of any
such failure. The agreements in this Section shall survive the termination of
this Loan Agreement and the payment of the Advances and all other amounts
payable hereunder.
(b) If the Lender hereunder (or an assignee or participant that
acquires an interest hereunder in accordance with Section 11.14 hereof) that is
not incorporated under the laws of the United States of America or a state
thereof shall:
(i) deliver to the Borrower (A) two duly completed copies of United
States Internal Revenue Service Form 1001 or 4224, or successor applicable
form, as the case may be, and (B) an Internal Revenue Service Form W-8 or
W-9, or successor applicable form, as the case may be;
(ii) deliver to the Borrower two further copies of any such form or
certification on or before the date that any such form or certification
expires or becomes obsolete and after the occurrence of any event requiring
a change in the most recent form previously delivered by it to the
Borrower; and
(iii) obtain such extensions of time for filing and complete such
forms or certifications as may reasonably be requested by the Borrower;
unless in any such case an event (including, without limitation, any change in
treaty, law or regulation) has occurred prior to the date on which any such
delivery would otherwise be required which renders all such forms inapplicable
or which would prevent such Lender from duly completing and delivering any such
form with respect to it and such Lender so advises the Borrower. Such Lender
shall certify (i) in the case of a Form 1001 or 4224, that it is entitled to
receive payments under this Loan Agreement without deduction or withholding of
any United States federal income taxes and (ii) in the case of a Form W-8 or W-
9, that it is entitled to an exemption from United States backup withholding
tax. Each Person that shall become a Lender or a participant pursuant to
Section 11.14 hereof shall, upon the effectiveness of the related transfer, be
required to provide all of the forms and statements required pursuant to this
Section, provided that in the case of a participant, such participant shall
--------
furnish all such required forms and statements to the Lender from which the
related participation shall have been purchased.
2.11 Extension of Termination Date. At the request of the Borrower,
-----------------------------
at least thirty (30) days prior to the then current Termination Date, the Lender
may in its sole discretion extend the
Termination Date for a period of 364 days 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.
SECTION 3 Payments; Computations; Etc.
---------------------------
3.01 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 Chase
Manhattan Bank: Account Number 140095961, For the A/C of Greenwich Capital
Financial Products, Inc., Attn: Xxxxx Xxxxx, not later than 1:00 p.m., New York
City time, on the date on which such payment shall become due (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.
3.02 Computations. Interest on the Advances 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.
3.03 Non-Utilization Fee. On a monthly basis, the Lender shall
-------------------
determine the average daily utilization during such month by the Borrower of the
Maximum Committed Amount made available hereunder by dividing (a) the sum of the
Committed Advances outstanding on each day during such month by (b) the number
days in such calendar month. If such average amount determined for any month as
a percentage of the then applicable Maximum Committed Amount (the "Utilization
Percentage") is less than 50% of the Maximum Committed Amount in effect for such
month, the Borrower shall pay to the Lender, on each Payment Date and on the
Termination Date, a non-utilization fee equal to the product of (i) .00125,
times (ii) the Maximum Committed Amount, times (iii) 1 minus the Utilization
Percentage. If the Utilization Percentage in any month is greater than or equal
to 50% the Lender shall not be entitled to a non-utilization fee for that month.
The Lender may, in its sole discretion, net such non-utilization fee from the
proceeds of any Advance made to the Borrower hereunder. The Borrower shall not
be required to pay a non-utilization fee pursuant to this Section 3.03 for the
first two months following the Effective Date hereof unless the Utilization
Percentage for the third month following the Effective Date is less than 50%, in
which case the amount of the non-utilization fee for such two month period shall
be payable at the time of payment of the non-utilization fee for such third
month.
SECTION 4 Collateral Security.
-------------------
4.01 Collateral; Security Interest.
-----------------------------
(a) Pursuant to the Custodial Agreement, the Custodian shall hold
the Mortgage Loan Documents as exclusive bailee and agent for the Lender
pursuant to terms of the Custodial Agreement and shall deliver Trust Receipts to
the Lender each to the effect that it has reviewed such Mortgage Loan Documents
in the manner and to the extent required by the Custodial Agreement and
identifying any Exceptions in such Mortgage Loan Documents as so reviewed in the
Exception Reports.
(b) Each of the following items of property is hereinafter referred
to as the "Collateral":
----------
(i) all Mortgage Loans identified on a Notice of Borrowing and Pledge
delivered by the Borrower to the Lender and the Custodian from time to time;
(ii) all Mortgage Loan Documents, including without limitation all
promissory notes, and all Servicing Records, Servicing Agreements, servicing
rights, 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 relating to such Mortgage Loans
(issued by governmental agencies or otherwise) and any mortgage insurance
certificate or other document evidencing such mortgage guaranties or insurance
relating to such Mortgage Loans 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 purchase or take-out commitments relating to or constituting any
or all of the foregoing;
(vi) 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;
(vii) all "accounts", "chattel paper" and "general intangibles" as defined
in the Uniform Commercial Code relating to or constituting any and all of the
foregoing; and
(viii) any and all replacements, substitutions, distributions on or proceeds
of any and all of the foregoing.
(c) The Borrower hereby pledges to the Lender, and grants a security
interest in favor of the Lender in, all of the Borrower's right, title and
interest in, to and under the Collateral, whether now owned or hereafter
acquired, now existing or hereafter created and wherever located, to secure the
Secured Obligations. The Borrower agrees to xxxx its computer records and tapes
to evidence the interests granted to the Lender hereunder.
4.02 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 carbon, photographic or other reproduction of this Loan
Agreement shall be sufficient as a financing statement for filing in any
jurisdiction.
4.03 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 Section 6 hereof or (ii) change its name, identity or corporate
structure (or the equivalent) or change the location where it maintains its
records with respect to the Collateral 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.
4.04 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 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
(iii) (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 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 reasonably 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
4.07 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.
4.05 Performance by Lender of Borrower's Obligations. If the Borrower
-----------------------------------------------
fails to perform or comply with any of its agreements contained in the Loan
Documents and the Lender may itself perform or comply, or otherwise cause
performance or compliance, with such agreement, the expenses of the Lender
incurred in connection with such performance or compliance, together with
interest thereon at a rate per annum equal to the Post-Default Rate, shall be
payable by the Borrower to the Lender on demand and shall constitute Secured
Obligations.
4.06 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.
4.07 Remedies. 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 (on a servicing released basis, at the Lender's
option), 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 as it may deem advisable and at such prices as it
may deem best, 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 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 2.04(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.
4.08 Limitation on Duties Regarding Presentation 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.
4.09 Powers Coupled with an Interest. All authorizations and agencies
-------------------------------
herein contained with respect to the Collateral are irrevocable and powers
coupled with an interest.
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; provided that if any payment,
--------
or any part thereof, of any of the Secured Obligations is rescinded or must
otherwise be restored or returned by the Lender upon the insolvency, bankruptcy,
dissolution, liquidation or reorganization of the Borrower, or upon or as a
result of the appointment of a receiver, intervenor or conservator of, or a
trustee or similar officer for, the Borrower or any substantial part of its
Property, or otherwise, this Loan Agreement, all rights hereunder and the Liens
created hereby shall continue to be effective, or be reinstated, as though such
payments had not been made.
SECTION 5 Conditions Precedent.
--------------------
5.01 Initial Advance. The agreement of the Lender to make the initial
---------------
Advance requested to be made by it hereunder is subject to the satisfaction,
immediately prior to or concurrently with the making of such Advance, of the
following conditions precedent:
a.
Loan Agreement. The Lender shall have received this Loan Agreement,
--------------
executed and delivered by a duly authorized officer of the Borrower.
(b) Note. The Lender shall have received the Note, conforming to the
----
requirements hereof and executed by a duly authorized officer of the Borrower.
(c) Custodial Agreement. The Lender shall have received the Custodial
-------------------
Agreement, conforming to the requirements hereof and executed by a duly
authorized officer of the Borrower and the Custodian.
(d) Securitization Letter. The Lender shall have received the
---------------------
Securitization Letter, in form and substance satisfactory to the Lender and
executed by a duly authorized officer of the Borrower.
(e) Reserved.
--------
(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.
(g) Corporate Proceedings. The Lender shall have received a certificate of
---------------------
the Secretary or Assistant Secretary of each Loan Party, dated as of the date
hereof, and certifying (A) that attached thereto is a true, complete and correct
copy of (i) the articles of incorporation of each Loan Party, (ii) the by-laws
of each Loan Party, and (iii) resolutions duly adopted by the Board of Directors
of each Loan Party authorizing the execution, delivery and performance of this
Loan Agreement, the Notes and the other Loan Documents to which it is a party,
and the borrowings contemplated hereunder, and that such resolutions have not
been amended, modified, revoked or rescinded, and (B) as to the incumbency and
specimen signature of each officer executing any Loan Documents on behalf of
each
Loan Party and authorized to execute any Notice of Borrowing, and such
certificate and the resolutions attached thereto shall be in form and substance
satisfactory to the Lender.
(h) Good Standing Certificates. The Lender shall have received copies of
--------------------------
certificates evidencing the good standing of the Borrower and the Guarantors
respectively, dated as of a recent date, from the Secretary of State (or other
appropriate authority) of the State of California, and of each other
jurisdiction where the ownership, lease or operation of property, or the conduct
of business, requires the Borrower or the Guarantors to qualify as a foreign
corporation, except where the failure to qualify would not have a Material
Adverse Effect.
(i) Legal Opinions. The Lender shall have received the executed legal
--------------
opinion of Xxxxxxxx Xxxxxxxxxxx, Esq., Senior Legal Counsel of the Guarantors
and General Counsel of the Borrower, addressing the matters set forth in the
form attached hereto as Exhibit C, dated the initial Funding Date and otherwise
---------
in form and substance acceptable to the Lender and covering such other matters
incident to the transactions contemplated by this Loan Agreement as the Lender
shall reasonably request.
(j) Fees and Expenses. The Lender shall have received all fees and
-----------------
expenses required to be paid by the Borrower on or prior to the initial Funding
Date pursuant to Section 11.03(b) and such fees and expenses may be netted out
of any Advance made by the Lender hereunder.
(k) Financial Statements. The Lender shall have received the financial
--------------------
statements referenced in Section 6.01(a).
(l) Underwriting Guidelines. The Lender and the Borrower shall have agreed
-----------------------
upon the Borrower's current Underwriting Guidelines for Mortgage Loans and the
Lender shall have received a certified copy thereof.
(m) Consents, Licenses, Approvals, etc. The Lender shall have received
-----------------------------------
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.
(n) Insurance. The Lender shall have received evidence in form and
---------
substance satisfactory to the Lender showing compliance by the Borrower as of
such initial Funding Date with Section 7.03 hereof.
(o) Affiliate Guaranty. The Lender shall have received the Affiliate
------------------
Guaranty, duly executed by the Guarantors; and
(p) Other Documents. The Lender shall have received such other documents
---------------
as the Lender or its counsel may reasonably request.
5.02 Initial and Subsequent Advances. The making of each Advance to
-------------------------------
the Borrower (including the initial Advance) on any Business Day is subject to
the satisfaction of the following further conditions precedent, both immediately
prior to the making of such Advance 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. Each representation and warranty made
------------------------------
by the Borrower in Section 6 hereof and elsewhere in each of the Loan Documents,
shall be true and correct on and as of the date of the making of such Advance
(in the case of the representations and warranties in Schedule 1, solely with
respect to Mortgage Loans included in the Borrowing Base on such date) 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). At the request of the Lender, the
Lender shall have received an officer's certificate signed by a duly authorized
officer of the Borrower certifying as to the truth and accuracy of the above,
which certificate shall specifically include a statement that the Borrower is in
compliance with all governmental licenses and authorizations and qualified to do
business and in good standing in all required jurisdictions where the failure to
be so qualified should reasonably be expected to have a Material Adverse Effect.
