1
EXHIBIT 10.88
AMENDED AND RESTATED
CREDIT AGREEMENT
(WAREHOUSE FACILITY)
Dated as of June 25, 1999
Between
DORAL FINANCIAL CORPORATION,
DORAL MORTGAGE CORPORATION,
THE LENDERS PARTY HERETO
And
BANKERS TRUST COMPANY,
as Agent
2
TABLE OF CONTENTS
PAGE
----
ARTICLE 1 DEFINITIONS....................................................................................1
Section 1.1 Defined Terms...................................................................1
Section 1.2 Terms Generally................................................................26
ARTICLE 2 AMOUNTS AND TERMS OF LOANS....................................................................27
Section 2.1 Commitments....................................................................27
Section 2.2 Method of Borrowing and of Conversions/Continuations...........................29
Section 2.3 Conversions/Continuations of Loans.............................................30
Section 2.4 Disbursement of Funds..........................................................31
Section 2.5 Notes..........................................................................33
Section 2.6 Interest.......................................................................34
Section 2.7 Termination of Commitments.....................................................34
Section 2.8 Mandatory Repayments...........................................................35
Section 2.9 Optional Prepayments...........................................................36
Section 2.10 Fees...........................................................................37
Section 2.11 Payments, Etc..................................................................37
Section 2.12 Eurodollar Rate Not Determinable; Illegality or Impropriety....................41
Section 2.13 Reserve Requirements; Change in Circumstances..................................41
Section 2.14 Indemnity......................................................................43
Section 2.15 Taxes..........................................................................43
Section 2.16 Sharing of Setoffs.............................................................44
ARTICLE 3 CONDITIONS TO LOANS...........................................................................45
Section 3.1 Conditions to Loans............................................................45
ARTICLE 4 REPRESENTATIONS AND WARRANTIES................................................................48
Section 4.1 Corporate Existence; Compliance with Law and Contractual Obligations...........48
Section 4.2 Corporate Power; Authorization; Enforceable Obligations........................48
Section 4.3 No Legal or Contractual Bar....................................................48
Section 4.4 Financial Information..........................................................49
Section 4.5 No Material Litigation.........................................................50
Section 4.6 Taxes..........................................................................50
3
Section 4.7 Investment Company Act.........................................................50
Section 4.8 Subsidiaries...................................................................50
Section 4.9 Use of Proceeds................................................................51
Section 4.10 ERISA..........................................................................51
Section 4.11 Security Interests.............................................................51
Section 4.12 Agency Approvals...............................................................52
Section 4.13 Solvency.......................................................................52
Section 4.14 Minimum Servicing Portfolio....................................................52
Section 4.15 Year 2000 Compliance...........................................................52
ARTICLE 5 COVENANTS.....................................................................................52
Section 5.1 Affirmative Covenants..........................................................52
Section 5.2 Negative Covenants of Each Borrower............................................58
Section 5.3 Additional Negative Covenants..................................................62
ARTICLE 6 EVENTS OF DEFAULT.............................................................................63
Section 6.1 Events of Default..............................................................63
ARTICLE 7 THE AGENT.....................................................................................65
Section 7.1 Appointment of Agent...........................................................65
Section 7.2 Nature of Duties of Agent......................................................66
Section 7.3 Lack of Reliance on Agent......................................................66
Section 7.4 Certain Rights of Agent........................................................66
Section 7.5 Reliance by Agent..............................................................67
Section 7.6 Indemnification of Agent.......................................................67
Section 7.7 Agent in its Individual Capacity...............................................67
Section 7.8 Holders of Notes...............................................................68
Section 7.9 Successor Agent................................................................68
ARTICLE 8 MISCELLANEOUS PROVISIONS......................................................................69
Section 8.1 Notices........................................................................69
Section 8.2 Amendments, Etc................................................................69
Section 8.3 No Waiver; Remedies Cumulative.................................................70
Section 8.4 Payment of Expenses, Etc.......................................................70
Section 8.5 Right of Setoff................................................................71
Section 8.6 Benefit of Agreement...........................................................71
Section 8.7 GOVERNING LAW; SUBMISSION TO JURISDICTION......................................74
4
Section 8.8 Counterparts...................................................................75
Section 8.9 Headings Descriptive...........................................................75
Section 8.10 Survival of Representations and Indemnities....................................75
Section 8.11 Severability...................................................................75
Section 8.12 Indemnification of Collateral Agent............................................75
Section 8.13 Joint and Several Nature of the Obligations....................................76
Section 8.14 Certain Waivers................................................................76
Section 8.15 Subrogation, Etc...............................................................77
Section 8.16 Confidentiality................................................................77
Section 8.17 Effectiveness..................................................................78
Section 8.18 Ratification; No Novation......................................................79
Section 8.19 Integration....................................................................79
Section 8.20 WAIVER OF JURY TRIAL...........................................................79
5
EXHIBITS
Exhibit A-1 Form of Facility 1 Note
Exhibit A-2 Form of Facility 2 Note
Exhibit B Amended and Restated Security Agreement (Warehouse Facility)
Exhibit C-1 Form of Opinion of Borrowers' New York Counsel
Exhibit C-2 Form of Opinion of Borrowers' Puerto Rico Counsel
Exhibit D-1 Officer's Certificate (DFC)
Exhibit D-2 Officer's Certificate (DMC)
Exhibit E-1 Facility 1 Borrowing Base Certificate
Exhibit E-2 Facility 2 Tranche A Borrowing Base Certificate
Exhibit X-0 Xxxxxxxx 0 Xxxxxxx X Borrowing Base Certificate
Exhibit F Notice of Borrowing
Exhibit G Notice of Conversion/Continuation
Exhibit H Approved Investors
Exhibit I Addresses for Notices
Exhibit J Eligible REO Criteria
Exhibit K Material Litigation
Exhibit L Form of Confidentiality Agreement
Exhibit M Permitted Subordinated Indebtedness
Exhibit N-1 REO Demand Note
Exhibit N-2 REO Pledge
Exhibit N-3 REO Mortgage
Exhibit O-1 Form of Pledged Servicing Portfolio Report
Exhibit O-2 Form of Recourse Servicing Portfolio Report
Exhibit O-3 Form of Recourse Servicing Portfolio Statistics Report
Exhibit P Authorized Officers
Exhibit Q Form of Additional Lender Agreement
Exhibit R Form of Assignment and Acceptance
6
AMENDED AND RESTATED CREDIT AGREEMENT
(WAREHOUSE FACILITY)
THIS AMENDED AND RESTATED CREDIT AGREEMENT (WAREHOUSE
FACILITY) is made and dated as of June 25, 1999, by and between the Lenders
party hereto from time to time, BANKERS TRUST COMPANY, a New York banking
corporation, as agent for the Lenders, DORAL FINANCIAL CORPORATION, a
corporation organized under the laws of the Commonwealth of Puerto Rico ("DFC"),
and DORAL MORTGAGE CORPORATION, a corporation organized under the laws of the
Commonwealth of Puerto Rico and a wholly-owned subsidiary of DFC ("DMC", and
together with DFC, each a "BORROWER" and collectively, the "BORROWERS") with
reference to the Credit Agreement, dated as of June 30, 1995, between the
Lenders, the Agent and the Borrowers (as amended to the date hereof, the
"ORIGINAL CREDIT Agreement"). Capitalized terms not otherwise defined herein are
defined in Article I.
The Lenders, the Agent and the Borrowers wish to amend and
restate the Original Credit Agreement in its entirety.
ACCORDINGLY, the parties hereto agree that the Original Credit
Agreement is amended and restated in its entirety as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.1 DEFINED TERMS.
For purposes of this Agreement, the terms set forth below
shall have the following meanings:
"ACCUMULATED FUNDING DEFICIENCY" shall mean a funding
deficiency described in Section 302 of ERISA.
"ACKNOWLEDGMENT AGREEMENT" shall mean an acknowledgment
agreement in form and substance satisfactory to the Agent pursuant to
which FNMA, FHLMC, GNMA or any other Person which owns Mortgage Loans
or has issued mortgaged-backed securities for which either Borrower
holds direct servicing rights, acknowledges and recognizes the security
interest in such rights granted to the Lenders.
"ADJUSTED TANGIBLE NET WORTH" shall mean, as of any date, (a)
the sum of: (i) Book Net Worth as of such date, (ii) one percent (1.0%)
of the outstanding principal balance of Mortgage Loans in the Servicing
Portfolio as of such date, and (iii) the aggregate principal amount of
Permitted Subordinated Indebtedness outstanding as of such date, less
(b)(i) fifty percent (50%) of the amount of "interest only strip
securities", (ii) all purchased loan administration contracts and (iii)
all other assets that would be classified as intangible assets under
GAAP, including purchased and capitalized value of
7
-2-
servicing rights, goodwill (whether representing the excess cost over
book value of assets acquired or otherwise), patents, trademarks, trade
names, copyrights, franchises, deferred charges (including unamortized
debt discount and expense, organization and acquisition costs and
research and product development costs), and in accordance with FASB
65, as amended by FASB 122, by the Financial Accounting Standards
Board, any originated mortgage servicing rights.
"ADJUSTMENT DATE" shall have the meaning given such term in
Section 8.6(h).
"AFFILIATE" shall mean, as to any Person, any other Person
directly or indirectly Controlling, Controlled by or under direct or
indirect common Control with, such Person, whether through the
ownership of voting securities, by contract or otherwise. "Control" as
used herein (and all forms of the word) means the power to direct the
management and policies of a Person.
"AGENCY" shall mean FHA, FHLMC, FNMA, GNMA or VA.
"AGENCY CUSTODIAL AGREEMENT" shall mean the agreement, as
amended, modified or supplemented from time to time, between FHLMC,
FNMA or GNMA, as applicable, and the Borrowers and any Person meeting
the eligibility requirements set forth in the FHLMC Guide, FNMA Guide
or GNMA Guide, as applicable, to serve as a "custodian," "certificating
custodian," or as "document custodian", as applicable, pursuant to
which such Person is authorized to act as Certificating Custodian.
"AGENCY GUIDES" shall mean the FHLMC Guide, the FNMA Guide and
the GNMA Guide.
"AGENT" shall mean Bankers Trust Company, in its capacity as
agent for the Lenders hereunder, and any successor agent appointed
pursuant to Section 7.9.
"AGREEMENT" shall mean this Agreement, as amended, modified or
supplemented from time to time.
"AMENDMENT EFFECTIVE DATE" shall have the meaning given such
term in Section 8.17.
"APPLICANT LENDER" shall have the meaning given such term in
Section 8.6(g).
"APPROVED INVESTOR" shall mean FNMA, FHLMC or any Person
listed on Exhibit H. At the request of the Borrowers, the Required
Facility 1 Lenders may from time to time agree in writing to add
Persons to the list set forth on Exhibit H. By written notice to the
Borrowers, the Required Facility 1 Lenders or the Agent may in their or
its reasonable discretion, based on their or its evaluation of the
creditworthiness or funding ability of any Approved Investor listed on
Exhibit H, remove such Approved Investor from such list. Such removal
shall become effective immediately upon written notice from the Agent.
8
-3-
"AUTHORIZED OFFICERS" shall mean those officers identified on
Exhibit P attached hereto; provided that DFC or DMC, as the case may
be, may, with respect to its Authorized Officers, by notice to the
Agent in accordance with Section 8.1, add or delete any person from the
list of Authorized Officers set forth above.
"BANKERS TRUST" shall mean Bankers Trust Company, in its
capacity as a Lender hereunder.
"BASE EURODOLLAR RATE" shall mean, with respect to any
Eurodollar Loan, a rate per annum equal to the offered rate for U.S.
Dollar deposits, in an amount equal to amount of the Eurodollar Loan
proposed to be subject to such rate and with maturities comparable to
such Eurodollar Interest Period, that appears on Telerate Page 3750 as
of approximately 11:00 a.m., London time, two (2) Eurodollar Business
Days prior to the commencement of such Eurodollar Interest Period;
provided that if such rate does not appear on Telerate Page 3750, the
"Base Eurodollar Rate" applicable to a particular Eurodollar Interest
Period shall mean a rate per annum equal to the rate at which U.S.
Dollar deposits, in an amount equal to the principal amount of the
Eurodollar Loans proposed to be subject to such rate and with
maturities comparable to such Eurodollar Interest Period, are offered
in immediately available funds in the London Interbank Market to the
London office of the Agent by leading banks in the London Interbank
Market as of approximately 11:00 a.m., London time, two (2) Eurodollar
Business Days prior to the commencement of the Eurodollar Interest
Period to which such Base Eurodollar Rate is applicable.
"BOARD" shall mean the Board of Governors of the Federal
Reserve System of the United States and any successor thereto.
"BOOK-ENTRY MBS" shall mean a Mortgage-Backed Security (a)
that is not represented by an instrument (other than the physical
security issued to GNMA's nominee, MBSCC & Co., evidencing a GNMA
Mortgage-Backed Security) and (b) the ownership and transfer of which
are entered upon books maintained for that purpose by a depository.
"BOOK NET WORTH" shall mean (a) the sum of (i) the net worth,
determined in accordance with GAAP consistently applied, of (A) DFC on
a non-consolidated basis, (B) DMC, (C) Centro Hipotecaro de Puerto
Rico, Inc. and (D) other Subsidiaries of DFC engaged primarily in the
business of mortgage banking (as reasonably determined by the Agent,
but excluding Doral Bank, Doral Securities, Inc., Doral Bank FSB and
Doral Money, Inc.) and (ii) the amount of intercompany payables between
DFC and DMC, less (b) the sum of (i) the amount of intercompany
receivables between DFC and DMC and (ii) investments by DFC and/or DMC
in any Subsidiaries, which investments are listed under the account
titled "Other Assets" (as such term is used in the consolidated
statement of financial condition of DFC dated as of December 31, 1998)
or which are listed under other accounts. Notwithstanding the
foregoing, if at any time any of the entities listed in clauses (B),
(C) or (D) above become businesses engaged primarily in
9
-4-
activities other than mortgage banking (as reasonably determined by the
Agent), then the net worth of such entity shall not be included in
clause (i) for the purposes of calculating Book Net Worth.
"BORROWER" and "BORROWERS" shall have the meaning given such
terms in the introductory paragraph of this Agreement.
"BORROWING" shall mean a Facility 1 Borrowing, a Facility 2
Borrowing or a Swing-Line Borrowing.