(c) Borrowing Base. The aggregate outstanding principal amount of the
--------------
Advances shall not exceed the lesser of the Borrowing Base and the Maximum
Credit.
(d) Notice of Borrowing and Pledge. The Lender shall have received a
------------------------------
Notice of Borrowing and Pledge and Mortgage Loan Schedule in accordance with
Section 2.03(a) hereof, appropriately completed.
(e) Trust Receipt; Exception Report. The Lender shall have received from
-------------------------------
the Custodian a Trust Receipt in respect of all Mortgage Loans to be pledged
hereunder on such Business Day and a corresponding Exception Report, with
Exceptions (as defined in the Custodial Agreement) in respect of such Mortgage
Loans acceptable to the Lender in its sole discretion, in each case dated such
Business Day and duly completed.
(f) Additional Matters. All corporate and other proceedings, and all
------------------
documents, instruments and other legal matters in connection with the
transactions contemplated by this Loan Agreement and the other Loan Documents
shall be reasonably satisfactory in form and substance to the Lender, and the
Lender shall have received such other documents and legal opinions in respect of
any aspect or consequence of the transactions contemplated hereby or thereby as
it shall reasonably request.
(g) No Material Adverse Effect. There shall not have occurred one or more
--------------------------
events that, in the reasonable judgment of the Lender, constitutes or should
reasonably be expected to constitute a Material Adverse Effect.
(h) Additional Opinion. In the event that the Mortgage Loans to be pledged
------------------
would cause the aggregate outstanding principal balance of Mortgage Loans
pledged secured by Mortgaged Property from any state to exceed 10% of the
aggregate outstanding principal balance of Mortgage Loans pledged hereunder,
then the Borrower shall, upon request by the Lender, deliver an opinion
acceptable to the Lender from outside counsel in such state, substantially in
the form of items #13 and 14 of Exhibit C.
(i) Due Diligence Review. Subject to the Lender's right to perform one or
--------------------
more Due Diligence Reviews pursuant to Section 11.16 hereof, the Lender shall
have completed its due diligence review of the Mortgage Loan Documents for each
Advance and such other documents, records, agreements, instruments, mortgaged
properties or information relating to such Advances as the Lender in
its sole discretion deems appropriate to review and such review shall be
satisfactory to the Lender in its sole discretion.
(j) True Sale Opinion. With respect to any Mortgage Loan that was funded
-----------------
in the name of or acquired by a Qualified Originator which is an Affiliate of
the Borrower, the Lender may, in its sole discretion, require the Borrower to
provide evidence sufficient to satisfy the Lender that such Mortgage Loan was
acquired in a legal sale, including without limitation, an opinion, in form and
substance and from an attorney, in both cases, acceptable to the Lender in its
sole discretion, that such Mortgage Loan was acquired in a legal sale.
(k) none of the following shall have occurred and/or be continuing:
(i) a catastrophic 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 for a period of (or reasonably expected to be) at least 30
consecutive days and the same has resulted in the Lender not being
able to finance any Advances through the "repo market" or "lending
market" with traditional counterparties at rates which would have been
reasonable prior to the occurrence of such catastrophic event or
events;
(ii) a catastrophic event or events shall have occurred resulting in
the effective absence of a "securities market" for securities backed
by mortgage loans for a period of (or reasonably expected to be) at
least 30 consecutive days and the same results in the Lender not being
able to sell securities backed by mortgage loans at prices which would
have been reasonable prior to such catastrophic 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 and the Lender shall
have given notice thereof pursuant to Section 11.02 hereof to the
Borrower at least 30 days prior to the requested Funding Date;
(l) if any Mortgage Loans to be pledged hereunder were acquired by the
Borrower, such Mortgage Loans shall conform to the Borrower's Underwriting
Guidelines or the Lender shall have received Underwriting Guidelines for
such Mortgage Loans acceptable to the Lender in its reasonable discretion;
Each request for a borrowing by the Borrower hereunder shall constitute a
certification by the Borrower to the effect set forth in this Section (both as
of the date of such notice, request or confirmation and as of the date of such
borrowing).
SECTION 6 Representations and Warranties. As of the Effective Date
------------------------------
and each Funding Date, Borrower represents and warrants to the Lender that:
6.01 Financial Condition.
-------------------
(a) The unaudited consolidated balance sheet of the Borrower and its
consolidated Subsidiaries as at December 31, 1998 and the audited consolidated
balance sheet of the Guarantors and their consolidated Subsidiaries as at
December 31, 1998, reported thereon by KPMG LLP, a copy of which has heretofore
been furnished to the Lender, is complete and materially correct and presents
fairly
the consolidated financial condition of each Loan Party and its respective
consolidated Subsidiaries as at such dates and the consolidated results of their
operations and their consolidated cash flows for the fiscal year then ended.
(b) Such financial statement, including the related schedules and
notes thereto, has been prepared in accordance with GAAP applied consistently
throughout the periods involved (except as approved by such accountants or
Responsible Officer, as the case may be, and as disclosed therein).
(c) Neither Loan Party, nor any of its respective consolidated
Subsidiaries had, at the date of the financial statement referred to above, any
material Guarantee Obligation (other than as described in the U.S. Bank
Financing Documents), contingent liability or liability for taxes, or any long-
term lease or unusual forward or long-term commitment, including, without
limitation, any interest rate or foreign currency swap or exchange transaction,
or other financial derivative, which is not reflected in the foregoing
statements or in the notes thereto.
6.02 No Change. Since December 31, 1998, there has been no
---------
development or event nor any prospective development or event which has had or
should reasonably be expected to have a Material Adverse Effect.
6.03 Corporate Existence; Compliance with Law. (a) The Borrower is a
----------------------------------------
corporation duly organized, validly existing and in good standing under the laws
of the State of California, (b) New Century is a corporation duly organized,
validly existing and in good standing under the laws of the State of California,
(c) New Century Financial Corporation is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, (d) Each
Loan Party has the corporate power and authority, and has all governmental
licenses, authorizations, consents and approvals necessary, to own and operate
its property, to lease the property it operates as lessee and to carry on its
business as now being or as proposed to be conducted, (e) Each Loan Party is
duly qualified to do business and is in good standing under the laws of each
jurisdiction in which the nature of the business conducted by it makes such
qualification necessary and where failure so to qualify should be reasonably
expected (either individually or in the aggregate) to have a Material Adverse
Effect, and (f) Each Loan Party is in compliance in all material respects with
all Requirements of Law.
6.04 Corporate Power; Authorization; Enforceable Obligations.
-------------------------------------------------------
(a) Each Loan Party has the corporate power and authority, and the
legal right, to make, deliver and perform its obligations under each Loan
Document to which it is a party, and to perform thereunder, and has taken all
necessary corporate action to authorize the terms and conditions of each Loan
Document to which it is a party, and the execution, delivery and performance
thereof.
(b) No consent or authorization of, approval by, notice to, filing
with or other act by or in respect of, any Governmental Authority or any other
Person is required or necessary in connection with the execution, delivery,
performance, validity or enforceability of each Loan Document, except (i) for
filings and recordings in respect of the Liens created pursuant to this Loan
Agreement, and (ii) as previously obtained and currently in full force and
effect.
(c) Each Loan Document has been duly and validly executed and
delivered by each Loan Party which is a party thereto, and constitutes, a legal,
valid and binding obligation of each Loan Party which is a party thereto,
enforceable against such Loan Party in accordance with their terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights generally and by
general equitable principles (whether enforcement is sought by proceedings in
equity or at law).
6.05 No Legal Bar. The execution, delivery and performance of each
------------
Loan Document which each Loan Party is a party thereto will not violate any
Requirement of Law or Contractual Obligation of such Loan Party or of any of its
Subsidiaries and will not result in, or require, the creation or imposition of
any Lien (other than the Liens created hereunder) on any of their respective
properties or revenues pursuant to any such Requirement of Law or Contractual
Obligation.
6.06 No Material Litigation. There are no actions, suits,
----------------------
arbitrations, investigations or proceedings of or before any arbitrator or
Governmental Authority pending or, to the knowledge of either Loan Party,
threatened against either Loan Party or any of its respective Subsidiaries or
against any of its or their respective properties or revenues, other than those
actions, suits, arbitrations, investigations or proceedings described on
Schedule 4 hereto, none of which should reasonably be expected to have a
Material Adverse Effect.
6.07 No Default. Neither Loan Party nor any of their respective
----------
Subsidiaries is in default under or with respect to any of their Contractual
Obligations in any respect which should reasonably be expected to have a
Material Adverse Effect. No Default or Event of Default has occurred and is
continuing.
6.08 Collateral; Collateral Security.
-------------------------------
(a) Except for Liens on the Collateral created pursuant to the U.S.
Bank Financing Documents that have been released or are to be released
simultaneously with the Liens granted in favor of the Lender hereunder, the
Borrower has not assigned, pledged, or otherwise conveyed or encumbered any of
the Collateral to any Person other than the Lender, and immediately prior to the
pledge of such Collateral, the Borrower was the sole owner of the Collateral and
had good and marketable title thereto, free and clear of all Liens, in each case
except for Liens that have been released or are to be released simultaneously
with the Liens granted in favor of the Lender hereunder.
(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 (i) receipt by the Custodian of each Mortgage Note endorsed
in blank by a duly authorized officer of the Borrower, and (ii) the filing (to
the extent such interest can be perfected by filing under the Uniform Commercial
Code) 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, in
both instances, 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.
6.09 Chief Executive Office. The Borrower's chief executive office on
----------------------
the Effective Date is located at 00000 Xxx Xxxxxx, Xxxxx 0000, Xxxxxx,
Xxxxxxxxxx 00000. The chief executive office of the Guarantors on the Effective
Date is located at 00000 Xxx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxxxxxxx 00000.
6.10 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 or at 00000 Xxxxx Xxxxxx,
Xxxxxx, Xxxxxxxxxx 00000.
6.11 No Burdensome Restrictions. No Requirement of Law or Contractual
--------------------------
Obligation of the Borrower or any of its Subsidiaries has a Material Adverse
Effect.
6.12 Taxes. Each of the Loan Parties and its respective Subsidiaries
-----
has filed all Federal and state income tax returns and all other material tax
returns that are required to be filed by them and has paid all taxes due
pursuant to such returns or pursuant to any assessment received by any of them,
except for any such taxes or assessments, if any, that are being appropriately
contested in good faith by appropriate proceedings diligently conducted and with
respect to which adequate reserves in conformity with GAAP have been provided.
No tax Lien has been filed, and, to the knowledge of the Borrower, no claim is
being asserted, with respect to any such tax or assessment.
6.13 Margin Regulations. No part of the proceeds of any Advances will
------------------
be used for "purchasing" or "carrying" any "margin stock" within the respective
meanings of each of the quoted terms under, or for any other purpose which
violates or would be inconsistent with the provisions of, Regulation G, T, U or
X.
6.14 Investment Company Act; Other Regulations. 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. The
Borrower is not subject to regulation under any Federal or state statute or
regulation which limits its ability to incur Indebtedness.
6.15 Subsidiaries. All of the Subsidiaries of each Loan Party at the
------------
date hereof are listed on Schedule 3 to this Loan Agreement.
6.16 Origination and Acquisition of Mortgage Loans. The Mortgage
---------------------------------------------
Loans were originated or acquired by the Borrower, and the origination and
collection practices used by the Borrower or Qualified Originator, if
applicable, with respect to the Mortgage Loans have been, in all material
respects legal, proper, prudent and customary in the residential mortgage loan
servicing business, and in accordance with the Underwriting Guidelines. With
respect to Mortgage Loans acquired by the Borrower all such Mortgage Loans are
in material conformity with the Underwriting Guidelines. Each of the Mortgage
Loans complies in all material respects with the representations and warranties
listed in Schedule 1 hereto.
6.17 No Adverse Selection. The Borrower used no selection procedures
--------------------
that identified the Mortgage Loans as being less desirable or valuable than
other comparable Mortgage Loans owned by the Borrower.