"BORROWING DATE" shall mean any date on which Bankers Trust
makes a Swing-Line Loan or the Lenders make Facility 1 Loans or
Facility 2 Loans at the Borrowers' request pursuant to Section 2.2.
"BUSINESS DAY" shall mean any day other than (i) a Saturday,
Sunday and any other day on which banks in New York City are required
or authorized to close or (ii) any public or bank holiday in the
Commonwealth of Puerto Rico.
"CERTIFICATING CUSTODIAN" shall mean any Person acting as the
Borrowers' "document custodian," "custodian" or "certificating
custodian," as such terms are used in the Agency Guides, for purposes
of (a) certifying that the documentation relating to Mortgage Loans
received by such Person from the Borrowers (or the Collateral Agent) is
complete and acceptable under an applicable Agency Guide for purposes
of including such Mortgage Loan in a pool of Mortgage Loans in which
Mortgage-Backed Securities will represent interests and (b) holding
such documentation following formation of such pools and issuance of
such Mortgage-Backed Securities. The Certificating Custodian shall at
all times be party to the Agency Custodial Agreements. The
Certificating Custodian shall be initially Banco Popular de Puerto
Rico.
"CODE" shall mean the Internal Revenue Code of 1986, as
amended from time to time, and the rules and regulations issues
thereunder as from time to time in effect.
"COLLATERAL" shall mean the Warehouse Collateral, the REO
Notes and the REO Property encumbered by the REO Mortgages.
"COLLATERAL AGENT" shall mean initially Banco Popular de
Puerto Rico, and any successor collateral agent thereto acceptable to
the Required Facility 1 Lenders and the Borrowers and designated as the
"Collateral Agent" under the Security Agreement.
"COLLATERAL AGREEMENTS" shall mean all REO Demand Notes, all
REO Mortgages, all REO Pledges, the Security Agreement, the Servicing
Security Agreement, and any other documents or certificates creating or
evidencing security interests granted to the Secured Parties in
connection with this Agreement and the other Loan Documents.
10
-5-
"COLLATERAL VALUE OF THE FACILITY 1 BORROWING BASE" shall
mean, at any time, the sum of the Collateral Value of the Facility 1
Tranche A Borrowing Base and the Collateral Value of the Facility 1
Tranche B Borrowing Base.
"COLLATERAL VALUE OF THE FACILITY 1 TRANCHE A BORROWING BASE"
shall mean, at the time of determination thereof, the aggregate
collateral value of all Eligible Gestation Mortgage Loans and Eligible
Mortgage-Backed Securities included in the Facility 1 Tranche A
Borrowing Base. For purposes hereof, the collateral value of (x) each
Eligible Gestation Mortgage Loan shall be an amount equal to
ninety-eight percent (98%) of the current unpaid principal balance
thereof, and (y) each Eligible Mortgage-Backed Security shall be an
amount equal to ninety-eight percent (98%) of the face amount thereof;
provided, that if the Agent, in its sole discretion, at any time
believes that the collateral value of any Mortgage Loan or
Mortgage-Backed Security included in the Facility 1 Tranche A Borrowing
Base is greater than the Fair Market Value thereof, then the collateral
value of any such Mortgage Loan or Mortgage-Backed Security shall,
until further notice from the Agent, be equal to (I) in the case of
each Eligible Gestation Mortgage Loan, ninety-eight percent (98%) of
the lesser of (i) the Fair Market Value of such Eligible Gestation
Mortgage Loan and (ii) the current unpaid principal balance of such
Eligible Gestation Mortgage Loan, and (II) in the case of each Eligible
Mortgage-Backed Security, ninety-eight percent (98%) of the lesser of
(i) the Fair Market Value of such Eligible Mortgage-Backed Security and
(ii) the face amount of such Eligible Mortgage-Backed Security. The
Collateral Value of the Facility 1 Tranche A Borrowing Base shall be
determined by reference to the most recent Facility 1 Borrowing Base
Certificate delivered by the Borrowers to the Agent absent any error in
such Facility 1 Borrowing Base Certificate as of the date delivered. By
adding any Eligible Gestation Mortgage Loan or Eligible Mortgage-Backed
Security to the Facility 1 Tranche A Borrowing Base in accordance with
the Security Agreement, each Borrower shall be deemed to represent and
warrant to the Agent and each Lender at and as of the date of such
addition that, with respect to such Mortgage Loans or Mortgage-Backed
Securities, each of the statements set forth in the definition of
Eligible Gestation Mortgage Loan or Eligible Mortgage-Backed Security,
as the case may be, is true and correct. If any such statement proves
to be untrue or incorrect in any respect at any time, such then
Mortgage Loan or Mortgage-Backed Security, as the case may be, shall be
deemed to have no collateral value for purposes of computing the
Collateral Value of the Facility 1 Tranche A Borrowing Base.
"COLLATERAL VALUE OF THE FACILITY 1 TRANCHE B BORROWING BASE"
shall mean, at the time of determination thereof, the aggregate
collateral value of all Eligible Conforming Mortgage Loans and Eligible
Non-Conforming Mortgage Loans included in the Facility 1 Tranche B
Borrowing Base. For purposes hereof, the collateral value of (x) each
Eligible Conforming Mortgage Loan shall be an amount equal to
ninety-eight percent (98%) of the current unpaid principal balance
thereof, and (y) each Eligible Non-Conforming Mortgage Loan shall be in
an amount equal to ninety-five percent (95%) of the current unpaid
principal balance thereof; provided that if the Agent, in its sole
discretion, at any time believes that the collateral value of any
Mortgage Loan included in the Facility 1 Tranche B Borrowing Base is
greater than the Fair Market
11
-6-
Value thereof, then the collateral value of any such Mortgage Loan
shall, until further notice from the Agent, be equal to (I) in the case
of each Eligible Conforming Mortgage Loan, ninety-eight percent (98%)
of the lesser of (i) the Fair Market Value of such Mortgage Loan and
(ii) the current unpaid principal balance of such Mortgage Loan and
(II) in the case of each Eligible Non-Conforming Mortgage Loan,
ninety-five percent (95%) of the lesser of (i) the Fair Market Value of
such Mortgage Loan and (ii) the current unpaid principal balance of
such Mortgage Loan. The Collateral Value of the Facility 1 Tranche B
Borrowing Base shall be determined by reference to the most recent
Facility 1 Borrowing Base Certificate delivered by the Borrowers to the
Agent absent any error in such Facility 1 Borrowing Base Certificate as
of the date delivered. By adding any Mortgage Loan to the Facility 1
Tranche B Borrowing Base in accordance with the Security Agreement,
each Borrower shall be deemed to represent and warrant to the Agent and
each Lender at and as of the date of such addition that with respect to
such Mortgage Loans, each of the statements set forth in the definition
of Eligible Conforming Mortgage Loan or Eligible Non-Conforming
Mortgage Loan, as the case may be, is true and correct. If any such
statement proves to be untrue or incorrect in any respect at any time,
then such Mortgage Loan shall be deemed to have no collateral value for
purposes of computing the Collateral Value of the Facility 1 Tranche B
Borrowing Base.
"COLLATERAL VALUE OF THE FACILITY 2 TRANCHE A BORROWING BASE"
shall mean, at the time of determination thereof, an amount equal to
eighty percent (80%) of the aggregate amount of Eligible Servicing
Receivables that are included in the Facility 2 Tranche A Borrowing
Base at such time. The Collateral Value of the Facility 2 Tranche A
Borrowing Base shall be determined by reference to the most recent
Facility 2 Tranche A Borrowing Base Certificate delivered by the
Borrowers to the Agent absent any error in such Facility 2 Tranche A
Borrowing Base Certificate as of the date delivered. Notwithstanding
the foregoing, no Eligible Servicing Receivable shall be deemed to have
any collateral value for purposes of computing the Collateral Value of
the Facility 2 Tranche A Borrowing Base (x) on the date of repayment of
any advanced amount which is an Eligible Servicing Receivable by any
Obligor or any other Person (including any Agency) and (y) to the
extent such reimbursement right which is an Eligible Servicing
Receivable is being contested or disputed by any applicable Agency or
by any Person who could be liable for such reimbursement or by any
other Person with standing to do so. By adding any Eligible Servicing
Receivable to the Facility 2 Tranche A Borrowing Base in accordance
with the Servicing Security Agreement, each Borrower shall be deemed to
represent and warrant to the Agent and each Lender at and as of the
date of such addition that with respect to such Eligible Servicing
Receivable, each of the statements set forth in the definition of
Eligible Servicing Receivable, is true and correct. If any such
statement proves to be untrue or incorrect in any respect at any time,
then such Eligible Servicing Receivable shall be deemed to have no
collateral value for purposes of computing the Collateral Value of the
Facility 2 Tranche A Borrowing Base.
"COLLATERAL VALUE OF THE FACILITY 2 TRANCHE B BORROWING BASE"
shall mean, at any time, an amount equal to fifty percent (50%) of the
REO Valuation of the REO Property included in the Facility 2 Tranche B
Borrowing Base at such time. The Collateral Value of the Facility 2
Tranche B Borrowing Base shall be determined by
12
-7-
reference to the most recent Facility 2 Tranche B Borrowing Base
Certificate delivered by the Borrowers to the Agent absent any error in
such Facility 2 Tranche B Borrowing Base Certificate as of the date
delivered.
"COLLATERAL VALUE OF THE PLEDGED SERVICING PORTFOLIO" shall
have the meaning given such term in the Servicing Credit Agreement.
"COMMITMENTS" shall mean the Facility 1 Commitments and the
Facility 2 Commitments.
"CONFORMING LOAN" shall mean a Mortgage Loan underwritten in
conformity with the underwriting standards of FNMA or FHLMC in effect
at the time of such underwriting and that is otherwise eligible for
inclusion in a pool of Mortgage Loans supporting FNMA or FHLMC
Mortgage-Backed Securities or for sale at the FNMA or FHLMC cash
window.
"CONTRACTUAL OBLIGATION" shall mean, as to any Person, any
provision of any security issued by such Person or of any agreement,
instrument or undertaking to which such Person is a party or by which
it or any of its property is bound.
"CONVENTIONAL MORTGAGE LOAN" shall mean a Mortgage Loan that
is not insured by the FHA or guaranteed by the VA.
"CONVERSION/CONTINUATION DATE" shall mean (a) any date on
which the Lenders, pursuant to Sections 2.2 and 2.3, convert Facility 1
Loans (other than Facility 1 Tranche A Loans) to Facility 1 Loans
bearing interest at a different interest rate, or continue outstanding
Eurodollar Loans for an additional Eurodollar Interest Period (which
date shall be a Eurodollar Business Day in the case of a conversion of
Fed Funds Loans into Eurodollar Loans or the continuation of a
Eurodollar Loan) and (b) the last day of each Eurodollar Interest
Period in the case of a Eurodollar Loan.
"DEFAULTING LENDER" shall have the meaning given such term in
Section 2.4(b).
"DFC" shall have the meaning given such term in the
introductory paragraph of this Agreement.
"DMC" shall have the meaning given such term in the
introductory paragraph of this Agreement.
"ELIGIBLE CONFORMING MORTGAGE LOAN" shall mean a Mortgage Loan
with respect to which each of the following statements is true and
correct:
(a) such Mortgage Loan is an Eligible Mortgage Loan;
(b) such Mortgage Loan is insured by the FHA or
guaranteed by the VA (or there exists a binding commitment to
issue such insurance or guaranty subject to
13
-8-
the satisfaction of customary conditions) or is a Conforming
Loan; and
(c) such Mortgage Loan is not an Eligible Gestation
Mortgage Loan.
"ELIGIBLE GESTATION MORTGAGE LOAN" shall mean a Mortgage Loan
with respect to which each of the following statements is true and
correct:
(a) such Mortgage Loan meets all of the requirements in
the definition of Eligible Conforming Mortgage Loan (except
the requirement set forth in paragraph (c) of such
definition); and
(b) the Certificating Custodian has initially certified
that all documentation relating to such Mortgage Loan received
by the Certificating Custodian from the applicable Borrower
(or the Collateral Agent) is complete and acceptable under an
applicable Agency Guide for purposes of including such
Mortgage Loan in a pool of Mortgage Loans in which a
Mortgage-Backed Security will represent an interest; provided
that if such Mortgage Loan is returned to the Collateral Agent
after the date of such initial certification but before the
issuance of such Mortgage-Backed Security because of a
determination that such Mortgage Loan may not be included in
such pool, such Mortgage Loan shall be deemed an Eligible
Conforming Mortgage Loan if such Mortgage Loan meets all of
the requirements set forth in the definition of Eligible
Conforming Mortgage Loan.
"ELIGIBLE MORTGAGE-BACKED SECURITY" shall mean a
Mortgage-Backed Security owned by the Borrowers with respect to which
each of the following statements is true and correct:
(a) such Mortgage-Backed Security is a valid and binding
obligation of the Obligor thereon, is in full force and effect
and is enforceable in accordance with its terms;
(b) such Mortgage-Backed Security is free of any default
and from any rescission, cancellation or avoidance, and all
rights thereof, whether by operation of law or otherwise;
(c) such Mortgage-Backed Security has either been
deposited with and is held by the Collateral Agent or an
agent, bailee and custodian of the Collateral Agent under the
Security Agreement (or by a Person who has executed a
custodial agreement acceptable to the Required Facility 1
Lenders), properly endorsed in blank for transfer or, if such
Mortgage-Backed Security is a Book-Entry MBS, such
Mortgage-Backed Security is the subject of a Perfected
Assignment;
(d) at all times such Mortgage-Backed Security will be
free and clear of all liens, encumbrances, charges, rights and
interests of any kind, except in favor of the Secured Parties
under the Security Agreement; and
14
-9-
(e) such Mortgage-Backed Security represents an interest
in Eligible Conforming Mortgage Loans.
"ELIGIBLE MORTGAGE LOAN" shall mean a Mortgage Loan owned by
the Borrowers for which each of the following statements is true and
correct:
(a) such Mortgage Loan is a valid and binding obligation
of the Obligor thereon, is in full force and effect and is
enforceable in accordance with its terms;
(b) except in the case of Eligible Non-Conforming
Mortgage Loans, such Mortgage Loan is secured by a first
priority mortgage (or deed of trust) on the Property
encumbered thereby;
(c) such Mortgage Loan is genuine, in all respects, as
appearing on its face or as represented in the books and
records of the applicable Borrower, and all information set
forth therein is true and correct;
(d) such Mortgage Loan is free of any material default
(other than as permitted in subsection (e) below) of any party
thereto (including the Borrowers), counterclaims, offsets and
defenses and from any rescission, cancellation or avoidance,
and all rights thereof, whether by operation of law or
otherwise;
(e) no payment under such Mortgage Loan is more than
thirty (30) days past due the payment due date set forth in
the underlying promissory note and mortgage (or deed of
trust);
(f) such Mortgage Loan contains the entire agreement of
the parties thereto with respect to the subject matter
thereof, has not been modified or amended in any respect and
is free of concessions or understandings with the Obligor
thereon of any kind not expressed in writing therein;
(g) such Mortgage Loan is in all respects as required by
and in accordance with all applicable laws and regulations
governing the same, including the federal Consumer Credit
Protection Act and the regulations promulgated thereunder and
all applicable usury laws and restrictions; and all notices,
disclosures and other statements or information required by
law or regulation to be given, and any other act required by
law or regulation to be performed, in connection with such
Mortgage Loan have been given and performed as required;
(h) all advance payments and other deposits on such
Mortgage Loan have been paid in cash, and no part of such sums
has been loaned, directly or indirectly, by either Borrower to
the Obligor thereon;
(i) at all times such Mortgage Loan will be free and
clear of all liens, encumbrances, charges, rights and
interests of any kind, except in favor of the Secured Parties
under the Security Agreement;
15
-10-
(j) the Property encumbered by such Mortgage Loan is
insured against loss or damage by fire and all other hazards
normally included within standard extended insurance coverage
(including flood plain insurance if such Property is located
in a federally designated flood plain) in accordance with the
provisions of such Mortgage Loan with the applicable Borrower
named as a loss payee thereon;
(k) the Property encumbered by such Mortgage Loan is free
and clear of all Liens except Liens in favor of the applicable
Borrower, which has assigned any and all such Liens to the
Secured Parties under the Security Agreement, subject only to
(i) Liens junior in priority to the Lien of such Borrower;
(ii) the Lien of real property taxes and assessments not yet
due and payable; (iii) covenants, conditions and restrictions,
rights of way, easements and other matters of public record,
as of the date of recording, being acceptable to mortgage
lending institutions generally and specifically referred to in
a lender's title insurance policy delivered to the originator
of the Mortgage Loan and (A) referred to or otherwise
considered in the appraisal made for the originator of the
Mortgage Loan or (B) that do not materially adversely affect
the appraised value of such Property as set forth in such
appraisal; and (iv) other matters to which like properties are
commonly subject that do not materially interfere with the
benefits of the security intended to be provided by the
Mortgage Loan or the use, enjoyment, value or marketability of
the related Property;
(l) if the promissory note for such Mortgage Loan (or any
other documentation relating thereto) has been withdrawn from
the possession of the Collateral Agent on terms and subject to
conditions set forth in Section 6 of the Security Agreement,
the promissory note and any related documentation for such
Mortgage Loan has been shipped by the Collateral Agent
directly to an Approved Investor for purchase, as permitted
under Section 6(b) of the Security Agreement, and such
shipment has occurred within the immediately preceding
twenty-four (24) hours (or within the immediately preceding
five (5) days in the case of Mortgage Loan sales to the FNMA
or FHLMC cash window);
(m) with respect to Conventional Mortgage Loans, in the
event the Loan-to-Value Ratio of such Mortgage Loan exceeds
eighty percent (80%), such Mortgage Loan is the subject of a
private mortgage insurance policy issued in favor of the
applicable Borrower by an insurer approved by FNMA, FHLMC,
GNMA or by nationally recognized rating agencies or pool
insurers for inclusion in privately-issued mortgage-backed
securities;
(n) if such Mortgage Loan is included in the Facility 1
Tranche B Borrowing Base, such Mortgage Loan has not been
included in such borrowing base for a period in excess of
three hundred sixty-five (365) days from the date such
Mortgage Loan was first included in such borrowing base; and
if such Mortgage Loan is included in the Facility 1 Tranche A
Borrowing Base, such Mortgage Loan has not been included in
the Facility 1 Tranche A Borrowing
16
-11-
Base (as an unpooled Mortgage Loan) for a period in excess of
thirty (30) days from the date such Mortgage Loan was first
included in the Facility 1 Tranche A Borrowing Base and has
not been included in the Facility 1 Tranche A Borrowing Base
and the Facility 1 Tranche B Borrowing Base (as an unpooled
Mortgage Loan) for a cumulative period in excess of three
hundred sixty-five (365) days from the date such Mortgage Loan
was first included in the Facility 1 Tranche B Borrowing Base;
provided that if such Mortgage Loan has been included in the
Facility 1 Tranche B Borrowing Base for a period in excess of
one hundred eighty (180) days from the date such Mortgage Loan
was first included in such borrowing base, or if such Mortgage
Loan has been included in the Facility 1 Tranche A Borrowing
Base (as an unpooled Mortgage Loan) and has been included in
the Facility 1 Tranche A Borrowing Base and the Facility 1
Tranche B Borrowing Base (as an unpooled Mortgage Loan) for a
cumulative period in excess of one hundred eighty (180) days
from the date such Mortgage Loan was first included in the
Facility 1 Tranche B Borrowing Base, then if the original
principal amount of such Mortgage Loan, when added to the
original principal amount of any other such Mortgage Loans
included in the Facility 1 Borrowing Base for a period in
excess of one hundred eighty (180) days, exceeds $50,000,000,
then such Mortgage Loan shall be deemed to have no collateral
value for purposes of computing the Collateral Value of the
Facility 1 Borrowing Base;
(o) (i) if such Mortgage Loan is to be included in the
Facility 1 Tranche B Borrowing Base, the Borrowers have
delivered (or caused to be delivered) those items described on
Attachment 2 to the Security Agreement for such Mortgage Loan
to the Collateral Agent prior to the inclusion of such
Mortgage Loan in the Facility 1 Tranche B Borrowing Base; (ii)
if such Mortgage Loan is to be included in the Facility 1
Tranche A Borrowing Base, the Borrowers have delivered (or
caused to be delivered), prior to the inclusion of such
Mortgage Loan in the Facility 1 Tranche A Borrowing Base (A)
to the Certificating Custodian, documentation for such
Mortgage Loan that the Certificating Custodian is required
under the applicable Agency Guide to examine, for completeness
and acceptability, for purposes of initially determining the
suitability of such Mortgage Loan for inclusion in a mortgage
loan pool supporting a Mortgage-Backed Security and (B) to the
Collateral Agent, a FHLMC Custodial Certification Schedule
(Form 1034) (or any comparable or successor form), a FNMA
Schedule of Mortgages (Form 2005) (or any comparable or
successor form) or a GNMA Schedule of Pooled Mortgages (HUD
Form 11706) (or any comparable or successor form) listing such
Mortgage Loan as a Mortgage Loan to be pooled in a
Mortgage-Backed Security, in each case completed and duly
executed by the Certificating Custodian on or prior to the
date such Mortgage Loan is to be included in the Facility 1
Tranche A Borrowing Base; (iii) the Borrowers hold in trust
for the Secured Parties those items described in Attachment 6
to the Security Agreement; and (iv) there has been delivered
to the Collateral Agent, if the Agent or the Collateral Agent
has so requested in writing, the additional items described on
Attachment 6 to the Security Agreement;
(p) such Mortgage Loan is not subject to any servicing
arrangement with any Person other than the Borrowers nor are
any servicing rights relating to such
17
-12-
Mortgage Loan subject to any lien, claim, interest or negative
pledge in favor of any Person other than as permitted
hereunder;
(q) such Mortgage Loan is not a "B or C mortgage loan"
(as such term is customarily used in the mortgage banking
industry); and
(r) if such Mortgage Loan is rated as an "A-" Mortgage
Loan (as such term is customarily used in the mortgage banking
industry), such Mortgage Loan qualifies for insurance by a
nationally recognized mortgage insurance company and is
eligible for sale to an Approved Investor, provided that the
collateral value of such Mortgage Loan, when added to the
collateral value of all other Mortgage Loans then included as
Eligible Mortgage Loans under this clause (s), shall not
exceed fifteen percent (15%) of the aggregate Facility 1
Commitments.
"ELIGIBLE NON-CONFORMING MORTGAGE LOAN" shall mean a Mortgage
Loan with respect to which each of the following statements is true and
correct:
(a) such Mortgage Loan is an Eligible Mortgage Loan;
(b) such Mortgage Loan (i) would be a Conforming Mortgage
Loan but for the fact that (A) its original principal amount
is in excess of the maximum amount eligible for purchase by
FNMA or (B) it is a second-priority Mortgage Loan, or (ii) has
been underwritten to guidelines approved by nationally
recognized rating agencies or pool insurers whose long term
debt is rated AAA by Standard & Poor's Corporation and AA by
Xxxxx'x Investors Service for inclusion in privately-issued
mortgage-backed securities;
(c) the original principal amount of such Mortgage Loan
is $600,000 or less; and
(d) if such Mortgage Loan is a second-priority Mortgage
Loan, then if the original principal amount of such
second-priority Mortgage Loan, when added to the original
principal amount of any other second Eligible Non-Conforming
Mortgage Loans which are second-priority mortgage loans
included in the Facility 1 Borrowing Base, exceeds $3,000,000,
then such Mortgage Loan shall be deemed to have no collateral
value for purposes of computing the Collateral Value of the
Facility 1 Borrowing Base.
"ELIGIBLE REO PROPERTY" shall mean REO Property meeting the
criteria set forth on Exhibit J hereto.
"ELIGIBLE SERVICING RECEIVABLE" shall mean either Borrower's
right to be reimbursed for the amount that such Borrower has advanced
to investors as servicer of, or FHA insurance claims that arise from
the servicing of, (i) any FHA-insured, VA-guaranteed or Conforming
Mortgage Loan included in the Pledged Servicing Portfolio, or (ii) any
other Mortgage Loan included in the Pledged Servicing Portfolio and
backing privately issued mortgage-backed securities, insured by
nationally recognized pool
18
-13-
insurers acceptable to the Agent, in each case in respect of principal,
interest, tax or insurance payments or any other payments in connection
with the servicing of such Mortgage Loan, which advanced amount or FHA
insurance claim, as the case may be, is fully or substantially
reimbursable by the Obligor under such Mortgage Loan or any other
Person (including any Agency), and the right of such Borrower to such
reimbursement is either subject to the Lien of the Servicing Security
Agreement or is subject to Section 5.2(o), and in either case such
receivable is also reflected on the books and records of such Borrower
as a current receivable.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as the same may from time to time be supplemented or amended,
and the rules and regulations issued thereunder as from time to time in
effect.
"ERISA AFFILIATE" shall mean each trade or business, including
the Borrowers, whether or not incorporated, that together with the
Borrowers would be treated as a single employer under section 4001 of
ERISA.
"EURODOLLAR BUSINESS DAY" shall mean any Business Day on which
commercial banks are open for international business (including
dealings in dollar deposits) in London, England.
"EURODOLLAR INTEREST PERIOD" shall mean, with respect to any
Eurodollar Loan, the period commencing on the Borrowing Date or a
Conversion/Continuation Date for such Eurodollar Loan, as the case may
be, and ending (i) in the case of Facility 1 Tranche A Loans, one month
thereafter, and (ii) in the case of Facility 1 Tranche B Loans, one,
two or three months thereafter as the Borrowers may elect in the
applicable Notice of Borrowing or Notice of Conversion/Continuation;
provided that (a) any Eurodollar Interest Period that would otherwise
end on a day that is not a Eurodollar Business Day shall be extended to
the next succeeding Eurodollar Business Day, unless such Eurodollar
Business Day falls in another calendar month, in which case such
Eurodollar Interest Period shall end on the next preceding Eurodollar
Business Day; (b) any Eurodollar Interest Period that begins on the
last Eurodollar Business Day of a calendar month or any Eurodollar
Interest Period that begins on a day for which there is no numerically
corresponding day in the calendar month at the end of such Eurodollar
Interest Period shall end on the last Eurodollar Business Day of such
calendar month at the end of such Eurodollar Interest Period; and (c)
no Eurodollar Interest Period shall end after the Maturity Date.
"EURODOLLAR LOAN" shall mean any Facility 1 Loan bearing
interest at the rate set forth in Section 2.6(b).
"EURODOLLAR RATE" shall mean, with respect to any Eurodollar
Interest Period, a rate per annum equal to the quotient obtained by
dividing (a) the Base Eurodollar Rate applicable to such Eurodollar
Interest Period by (b) one minus the Reserve Requirement (expressed as
a decimal) applicable to such Eurodollar Interest Period. The
Eurodollar
19
-14-
Rate shall be rounded, if necessary, to the next higher one-sixteenth
of one percent (1/16 of 1%).
"EVENT OF DEFAULT" shall have the meaning given such term in
Article VI.
"FACILITY 1 BORROWING" shall mean a borrowing pursuant to a
Notice of Borrowing consisting of Facility 1 Tranche A Loans and/or
Facility 1 Tranche B Loans made concurrently by all of the Facility 1
Lenders.
"FACILITY 1 BORROWING BASE" shall mean, at any time, all
Eligible Conforming Mortgage Loans, Eligible Non-Conforming Mortgage
Loans and Eligible Mortgage-Backed Securities delivered to and held by
the Collateral Agent under the Security Agreement as collateral
security for the Obligations.
"FACILITY 1 BORROWING BASE CERTIFICATE" shall mean a
certificate in the form of and containing the information required by
Exhibit E-1, delivered to the Agent pursuant to the Loan Documents.
"FACILITY 1 COMMITMENT" shall mean, with respect to each
Lender, the commitment, if any, of such Lender to make Facility 1 Loans
hereunder as set forth in Section 2.1, as such commitment may be
modified pursuant to Section 8.6(c).
"FACILITY 1 LENDER" shall mean any Lender with a Facility 1
Commitment or an outstanding Facility 1 Loan or Swing-Line Loan.
"FACILITY 1 LOANS" shall mean the Facility 1 Tranche A Loans
and the Facility 1 Tranche B Loans.
"FACILITY 1 NOTE" shall have the meaning given such term in
Section 2.5.
"FACILITY 1 SETTLEMENT ACCOUNT" shall have the meaning given
such term in Section 6(b) of the Security Agreement.