6.18 Loan Party Solvent; Fraudulent Conveyance. As of the date hereof
-----------------------------------------
and immediately after giving effect to each Advance, the fair value of the
assets of each Loan Party is greater than the fair value of the liabilities
(including, without limitation, contingent liabilities if and to the extent
required to be recorded as a liability on the financial statements of such Loan
Party in accordance with GAAP) of such Loan Party and such Loan Party is and
will be solvent, is and will be able to pay its debts as they mature and does
not and will not have an unreasonably small capital to engage in the business in
which it is engaged and proposes to engage. Neither Loan Party intends to incur,
or believes that it has incurred, debts beyond its ability to pay such debts as
they mature.
Neither Loan Party is contemplating the commencement of insolvency, bankruptcy,
liquidation or consolidation proceedings or the appointment of a receiver,
liquidator, conservator, trustee or similar official in respect of such Loan
Party or any of its assets. Neither Loan Party is transferring any Mortgage
Loans with any intent to hinder, delay or defraud any of its creditors.
6.19 ERISA. Each Plan to which either Loan Party 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.
6.20 True and Complete Disclosure. The information, reports,
----------------------------
financial statements, exhibits and schedules furnished in writing by or on
behalf each Loan Party 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, do not
contain any untrue statement of material fact or omit to state any material fact
necessary to make the statements herein or therein not misleading. All written
information furnished after the date hereof by or on behalf of any Loan Party to
the Lender in connection with this Loan Agreement and the other Loan Documents
and the transactions contemplated hereby and thereby will be true, correct 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 any Loan Party
that, after due inquiry, should 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.
6.21 Relevant States. Schedule 5 sets forth all of the states or
---------------
other jurisdictions (the "Relevant States") in which the Borrower or New Century
---------------
does not originate Mortgage Loans in its own name or through brokers on the date
of this Loan Agreement.
6.22 True Sales. Any Mortgage Loan funded in the name of or acquired
----------
by a Qualified Originator which is an Affiliate of the Borrower has been sold,
transferred, conveyed and assigned to the Borrower pursuant to a legal sale and
such Qualified Originator retains no interest in such Mortgage Loan, and if so
requested by the Lender, is covered by an opinion of counsel to that effect in
form and substance acceptable to the Lender.
6.23 No Breach. Neither (a) the execution and delivery of the Loan
---------
Documents or (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 the Guarantors, or any
applicable law, rule or regulation, or any order, writ, injunction or decree of
any Governmental Authority, or other material agreement or instrument to which
the Borrower or the Guarantors, or any of their Subsidiaries, 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 (except for the Liens created pursuant to this Loan Agreement)
result in the creation or imposition of any Lien upon any property of the
Borrower or the Guarantors or any of their Subsidiaries, pursuant to the terms
of any such agreement or instrument.
6.24 Tangible Net Worth. The aggregate Tangible Net Worth of the
------------------
Borrower on the Effective Date is not less than $40,000,000.
6.25 Reserved.
--------
6.26 Year 2000 Compliance. The Borrower has made a full and complete
--------------------
assessment of all material issues which may be related to the occurrence of the
year 2000, including all material issues related to its computer program and
software and the computer program and software of the Servicer (the "Year 2000
Issues"), and both the Borrower and the Servicer have realistic and achievable
programs for remediating the Year 2000 Issues on a timely basis (the "Year 2000
Program"). Based on such assessment and on the Year 2000 Program, the Borrower
does not reasonably anticipate that Year 2000 Issues will have a material
adverse effect on the Borrower's or the Servicer's operations or financial
condition.
SECTION 7 Covenants of the Borrower. The Borrower covenants and
-------------------------
agrees with the Lender that, so long as any Advance is outstanding and until the
later to occur of the payment in full of all Secured Obligations and the
termination of this Loan Agreement:
7.01 Financial Statements. Each Loan Party shall deliver to the
--------------------
Lender:
(a) as soon as available, but in any event not later than thirty
(30) days after the end of each calendar month (except those calendar months
which are quarter-end months), unaudited consolidated balance sheets of each
Loan Party and its respective consolidated Subsidiaries as at the end of each
such month and the related unaudited consolidated statements of income and cash
flows of each Loan Party and its respective consolidated Subsidiaries for such
month and the portion of the fiscal year through such date, setting forth in
each case in comparative form the figures for the previous year, accompanied by
a Certificate of a Responsible Officer which certificate shall state that said
consolidated financial statements fairly present the consolidated financial
condition and results of operations of each Loan Party and its respective
Consolidated Subsidiaries as at the end of, and for, such month (subject to
normal year-end audit adjustments);
(b) if available, as soon as available and in any event within
forty-five (45) days after the end of each of the first three quarterly fiscal
periods of each fiscal year of the Borrower, the consolidated and consolidating
balance sheets of each Loan Party and its respective consolidated Subsidiaries
as at the end of such period and the related unaudited consolidated and
consolidating statements of income and of cash flows for each Loan Party and its
respective 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 each Loan Party, which certificate shall state that
said consolidated financial statements fairly present the consolidated and
consolidating financial condition and results of operations of each Loan Party
and its respective Subsidiaries in accordance with GAAP, consistently applied,
as at the end of, and for, such period (subject to normal year-end audit
adjustments);
(c) as soon as available and in any event within ninety (90) days
after the end of each fiscal year of each Guarantor, the consolidated and
consolidating balance sheets of each Guarantor and its respective consolidated
Subsidiaries as at the end of such fiscal year and the related consolidated and
consolidating statements of income and retained earnings and of cash flows for
each Guarantor and its respective consolidated Subsidiaries for such year,
setting forth in each case in comparative form the figures for the previous
year, accompanied by a report thereon of independent certified public
accountants of recognized national standing, which report 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 each Guarantor and its respective consolidated
Subsidiaries as at the end of, and for, such fiscal year in accordance with
GAAP; and
(d) from time to time such other information regarding the financial
condition, operations, or business of each Loan Party and its respective
Subsidiaries as the Lender may reasonably request.
The parties hereto acknowledge that the financial statements of the
Borrower described in Section 7.01(a) above shall not be required to be prepared
in accordance with GAAP. Notwithstanding the preceding sentence, the Borrower
hereby represents to the Lender that such financial statements will accurately
reflect the Borrower's financial condition and any deviation from GAAP standards
will not have the effect of increasing the Borrower's Tangible Net Worth above
the amount that would have been determined using GAAP standards.
Each Loan Party will furnish to the Lender, at the time it furnishes
each set of financial statements pursuant to paragraphs (a), (b) and (c) above,
a certificate of a Responsible Officer of such Loan Party to the effect that, to
the best of such Responsible Officer's knowledge, such Loan Party during such
fiscal period or year has observed or performed all of its covenants and other
agreements, and satisfied every material 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).
7.02 Existence, Etc. Each Loan Party and its respective Subsidiaries
---------------
will:
(a) preserve and maintain its legal existence;
(b) preserve and maintain all of its material rights, privileges,
licenses and franchises;
(c) comply with the requirements of all applicable Requirements of
Law (including, without limitation, the Truth in Lending Act, the Real
Estate Settlement Procedures Act and all environmental laws) if failure to
comply with such requirements should reasonably be expected (either
individually or in the aggregate) to have a Material Adverse Effect; and
(d) keep adequate records and books of account, in which complete
entries will be made in accordance with GAAP consistently applied.
7.03 Maintenance of Property; Insurance. The Borrower shall keep all
----------------------------------
property useful and necessary in its business in good working order and
condition. Each Loan Party shall maintain errors and omissions insurance and/or
mortgage impairment insurance and blanket bond coverage in such amounts as are
in effect on the Effective Date (as disclosed to Lender in writing) and shall
not reduce such coverage without the written consent of the Lender, and shall
also maintain such other insurance with financially sound and reputable
insurance companies, and with respect to property and risks of a character
usually maintained by entities engaged in the same or similar business similarly
situated, against loss, damage and liability of the kinds and in the amounts
customarily maintained by such entities.
7.04 Notices.
-------
(a) The Borrower shall give notice to the Lender promptly:
(i) upon the Borrower becoming aware of, and in any event within one (1)
Business Day after, the occurrence of any Default or Event of Default or any
Event of Default or Default under any other material agreement of the Borrower;
(ii) upon, and in any event within three (3) Business Days after, service
of process on any Loan Party or its respective Subsidiaries, or any agent
thereof for service of process, in respect of any legal or arbitrable
proceedings affecting any Loan Party or its respective Subsidiaries (a) that
questions or challenges the validity or enforceability of any of the Loan
Documents or (b) in which the amount in controversy exceeds $1,000,000;
(iii) upon the Borrower becoming aware of any Material Adverse Effect or any
event or change in circumstances which could reasonably be expected to have a
Material Adverse Effect;
(iv) upon the Borrower becoming aware that the Mortgaged Property in
respect of any Mortgage Loan has been damaged by waste, fire, earthquake or
earth movement, windstorm, flood, tornado or other casualty, or otherwise
damaged so as to materially and adversely affect the Collateral Value of such
Mortgage Loan;
(v) of entry of a judgment or decree against any Loan Party or its
respective Subsidiaries in an amount in excess of $2,500,000.
Each notice pursuant to this Section 7.04(a) (other than 7.04(a)(v))
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.
7.05 Other Information. The Borrower shall furnish to the Lender, as
-----------------
soon as available, copies of any and all proxy statements, financial statements
and reports which any Loan Party sends to its stockholders, and copies of all
regular, periodic and special reports, and all registration statements filed
with the Securities and Exchange Commission, any Governmental Authority which
supervises the issuance of securities by the Borrower.
7.06 Further Identification of Collateral. The Borrower will furnish
------------------------------------
to the Lender from time to time statements and schedules further identifying and
describing the Collateral and such other reports in connection with the
Collateral as the Lender or any Lender may reasonably request, all in reasonable
detail.
7.07 Mortgage Loan Determined to be Defective. Upon discovery by the
----------------------------------------
Borrower or the Lender of any breach of any representation or warranty listed on
Schedule 1 hereto applicable to any Mortgage Loan, the party discovering such
breach shall promptly give notice of such discovery to the other.
7.08 Monthly Reporting.
-----------------
(a) The Borrower shall deliver or cause to be delivered to the
Lender, no later than 11:00 a.m. eastern time two (2) Business Days prior to
each Payment Date (or such other day requested by Lender), a monthly servicing
report and Mortgage Loan Tape in a computer-readable format reasonably
acceptable to the Lender, listing and setting forth such information in respect
of, all Mortgage Loans as the Lender may reasonably request, including, without
limitation, the outstanding principal
balance and delinquency status of each such Mortgage Loan as at the last day of
the prior calendar month, and shall provide to the Lender no later than seven
(7) days after the last day of each calendar month, (i) all information
delivered by the Servicer to the Borrower under the Servicing Agreement, (ii) a
Remittance Report in the form attached hereto as Exhibit I, (iii) if the
---------
Borrower and the Lender shall mutually agree (in accordance with Section 2.06
(b) hereof), a Borrowing Base Certificate in the form attached hereto as Exhibit
-------
H, and (v) any other information as the Lender shall reasonably request.
-
(b) The Borrower shall deliver to the Lender, no later than seven
(7) days after the last day of any calendar month in which the list of Relevant
States listed on Schedule 5 is not complete, an updated complete copy of
Schedule 5.
(c) The Borrower shall cause the Servicer to provide to the Lender
on a monthly basis(i) an electronic transmission, on a loan-by-loan basis and in
the aggregate, with respect to the Mortgage Loans serviced hereunder by the
Servicer which were funded prior to the first day of the current month,
summarizing the Borrower's delinquency and loss experience with respect to
Mortgage Loans serviced by the Servicer (including, in the case of the Mortgage
Loans, the following categories: current, 30-59, 60-89, 90-119, 120-149 and
150+) and (ii) any other information reasonably requested by the Lender with
respect to the Mortgage Loans.