"FACILITY 1 TRANCHE A BORROWING" shall mean a borrowing
pursuant to a Notice of Borrowing consisting of Facility 1 Tranche A
Loans made concurrently by all of the Facility 1 Lenders.
"FACILITY 1 TRANCHE A BORROWING BASE" shall mean, at any time,
all Eligible Gestation Mortgage Loans and Eligible Mortgage-Backed
Securities delivered to and held by the Collateral Agent under the
Security Agreement as collateral security for the Obligations.
"FACILITY 1 TRANCHE A LOAN" shall mean a loan made by a
Facility 1 Lender pursuant to Section 2.1(a)(i) for the purpose set
forth in Section 4.9.
20
-15-
"FACILITY 1 TRANCHE B BORROWING" shall mean a borrowing
pursuant to a Notice of Borrowing consisting of Facility 1 Tranche B
Loans made concurrently by all of the Facility 1 Lenders.
"FACILITY 1 TRANCHE B BORROWING BASE" shall mean, at any time,
all Eligible Conforming Mortgage Loans and Eligible Non-Conforming
Loans delivered to and held by the Collateral Agent under the Security
Agreement as collateral security for the Obligations.
"FACILITY 1 TRANCHE B LOAN" shall mean a loan made by a
Facility 1 Lender pursuant to Section 2.1(a)(ii) for the purpose set
forth in Section 4.9.
"FACILITY 2 BORROWING" shall mean a Facility 2 Tranche A
Borrowing, a Facility 2 Tranche B Borrowing or a Facility 2 Tranche C
Borrowing.
"FACILITY 2 COMMITMENT" shall mean, with respect to each
Lender, the commitment, if any, of such Lender to make Facility 2 Loans
hereunder as set forth in Section 2.1, as such commitment may be
modified from time to time pursuant to Section 8.6(c).
"FACILITY 2 LENDER" shall mean any Lender with a Facility 2
Commitment or an outstanding Facility 2 Loan.
"FACILITY 2 LOANS" shall mean Facility 2 Tranche A Loans,
Facility 2 Tranche B Loans and Facility 2 Tranche C Loans, as the
context requires.
"FACILITY 2 NOTE" shall have the meaning given such term in
Section 2.5.
"FACILITY 2 TRANCHE A BORROWING" shall mean a borrowing
pursuant to a Notice of Borrowing consisting of Facility 2 Tranche A
Loans made concurrently by all of the Facility 2 Lenders.
"FACILITY 2 TRANCHE A BORROWING BASE" shall mean, at any time,
all Eligible Servicing Receivables, the proceeds of the repayment of
which have been pledged to the Servicing Collateral Agent under the
Servicing Security Agreement as collateral security for the
Obligations.
"FACILITY 2 TRANCHE A BORROWING BASE CERTIFICATE" shall mean a
certificate in the form of Exhibit E-2 delivered to the Agent pursuant
to the Loan Documents.
"FACILITY 2 TRANCHE A LOAN" shall mean a loan made by a
Facility 2 Lender pursuant to Section 2.1(b) for the purpose set forth
in Section 4.9.
"FACILITY 2 TRANCHE A MAXIMUM AMOUNT" shall have the meaning
given such term in Section 2.1(b).
21
-16-
"FACILITY 2 TRANCHE B BORROWING" shall mean a borrowing
pursuant to a Notice of Borrowing consisting of Facility 2 Tranche B
Loans made concurrently by all of the Facility 2 Lenders.
"FACILITY 2 TRANCHE B BORROWING BASE" shall mean, at any time,
all Eligible REO Property mortgaged to the Secured Parties, as
collateral security for the Obligations.
"FACILITY 2 TRANCHE B BORROWING BASE CERTIFICATE" shall mean a
certificate in the form of Exhibit E-3 delivered to the Agent pursuant
to the Loan Documents.
"FACILITY 2 TRANCHE B LOAN" shall mean a loan made by a
Facility 2 Lender pursuant to Section 2.1(c) for the purpose set forth
in Section 4.9.
"FACILITY 2 TRANCHE B MAXIMUM AMOUNT" shall have the meaning
given such term in Section 2.1(c).
"FACILITY 2 TRANCHE C BORROWING" shall mean a borrowing
pursuant to a Notice of Borrowing consisting of Facility 2 Tranche C
Loans made concurrently by all of the Facility 2 Lenders.
"FACILITY 2 TRANCHE C LOAN" shall mean a loan made by a
Facility 2 Lender pursuant to Section 2.1(d) for the purpose set forth
in Section 4.9.
"FACILITY 2 TRANCHE C MAXIMUM AMOUNT" shall have the meaning
given such term in Section 2.1(d).
"FAIR MARKET VALUE" shall mean at any date with respect to any
Mortgage Loan or Mortgage-Backed Security, (i) the bid price (expressed
as a percentage) quoted to the Agent as of the computation date by any
nationally recognized dealer (or Puerto Rican subsidiary of such
dealer) or investor selected by the Agent or its designee who at the
time regularly purchases similar Mortgage Loans or Mortgage-Backed
Securities, as applicable, multiplied by (ii) the outstanding principal
balance thereof in the case of Mortgage Loans, or the face amount
thereof in the case of Mortgage-Backed Securities.
"FED FUNDS LOAN" shall mean any Facility 1 Tranche B Loan or
Facility 2 Loan bearing interest at the rate set forth in Section
2.6(c).
"FEDERAL FUNDS RATE" shall mean, for any period, a fluctuating
interest rate per annum equal for each day during such period to the
weighted average of the rates on overnight federal funds transactions
with members of the Federal Reserve System arranged by Federal funds
brokers, as published for such day (or, if such day is not a Business
Day, for the preceding Business Day) by the Federal Reserve Bank of New
York or, if such rate is not so published for any day that is a
Business Day, the average of the quotations for such day on such
transactions received by the Agent from three (3) Federal funds brokers
of recognized standing selected by it.
22
-17-
"FEES" shall mean all fees payable by the Borrowers to the
Agent and/or the Lenders pursuant to Section 2.10 or otherwise.
"FHA" shall mean the Federal Housing Administration and any
successor thereto.
"FHLMC" shall mean the Federal Home Loan Mortgage Corporation
and any successor thereto.
"FHLMC GUIDE" shall mean the "Sellers" & Servicers' Guide"
published by FHLMC, as amended, modified or supplemented from time to
time.
"FNMA" shall mean the Federal National Mortgage Association
and any successor thereto.
"FNMA GUIDE" shall mean, collectively, the "Selling Guide" and
the "Servicing Guide" published by FNMA, as amended, modified or
supplemented from time to time.
"FNMA/FHLMC SERVICING PORTFOLIO" shall mean the portfolio of
outstanding Mortgage Loans (excluding Mortgage Loans owned by either
Borrower or its Affiliates that are not serviced pursuant to a
Permitted Affiliate Servicing Agreement) that are owned by FNMA or
FHLMC or included in pools of Mortgage Loans with respect to which FNMA
or FHLMC has issued a Mortgage-Backed Security and with respect to
which either Borrower holds direct servicing rights, and that are
covered by an effective Acknowledgment Agreement.
"GAAP" shall mean generally accepted accounting principles in
the United States of America in effect from time to time.
"GNMA" shall mean the Government National Mortgage Association
and any successor thereto.
"GNMA GUIDE" shall mean, collectively, the "GNMA I
Mortgage-Backed Securities Guide" and the "GNMA II Mortgage-Backed
Securities Guide" published by HUD, as amended, modified or
supplemented from time to time.
"GNMA SERVICING PORTFOLIO" shall mean the portfolio of
outstanding Mortgage Loans (excluding Mortgage Loans owned by either
Borrower or its Affiliates that are not serviced pursuant to a
Permitted Affiliate Servicing Agreement) that are guaranteed by GNMA or
included in pools of Mortgage Loans with respect to which GNMA has
issued a Mortgage-Backed Security and with respect to which either
Borrower holds direct servicing rights, and that are covered by an
effective Acknowledgment Agreement if requested by the Agent and the
Lenders.
"GOVERNMENTAL AUTHORITY" shall mean any nation or government,
any state, commonwealth or other political subdivision thereof, and any
entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
23
-18-
"HEDGING INVENTORY REPORT" shall mean a monthly report,
prepared by the Borrowers, in form and substance satisfactory to the
Agent, setting forth the existing Take-Out Commitments and all options
or cash market instruments, pursuant to which the Borrowers have hedged
against interest rate fluctuations to protect the value of Mortgage
Loans and/or Mortgage-Backed Securities owned by the Borrowers, and
whether there has been any change in the Hedging Policy since the
Amendment Effective Date.
"HEDGING POLICY" shall mean the hedging policy of the
Borrowers as approved by the Board of Directors of each Borrower and as
in effect as of the Amendment Effective Date, a copy of which has been
delivered to each of the Lenders.
"HUD" shall mean the Department of Housing and Urban
Development and any successor thereto.
"INDEBTEDNESS" shall mean, with respect to any Person, all
items of indebtedness that, in accordance with GAAP, would be included
in determining liabilities as shown on the liability side of a
statement of financial condition of such Person as of the date as of
which indebtedness is to be determined, including all obligations for
money borrowed, the deferred purchase price of property or services and
capitalized lease obligations, and shall also include all indebtedness
and liabilities of others assumed or guaranteed by such Person, or
secured by any Lien upon property owned by such Person, whether or not
such indebtedness is assumed, or in respect of which such Person is
secondarily or contingently liable (other than by endorsement of
instruments in the course of collection), including contingent
reimbursement obligations of such Person under undrawn letters of
credit, whether by reason of any agreement to acquire such indebtedness
or to supply or advance sums or otherwise (but excluding any
obligations (whether recourse or nonrecourse) to advance principal and
interest payments and taxes and insurance payments on Mortgage Loans in
advance of receipt of such payments from the underlying obligor under
servicing agreements entered into by either Borrower which agreements
exist on the date hereof and any similar agreements entered into after
the date hereof).
"INFORMATION SYSTEMS AND EQUIPMENT" shall mean all computer
hardware, firmware and software, as well as other information
processing systems, or any equipment containing embedded microchips,
whether directly owned, licensed, leased, operated or otherwise
controlled by either Borrower or any of their respective Subsidiaries,
including through third-party service providers, and which, in whole or
in part, are used, operated, relied upon, or integral to either
Borrower's or any of their Subsidiaries' conduct of their business.
"INTERCREDITOR AGREEMENT" shall mean the Intercreditor
Agreement dated as of June 25, 1999, between the Agent, the Lenders,
and each of the Servicing Lenders, as amended, supplemented or
otherwise modified from time to time.
24
-19-
"LENDERS" shall mean the banks and other financial
institutions party hereto from time to time.
"LIEN" shall mean any security interest, mortgage, pledge,
lien, claim on property, charge or encumbrance (including any
conditional sale or other title retention agreement), any lease in the
nature thereof, and the filing of or agreement to give any financing
statement under the Uniform Commercial Code of any jurisdiction.
"LOAN DOCUMENTS" shall mean this Agreement, the Collateral
Agreements, the Notes, the Acknowledgment Agreements and any other
document, instrument or agreement executed by the Borrowers in
connection herewith or therewith, as any of the same may be amended,
modified or supplemented from time to time.
"LOAN-TO-VALUE RATIO" shall mean, with respect to any Mortgage
Loan, the ratio of the principal amount of such Mortgage Loan
outstanding at the origination thereof divided by the appraised value
of the Property encumbered thereby (as set forth in the appraisal
delivered in connection with the origination of such Mortgage Loan).
"LOANS" shall mean the Facility 1 Loans, the Facility 2 Loans
and the Swing-Line Loans.
"MARGIN STOCK" shall have the meaning given such term in
Regulation U of the Board.
"MATERIAL ADVERSE EFFECT" shall mean a material adverse effect
with respect to (a) the business, operations or financial condition of
a Borrower, (b) the ability of any Borrower to pay and perform its
Obligations, (c) the validity or enforceability of this Agreement, any
of the other Loan Documents, or the rights and remedies of the Secured
Parties hereunder or thereunder or (d) the value of the Collateral or
the Servicing Collateral.
"MATERIAL AMOUNT" shall mean, at any time, ten percent (10%)
of Book Net Worth, as set forth in the most recent annual or quarterly
statement of financial condition of DFC delivered to the Lenders,
absent manifest error in such statement.
"MATURITY DATE" shall mean June 23, 2000; provided that upon
the written request of the Borrowers to the Agent, the Lenders may
elect to extend the Maturity Date on terms as they may deem appropriate
in their sole discretion.
"MORTGAGE-BACKED SECURITY" shall mean any security (including
a participation certificate) issued by FHLMC, FNMA or any other Person,
or guaranteed by GNMA, that represents an interest in a pool of
Mortgage Loans.
"MORTGAGE LOAN" shall mean a one-to-four family, residential
real estate secured loan other than any loan secured by mobile homes or
other temporary housing facilities.
25
-20-
"MULTIEMPLOYER PLAN" shall mean a plan described in section
4001(a)(3) of ERISA to which the Borrowers or any ERISA Affiliate is
required to contribute on behalf of any of its employees.
"NOTES" shall mean the Facility 1 Notes and the Facility 2
Notes.
"NOTICE OF BORROWING" shall have the meaning given such term
in Section 2.2.
"NOTICE OF CONVERSION/CONTINUATION" shall have the meaning
given such term in Section 2.2.
"OBLIGATIONS" shall mean, collectively, the unpaid principal
of and interest on the Loans and any Notes and all other obligations
and liabilities of each of the Borrowers to the Agent, the Lenders, the
Collateral Agent and any other Secured Parties (including, without
limitation, interest accruing at the then applicable rate provided in
this Agreement after the maturity of the Loans and interest accruing at
the then applicable rate provided in this Agreement after the filing of
any petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to either Borrower, whether
or not a claim for post-filing or post-petition interest is allowed in
such proceeding), whether direct or indirect, absolute or contingent,
due or to become due, voluntary or involuntary, whether or not jointly
owed with others, liquidated or unliquidated, or now existing or
hereafter incurred, and whether or not from time to time decreased or
extinguished and later increased, created or incurred, which may arise
under, out of, or in connection with, this Agreement, the Loans, any
Notes, the Security Agreement, the Servicing Security Agreement, the
other Loan Documents or any other document made, delivered or given in
connection therewith, in each case whether on account of principal,
interest, reimbursement obligations, fees, indemnities, costs, expenses
or otherwise (including, without limitation, all reasonable fees and
disbursements of counsel to any of the Agent, the Collateral Agent or
any of the other Secured Parties that are required to be paid by the
Borrowers pursuant to the terms of this Agreement, the Security
Agreement, the Servicing Security Agreement or any other Loan
Document).