7.09 Financial Condition Covenants.
-----------------------------
(a) Maintenance of Tangible Net Worth. The Borrower will maintain
---------------------------------
Tangible Net Worth of not less than the greater of (i) $40,000,000 measured on a
monthly basis (as at the end of each month) or (ii) 85% of Tangible Net Worth at
the end of the most recently completed fiscal year plus 90% of capital
contributions made during such fiscal year plus 50% of positive year to date net
income.
7.10 Borrowing Base Deficiency. If at any time there exists a
--------------------------
Borrowing Base Deficiency the Borrower shall cure same in accordance with
Section 2.06 hereof.
7.11 Prohibition on Fundamental Changes. Neither Loan Party shall
----------------------------------
engage in any material business activities or operations unrelated to mortgage
banking or consumer finance, enter into any transaction of merger or
consolidation in which it is not the surviving entity, or liquidate, wind up or
dissolve itself (or suffer any liquidation or dissolution), or convey, sell,
lease, transfer or otherwise dispose of, in one transaction or a series of
transactions, any of its assets, whether now owned or hereafter acquired, except
that either Loan Party may sell or otherwise dispose of property in the ordinary
course of business, provided such sales do not include all or substantially all
of the assets of such Loan Party.
7.12 Limitation on Liens on Collateral. The Borrower will not, nor
---------------------------------
will it permit or allow others to, create, incur or permit to exist any Lien,
security interest or claim on or to any of its Property, except for (i) Liens
(not otherwise permitted hereunder) which are created in connection with the
purchase of fixed assets and equipment necessary in the ordinary course of the
Borrower's business or to finance residual certificates issued in connection
with securitizations of mortgage loans completed by the Borrower which are
financed solely based on a pledge of such residual certificates; (ii) Liens in
connection with deposits or pledges to secure payment of workers' compensation,
unemployment insurance, old age pensions or other social security obligations,
in the ordinary course of business of the Borrower; (iii) Liens for taxes, fees,
assessments and governmental charges not delinquent or which are being contested
in good faith by appropriate proceedings and for which appropriate reserves have
been established in accordance with GAAP; (iv) encumbrances consisting of zoning
regulations, easements,
rights of way, survey exceptions and other similar restrictions on the use of
real property and minor irregularities in title thereto which do not materially
impair their use in the operation of its business; (v) Liens incurred in
connection with gestation repurchase agreements or similar arrangements under
which Borrower is required to repurchase mortgage-backed securities or mortgage
loans from the Lender; provided, that such gestation repurchase agreements are
--------
entered into in the ordinary course of business in contemplation of the
subsequent non-recourse sale of such mortgage-backed securities or mortgage
loans; (vi) Liens arising under hedging arrangements; (vii) Liens on Property of
the Borrower, which Property shall not include any of the Collateral hereunder,
created pursuant to the U.S. Bank Financing Documents or the PaineWebber
Financing Documents, and (viii) Liens on the Collateral created pursuant to this
Loan Agreement. 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.
7.13 Limitation on Sale or Other Disposition of Collateral. The
-----------------------------------------------------
Borrower shall not convey, sell, lease, assign, transfer or otherwise dispose of
(collectively, "Transfer"), all or substantially all of its Property, business
or assets (including, without limitation, receivables and leasehold interests)
whether now owned or hereafter acquired or allow any Subsidiary to Transfer
substantially all of its assets to any Person; provided, that the Borrower may
after prior written notice to the Lender allow such action with respect to any
Subsidiary which is not a material part of the Borrower's overall business
operations.
7.14 Limitation on Transactions with Affiliates. Except for (i) the
------------------------------------------
guaranties of Indebtedness created under this Loan Agreement and under the U.S.
Bank Financing Documents, (ii) transfers by New Century of mortgage loans to
Borrower, and (iii) any transfers of mortgage loans permitted under the U.S.
Bank Financing Documents or the PaineWebber Financing Documents, neither Loan
Party nor their respective Subsidiaries shall 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) not otherwise prohibited under this Loan Agreement, (b) in the ordinary
course of such Loan Party's business and (c) upon fair and reasonable terms no
less favorable to such Loan Party, as the case may be, than it would obtain in a
comparable arm's length transaction with a Person which is not an Affiliate.
7.15 Underwriting Guidelines. Without prior consent of the Lender,
-----------------------
which consent shall not be unreasonably withheld, the Borrower shall not amend
or otherwise modify the Underwriting Guidelines.
7.16 Limitations on Modifications, Waivers and Extensions of Mortgage
----------------------------------------------------------------
Loans. The Borrower will not, nor will it permit or allow others to, amend,
-----
modify, terminate or waive any provision of any Mortgage Loan to which the
Borrower is a party in any manner which should reasonably be expected to
materially and adversely affect the value of such Mortgage Loan as Collateral.
7.17 Servicing. The Borrower shall not permit any Person other than
---------
the Servicer to service Mortgage Loans without the prior written consent of the
Lender.
7.18 Limitation on Distributions. After the occurrence and during the
---------------------------
continuation of any Event of Default, neither Loan Party shall 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 such Loan Party, whether
now or hereafter outstanding, or make any other distribution in respect thereof,
either directly or indirectly, whether in cash or property or in obligations of
such Loan Party.
7.19 Use of Proceeds. Each Advance shall be used by the Borrower to
---------------
originate, acquire, fund, manage and service Mortgage Loans or otherwise in
connection with the conduct of its business as currently conducted.
7.20 Restricted Payments. After the occurrence of an Event of
--------------------
Default, neither Loan Party shall make any Restricted Payments.
7.21 Year 2000 Compliance. (a) The Borrower shall take and shall
--------------------
cause each of its Affiliates and the Servicer to take all such actions as are
reasonably necessary to successfully implement the Year 2000 Program and to
assure that the Year 2000 Issues will not have a material adverse effect on the
Borrower's operations or financial condition. At the request of the Lender, the
Borrower will provide a description of the Year 2000 Program, together with any
updates or progress reports with respect thereto. The Borrower shall provide
the Lender with immediate notice in writing in the event that the Lender has
reason to believe that the occurrence of the year 2000 will adversely affect the
Borrower's business or any Advances executed in connection herewith.
(b) By September 30, 1999, the Borrower shall be required to provide
written assurance to the Lender that it is year 2000 compliant. If satisfactory
assurance can not be made on such date, the Lender shall have no obligation to
make any additional Advances under this Agreement. In addition, the failure of
the Borrower to provide satisfactory assurance of year 2000 compliance within
thirty days thereafter shall constitute an Event of Default under this
Agreement.
7.22 Certificate of a Responsible Officer. At the time that each Loan
------------------------------------
Party delivers financial statements to the Lender in accordance with Section
7.01 hereof, such Loan Party shall forward to the Lender a certificate of a
Responsible Officer which demonstrates that the Loan Party is in compliance with
the covenants set forth in Section 7.09 above.
SECTION 8 Events of Default. Each of the following events shall
-----------------
constitute an event of default (an "Event of Default") hereunder:
----------------
a. Borrower Default in the Payment of any Advance or Guarantor Default in
----------------------------------------------------------------------
the Payment of Amounts Required Under Guaranty. The Borrower shall default in
----------------------------------------------
payment of any principal of or interest on any Advance when due (whether at
stated maturity, upon acceleration or at mandatory or optional prepayment) or
the Guarantors shall default in the payment of any amount required to be paid to
the Lender under the Guaranty; or
(b) Default in the Payment of Other Amount. Any Loan Party shall default
--------------------------------------
in the payment of any other amount payable by it hereunder or under any other
Loan Document, and such default shall have continued unremedied for five (5)
Business Days; or
(c) Failure of Representation or Warranty. Any representation, warranty or
-------------------------------------
certification made or deemed made by the Borrower herein (other than those in
Schedule 1 hereto unless Borrower shall have made any such representations or
warranties with knowledge that they were materially false or misleading at the
time made) or by any Loan Party in any other Loan Document or any certificate
furnished to the Lender pursuant to the provisions thereof, shall prove to have
been false or misleading in any material respect as of the time made or
furnished; or
(d) Default of Covenant.
-------------------
(i) The Borrower shall fail to comply with the requirements of
Section 7.02(a) or (b), Section 7.03, Section 7.04(a)(i) or (iii), Section
7.09 through Section 7.13, and Section 7.18 through Section 7.21 or Section
11.15(b)(ii) hereof or the Guarantors shall fail to comply with the
requirements of Section 3(b) of the Guaranty and any such default shall
continue unremedied for a period of one (1) Business Day,
(ii) Any Loan Party shall fail to observe or perform any other
covenant, condition 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
(a) Cross Default. Any Loan Party or its respective Subsidiaries shall:
-------------
(i) default in any payment of principal of or interest on any
Indebtedness (other than the Advances) or in the payment of any Guarantee
Obligation, beyond the period of grace (not to exceed 30 days), if any,
provided in the instrument or agreement under which such Indebtedness or
Guarantee Obligation was created, if the aggregate amount of the
Indebtedness and/or Guarantee Obligations in respect of which such default
or defaults shall have occurred is $5,000,000 or more; or
(ii) default in the observance or performance of any other agreement
or condition relating to any Indebtedness (other than the Advances) or
Guarantee Obligation or contained in any instrument or agreement
evidencing, securing or relating thereto, in each case beyond the period of
grace (not to exceed 30 days), if any, provided in the instrument or
agreement under which such Indebtedness or Guarantee Obligation was
created; or
(iii) permit any other event to occur or condition exist that results
in a default on any Indebtedness; or
(iv) default in any other agreement between either Loan Party or any
of its respective Affiliates, on the one hand, and the Lender or any of its
Affiliates on the other hand, which has not been waived by the Lender, the
effect of which default or other event or condition is to cause, or give
the holder or holders of such Indebtedness or the beneficiary or
beneficiaries of such Guarantee Obligation (or a trustee or agent on behalf
of such holder or holders or beneficiary or beneficiaries) the immediate
right to cause, with the giving of notice if required, such Indebtedness to
become due prior to its stated maturity or such Guarantee Obligation to
become payable; or
(a) Unsatisfied Judgment. One or more judgments or decrees shall be
--------------------
entered against either Loan Party or any of its respective Subsidiaries
involving in the aggregate a liability (not paid or fully covered by insurance)
of $5,000,000 or more, and all such judgments or decrees shall not have been
vacated, discharged, stayed or bonded pending appeal within 90 days from the
entry thereof; or
(b) Inability to Pay Debts. Either Loan Party shall admit in writing its
----------------------
inability to pay its debts as such debts become due; or
(c) Voluntary Bankruptcy Event. Either Loan Party or any of its respective
--------------------------
Subsidiaries shall (i) apply for or consent to the appointment of, or the taking
of possession by, a receiver, custodian,
trustee, examiner or liquidator 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) fail to controvert in a timely and
appropriate manner, or 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
(d) Involuntary Bankruptcy Event. A proceeding or case shall be commenced,
----------------------------
without the application or consent of either Loan Party or any of its respective
Subsidiaries, 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 a receiver,
custodian, trustee, examiner, liquidator or the like of the Loan Party or any
such Subsidiary or of all or any substantial part of its property, or (iii)
similar relief in respect of the Loan Party or any such Subsidiary under any law
relating to bankruptcy, insolvency, reorganization, 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 60 or more days;
or an order for relief against the Loan Party or the Subsidiary shall be entered
in an involuntary case under the Bankruptcy Code; or
(e) Termination of Loan Documents. The Custodial Agreement, or any other
-----------------------------
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 any party
thereto; or
(f) ERISA Default. (i) any Person shall engage in any "prohibited
-------------
transaction" (as defined in Section 406 of ERISA or Section 4975 of the Code)
involving any Plan, (ii) any "accumulated funding deficiency" (as defined in
Section 302 of ERISA), whether or not waived, shall exist with respect to any
Plan or any Lien in favor of the PBGC or a Plan shall arise on the assets of
either Loan Party or any Commonly Controlled Entity, (iii) a Reportable Event
shall occur with respect to, or proceedings shall commence to have a trustee
appointed, or a trustee shall be appointed, to administer or to terminate, any
Single Employer Plan, which Reportable Event or commencement of proceedings or
appointment of a trustee is, in the reasonable opinion of the Lenders, likely to
result in the termination of such Plan for purposes of Title IV of ERISA, (iv)
any Single Employer Plan shall terminate for purposes of Title IV of ERISA, (v)
either Loan Party or any Commonly Controlled Entity shall, or in the reasonable
opinion of the Lenders is likely to, incur any liability in connection with a
withdrawal from, or the insolvency or reorganization of, a Multiemployer Plan or
(vi) any other event or condition shall occur or exist with respect to a Plan;
and in each case in clauses (i) through (vi) above, such event or condition,
together with all other such events or conditions, if any, could reasonably be
expected to have a Material Adverse Effect; or
(g) Material Adverse Effect. Any other event shall occur which, in the
-----------------------
sole good faith discretion of the Lender, may have a Material Adverse Effect; or
(h) Change of Control. Any Change of Control shall have occurred; or
-----------------
(i) Pre-Existing Condition. The discovery by the Lender during its
----------------------
continuing due diligence of the Borrower of a condition or event which existed
at or prior to the execution hereof and which the Lender, in its sole reasonable
discretion, determines materially and adversely affects: (i) the condition
(financial or otherwise) of the Borrower, its Subsidiaries or Affiliates; or
(ii) the ability of either the Borrower or the Lender to fulfill its respective
obligations under this Agreement; or
(j) Other Liens. 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
(a) Failure to Answer. The Lender shall reasonably request, specifying the
-----------------
reasons for such request, information, and/or written responses to such
requests, regarding the financial well-being of the Borrower and such
information and/or responses shall not have been provided within three Business
Days of such request.