"OBLIGOR" shall mean the Person or Persons obligated to pay
the indebtedness that is the subject of a Mortgage Loan or
Mortgage-Backed Security, including any guarantor of such indebtedness.
"ORIGINAL CREDIT AGREEMENT" shall have the meaning given such
term in the introductory paragraph of this Agreement.
"PAYMENT OFFICE" shall mean the Agent's office located at Xxx
Xxxxxxx Xxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, or such other office as
the Agent shall specify by notice to the Borrowers and the Lenders.
"PBGC" shall mean the Pension Benefit Guaranty Corporation
established pursuant to Subtitle A of Title IV of ERISA and any
successor thereto.
26
-21-
"PERFECTED ASSIGNMENT" shall mean as to any Book-Entry MBS,
that such Book-Entry MBS has been transferred to the Collateral Agent
or any entity designated by the Collateral Agent so that the Collateral
Agent or such entity may maintain such Book-Entry MBS as depository in
one of its book-entry accounts with a Federal Reserve Bank or with the
Mortgage-Backed Securities Division of the Depository Trust Company or
its nominee, MBSCC & Co., and a pledge to the Secured Parties has been
registered with the Collateral Agent or such entity, or the Borrowers
has taken such other action as the Collateral Agent may reasonably
request to perfect, protect and maintain the valid, first priority
security interest of the Secured Parties in such Book-Entry MBS.
"PERMITTED AFFILIATE SERVICING AGREEMENT" shall mean an
agreement between either Borrower and an Affiliate thereof pursuant to
which such Borrower has direct servicing rights to service Mortgage
Loans owned by such Affiliate on terms and at rates no less favorable
than would be obtained from a non-Affiliate of such Borrower, including
the Master Servicing and Collection Agreement between DFC and Doral
Bank, dated as of October 1, 1995, as amended by the First Amendment to
Master Servicing and Collection Agreement, dated as of March 1, 1996.
"PERMITTED SUBORDINATED INDEBTEDNESS" shall mean any
Indebtedness (other than the Obligations) incurred by each Borrower
that is subordinated to the Obligations in accordance with the criteria
set forth on Exhibit M attached hereto.
"PERSON" shall mean any corporation, natural person, firm,
joint venture, partnership, trust, unincorporated organization,
government or any political subdivision, department, agency or
instrumentality of any government.
"PLAN" shall mean any plan (other than a Multiemployer Plan)
subject to Title IV of ERISA maintained for employees of the Borrowers
or any ERISA Affiliate (and any such plan no longer maintained by the
Borrowers or any of its ERISA Affiliates to which the Borrowers or any
of its ERISA Affiliates has made or was required to make any
contributions during the five years preceding the date on which such
plan ceased to be maintained).
"PLEDGED SERVICING PORTFOLIO" shall mean the FNMA/FLHMC
Servicing Portfolio and the GNMA Servicing Portfolio, in each case with
respect to which the Lenders have a valid and perfected second priority
security interest in the related direct servicing rights owned by
either Borrower.
"PLEDGED SERVICING PORTFOLIO REPORT" shall mean a report
prepared by the Borrowers in the format prescribed by the Mortgage
Bankers' Association of America listing the FNMA/GNMA/FHLMC statistics
and the other information shown on Exhibit O-1.
"PLEDGED SERVICING VALUATION REPORT" shall mean a report
prepared by a nationally recognized mortgage servicing broker
acceptable to the Agent and the Borrowers, and otherwise in form and
substance reasonably satisfactory to the Agent,
27
-22-
setting forth the fair market value of the servicing rights relating to
the Mortgage Loans included in the Pledged Servicing Portfolio as of
such date (with the FNMA/FHLMC Servicing Portfolio and the GNMA
Servicing Portfolio each listed and valued separately (and, with
respect to the FNMA/FHLMC Servicing Portfolio, with the portfolio
serviced for FNMA listed separately from the portfolio serviced for
FHLMC)), with such value determined on the basis of the net present
value of the expected stream of annual cash flow generated thereby
using assumptions reasonably acceptable to the Agent.
"POWER OF ATTORNEY" shall mean a power of attorney granted by
the Borrowers, substantially in the form of Exhibit G to the Servicing
Credit Agreement.
"POTENTIAL DEFAULT" shall mean an event that with the lapse of
time or the giving of notice, or both, would, unless cured or waived,
constitute an Event of Default.
"PRIME RATE" shall mean the rate of interest that is publicly
announced from time to time by Bankers Trust Company in New York City
as its prime lending rate as in effect from time to time, such rate to
change automatically and without notice to the Borrowers when and as
such prime lending rate changes. The Prime Rate is a reference rate and
does not necessarily represent the best or lowest rate actually charged
by Bankers Trust Company to any customer. Bankers Trust Company may
make commercial loans or other loans at rates of interest at, above or
below the Prime Rate.
"PROCESS AGENT" shall have the meaning given such term in
Section 8.7.
"PROHIBITED TRANSACTION" shall mean any transaction described
in section 406 of ERISA that is not exempt by reason of section 408 of
ERISA or the transitional rules set forth in section 414(c) of ERISA
and any transaction described in section 4975(c)(1) of the Code that is
not exempt by reason of section 4975(c)(2) or section 4975(d) of the
Code, or the transitional rules of section 2003(c) of ERISA.
"PROPERTY" shall mean the real property, including the
improvements thereon, and the personal property (tangible and
intangible) which are encumbered pursuant to a Mortgage Loan.
"REAL ESTATE CLOSING" shall mean a real estate closing with
respect to a Borrowing of a Facility 2 Tranche B Loan.
"RECOURSE SERVICING PORTFOLIO REPORT" shall mean a report
prepared by the Borrowers in substantially the form set forth in
Exhibit O-2, including the following information: the recourse Mortgage
Loan or Mortgage-Backed Security investor; the type of recourse (i.e.
limited or full); delinquency and foreclosure rates on the Borrowers'
recourse servicing portfolio; the amount of risk weighted capital
required to support DFC's consolidated recourse exposure; and
consolidated total capital to risk weighted assets in both amount and
ratio terms.
28
-23-
"RECOURSE SERVICING PORTFOLIO STATISTICS REPORT" shall mean a
report prepared by the Borrowers in substantially the form set forth in
Exhibit O-3.
"REGULATION D" shall mean Regulation D of the Board as from
time to time in effect, and any other regulation hereafter promulgated
by the Board to replace the prior Regulation D and having substantially
the same function.
"REO DEMAND NOTE" shall mean a demand note, substantially in
the form of Exhibit N-1 hereto, as amended, modified or supplemented
from time to time.
"REO MORTGAGE" shall mean the deed of mortgage, substantially
in the form of Exhibit N-3 hereto, as amended, modified or supplemented
from time to time.
"REO PLEDGE" shall mean the pledge agreement, substantially in
the form of Exhibit N-2 hereto, as amended, modified or supplemented
from time to time.
"REO PROPERTY" shall mean real property owned by either
Borrower as a result of foreclosure of a mortgage loan held by such
Borrower.
"REO VALUATION" shall mean a valuation of the fair market
value of the REO Property, as determined by (i) an appraisal of such
REO Property conducted by an appraiser, which appraisal and appraiser
meet the criteria specified by FNMA, FHLMC and HUD in connection with
the origination of Mortgage Loans and which appraisal was conducted and
had an effective date within the ninety (90) days preceding the date of
the Real Estate Closing covering such REO Property, or (ii) an
inspection report if no appraisal conducted within such preceding
ninety (90) days described in clause (i) exists, which inspection
report (A) was prepared by an appraiser described in clause (i) above
after an inspection of such REO Property, (B) is an update of a
previous appraisal described in clause (i) above, and (C) has an
effective date relating to an inspection conducted within such
preceding ninety (90) days.
"REPORTABLE EVENT" shall mean any of the events set forth in
section 4043(c) of ERISA or the regulations thereunder, a withdrawal
from a Plan described in section 4063 of ERISA, a cessation of
operations described in section 4068(f) of ERISA, an amendment to a
Plan necessitating the posting of security under section 401(a)(29) of
the Code, or a failure to make a payment required by section 412(m) of
the Code and section 302(e) of ERISA when due.
"REQUIRED FACILITY 1 LENDERS" shall mean, at any time, Lenders
holding at least sixty-six and two-thirds percent (66.66%) of the then
aggregate unpaid principal amount of the Facility 1 Loans (and, in the
case of Bankers Trust, Swing-Line Loans to the extent any Lender shall
have failed to comply with its obligation to refinance such Swing-Line
Loans as provided in Section 2.4), or if no Facility 1 Loans or
Swing-Line Loans are then outstanding, Lenders holding at least
sixty-six and two-thirds percent (66.66%) of the Facility 1
Commitments.
29
-24-
"REQUIRED FACILITY 2 LENDERS" shall mean, at any time, Lenders
holding at least sixty-six and two-thirds percent (66.66%) of the then
aggregate unpaid principal amount of the Facility 2 Loans, or if no
Facility 2 Loans are then outstanding, Lenders holding at least
sixty-six and two-thirds percent (66.66%) of the Facility 2
Commitments.
"REQUIRED LENDERS" shall mean, at any time, Lenders holding at
least sixty-six and two-thirds percent (66.66%) of the then aggregate
unpaid principal amount of all outstanding Facility 1 Loans (and, in
the case of Bankers Trust, Swing-Line Loans to the extent any Lender
shall have failed to comply with its obligations to refinance such
Swing-Line Loans as provided in Section 2.4) and Facility 2 Loans, or
if no Loans are then outstanding, Lenders holding at least sixty-six
and two-thirds percent (66.66%) of the Commitments.
"REQUIREMENTS OF LAW" shall mean as to any Person the Articles
or Certificate of Incorporation and Bylaws or other organizational or
governing documents of such Person, and any law, treaty, rule or
regulation, or a final and binding determination of an arbitrator or a
determination of 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.
"RESERVE REQUIREMENT" shall mean, with respect to any
Eurodollar Interest Period, the daily average during such Eurodollar
Interest Period of the maximum aggregate reserve requirement (including
all basic, supplemental, marginal and other reserves and taking into
account any transitional adjustments or other scheduled changes in
reserve requirements during such Eurodollar Interest Period) which is
imposed under Regulation D on any member bank of the Federal Reserve
System, in respect of eurocurrency or eurodollar funding, lending or
liabilities.
"SECURED PARTIES" shall have the meaning given such term in
the Security Agreement.
"SECURITY AGREEMENT" shall mean the Amended and Restated
Security, Custody and Collateral Agency Agreement (Warehouse
Collateral) substantially in the form of Exhibit B, as amended,
modified or supplemented from time to time.
"SERVICING AGENT" shall mean the "Agent" as such term is
defined in the Servicing Credit Agreement.
"SERVICING COLLATERAL" shall mean the "Collateral" as such
term is defined in the Servicing Security Agreement.
"SERVICING COLLATERAL AGENT" shall mean Bankers Trust Company,
in its capacity as Collateral Agent under the Servicing Security
Agreement.
"SERVICING COMMITMENTS" shall mean the "Commitments" as such
term is defined in the Servicing Credit Agreement.
30
-25-
"SERVICING CREDIT AGREEMENT" shall mean the Amended and
Restated Credit Agreement (Servicing Facility), dated as of June 25,
1999, between the Borrowers, Bankers Trust Company, as Agent
thereunder, and the lenders party thereto from time to time, as
amended, supplemented or otherwise modified from time to time.
"SERVICING EVENT OF DEFAULT" shall mean an "Event of Default"
as such term is defined in the Servicing Credit Agreement.
"SERVICING LENDERS" shall mean the "Lenders" as such term is
defined in the Servicing Credit Agreement.
"SERVICING LOANS" shall mean the "Loans" as such term is
defined in the Servicing Credit Agreement.
"SERVICING OBLIGATIONS" shall mean the "Obligations" as such
term is defined in the Servicing Credit Agreement.
"SERVICING PORTFOLIO" shall mean, at any time, the portfolio
of outstanding Mortgage Loans (excluding Mortgage Loans owned by either
Borrower or its Affiliates which are not serviced pursuant to a
Permitted Affiliate Servicing Agreement) with respect to which the
Borrowers have direct servicing rights.
"SERVICING SECURITY AGREEMENT" shall mean the Amended and
Restated Security Agreement (Servicing Collateral), dated as of June
25, 1999, between the Servicing Collateral Agent and the Borrowers, as
amended, supplemented or otherwise modified from time to time.
"SUBSIDIARY" shall mean with respect to any Person, any
corporation, association or other business entity of which more than
fifty percent (50%) of the securities or other ownership interests
having ordinary voting power is, or with respect to which rights to
control management (pursuant to any contract or other agreement or
otherwise) are, at the time as of which any determination is being
made, owned, controlled or held by such Person or one or more
subsidiaries of such Person.
"SWING-LINE BORROWING" shall mean a borrowing, pursuant to a
Notice of Borrowing, of a Swing-Line Loan made by Bankers Trust.
"SWING-LINE LOAN" shall mean a loan made by Bankers Trust
pursuant to Section 2.1(e) for the purpose set forth in Section 4.9.
"TAKE-OUT COMMITMENT" shall mean, with respect to any
specified aggregate amount of Mortgage Loans or Mortgage-Backed
Securities included in the Facility 1 Borrowing Base, a bona fide
current, unfilled and unexpired commitment of an Approved Investor,
issued in favor of and held by either Borrower, under which such
Approved Investor agrees to purchase such specified aggregate amount of
Mortgage Loans or Mortgage-Backed Securities at a specified price,
which commitment in the reasonably anticipated course of events, (a)
can be fully complied with prior to the expiration
31
-26-
thereof, (b) is not subject to any term or condition that is not
customary in commitments of like nature and (c) is for a purchase to be
consummated in more than thirty (30) days from the date such commitment
was entered into.
"TAXES" shall have the meaning given such term in Section
2.15.