SECTION 9 Remedies Upon Default.
---------------------
(a) Upon the occurrence of one or more Events of Default other than
those referred to in Sections 8(h) or (i), and in addition to the remedies
provided in Section 4.07 hereof and otherwise provided in this Loan Agreement,
the Lender may immediately declare the principal amount of the Advances then
outstanding under the Note to be immediately due and payable, together with all
interest thereon and fees and expenses accruing under this Loan Agreement. Upon
the occurrence of an Event of Default referred to in Sections 8(h) or (i), and
in addition to the remedies provided in Section 4.07 hereof and otherwise
provided in this Loan Agreement, 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 one or more Events of Default, and in
addition to the remedies provided in Section 4.07 hereof and otherwise provided
in this Loan Agreement, the Lender shall have the right to obtain 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 Borrower shall be responsible for
paying any fees of any Servicer resulting from the termination of a Servicer due
to an Event of Default. The Lender shall be entitled to specific performance of
all agreements of the Borrower contained in this Loan Agreement.
SECTION 10 No Duty of Lender. 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.
SECTION 11 Miscellaneous.
-------------
11.01 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.
11.02 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, as to any party, at
such other address as shall be designated by such party in a written notice to
each other party. Except as otherwise provided in this Loan Agreement and except
for notices given under Section 2 (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.
11.03 Indemnification and Expenses.
----------------------------
(a) The Borrower agrees to hold the Lender and each of its
officers, directors, agents and employees (each, an "Indemnified Party")
-----------------
harmless from and indemnify each 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 in any suit, action,
claim or proceeding relating to or arising out of this Loan Agreement, the Note,
any other Loan Document or any transaction contemplated hereby or thereby, or
any amendment, supplement or modification of, or any waiver or consent under or
in respect of, this Loan Agreement, the Note, any other Loan Document or any
transaction contemplated hereby or thereby, except, in each case, to the extent
arising from such Indemnified Party's gross negligence or willful misconduct. In
any suit, proceeding or action brought by the Lender in connection with any
Mortgage Loan for any sum owing thereunder, or to enforce any provisions of any
such Mortgage Loan, the Borrower will save, indemnify and hold the Lender
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 the Lender as and when billed by the Lender for all the Lender's
costs and expenses incurred in connection with the enforcement or the
preservation of the Lender's rights under this Loan Agreement, the Note, any
other Loan Document or any transaction contemplated hereby or thereby, including
without limitation the fees and disbursements of its counsel (including all
reasonable fees and disbursements incurred in any action or proceeding between
the Borrower and an Indemnified Party or between an Indemnified Party and any
third party relating hereto). 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.
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 fees, disbursements and expenses
of counsel to the Lender in connection with the execution of this Loan Agreement
(which are not expected to exceed $50,000), (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 11.03(a),
11.14 and 11.16 hereof and (iii) initial and ongoing fees and expenses incurred
by the Custodian in connection with the performance of its duties under the
Custodial Agreement.
11.04 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.
11.05 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.
11.06 Survival. The obligations of the Borrower under Sections 2.10
--------
and 11.03 hereof shall survive the repayment of the Advances and the termination
of this Loan Agreement. In addition, each representation and warranty made or
deemed to be made by a request for a borrowing herein or pursuant hereto shall
survive the making of such representation and warranty, and the Lender shall not
be deemed to have waived, by reason of making any Advance, any Default that may
arise by reason of such representation or warranty proving to have been 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 Advance was made.
11.07 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.
11.08 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.
11.09 GOVERNING LAW; ETC. THIS LOAN AGREEMENT SHALL BE GOVERNED BY
------------------
THE LAW OF THE STATE OF NEW YORK WITHOUT REFERENCE TO CHOICE OF LAW DOCTRINE
(BUT WITH REFERENCE TO SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW,
WHICH BY ITS TERMS APPLIES TO THIS LOAN AGREEMENT), AND SHALL CONSTITUTE A
SECURITY AGREEMENT WITHIN THE MEANING OF THE UNIFORM COMMERCIAL CODE.
11.10 SUBMISSION TO JURISDICTION; WAIVER. EACH LOAN PARTY HEREBY
-----------------------------------
IRREVOCABLY AND UNCONDITIONALLY:
(A) 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;
(B) 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;
(C) 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
(D) 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.
11.11 WAIVER OF JURY TRIAL. EACH OF THE BORROWER AND THE LENDER
--------------------
HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR
RELATING TO THIS LOAN AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY.
11.12 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.
11.13 Hypothecation and Pledge of Collateral. 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.
11.14 Assignments; Participations.
---------------------------
(a) The Borrower may assign any of its rights or obligations
hereunder or under the Note with the prior written consent of the Lender. The
Lender may assign or transfer to any bank or other financial institution that
makes or invests in loans or any Affiliate of the Lender all or any of its
rights or obligations under this Loan Agreement and the other Loan Documents.
(b) The Lender may, in accordance with applicable law, at any time
sell to one or more lenders or other entities ("Participants") participating
------------
interests in any Advance, the Note, its commitment to make Advances, or any
other interest of the Lender hereunder and under the other Loan Documents. In
the event of any such sale by the Lender of participating interests to a
Participant, the Lender's obligations under this Loan Agreement to the Borrower
shall remain unchanged, the Lender shall remain solely responsible for the
performance thereof, the Lender shall remain the holder of the Note for all
purposes under this Loan Agreement and the other Loan Documents, and the
Borrower and the Lender shall continue to deal solely and directly with the
Lender in connection with the Lender's rights and obligations under this Loan
Agreement and the other Loan Documents. The Borrower agrees that if amounts
outstanding under this Loan Agreement and the Note are due or unpaid, or shall
have been declared or shall have become due and payable upon the occurrence of
an Event of Default, each Participant shall be deemed to have the right of set-
off in respect of its participating interest in amounts owing under this Loan
Agreement and the Note to the same extent as if the amount of its participating
interest were owing directly to it as a Lender under this Loan Agreement or the
Note; provided, that such Participant shall only be entitled to such right of
--------
set-off if it shall have agreed in the agreement pursuant to which it shall have
acquired its participating interest to share with the Lender the proceeds
thereof. The Lender also agrees that each Participant shall be entitled to the
benefits of Sections 2.08 and 11.03 with respect to its participation in the
Advances outstanding from time to time; provided, that the Lender and all
--------
Participants shall be entitled to receive no greater amount in the aggregate
pursuant to such Sections than the Lender would have been entitled to receive
had no such transfer occurred.
(c) The Lender may furnish any information concerning the Borrower
or any of its Subsidiaries in the possession of such Lender from time to time to
assignees and participants (including prospective assignees and participants).
(d) The Borrower agrees to cooperate with the Lender in connection
with any such assignment and/or participation, to execute and deliver such
replacement notes, and to enter into such restatements of, and amendments,
supplements and other modifications to, this Loan Agreement and the other Loan
Documents in order to give effect to such assignment and/or participation. The
Borrower further agrees to furnish to any Participant identified by the Lender
to the Borrower copies of all reports and certificates to be delivered by the
Borrower to the Lender hereunder, as and when delivered to the Lender.
11.15 Servicing.
---------
(a) The Borrower covenants to maintain or cause the servicing of
the Mortgage Loans to be maintained in conformity with accepted customary 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 ("Accepted Servicing
------------------
Practices"). 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 earlier of (i) an Event of Default, or (ii) the
Termination Date.
(b)(i)(A) The Borrower agrees that the Lender has a first priority,
perfected security interest in 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 such Mortgage Loans
(the "Servicing Records"), and (B) the Borrower grants the Lender a security
-----------------
interest in all of the Borrower's rights relating to the
Mortgage Loans (including the servicing rights related thereto) 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
deliver them promptly to the Lender or its designee (including the Custodian) at
the Lender's request.
(ii) The Borrower and the Lender hereby agree that
notwithstanding the provisions of Subsection 11.15(b)(i) above, on the date of
this Loan Agreement, the Lender does not have a lien on the Servicing Records
attributable to the Mortgage Loans and that such Servicing Records may be
subject to a lien under the U.S. Bank Financing Facility Documents. The Borrower
shall, not later than 90 days following the date of this Loan Agreement, take
all necessary action to ensure that the Lender has a first priority, perfected
security interest in all such Servicing Records relating to the Mortgage Loans
not subject to any other lien, either created under the U.S. Bank Financing
Facility Documents or otherwise. The failure of the Borrower to grant the Lender
a first priority, perfected security interest in such Servicing Records within
such 90-day period shall constitute an Event of Default under this Loan
Agreement.
(c) After the Funding Date, until the pledge of any Mortgage Loan
is relinquished by the Custodian, the Borrower will have no right to modify or
alter the terms of such Mortgage Loan or consent to the alteration or
modification of the terms of such Mortgage Loan except with the prior written
consent of the Lender, and 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; provided, that the Borrower may enter into
forbearance agreements or plans with Mortgagors consistent with its collection
activities as servicer of the Mortgage Loans and in conformity with Accepted
Servicing Practices.
(d) The Borrower shall permit the Lender 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.
(e) The Borrower agrees that upon the occurrence of an Event of
Default, the Lender may terminate the Servicer in its capacity as servicer and
terminate any Servicing Agreement and transfer such servicing to the Lender or
its designee. The costs or expenses incurred in the transfer of servicing shall
be borne by the Borrower. The Lender shall be responsible for the execution of a
Servicing Agreement with such successor servicer. In addition, the Borrower
shall provide to the Lender an Instruction Letter from the Borrower to the
effect that upon the occurrence of an Event of Default, the Lender may terminate
any subservicer or Servicing Agreement and direct that collections with respect
to the Mortgage Loans be remitted in accordance with the Lender's instructions.
The Borrower and the Servicer agree to cooperate with the Lender in connection
with the transfer of servicing.
11.16 Periodic Due Diligence Review. The Borrower acknowledges that
-----------------------------
the Lender has the right to perform continuing due diligence reviews with
respect to the Mortgage Loans, for purposes of verifying compliance with the
representations, warranties and specifications made hereunder, or otherwise, and
the Borrower agrees that upon reasonable (but no less than one (1) Business
Day's) prior notice to the Borrower (which prior notice shall not be required
after the occurrence and during the continuation of a Default), 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 any
and all documents, records, agreements, instruments or information relating to
such Mortgage Loans in the possession or under the control of the Borrower
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 shall make Advances to the Borrower based
solely upon the information provided in the monthly reports by the Borrower to
the Lender 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 Advance, 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. In addition, the Lender has the right to
perform continuing Due Diligence Reviews of the Borrower, the Guarantors, and
their respective Affiliates, directors, officers, employees and significant
shareholders. The Borrower and Lender further agree that all out-of-pocket costs
and expenses incurred by the Lender in connection with the Lender's activities
pursuant to this Section 11.16, shall be paid for as agreed by such parties.
11.17 Set-Off. In addition to any rights and remedies of the Lender
-------
provided by this Loan Agreement and by law, the Lender shall have the right,
without prior notice to the Borrower, any such notice being expressly waived by
the Borrower to the extent permitted by applicable law, upon any amount becoming
due and payable by the Borrower hereunder (whether at the stated maturity, by
acceleration or otherwise) to set-off and appropriate and apply against such
amount any and all deposits (general or special, time or demand, provisional or
final), in any currency, and any other credits, indebtedness or claims, in any
currency, in each case whether direct or indirect, absolute or contingent,
matured or unmatured, at any time held or owing by the Lender or any Affiliate
thereof to or for the credit or the account of the Borrower. The Lender agrees
promptly to notify the Borrower after any such set-off and application made by
the Lender; provided that the failure to give such notice shall not affect the
--------
validity of such set-off and application.
11.18 Intent. The parties recognize that each Advance is a
------
"securities contract" as that term is defined in Section 741 of Title 11 of the
United States Code, as amended.
11.19 Confidential Information.
------------------------
(a) The Lender hereby acknowledges and agrees that all written or
computer readable information provided by any Loan Party to the Lender regarding
any Loan Party or the Collateral (the "Loan Party's Confidential Information"),
-------------------------------------
shall be kept confidential and each of their respective contents will not be
divulged to any party without each Loan Party's consent except to the extent
that (i) the Lender deems appropriate to do so in working with legal counsel,
auditors, taxing authorities or other governmental agencies or regulatory bodies
or in order to comply with any applicable federal or state laws, (ii) any
portion of the Loan Party's Confidential Information is in the public domain
other than due to a breach of this covenant, (iii) the Lender deems appropriate
in connection with exercising any or all of the Lender's rights or remedies or
complying with any obligations under any of the Loan Documents.
(b) Each Loan Party hereby acknowledges and agrees that all written
or computer readable information provided by the Lender to any Loan Party
regarding the Lender (the "Lender's Confidential Information"), shall be kept
---------------------------------
confidential and each of their respective contents will not be
divulged to any party without the Lender's consent except to the extent that (i)
such Loan Party deems appropriate to do so in working with legal counsel,
auditors, taxing authorities or other governmental agencies or regulatory bodies
or in order to comply with any applicable federal or state laws, (ii) any
portion of the Lender's Confidential Information is in the public domain other
than due to a breach of this covenant, (iii) such Loan Party deems appropriate
in connection with exercising any or all of such Loan Party's rights or remedies
or complying with any obligations under any of the Loan Documents.
(c) The provisions set forth in this Section 11.19 shall survive the
termination of this Loan Agreement for a period of two years following such
termination.
[SIGNATURE PAGE FOLLOWS]
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/ Xxxx Xxxxxxxxx
--------------------------------
Name: ___________________________
Title: Senior Vice President
--------------------------
Address for Notices:
-------------------
NC Capital Corporation
00000 Xxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxxxxxxx 00000
Attention:______
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
LENDER
------
GREENWICH CAPITAL FINANCIAL
PRODUCTS, INC.
By /s/ Xxxx Xxxxxxxx
--------------------------------
Name: __________________________
Title: Vice President
----------------------------
Address for Notices:
--------------------
000 Xxxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxxxx Xxxxxxxxx
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
Schedule 1
REPRESENTATIONS AND WARRANTIES RE: MORTGAGE LOANS
Eligible Mortgage Loans
-----------------------
As to each Mortgage Loan included in the Borrowing Base on a Funding
Date (and the related Mortgaged Property), the Borrower shall be deemed to make
the following representations and warranties to the Lender on and as of such
Funding Date and at all times thereafter while such Mortgage Loan is included in
the Borrowing Base (with respect to any representations and warranties made to
the best of the Borrower's knowledge, in the event that it is discovered that
the circumstances with respect to the related Mortgage Loan are not accurately
reflected in such representation and warranty notwithstanding the knowledge or
lack of knowledge of the Borrower, then, notwithstanding that such
representation and warranty is made to the best of the Borrower's knowledge,
such Mortgage Loan shall be assigned a Collateral Value in accordance with the
definition thereof in the Loan Agreement):
(a) Mortgage Loans as Described. The information set forth in the
---------------------------
Mortgage Loan Schedule accompanying the related Notice of Borrowing and Pledge
is true and correct;
(b) Reserved.
--------
(c) No Outstanding Charges. There are no defaults in complying with
----------------------
the terms of the Mortgage securing the Mortgage Loan, and 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 more recent, to the day which precedes by one month
the Due Date of the first installment of principal and interest;
(d) Original Terms Unmodified. The terms of the Mortgage Note and
-------------------------
Mortgage have not been impaired, waived, altered or modified in any respect,
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 by the policy, and its terms are reflected on
the Mortgage Loan Schedule. No Mortgagor 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 the 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;
(e) 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 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 was a debtor in
any state or federal bankruptcy or insolvency proceeding at the time the
Mortgage Loan was originated;
(f) Hazard Insurance. Pursuant to the terms of the Mortgage, all
----------------
buildings or other improvements upon the Mortgaged Property are insured by an
insurer who meets Xxxxxx Xxx and/or Xxxxxxx Mac guidelines against loss by fire,
hazards of extended coverage and such other hazards as are customary in the area
where the Mortgaged Property is located pursuant to insurance policies
conforming to the requirements of the Underwriting Guidelines. If upon
origination of the Mortgage Loan, the Mortgaged Property was in an area
identified in the Federal Register by the Federal Emergency Management Agency as
having special flood hazards (and such flood insurance was required by federal
regulation and such flood insurance has been made available) a flood insurance
policy meeting the requirements of the current guidelines of the Federal
Insurance Administration is in effect. All individual insurance policies contain
a standard mortgagee clause naming the loan originator or the Borrower and its
respective successors and assigns as mortgagee, and all premiums thereon have
been paid. The Mortgage obligates the Mortgagor thereunder to maintain the
hazard insurance policy at the Mortgagor's cost and expense, and on the
Mortgagor's failure to do so, authorizes the holder of the Mortgage to obtain
and maintain such insurance at such Mortgagor's cost and expense, and to seek
reimbursement therefor from the 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,
is in full force and effect, and will be in full force and effect and inure to
the benefit of the Lender upon the consummation of the transactions contemplated
by this Loan Agreement. The Borrower has not engaged in, and has no knowledge of
the Mortgagor's having engaged in, any act or omission which would impair the
coverage of any such policy, the benefits of the endorsement provided for
herein, 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 an
attorney, firm or other person or entity and no such unlawful items have been
received, retained or realized by the Borrower;
(g) 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 in all material respects, the consummation by Borrower of the
transactions contemplated hereby will not involve the violation of any such laws
or regulations, and the Borrower shall maintain in its possession, available for
the Lender's inspection, to the extent required by law, and shall deliver to the
Lender upon demand, evidence of compliance with all such requirements;
(h) No Satisfaction of Mortgage. The Mortgage has not been
---------------------------
satisfied, canceled, subordinated (other than, if a Second Lien Mortgage Loan,
as expressly set forth in paragraph (j) of this Schedule 1) 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 (other than, if a
Second Lien Mortgage Loan, in connection with the first lien referenced in
paragraph (j) of this Schedule 1) 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 acting or inaction by the Mortgagor;
(i) Location and Type of Mortgaged Property. The Mortgaged Property
---------------------------------------
is located in the state identified in the Mortgage Loan Schedule and consists of
a parcel or parcels 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 or high-rise condominium project, 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 Xxxxxx Xxx and Xxxxxxx Mac requirements regarding such
dwellings and that no residence or dwelling is a mobile home or a manufactured
dwelling which is not real estate under applicable state law. No portion of the
Mortgaged Property is used for commercial purposes;
(j) Valid First or Second Lien. The Mortgage is a valid, subsisting,
--------------------------
enforceable, and perfected first or second lien on 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: (i) the lien of current real property taxes and assessments not
yet due and payable; (ii) covenants, conditions and restrictions, rights of way,
easements and other matters of the public record as of the date of recording
acceptable to 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 to otherwise considered in the appraisal
(if any) 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; (iii) 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; and (iv) in the case of a Second Lien Mortgage Loan,
a First Lien on the 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 sell 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 made by the Borrower creating a lien subordinate to
the lien of the Mortgage;
(k) Validity of Mortgage Documents. The Mortgage Note, the Mortgage
------------------------------
and any other agreement executed and delivered by a Mortgagor 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 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 parties. To the best of Borrower's knowledge, 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 Mortgage File and has made such inquiries as
it deems necessary to make and confirm the accuracy of the representations set
forth herein;
(l) Full Disbursement of Proceeds. The proceeds of the Mortgage
-----------------------------
Loan have been fully disbursed and there is no requirement for future advances
and any and all requirements as to completion of any on-site or off-site
improvement and as to disbursements of any escrow funds therefor have been
complied with. All costs, fees and expenses incurred in making or closing the
Mortgage Loan and the recording of the Mortgage were paid, and the Mortgagor is
not entitled to any refund of any amounts paid or due under the Mortgage Note or
Mortgage;
(m) Ownership. The Borrower is the sole owner of record and holder of
---------
the Mortgage Loan. All Mortgage Loans acquired by the Borrower from third
parties (including affiliates) were acquired in a true and legal sale pursuant
to which such third party sold, transferred, conveyed and assigned to the
Borrower all of its right, title and interest in, to and under such Mortgage
Loan and retained no interest in such Mortgage Loan. In connection with such
sale, such third party received reasonably equivalent value and fair
consideration and, in accordance with GAAP and for federal income tax purposes,
reported the sale of such Mortgage Loan to the Borrower as a sale of its
interests in such Mortgage Loan. The Mortgage Loan is not assigned or pledged
(other than as contemplated under the Loan Agreement), and the Borrower has good
indefeasible and marketable title thereto, and has full right to transfer and
pledge the Mortgage Loan therein 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 pledge and assign 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;
(n) 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) (A) organized under
the laws of such state, or (B) qualified to do business in such state, or (C) a
federal savings and loan association, savings bank or a national bank having its
principal office in such state, or (D) not doing business in such state;
(o) LTV. As of the date of origination of the Mortgage Loan, the LTV
---
and CLTV are as identified in the applicable Mortgage Loan Schedule;
(p) Title Insurance. The Mortgage Loan is covered by a limited
---------------
liability lender's title insurance policy or such other form of policy of
insurance acceptable to Xxxxxx Mae or Xxxxxxx Mac for loans similar to the
Mortgage Loans issued by a title insurer qualified to do business in the
jurisdiction where the Mortgaged Property is located, insuring the Borrower, its
successors and assigns, as to the priority of its lien of the Mortgage in the
original principal amount of the Mortgage Loan, and subject only to the
exceptions contained in clauses (1), (2), (3) and (4) of paragraph (j) above.
Where required by state law or regulation, the Mortgagor has been given the
opportunity to choose the carrier of the required mortgage title insurance.