"TELERATE PAGE 3750" shall mean the display designated as
"Page 3750" on the Associated Press-Dow Xxxxx Telerate Service (or such
other page as may replace Page 3750 on the Associated Press-Dow Xxxxx
Telerate Service or such other service as may be nominated by the
British Bankers' Association as the information vendor for the purposes
of displaying British Bankers' Association interest settlement rates
for U.S. Dollar deposits). Any Base Eurodollar Rate determined on the
basis of the rate displayed on Telerate Page 3750 shall be subject to
corrections, if any, made in such rate and displayed by the Associated
Press-Dow Xxxxx Telerate Service within one (1) hour of the time when
such rate is first displayed by such service.
"TOTAL LIABILITIES" shall mean (i) the aggregate amount of all
liabilities of each Borrower and each of its consolidated Subsidiaries
(other than Doral Bank, Doral Securities, Inc., Doral Bank FSB and
Doral Money, Inc.) determined in accordance with GAAP, consistently
applied, other than Permitted Subordinated Indebtedness, less (ii) the
aggregate amount of intercompany payables owing from one Borrower to
the other Borrower.
"TYPE" shall mean (a) when used in respect of any Mortgage
Loan, an Eligible Gestation Mortgage Loan, an Eligible Conforming
Mortgage Loan or an Eligible Non-Conforming Mortgage Loan; (b) when
used in respect of any Commitment, a Facility 1 Commitment or a
Facility 2 Commitment; and (c) when used in respect of any Loan, a
Facility 1 Tranche A Loan, a Facility 1 Tranche B Loan, a Facility 2
Tranche A Loan, a Facility 2 Tranche B Loan, a Facility 2 Tranche C
Loan or a Swing-Line Loan.
"VA" shall mean the Veterans Administration and any successor
thereto.
"WAREHOUSE COLLATERAL" shall mean the "Collateral" as defined
in Section 1 of the Security Agreement.
"YEAR 2000 COMPLIANT" shall mean that all Information Systems
and Equipment accurately process date data (including, but not limited
to, calculating, comparing and sequencing), before, during and after
the year 2000, as well as same and multi-century dates, or between the
years 1999 and 2000, taking into account all leap years, including the
fact that the year 2000 is a leap year, and further, that when used in
combination with, or interfacing with, other Information Systems and
Equipment, shall accurately accept, release and exchange date data, and
shall in all material respects continue to function in the same manner
as it performs today and shall not otherwise impair the accuracy or
functionality of Information Systems and Equipment.
32
-27-
SECTION 1.2 TERMS GENERALLY.
The definitions in Section 1.1 shall apply equally to both the
singular and plural forms of the terms defined. Whenever the context may
require, any pronoun shall include the corresponding masculine, feminine and
neuter forms. The words "include," "includes" and "including" shall be deemed to
be followed by the phrase "without limitation." All references herein to
Articles, Sections, Exhibits and Attachments shall be deemed references to
Articles and Sections of, and Exhibits and Attachments to, this Agreement or to
an Exhibit to this Agreement unless the context shall otherwise require. Except
as otherwise provided herein, all terms of an accounting or financial nature
shall be construed in accordance with GAAP, as in effect from time to time;
provided, that for purposes of determining compliance with any covenant set
forth in Article V, such term shall be construed in accordance with GAAP as in
effect on the date of this Agreement applied on a basis consistent with the
financial statements referred to in Section 4.4(a).
ARTICLE 2
AMOUNTS AND TERMS OF LOANS
SECTION 2.1 COMMITMENTS.
(a) (i) Facility 1 Tranche A Loans. Subject to and upon the
terms and conditions herein set forth (including the limitations set
forth in Section 2.1(f)), each Facility 1 Lender agrees, severally and
not jointly, at any time and from time to time from the Amendment
Effective Date up to but excluding the date upon which the Facility 1
Commitments are terminated, to make Facility 1 Tranche A Loans to the
Borrowers in an aggregate principal amount at any time outstanding not
to exceed the Facility 1 Commitment set forth opposite such Facility 1
Lender's name on the signature pages hereto, as such commitment may be
modified from time to time pursuant to Section 8.6(c); provided that
the aggregate principal amount of Facility 1 Tranche A Loans
outstanding at any time shall not exceed the least of (i) $62,500,000,
(ii) the then current Collateral Value of the Facility 1 Tranche A
Borrowing Base, and (iii) the aggregate Facility 1 Commitments of the
Facility 1 Lenders then in effect less the aggregate amount of Facility
1 Tranche B Loans then outstanding. Subject to Section 2.12, each
Facility 1 Tranche A Loan shall be a Eurodollar Loan or a Fed Funds
Loan. Each Facility 1 Tranche A Borrowing shall be in an aggregate
principal amount of at least $1,000,000 (or in any lesser amount equal
to the unused Facility 1 Commitments) and shall be made ratably by the
Facility 1 Lenders in proportion to their respective Facility 1
Commitments. Within the foregoing limits and subject to the conditions
set forth in Article III, the Borrowers may borrow and reborrow
Facility 1 Tranche A Loans under Section 2.2 and prepay Facility 1
Tranche A Loans under Section 2.9.
(ii) Facility 1 Tranche B Loans. Subject to and upon the
terms and conditions herein set forth (including the limitations set
forth in Section 2.1(f)), each Facility 1 Lender agrees, severally and
not jointly, at any time and from time to time from the Amendment
Effective Date up to but excluding the date upon which the Facility 1
Commitments are terminated, to make Facility 1 Tranche B Loans to the
Borrowers in an aggregate principal amount at any time outstanding not
to exceed the Facility 1 Commitment set forth opposite such Facility 1
Lender's name on the signature pages
33
-28-
hereto, as such commitment may be modified from time to time pursuant
to Section 8.6(c); provided that the aggregate principal amount of
Facility 1 Tranche B Loans outstanding at any time shall not exceed the
lesser of (i) the then current Collateral Value of the Facility 1
Tranche B Borrowing Base, and (ii) the aggregate Facility 1 Commitments
of the Facility 1 Lenders then in effect less the aggregate amount of
Facility 1 Tranche A Loans then outstanding. Subject to Section 2.12,
each Facility 1 Tranche B Loan shall be a Eurodollar Loan or a Fed
Funds Loan. Subject to Section 2.2(a)(ii), each Facility 1 Borrowing
shall be in an aggregate principal amount of at least $1,000,000 (or in
any lesser amount equal to the unused Facility 1 Commitments) and shall
be made ratably by the Facility 1 Lenders in proportion to their
respective Facility 1 Commitments. Within the foregoing limits and
subject to the conditions set forth in Article III, the Borrowers may
borrow and reborrow Facility 1 Tranche B Loans under Section 2.2 and
prepay Facility 1 Tranche B Loans under Section 2.9.
(b) Facility 2 Tranche A Loans. Subject to and upon the terms and
conditions herein set forth, each Facility 2 Lender agrees, severally and not
jointly, at any time and from time to time from the Amendment Effective Date up
to but excluding the date upon which the Facility 2 Commitments are terminated,
to make Facility 2 Tranche A Loans to the Borrowers in an aggregate principal
amount at any time outstanding not to exceed the Facility 2 Commitment set forth
opposite such Facility 2 Lender's name on the signature pages hereto, as such
commitment may be modified from time to time pursuant to Section 8.6(c);
provided that the aggregate principal amount of Facility 2 Tranche A Loans
outstanding at any time shall not exceed the least of (i) the aggregate Facility
2 Commitments of all of the Facility 2 Lenders then in effect less the aggregate
amount of Facility 2 Tranche B Loans and Facility 2 Tranche C Loans then
outstanding, (ii) the then current Collateral Value of the Facility 2 Tranche A
Borrowing Base, and (iii) $7,000,000 (such least amount is referred to herein as
the "FACILITY 2 TRANCHE A MAXIMUM AMOUNT"); and provided further, that the
Borrowers shall not make any Facility 2 Tranche A Borrowing, the Facility 2
Lenders shall not make any Facility 2 Tranche A Loans and, pursuant to Section
2.8(b), no Facility 2 Tranche A Loans shall be outstanding, during the period
commencing on the seventh (7th) calendar day and ending on the twelfth (12th)
calendar day of each month. Each Facility 2 Tranche A Loan shall be a Fed Funds
Loan. Each Facility 2 Tranche A Borrowing shall be in an aggregate principal
amount of at least $500,000 (or in any lesser amount equal to the unused
Facility 2 Tranche A Commitments) and shall be made by the Facility 2 Lenders
ratably in proportion to their respective Facility 2 Commitments. Within the
foregoing limits and subject to the conditions set forth in Article III, the
Borrowers may borrow and reborrow Facility 2 Tranche A Loans under Section 2.2
and prepay Facility 2 Tranche A Loans under Section 2.9.
(c) Facility 2 Tranche B Loans. Subject to and upon the terms and
conditions herein set forth, each Facility 2 Lender agrees, severally and not
jointly, at any time and from time to time from the Amendment Effective Date up
to but excluding the date upon which the Facility 2 Commitments are terminated,
to make Facility 2 Tranche B Loans to the Borrowers in an aggregate principal
amount at any time outstanding not to exceed the Facility 2 Commitment set forth
opposite such Facility 2 Lender's name on the signature pages hereto, as the
same may be modified from time to time pursuant to Section 8.6(c); provided that
the aggregate principal amount of Facility 2 Tranche B Loans outstanding at any
time shall not exceed the least of: (i) the aggregate Facility 2 Commitments of
all of the Facility 2 Lenders then in effect less the
34
-29-
aggregate amount of Facility 2 Tranche A Loans and Facility 2 Tranche C Loans
then outstanding, (ii) the then current Collateral Value of the Facility 2
Tranche B Borrowing Base and (iii) $3,000,000 (such least amount is referred to
herein as the "FACILITY 2 TRANCHE B MAXIMUM AMOUNT"). Each Facility 2 Tranche B
Loan shall be a Fed Funds Loan. Each Facility 2 Tranche B Borrowing shall in an
aggregate principal amount of at least $1,000,000 (or in any lesser amount equal
to the unused Facility 2 Tranche B Commitments) and shall be made by the
Facility 2 Lenders ratably in proportion to their respective Facility 2
Commitments. No more than two (2) Borrowings for a Facility 2 Tranche B Loan may
be outstanding simultaneously hereunder. Within the foregoing limits and subject
to the conditions set forth in Article III, the Borrowers may borrow and
reborrow Facility 2 Tranche B Loans under Section 2.2 and prepay Facility 2
Tranche B Loans under Section 2.9.
(d) Facility 2 Tranche C Loans. Subject to and upon the terms and
conditions herein set forth, each Facility 2 Lender agrees, severally and not
jointly, at any time and from time to time from the Amendment Effective Date up
to but excluding the date upon which the Facility 2 Commitments are terminated,
to make Facility 2 Tranche C Loans to the Borrowers in an aggregate principal
amount at any time outstanding not to exceed the Facility 2 Commitment set forth
opposite such Facility 2 Lender's name on the signature pages hereto, as the
same may be modified from time to time pursuant to Section 8.6(c); provided that
the aggregate principal amount of Facility 2 Tranche C Loans outstanding at any
time shall not exceed the lesser of: (i) the sum of the Facility 2 Commitments
of all of the Facility 2 Lenders then in effect less the aggregate amount of
Facility 2 Tranche A Loans and Facility 2 Tranche B Loans then outstanding, and
(ii) $7,000,000 (such lesser amount is referred to herein as the "FACILITY 2
TRANCHE C MAXIMUM AMOUNT"); and provided further, that the aggregate principal
amount of Facility 2 Tranche C Loans plus the aggregate principal amount of
Servicing Loans outstanding at any time shall not exceed the then current
Collateral Value of the Pledged Servicing Portfolio. Each Facility 2 Tranche C
Loan shall be a Fed Funds Loan. Each Facility 2 Tranche C Borrowing shall in an
aggregate principal amount of at least $500,000 (or in any lesser amount equal
to the unused Facility 2 Commitments) and shall be made by the Facility 2
Lenders ratably in proportion to their respective Facility 2 Commitments. Within
the foregoing limits and subject to the conditions set forth in Article III, the
Borrowers may borrow and reborrow Facility 2 Tranche C Loans under Section 2.2
and prepay Facility 2 Tranche C Loans under Section 2.9.
(e) Swing Line Loans. Subject to and upon the terms and conditions
herein set forth, Bankers Trust may, in its sole discretion, at any time and
from time to time from the Amendment Effective Date up to but excluding the
Maturity Date, make Swing-Line Loans to the Borrowers in an aggregate principal
amount at any time outstanding not to exceed ten percent (10%) of the Facility 1
Commitments; provided that the aggregate principal amount of Swing-Line Loans
outstanding at any time shall not exceed the limitations set forth in Section
2.1(f). Each Swing-Line Loan shall be a Fed Funds Loan. Within the foregoing
limits and subject to the conditions set forth in Article III, the Borrowers may
borrow and reborrow Swing-Line Loans under Section 2.2 and prepay such Loans
under Section 2.9. If Bankers Trust, in its sole discretion, elects not to make
a Swing-Line Loan on any date, the Agent shall treat the Notice of Borrowing for
such Swing-Line Loan as a Notice of Borrowing for Facility 1 Tranche B Loans.
(f) Limitation on Aggregate Facility 1 Loans and Swing-Line Loans.
Notwithstanding anything contained herein, the aggregate principal amount of
Facility 1 Loans
35
-30-
and Swing-Line Loans of all of the Facility 1 Lenders and Bankers Trust at any
time outstanding shall not exceed the lesser of (i) the sum of the Facility 1
Commitments of all of the Facility 1 Lenders then in effect, and (ii) the
Collateral Value of the Facility 1 Borrowing Base.
SECTION 2.2 METHOD OF BORROWING AND OF CONVERSIONS/CONTINUATIONS.
(a) Whenever the Borrowers desire to make a Facility 1 Borrowing,
a Facility 2 Borrowing or a Swing-Line Borrowing hereunder, to convert any
Facility 1 Tranche B Loan pursuant to Section 2.3 or to continue any Facility 1
Tranche B Loan for an additional Eurodollar Interest Period pursuant to Section
2.3, an Authorized Officer shall deliver to the Agent written notice of such
proposed Borrowing, conversion or continuation (a "NOTICE OF BORROWING" or
"NOTICE OF CONVERSION/CONTINUATION," as the case may be), each such notice to be
given (x) prior to 12:00 noon (New York City time) on the date of such proposed
Borrowing or conversion, in the case of a Borrowing of Fed Funds Loans or a
conversion of Eurodollar Loans into Fed Funds Loans; and (y) prior to 12:00 noon
(New York City time) on the third Eurodollar Business Day before the date of
such proposed Borrowing, conversion or continuation (which date shall be a
Eurodollar Business Day), in the case of a Borrowing of Eurodollar Loans, a
conversion of Fed Funds Loans into Eurodollar Loans or a continuation of
Eurodollar Loans for an additional Eurodollar Interest Period. Each such notice
shall be irrevocable and shall be in the form of Exhibit F or Exhibit G, as the
case may be. Notwithstanding any other provision hereof to the contrary, (i) no
more than four (4) Eurodollar Interest Periods for Facility 1 Tranche B Loans
may be in effect hereunder at any time; and (ii) no Facility 1 Tranche B
Borrowing of Eurodollar Loans shall be in an aggregate principal amount of less
than $1,000,000.
(b) Without in any way limiting the Borrowers' obligation to
deliver to the Agent a copy of any written Notice of Borrowing or Notice of
Conversion/Continuation, the Agent may act without liability upon the basis of
any telephonic Notice of Borrowing or Notice of Conversion/Continuation believed
by the Agent in good faith to be from an Authorized Officer prior to receipt of
written confirmation. In each such case, the Borrowers hereby waive the right to
dispute the Agent's record of the terms of such telephonic notice. An Authorized
Officer shall promptly confirm in writing any Notice of Borrowing or Notice of
Conversion/Continuation given by telephone.
(c) On the date of receipt of any Notice of Borrowing or Notice of
Conversion/Continuation), the Agent shall promptly give (and in any event by
1:00 p.m. (New York City time)) each Lender with a related Commitment
telefacsimile notice of each proposed Facility 1 Borrowing or Facility 2
Borrowing, such Lender's proportionate share thereof, each proposed conversion
or continuation and any other matters covered by the Notice of Borrowing or
Notice of Conversion/Continuation. The Agent shall not be required to notify any
Lender (other than Bankers Trust) of a Swing-Line Borrowing.
(d) Unless otherwise specified in a Notice of Borrowing, each Loan
to be made as part of a Facility 1 Borrowing shall be made as a Fed Funds Loan.
If a timely notice as specified in Section 2.2(a) is not received from the
Borrowers prior to the expiration of any Eurodollar Interest Period for any
outstanding Eurodollar Loan, the Borrowers shall be deemed to have irrevocably
elected to convert such Loan into a Fed Funds Loan. The Agent will endeavor to
36
-31-
notify the Borrowers prior to the expiration of any Eurodollar Interest Period
but shall have no liability for failure to provide such notice.
(e) By delivering a Notice of Conversion/Continuation to the Agent
hereunder of the continuation of any Eurodollar Loans for an additional
Eurodollar Interest Period or the conversion of any outstanding Loans to
Eurodollar Loans, the Borrowers shall be deemed to have represented and
warranted that no Potential Default or Event of Default has occurred and is
continuing.
SECTION 2.3 CONVERSIONS/CONTINUATIONS OF LOANS.
(a) Subject to the terms and conditions hereof and in accordance
with the procedures for conversions and continuations and the other provisions
set forth in Section 2.2, each Facility 1 Lender agrees to convert outstanding
Facility 1 Tranche B Loans that are Fed Funds Loans into Eurodollar Loans and
Eurodollar Loans into Fed Funds Loans and to continue Facility 1 Tranche B Loans
that are Eurodollar Loans for an additional Eurodollar Interest Period, in each
case in an aggregate principal amount not to exceed the principal amount of the
Fed Funds Loans or Eurodollar Loans, as the case may be, being converted or
Eurodollar Loans, as the case may be, being continued; provided that no Lender
shall convert any Facility 1 Tranche B Loan into a Eurodollar Loan or continue
any Eurodollar Loan for an additional Eurodollar Interest Period if a Potential
Default or an Event of Default has occurred and is continuing.
SECTION 2.4 DISBURSEMENT OF FUNDS.
(a) No later than 2:00 p.m. (New York City time) on the date of
each Facility 1 Borrowing and Facility 2 Borrowing, each Facility 1 Lender or
Facility 2 Lender, as the case may be, will make available to the Agent the full
amount of such Lender's pro rata share of such Borrowing, in immediately
available funds, by wire transfer of such funds to the Agent at the Payment
Office; provided, that pursuant to a Borrower's request set forth in a Notice of
Borrowing, the Facility 1 Lenders shall apply the proceeds of any Facility 1
Tranche A Borrowing directly to the repayment of outstanding Facility 1 Tranche
B Loans, without any exchange of funds. Unless the Agent determines that any
applicable condition in Article III has not been satisfied, the Agent shall make
the funds so received from the Lenders available to the Borrowers by wire
transfer of such funds to such account as the Borrowers through the Agent may
direct in writing for such purpose. If a Facility 1 Borrowing or a Facility 2
Borrowing does not occur on the requested date because any condition precedent
herein specified has not been satisfied, the Agent shall so notify the affected
Lenders promptly and shall return the amounts so received to the respective
Lenders.
(b) Unless the Agent has been notified by any Facility 1 Lender or
Facility 2 Lender, as the case may be, before 2:00 p.m. (New York City time) on
the date of a proposed Facility 1 Borrowing or Facility 2 Borrowing, as the case
may be, that such Lender does not intend to make available to the Agent on such
date such Lender's portion of such Facility 1 Borrowing or Facility 2 Borrowing,
the Agent may assume that such Lender will make such amount available to the
Agent on such date and the Agent may (but shall not be obligated to) make
available to the Borrowers a corresponding amount. If such corresponding amount
is not in fact made available to the Agent by such Lender (a "DEFAULTING
LENDER") on such date, the Agent shall be entitled to
37
-32-
recover such corresponding amount on demand from such Defaulting Lender,
together with interest at the overnight Federal Funds Rate for each day until
paid. A Defaulting Lender shall be deemed to have assigned to the Agent the
right to receive any and all payments due to it in respect of the Obligations
until the sum of such payments received by the Agent is equal to the amount owed
to the Agent by such Defaulting Lender pursuant to the preceding sentence. The
foregoing assignment shall be deemed to be a power coupled with an interest and
shall be absolute and irrevocable. Nothing in this subsection shall be deemed to
relieve any Lender from its obligation to fulfill its obligation to make Loans
hereunder or to prejudice any rights that the Borrowers, the Agent or any Lender
may have against any Defaulting Lender hereunder.
(c) No later than 3:00 p.m. (New York City time) on the date of
each Swing-Line Borrowing, Bankers Trust shall, unless it has elected not to
make a Swing-Line Loan pursuant to the related Notice of Borrowing, or unless it
determines that any applicable condition in Article III has not been satisfied,
make the full amount of such Swing-Line Borrowing available to the Borrowers by
wire transfer of such funds such account as the Borrowers may direct in writing
for such purpose.
(d) No later than 12:00 noon (New York City time) on any Business
Day, the Agent shall, upon Bankers Trust's request, notify each Facility 1
Lender of the aggregate principal amount of Swing-Line Loans that are
outstanding and the amount of Facility 1 Loans required to be made by each
Facility 1 Lender (including Bankers Trust) to refinance such outstanding
Swing-Line Loans (which amount shall be equal to each Facility 1 Lender's pro
rata share of such outstanding Swing-Line Loan and which notice shall be deemed
automatically given upon the occurrence of an Event of Default under 6.1(h)).
Interest on the Swing-Line Loans being refinanced shall be payable by the
Borrowers in accordance with Section 2.6. Bankers Trust may request that the
Swing-Line Loans be refinanced pursuant to this Section 2.4(d) on any Business
Day.
(e) No later than 2:00 p.m. (New York City time) on each date that
the Agent gives notices to the Facility 1 Lenders of the refinancing of
Swing-Line Loans pursuant to Section 2.4(d), each Facility 1 Lender will make
available to the Agent for payment to Bankers Trust the full amount of such
Lender's pro rata share of the outstanding amount of Swing-Line Loans being
refinanced. All amounts made available to the Agent pursuant to this Section
2.4(e) (including Bankers Trust's pro rata share of such amounts) shall be
deemed Facility 1 Loans and shall be allocated to each Type of Facility 1 Loan
in the following order of priority to the extent that such allocation can be
made without breaching the provisions of Section 2.1 or causing a mandatory
repayment under Section 2.8(c): first, to Facility 1 Tranche A Loans; and
second, to Facility 1 Tranche B Loans. Each such Swing-Line Loan being
refinanced as a Facility 1 Loan shall be a Fed Funds Loan. The proceeds of
Facility 1 Loans made pursuant to this Section 2.4(e) shall be paid to the Agent
(and not to the Borrowers ) and then paid over by the Agent to Bankers Trust, to
be applied to the outstanding Swing-Line Loans. The Borrowers authorize the
Agent to charge any account maintained by the Borrowers with the Agent in order
to immediately pay the Agent the amount of such outstanding Swing-Line Loans, to
the extent amounts received from the Facility 1 Lenders are insufficient to
repay in full the outstanding Swing-Line Loans to be refinanced. If any portion
of any amount paid to the Agent by the Borrowers pursuant to this Section 2.4(e)
(other than any amounts received by the Agent pursuant to the preceding
sentence) should be recovered by or on behalf of the Borrowers from
38
-33-
the Agent or Bankers Trust in bankruptcy or otherwise, the loss of the amount so
recovered shall be ratably shared among all the Facility 1 Lenders. In the event
that a refinancing of the Swing-Line Loans cannot be made for any reason on any
date required by Bankers Trust, each Facility 1 Lender hereby agrees that it
shall immediately purchase from Bankers Trust (without recourse or warranty)
such assignment of the outstanding Swing-Line Loans as shall be necessary to
cause the Facility 1 Lenders to share in such Swing-Line Loans ratably based on
their respective pro rata Facility 1 Commitments; provided that all interest
payable on such Swing-Line Loans shall be for the account of Bankers Trust until
the date the respective assignment is purchased and, to the extent attributable
to the purchased assignment, shall be for the account of the Facility 1 Lender
purchasing the assignment from and after the date of such purchase. Each
Facility 1 Lender's obligation to make Facility 1 Loans or purchase assignments
pursuant to this Section 2.4(e) shall be absolute and unconditional and shall
not be affected by any circumstance, including, without limitation, (1) any
setoff, counterclaim, recoupment, defense or other right that such Facility 1
Lender may have against the Agent, Bankers Trust, any Lender, the Borrowers or
any other Person for any reason whatsoever; (2) the occurrence or continuance of
a Potential Default or Event of Default; (3) any adverse change in the condition
(financial or otherwise) of the Borrowers; (4) any breach of this Agreement or
any other Loan Document by the Borrowers, the Agent or any Lender; or (5) any
other circumstance, happening or event whatsoever, whether or not similar to any
of the foregoing; provided that in no event shall a Facility 1 Lender be
obligated to make a Facility 1 Loan pursuant to this Section 2.4(e) if after
giving effect thereto, the outstanding principal amount of such Facility 1
Lender's Facility 1 Loans plus its pro rata share of any Swing-Line Loans
remaining outstanding would exceed its Facility 1 Commitment. If any Lender
fails to make the full amount of its Facility 1 Loan available to the Agent
pursuant to this Section 2.4(e), Bankers Trust shall be entitled to recover such
corresponding amount on demand from such Lender together with interest for each
day until paid at the overnight Fed Funds Rate. Such Lender shall be deemed to
have assigned to Bankers Trust the right to receive any and all payments due to
it in respect of the Obligations until the sum of such payments received by the
Agent and paid over to Bankers Trust is equal to the amount owed to Bankers
Trust by such Lender pursuant to the preceding sentence. The foregoing
assignment shall be deemed to be a power coupled with an interest and shall be
absolute and irrevocable.
(f) No Lender shall be responsible for any default by any other
Lender in its obligation to make Loans hereunder, and each Lender shall be
obligated to make the Loans on the terms set forth herein, regardless of the
failure of any other Lender to fulfill its obligations hereunder. If any
Facility 1 Lender fails to make available its pro rata share of any Facility 1
Borrowing or any Facility 2 Lender fails to make available its pro rata share of
any Facility 2 Borrowing (and the Agent does not advance such Lender's share to
the Borrowers pursuant to subsection (b) above), then the Borrowers may, subject
to all of the terms and conditions set forth in Sections 2.1 and 2.2, make
additional Facility 1 Borrowings or Facility 2 Borrowings, as the case may be,
hereunder to cover the unfunded share of the original Facility 1 Borrowing or
Facility 2 Borrowing.
SECTION 2.5 NOTES.
(a) Each Borrower's joint and several obligation to pay the
principal of and interest on the Facility 1 Loans made by each Facility 1 Lender
and Swing-Line Loans made by Bankers
39
-34-
Trust shall be evidenced by a promissory note (each a "FACILITY 1 NOTE" and
collectively the "FACILITY 1 NOTES") substantially in the form of Exhibit A-1,
with blanks appropriately completed in conformity therewith and payable to the
order of such Facility 1 Lender. Each Borrower's joint and several obligation to
pay the principal of and interest on the Facility 2 Loans made by each Facility
2 Lender shall be evidenced by a promissory note (each a "FACILITY 2 NOTE" and
collectively the "FACILITY 2 NOTES") substantially in the form of Exhibit A-2,
with blanks appropriately completed in conformity therewith and payable to the
order of such Facility 2 Lender. Each Lender shall, and is hereby authorized by
the Borrowers to, endorse on the schedule attached to the applicable Note
delivered to such Lender (or on a continuation of such schedule attached to such
Note and made a part thereof), or otherwise to record in such Lender's internal
records, an appropriate notation evidencing the date and amount of each Loan of
the related Type from such Lender, each payment and prepayment of principal of
any such Loan, each payment of interest on any such Loan, and applicable
interest rates and Eurodollar Interest Periods and other information with
respect thereto, and any such recordation shall absent manifest error constitute
prima facie evidence of the accuracy of the information so recorded; provided
that the failure of any Lender to make such a notation or any error therein
shall not affect the joint and several obligations of the Borrowers, including
the joint and several obligation of the Borrowers to repay the Loans made by
such Lender in accordance with the terms of this Agreement and the applicable
Notes.
SECTION 2.6 INTEREST.