Immediately prior to the sale of the Mortgage Loan to the Lender under the terms
of this Loan Agreement, the Borrower, its successors and assigns were the sole
insureds of such lender's title insurance policy. Such lender's title insurance
policy is 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
of the Mortgage, including the Borrower, has done, by act or omission, anything
which should reasonably
be expected to impair the coverage of such lender's title insurance policy. In
connection with the issuance of such lender's title insurance policy, 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 persons or entity, and no such unlawful items have been received,
retained or realized by the Company;
(q) First Lien Consent. With respect to each Mortgage Loan which is
------------------
a Second Lien Mortgage Loan (i) if the related First Lien provides for negative
amortization, the LTV was calculated at the maximum principal balance of such
First Lien that could result upon application of such negative amortization
feature, and (ii) either no consent for the Mortgage Loan is required by the
holder of the First Lien or such consent has been obtained as in contained in
the Mortgage File;
(r) No Defaults; Right to Cure; No Failure to Cure. If a First Lien
----------------------------------------------
Mortgage Loan, 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 (other than those payment delinquencies permitted by paragraph (a)
of this Schedule 1), and neither the Borrower nor its predecessors have waived
any default, breach, violation or event of acceleration. If a Second Lien
Mortgage Loan, (a) to the best of the Borrower's knowledge the First Lien is in
full force and effect, (b) there is no default, breach, violation or event of
acceleration existing under such First Lien mortgage or the related-mortgage
note, and (c) there has occurred no event 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 thereunder acceleration
(other than those payment delinquencies permitted by paragraph (a) of this
Schedule 1). If a Second Lien Mortgage Loan, either (i) the First Lien mortgage
contains a provision which allows or (ii) applicable law requires, the mortgagee
under the second lien Mortgage Loan to receive notice of, and affords such
mortgagee an opportunity to cure any default under the First Lien mortgage, and
the Borrower has not received notice of any such default which has not been
cured. For purposes of the foregoing, a delinquent payment of less than 30 days
on a Mortgage Loan or Mortgage Note in and of itself does not constitute a
default, breach, violation or event of acceleration with respect to such
Mortgage Loan or Mortgage Note;
(s) 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
related Mortgaged Property which are or may be liens prior to, or equal or
coordinate with, the lien of the related Mortgage;
(t) Location of Improvements; No Encroachments. All improvements
------------------------------------------
which were considered in determining the Appraised Value of the Mortgaged
Property lay 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;
(u) Origination: Payment Terms. The Mortgage Loan was originated
--------------------------
(for purposes of the Seconary Mortgage Market Enhancement Act of 1984) 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 sixty (60) days after funds were disbursed in
connection with the Mortgage Loan. To the best of the Borrower's knowledge,
the documents, instruments and agreements submitted for loan underwriting were
not falsified and contain no untrue statement of material fact or omit to state
a material fact required to be stated therein. The Mortgage Note has the terms
identified in the applicable Mortgage Loan Schedule;
(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
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 marketable 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, and the Mortgage Loan and
Mortgaged Property conform to, the Borrower's applicable Underwriting
Guidelines. The Mortgage Note and Mortgage are on forms similar to those used by
Xxxxxxx Mac or Xxxxxx Mae 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. 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 written 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 the Mortgaged Property is non-owner occupied
as permitted by the Underwriting Guidelines, the 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 (j) above;
(z) Deeds of Trust. In the event the Mortgage constitutes a deed of
--------------
trust, a trustee, 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 Lender to the trustee under
the deed of trust, except in connection with a trustee's sale after default by
the Mortgagor;
(aa) Acceptable Investment. No specific circumstances or conditions
---------------------
exist with respect to the Mortgage, the Mortgaged Property, the Mortgagor or the
Mortgagor's credit standing that should reasonably be expected to (i) cause
private institutional investors which invest in Mortgage Loans similar to the
Mortgage Loan to regard the Mortgage Loan as an unacceptable investment, (ii)
cause the Mortgage Loan to be more likely to become past due in comparison to
similar Mortgage Loans, or (iii)
adversely affect the value or marketability of the Mortgage Loan in comparison
to similar Mortgage Loans;
(bb) Delivery of Mortgage Documents. The Mortgage Note, the Mortgage,
------------------------------
the Assignment of Mortgage and any other documents required to be delivered for
the Mortgage Loan by the Borrower under the Custodial Agreement have been
delivered to the Custodian at or prior to the time specified for delivery in the
Custodial Agreement.
(cc) Assignment of Mortgage. The Assignment of Mortgage is in
----------------------
form and is acceptable for recording under the laws of the jurisdiction in which
the Mortgaged Property is located;
(dd) 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;
(ee) 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 currently in effect 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;
(ff) Consolidation of Future Advances. Any future advances made after
--------------------------------
origination of the Mortgage Loan 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 second lien priority by a title insurance policy, an endorsement to
the policy insuring the mortgagee's consolidated interest or by other title
evidence satisfying paragraph (p) above. The consolidated principal amount does
not exceed the original principal amount of the Mortgage Loan;
(gg) Mortgaged Property Undamaged: Condemnation. The Mortgaged
------------------------------------------
Property is undamaged by waste, fire, earthquake or earth movement, windstorm,
flood, tornado or other casualty so as to adversely affect 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 in the future;
(hh) Collection Practices; Escrow Deposits. 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 and consistent with industry
standards for mortgage loans of the same type as the Mortgage Loan. With respect
to escrow deposits and Escrow Payments, if any, in the case of Second Lien
Mortgage Loans to the extent such Escrow Payments are not collected by the
mortgagee or its designee under the First Lien, all such payments are in the
possession of, or under 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, if any, have been collected in full
compliance with state and federal law. An escrow of funds
is not prohibited by applicable law and, to the extent such Escrow Payments are
not collected by the mortgagee or its designee under the First Lien, any escrow
that has been established is 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. Any interest required
to be paid pursuant to state and local law has been properly paid and credited;
(ii) Appraisal. The Mortgage File contains an appraisal of the
---------
related Mortgaged Property signed prior to the approval of the Mortgage Loan
application by a qualified appraiser, duly appointed by the Borrower or the
Qualified Originator, 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 Title XI of the Federal
Institutions Reform, Recovery and Enforcement Act of 1989, as amended, and the
regulations promulgated thereunder, as in effect on the date the Mortgage Loan
was originated;
(jj) Soldiers' and Sailors' 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) Environmental Matters. To the Borrower's actual knowledge, the
---------------------
Mortgaged Property is free from any and all toxic or hazardous substances and
there exists no violation of any local, state or federal environmental law, rule
or regulation;
(ll) 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;
(mm) Ground Leases. With respect to each ground lease to which the
-------------
Mortgaged Property is subject (a "Ground Lease"): (i) the Mortgagor is the owner
------------
of a valid and subsisting interest as tenant under the Ground Lease; (ii) the
Ground Lease is in full force and effect, unmodified and not supplemented by any
writing or otherwise; (iii) all rent, additional rent and other charges reserved
therein have been paid to the extent they are payable to the date hereof; (iv)
the Mortgagor enjoys the quiet and peaceful possession of the estate demised
thereby, subject to any sublease; (v) the Mortgagor is not in default under any
of the terms thereof and there are no circumstances which, with the passage of
time or the giving of notice or both, would constitute an event of default
thereunder; (vii) the lessor under the Ground Lease is not in default under any
of the terms or provisions thereof on the part of the lessor to be observed or
performed; (vii) the lessor under the Ground Lease has satisfied all of its
repair or construction obligations, if any, to date pursuant to the terms of the
Ground Lease; and (ix) the execution, delivery and performance of the Mortgage
do not require the consent (other than those consents which have been obtained
and are in full force and effect) under, and will not contravene any provision
of or cause a default under, the Ground Lease.
(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 (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 applicable pool policy, special hazard insurance policy, or
bankruptcy bond (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 insurance or coverage, including the appraisal, plans and
specifications and other exhibits or documents submitted therewith to the
insurer or under any such insurance policy, or for any other xxxxx under such
coverage, but not including the failure of the insurer to pay by reason of the
insurer's breach of the insurance policy or the insurer's financial inability to
pay. In connection with the placement of any insurance or coverage, 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;
(oo) Value of Mortgage Property. The Borrower has no knowledge of any
--------------------------
circumstances existing that should reasonably be expected to adversely affect
the value or the marketability of the Mortgaged Property or the Mortgage Loan or
to cause the Mortgage Loan to prepay during any period materially faster or
slower than the Mortgage Loans originated by the Borrower generally;
(pp) Section 32 Mortgages; Overages. The Borrower has provided the
------------------------------
related Mortgagor with all disclosure materials required by Section 226.32 of
the Federal Reserve Board Regulation Z with respect to any Mortgage Loans
subject to such Section of the Federal Reserve Board Regulation Z. The Borrower
has not made or caused to be made any payment in the nature of an "overage" or
"yield spread premium" to a mortgage broker or like Person which has not been
fully disclosed to the Mortgagor;
(a) Capitalization of Interest. The Mortgage Note does not by its
--------------------------
terms provide for the capitalization or forbearance of interest.
(a) 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.
(a) 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).
(b) No Exception. Other than as noted by the Custodian on the
------------
Exception Report; no Material Exception exists (as defined in the Custodial
Agreement) 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 as determined by the Lender in its sole
discretion.
(c) Qualified Originator. The Mortgage Loan has been originated by,
--------------------
and, if applicable, purchased by the Borrower from, a Qualified Originator.
(d) Mortgage Submitted for Recordation. The Mortgage has been
----------------------------------
submitted for recordation in the appropriate governmental recording office of
the jurisdiction where the Mortgaged Property is located.
Schedule 2
FILING JURISDICTIONS AND OFFICES
State of California
Schedule 3
SUBSIDIARIES
[TO BE PROVIDED BY COUNSEL TO BORROWER]
Schedule 4
LITIGATION
[TO BE PROVIDED BY COUNSEL TO BORROWER]
Schedule 5
RELEVANT STATES
Alabama, Alaska and New York
EXHIBIT A Form of Promissory Note
---------------------------------
[FORM OF PROMISSORY NOTE]
$300,000,000 June 23, 0000
Xxx Xxxx, Xxx Xxxx
FOR VALUE RECEIVED, NC CAPITAL CORPORATION, a California corporation
(the "Borrower"), hereby promises to pay to the order of GREENWICH CAPITAL
--------
FINANCIAL PRODUCTS, INC. a Delaware corporation (the "Lender"), at the principal
------
office of the Lender at 000 Xxxxxxxxx Xxxx, Xxxxxxxxx, Xxxxxxxxxxx 00000, in
lawful money of the United States, and in immediately available funds, the
principal sum of THREE HUNDRED MILLION DOLLARS ($300,000,000) (or such lesser
amount as shall equal the aggregate unpaid principal amount of the Advances made
by the Lender to the Borrower under the Loan Agreement as defined 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 Advance, at such office, in
like money and funds, for the period commencing on the date of such Advance
until such Advance shall be paid in full, at the rates per annum and on the
dates provided in the Loan Agreement.
The date, amount and interest rate of each Advance 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 Advances made by the Lender.
This Note is the Note referred to in the Master Loan and Security
Agreement dated as of June 23, 1999 (as amended, supplemented or otherwise
modified and in effect from time to time, the "Loan Agreement") between the
--------------
Borrower and the Lender, and evidences Advances 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 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 indorsers 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.
Any enforcement action relating to this Note may be brought by motion
for summary judgment in lieu of a complaint pursuant to Section 3213 of the New
York Civil Practice Law and Rules. The Borrower hereby submits to New York
jurisdiction with respect to any action brought with respect to this Note and
waives any right with respect to the doctrine of forum non conveniens with
respect to such transactions.
This Note shall be governed by and construed under the laws of the
State of New York (without reference to choice of law doctrine but with
reference to Section 5-1401 of the New York General Obligations Law, which by
its terms applies to this Note) 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-3
SCHEDULE OF ADVANCES
This Note evidences Advances made under the within-described Loan
Agreement to the Borrower, on the dates, in the principal amounts and bearing
interest at the rates set forth below, and subject to the payments and
prepayments of principal set forth below:
Principal Amount Interest Amount Paid Unpaid Principal Notation
Date Made of Advance Rate or Prepaid Amount Made by
------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------
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EXHIBIT B
---------
[FORM OF CUSTODIAL AGREEMENT]
[distributed separately]
EXHIBIT C
----------
[FORM OF OPINION OF COUNSEL TO BORROWER]
(date)
Greenwich Capital Financial Products, Inc.
000 Xxxxxxxxx Xxxx Xxxxxxxxx,
Xxxxxxxxxxx 00000
Dear Sirs and Mesdames:
You have requested [our] [my] opinion, as counsel to NC Capital
Corporation, a California corporation (the "Borrower"), New Century Mortgage
--------
Corporation, a California corporation and to New Century Financial Corporation,
a California corporation (collectively, the "Guarantors"), with respect to
----------
certain matters in connection with that certain Master Loan and Security
Agreement, dated as of June 23, 1999 (the "Loan and Security Agreement"), by and
---------------------------
between the Borrower and Greenwich Capital Financial Products, Inc. (the
"Lender"), being executed contemporaneously with a Promissory Note dated June
------
23, 1999 from the Borrower to the Lender (the "Note"), a Custodial Agreement,
----
dated as of June 23, 1999 (the "Custodial Agreement"), by and among the
-------------------
Borrower, [Custodian] (the "Custodian"), and the Lender, and an Affiliate
---------
Guaranty (the "Guaranty"), made in favor of the Lender by the Guarantors.
--------
Capitalized terms not otherwise defined herein have the meanings set forth in
the Loan and Security Agreement.
[We] [I] have examined the following documents:
1. the Loan and Security Agreement;
2. the Note;
3. the Custodial Agreement;
4. the Affiliate Guaranty;
5. 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 I understand will be filed in the
-----------------
filing offices listed on Schedule 1 (the "Filing Offices");
---------- --------------
6. the reports listed on Schedule 2 as to UCC financing statements
----------
(collectively, the "UCC Search Report"); and
-----------------
7. 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 me as originals, the genuineness of all signatures, the
legal capacity of natural persons and the conformity to the originals of all
documents.
Based upon the foregoing, it is [our] [my] opinion that:
1. The Borrower is a California corporation duly organized, validly
existing and in good standing under the laws of California and is qualified to
transact business in, and is in good standing under, the laws of the state of
California and each state in which any Mortgaged Property is located to the
extent necessary to ensure the enforceability of each Mortgage Loan and the
servicing of each Mortgage Loan pursuant to the Loan and Security Agreement.
2. The New Century Mortgage Corporation is a corporation duly
organized, validly existing and in good standing under the laws of California
and are qualified to transact business in, and are in good standing under, the
laws of the state of California.
3. New Century Financial Corporation is a corporation duly organized,
validly existing and in good standing under the laws of Delaware and are
qualified to transact business in, and are in good standing under, the laws of
the state of Delaware.
4. Each of the Borrower and the Guarantors has the corporate power to
engage in the transactions contemplated by the Loan Documents to which it is a
party and all requisite corporate power, authority and legal right to execute
and deliver the Loan Documents to which it is a party and observe the terms and
conditions of such instruments. Each of the Borrower and the Guarantors has all
requisite corporate power to borrow under the Loan and Security Agreement and to
grant a security interest in the Collateral pursuant to the Loan and Security
Agreement.
5. The execution, delivery and performance by each of the Borrower
and the Guarantor of the Loan Documents to which it is a party have been duly
authorized by all necessary corporate action on the part of each of the Borrower
and the Guarantors. Each of the Loan Documents to which each of the Borrower
and the Guarantors is a party has been executed and delivered by each of the
Borrower and Guarantor, and are legal, valid and binding agreements enforceable
in accordance with their terms against each of the Borrower and 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 or with the Lender's security interest in the Mortgage
Loans.
6. 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 or the Guarantors for the execution,
delivery or performance by each of the Borrower and the Guarantors of the Loan
Documents to which it is a party.
7. The execution, delivery and performance by each of the Borrower
and the Guarantors of, and the consummation of the transactions contemplated by,
the Loan Documents to which it is a party do not and will not (a) violate any
provision of the Borrower's or the Guarantors' 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 or the Guarantors 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 I
have knowledge (after due inquiry) to which the Borrower or the Guarantors 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 or the
Guarantors pursuant to the terms of any such agreement or instrument.
C-3
8. There is no action, suit, proceeding or investigation pending or,
to the best of [our] [my] knowledge, threatened against the Borrower or the
Guarantors 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 or the
Guarantors to carry on its business substantially as now conducted or in any
material liability on the part of the Borrower or the Guarantors or which would
draw into question the validity of the Loan Documents to which it is a party 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 or the Guarantors to perform under the terms of the
Loan Documents to which it is a party.
9. 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, (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.
10. 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.
11. (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 referred to in paragraph 8 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. Except for the
----------
matters listed 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.
12. 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.
13. The Borrower is duly registered as a [____________] in each state
in which Mortgage Loans were originated to the extent such registration is
required by applicable law, and has obtained all other licenses and governmental
approvals in each jurisdiction to the extent that the failure to obtain such
licenses and approvals would render any Mortgage Loan unenforceable or would
materially and adversely affect the ability of the Borrower to perform any of
its obligations under, or the enforceability of, the Loan Documents.
14. Assuming that all other elements necessary to render a Mortgage
Loan legal, valid, binding and enforceable were present in connection with the
execution, delivery and performance of each Mortgage Loan (including completion
of the entire Mortgage Loan fully, accurately and in compliance with all
applicable laws, rules and regulations) and assuming further that no action was
taken in connection with the execution, delivery and performance of each
Mortgage Loan (including in connection with the sale of the related Mortgaged
Property) that would give rise to a defense to the legality, validity, binding
effect and enforceability of such Mortgage Loan, nothing in the forms of such
Mortgage Loans, as attached hereto as Exhibit A, would render such Mortgage
Loans other than legal, valid, binding and enforceable.
15. Assuming their validity, binding effect and enforceability in all
other respects (including completion of the entire Mortgage Loan fully,
accurately and in compliance with all applicable laws, rules and regulations),
the forms of Mortgage Loans attached hereto as Exhibit A are in sufficient
compliance with ________ law and Federal consumer protection laws so as not to
be rendered void or voidable at the election of the Mortgagor thereunder.
Very truly yours,
C-5
EXHIBIT D
---------
FORM OF NOTICE OF BORROWING AND PLEDGE
--------------------------------------
[insert date]
Greenwich Capital Financial Products, Inc.
000 Xxxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Attention: _______________________
Notice of Borrowing and Pledge No.: _____________________
Ladies/Gentlemen:
Reference is made to the Master Loan and Security Agreement, dated as
of June 23, 1999 (the "Loan Agreement"; capitalized terms used but not otherwise
--------------
defined herein shall have the meaning given them in the Loan Agreement), between
NC Capital Mortgage Corporation (the "Borrower") and Greenwich Capital Financial
--------
Products, Inc. (the "Lender").
------
In accordance with Section 2.03(a) of the Loan Agreement, the
undersigned Borrower hereby requests that you, the Lender, make Advances to us
in an aggregate principal amount of $_________________ [insert requested Advance
amount] (such amount representing [insert number of Mortgage Loans] loans on
____________________ [insert requested Funding Date, which must be at least two
(2) Business Days following the date of the request], in connection with which
we shall pledge to you as Collateral the Mortgage Loans set forth on the
Mortgage Loan Schedule attached hereto.
The Borrower hereby certifies, as of such 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 Advance as a
result of such Advance;
(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 (in the case of the representations and
warranties in respect of Mortgage Loans, solely with respect to Mortgage
Loans being included the Borrowing Base on the Funding 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 is in good standing in
all required jurisdictions.
(d) the Borrower has satisfied all conditions precedent in Section
5.02 of the Loan Agreement and all other requirements of the Loan
Agreement.
The undersigned duly authorized officer of Borrower further represents
and warrants that (1) the documents constituting the Custodial File (as
defined in the Custodial Agreement) with respect to the Mortgage Loans that
are the subject of the Advance requested herein and more specifically
identified on the mortgage loan schedule or computer readable magnetic
transmission delivered to both the Lender and the Custodian in connection
herewith (the "Receipted Mortgage Loans") have been or are hereby submitted
to Custodian and such Required Documents are to be held by the Custodian
subject to Lender's first priority security interest thereon, (2) all other
documents related to such Receipted Mortgage Loans (including, but not
limited to, mortgages, insurance policies, loan applications and
appraisals) have been or will be
created and held by Borrower in trust for Lender, (3) all documents related
to such Receipted Mortgage Loans withdrawn from Custodian shall be held in
trust by Borrower for Lender, and Borrower will not attempt to pledge,
hypothecate or otherwise transfer such Receipted Mortgage Loans to any
other party until the Advance to which such Receipted Mortgage Loans are
related has been paid in full by Borrower and (4) Borrower has granted a
first priority perfected security interest in and lien on the Receipted
Mortgage Loans.
Borrower hereby represents and warrants that (x) the Receipted
Mortgage Loans have an unpaid principal balance as of the date hereof of
$__________ and (y) the number of Receipted Mortgage Loans is ______.
Very truly yours,
NC Capital Corporation
By:______________________________
Name:
Title:
D-3
Schedule I
to Notice of Borrowing and Pledge
---------------------------------
[MORTGAGE LOANS PROPOSED TO BE PLEDGED
--------------------------------------
TO LENDER ON FUNDING DATE]
--------------------------
[attach Mortgage Loan Schedule]
D-1
EXHIBIT E
UNDERWRITING GUIDELINES
EXHIBIT F
---------
RESERVED
F-1
EXHIBIT G
---------
FORM OF DATA EDIT SHEET (Funding Date)
[TO BE PROVIDED BY]
F-1
EXHIBIT H
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FORM OF BORROWING BASE CERTIFICATE
EXHIBIT I
FORM OF REMITTANCE CERTIFICATE
______, 19__
Greenwich Capital Financial Products, Inc.
000 Xxxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Attention: _________
Ladies and Gentlemen:
The undersigned, NC Capital Corporation, refers to the Master Loan and
Security Agreement, dated as of June 23, 1999 (as amended, supplemented or
otherwise modified from time to time, the "Loan Agreement,") between NC Capital
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Corporation and Greenwich Capital Financial Products, Inc. Capitalized terms
used herein but not defined herein shall have the meaning assigned to such terms
in the Loan Agreement.
The undersigned hereby delivers this Remittance Certificate to you pursuant
to Section 7.08 of the Loan Agreement and hereby certifies to you as follows as
of _______, 1999./1/
I. Summary of Collection Account Cash Flow
(a) Total Collections remitted for the calendar month: $_______.
(b) Borrowing Base Deficiency due to you on Remittance Date:
$_______.
(c) Interest due to you on the Remittance Date (for the period from
and including the previous Remittance Date to and including the
day preceding the current Remittance Date): $_______.
(d) Total cash due to you on the Remittance Date: $_______.
(e) Cash flow in connection with any other act which during the
month:
(i) Principal received: $_______.
(ii) Accrued interest received: $________.
(iii) Amounts swept from the Lender's Collection Account to the
securitization or whole loan buyer: $________.
(g) Balance to the undersigned $________.
LIBOR reset for the following month as of ________, 1997 ______%.
II. Breakout of Daily Remittances to the Collection Account
Collection Dates Wire Date Cash Amount Total Amount
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/1/ Date should be the last day of the immediately preceding calendar month.
Totals [attach Bank Statement]
III. Portfolio Principal Paydown by Contract
Beginning Ending
Loan Principal Principal Principal Interest
Number Balance Balance Paydown Applied
Totals [refer to tape]
NC CAPITAL CORPORATION
By:____________________________________
Title:
F-3