(a) The Borrowers agree to pay interest in respect of the unpaid
principal amount of each Eurodollar Loan for each day during the Eurodollar
Interest Period applicable thereto at a rate per annum equal to (i) in the case
of Facility 1 Tranche A Loans, sixty-five one-hundredths of one percent (0.65%)
plus the average daily Base Eurodollar Rate for such Eurodollar Interest Period,
and (ii) in the case of Facility 1 Tranche B Loans, ninety-five one-hundredths
of one percent (0.95%) plus the Eurodollar Rate for such Eurodollar Interest
Period.
(b) The Borrowers agree to pay interest in respect of the unpaid
principal amount of each Fed Funds Loan for each day such Fed Funds Loan is
outstanding at a rate per annum equal to (i) in the case of Facility 1 Tranche A
Loans, seventy-seven one-hundredths of one percent (0.77%) plus the Federal
Funds Rate, (ii) in the case of Facility 1 Tranche B Loans and Swing-Line Loans,
one and seven one hundredths of one percent (1.07%) plus the Federal Funds Rate,
and (iii) in the case of Facility 2 Loans, one and five-eighths percent (1.625%)
plus the Federal Funds Rate.
(c) Overdue principal and interest in respect of each Loan and all
other overdue amounts owing hereunder shall bear interest for each day that such
amounts are overdue (after as well as before judgment) at a rate per annum equal
to two and one-quarter percent (2.25%) per annum plus the Prime Rate.
(d) Interest on each Loan shall accrue from and including the
Borrowing Date thereof to but excluding the date of any repayment thereof and
shall be payable (i) on or before the third Business Day after receipt of the
billing statement referred to in clause (f) below, (ii) on any prepayment in
full of all of any Lender's outstanding Loans, (iii) at maturity (whether by
acceleration or otherwise) and (iv) after maturity, on demand.
40
-35-
(e) The Agent shall deliver to the Borrowers one interest billing
statement for each month on or before the third Business Day of the next
succeeding month, which interest billing statement shall set forth the interest
accrued on the Loans for such month; provided that any failure or delay in
delivering such interest billing statement or any inaccuracy therein shall not
affect the Obligations.
SECTION 2.7 TERMINATION OF COMMITMENTS.
(a) The Facility 1 Commitments shall automatically terminate on
the Maturity Date, subject to earlier termination as set forth in Section 2.7
(b) or pursuant to Section 6.1. The Facility 1 Commitments may not be reduced in
part by the Borrowers, but may be terminated in their entirety at any time by
the Borrowers upon at least fifteen (15) days' prior irrevocable written notice
to the Agent.
(b) The Facility 2 Commitments shall automatically terminate on
the earliest of: (i) Maturity Date, and (ii) the date on which the Borrowers
terminate or fail to renew the Facility 1 Commitments, in each case subject to
earlier termination pursuant to Section 6.1. The Facility 2 Commitments may not
be reduced in part by the Borrowers, but may be terminated in their entirety at
any time by the Borrowers upon at least fifteen (15) days' prior irrevocable
written notice to the Agent; provided, that upon delivery of a notice of
termination of the Facility 2 Commitments by the Borrowers, the parties to this
Agreement agree to discuss the terms and conditions upon which this Agreement
and the Facility 1 Commitments shall remain in effect; and provided further,
that if the parties shall fail to agree upon terms and conditions that are
satisfactory to the Lenders in their sole and absolute discretion, then the
Facility 1 Commitments shall terminate thirty (30) days following delivery by
the Borrowers of the notice of termination of the Facility 2 Commitments (which
thirty (30) period may be extended to sixty (60) days in the sole and absolute
discretion of the Lenders).
SECTION 2.8 MANDATORY REPAYMENTS.
(a) The Borrowers shall repay all outstanding Facility 1 Loans
(whether matured or unmatured) on the earlier to occur of the termination of the
Facility 1 Commitments and the Maturity Date.
(b) The Borrowers shall repay all outstanding Facility 2 Loans on
the earlier to occur of the termination of the Facility 2 Commitments and the
Maturity Date. Additionally, the Borrowers shall repay all outstanding Facility
2 Tranche A Loans on the seventh (7th) calendar day of each month, so that no
Facility 2 Tranche A Loans remain outstanding during the period commencing on
the seventh (7th) calendar day and ending on the twelfth (12th) calendar day of
each month.
(c) The Borrowers shall immediately prepay: (i) Facility 1 Tranche
A Loans to the extent that the aggregate outstanding principal amount of
Facility 1 Tranche A Loans exceeds the limitations set forth in Section
2.1(a)(i) or 2.1(f) or, provided no Potential Default or Event of Default has
occurred and is continuing, deliver additional Collateral of the type described
in the definition of "Collateral Value of the Facility 1 Tranche A Borrowing
Base" in Section 1.1 as shall be necessary so that the aggregate principal
amount of Facility 1 Tranche A Loans does not
41
-36-
exceed such limitations, (ii) Facility 1 Tranche B Loans to the extent that the
aggregate outstanding principal amount of Facility 1 Tranche B Loans exceeds the
limitations set forth in Section 2.1(a)(ii) or 2.1(f) or, provided no Potential
Default or Event of Default has occurred and is continuing, deliver additional
Collateral of the type described in the definition of "Collateral Value of the
Facility 1 Tranche B Borrowing Base" in Section 1.1 as shall be necessary so
that the aggregate principal amount of Facility 1 Tranche B Loans does not
exceed such limitations, (iii) Swing-Line Loans to the extent that the aggregate
outstanding principal amount of Swing-Line Loans exceeds the limitations set
forth in Section 2.1(f), (iv) Facility 2 Tranche A Loans to the extent that the
aggregate outstanding principal amount of Facility 2 Tranche A Loans exceeds the
Facility 2 Tranche A Maximum Amount or, provided no Potential Default or Event
of Default has occurred and is continuing, deliver additional Collateral of the
type described in the definition of "Collateral Value of the Facility 2 Tranche
A Borrowing Base" in Section 1.1 as shall be necessary so that the aggregate
outstanding principal amount of Facility 2 Tranche A Loans does not exceed the
Facility 2 Tranche A Maximum Amount , (v) Facility 2 Tranche B Loans to the
extent that the aggregate outstanding principal amount of Facility 2 Tranche B
Loans exceeds the Facility 2 Tranche B Maximum Amount, and (vi) Facility 2
Tranche C Loans to the extent that the aggregate outstanding principal amount of
Facility 2 Tranche C Loans exceeds the Facility 2 Tranche C Maximum Amount.
(d) On any date upon which the aggregate principal amount of the
outstanding Facility 2 Tranche C Loans plus the aggregate principal amount of
the outstanding Servicing Loans exceeds the Collateral Value of the Pledged
Servicing Portfolio, the Borrowers shall repay on such date the aggregate
principal amount of the Facility 2 Tranche C Loans or Servicing Loans as shall
be necessary so that the aggregate principal amount of outstanding Facility 2
Tranche C Loans plus the aggregate principal amount of the outstanding Servicing
Loans does not exceed the Collateral Value of the Pledged Servicing Portfolio.
(e) Each repayment of Loans of a certain Type under this Section
2.8 shall be allocated among the Lenders in accordance with the aggregate
outstanding principal amounts of their respective Loans of such Type. All
repayments of the Facility 1 Tranche B Loans of any Facility 1 Lender under this
Section 2.8 shall be applied first to such Lender's Facility 1 Tranche B Loans
that are Fed Funds Loans and second, to such Lender's Facility 1 Tranche B Loans
that are Eurodollar Loans. All repayments of Loans under this Section 2.8 shall
be without premium or penalty, except that any repayment of Eurodollar Loans
shall be subject to the provisions of Section 2.14. Interest shall be payable in
accordance with the provisions of Section 2.6.
SECTION 2.9 OPTIONAL PREPAYMENTS.
The Borrowers shall have the right at any time and from time
to time to prepay outstanding Loans of any Type, in whole or in part, upon one
(1) Business Day's prior written notice to the Agent, in the case of Eurodollar
Loans, and without prior notice in the case of all other Loans; provided that
each partial prepayment of any Loan (other than a Swing-Line Loan, which may be
prepaid in any amount) shall be in an aggregate principal amount of $500,000 or
any multiple of $100,000 in excess thereof; and provided further, that the
Borrowers shall not prepay any Facility 1 Loans so long as any Swing-Line Loans
are outstanding. The Borrowers shall, at the time of making such prepayment,
designate whether it is a prepayment of Facility 1 Tranche A Loans, Facility 1
Tranche B Loans, Facility 2 Tranche A Loans, Facility 2 Tranche B
42
-37-
Loans or Facility 2 Tranche C Loans. If the Borrowers fail to make such a
designation, any funds received as a prepayment pursuant to this Section 2.9
shall be applied first, to Facility 2 Tranche B Loans then outstanding; second,
to Facility 2 Tranche A Loans then outstanding; third to Facility 2 Tranche C
Loans then outstanding; fourth, to Facility 1 Tranche B Loans then outstanding;
and fifth, to Facility 1 Tranche A Loans then outstanding. If such prepayment
has not been designated by the Borrowers, the Agent shall endeavor to contact
the Borrowers for prepayment instructions before applying the prepayment as
noted herein but the Agent shall not be liable for failure to so contact the
Borrowers. Each prepayment of Loans of a certain Type under this Section 2.9
shall be allocated among the Lenders in accordance with the aggregate
outstanding principal amounts of their respective Loans of such Type. All
prepayments of the Facility 1 Loans of any Facility 1 Lender under this Section
2.9 shall be applied first, to such Lender's Facility 1 Loans that are Fed Funds
Loans, and second, to such Lender's Facility 1 Loans that are Eurodollar Loans.
All prepayments of Loans under this Section 2.9 shall be without premium or
penalty, except that any prepayment of Eurodollar Loans shall be subject to the
provisions of Section 2.14. Interest shall be payable upon such prepayment in
accordance with the provisions of Section 2.6.
SECTION 2.10 FEES.
(a) The Borrowers agree to pay to the Agent for the account of
each Facility 1 Lender a facility fee at a rate per annum equal to 0.16% on the
amount of such Lender's Facility 1 Commitment (whether used or unused). The
Borrowers agree to pay to the Agent for the account of each Facility 2 Lender a
facility fee at a rate per annum equal to 0.20% on the amount of such Lender's
Facility 2 Commitment (whether used or unused). Such fees shall be deemed to be
earned in full upon the Amendment Effective Date and shall be payable in advance
on the Amendment Effective Date and thereafter in quarterly installments on the
last Business Day of each March, June, September and December, commencing June
30, 1999; provided that if the Facility 1 Commitments or the Facility 2
Commitments are terminated at any time prior to the Maturity Date, each
remaining unpaid quarterly installment of the respective fees shall be paid in
full on the date of such termination.
(b) The Borrowers agree to pay to the Agent, for its own account,
an agency fee in the amount and on the dates separately agreed to by the Agent
and the Borrowers.
(c) In respect of any Loan which was originally made as a Facility
1 Tranche A Loan and which, after a completed review by the Collateral Agent of
the relevant Mortgage Loans included in the Facility 1 Tranche A Borrowing Base
and the relevant documentation executed in connection therewith, should have
constituted for any period a Facility 1 Tranche B Loan because the Collateral
related thereto did not satisfy the Facility 1 Tranche A Borrowing Base
requirements, the Borrowers agree to pay to the Agent for the account of each of
the Facility 1 Lenders, a gestation collateral reconciliation fee in an amount
equal to the difference between (i) the interest payable hereunder in respect of
such Loan had it been determined to be a Facility 1 Tranche B Loan for such
period and (ii) the interest paid hereunder during such period in respect of
such Loan as a Facility 1 Tranche A Loan. Such fee shall be payable promptly
after delivery of notice by the Agent to the Borrowers of the amount owing.
43
-38-
(d) The fees set forth in this Section 2.10, once paid, shall not
be refundable under any circumstances.
SECTION 2.11 PAYMENTS, ETC.
(a) Except as otherwise specifically provided herein, all payments
by the Borrowers under this Agreement shall be made without defense, set-off or
counterclaim to the Agent not later than 1:00 p.m. (New York City time) on the
date when due, it being expressly agreed and understood that if a payment is
received after 1:00 p.m. (New York City time) by the Agent, such payment will be
deemed to have been made on the next succeeding Business Day and interest
thereon shall be payable at the then applicable rate during such extension;
provided that if the Agent receives the federal wire confirmation number with
respect to such payment before 1:00 p.m. (New York City time) on the date when
such payment is due, and the payment is actually received and credited for value
to the appropriate account at Bankers Trust before the close of business on such
due date, then the payment will be deemed to be made on such due date. All
payments hereunder shall be made in U.S. Dollars in immediately available funds
at the Payment Office. The Agent will promptly after receipt of each such
payment (and in any event by the close of business on the day on which such
funds are received or deemed to have been received) distribute funds in the form
received relating to the payment of (i) principal or interest on any Type of
Loan to the Lenders with Loans of the corresponding Type ratably in accordance
with the aggregate principal amount of the Loans of such Type of such Lenders,
(ii) Fees (other than the agency fee set forth in Section 2.10(b)) with respect
to any Type of Commitment ratably to Lenders with Commitments of the
corresponding Type, and (iii) any other amount payable to any Lender to such
Lender.
(b) Whenever any payment to be made hereunder or under any Note
shall be stated to be due on a day that is not a Business Day, the due date
thereof shall be extended to the next succeeding Business Day and, with respect
to payments of principal, interest thereon shall be payable at the then
applicable rate during such extension.
(c) All computations of interest and Fees shall be made on the
basis of a year of three hundred and sixty (360) days for the actual number of
days (including the first day but excluding the last day) occurring in the
period for which such interest or Fees are payable. Each determination by the
Agent of an interest rate or Fee hereunder shall be conclusive and binding
absent manifest error.
(d) Prior to the maturity of the Facility 1 Loans and Swing-Line
Loans (whether upon acceleration, upon any date that the Facility 1 Commitments
are terminated pursuant to Section 2.7(a), or otherwise), all amounts received
on any day by the Agent hereunder in respect of principal of Facility 1 Loans or
Swing-Line Loans or under the Collateral Agreements, including amounts received
by the Agent from the Facility 1 Settlement Account, and all amounts received
from the Servicing Agent in respect of the Servicing Collateral, shall be
disbursed by the Agent as follows: first, to Bankers Trust, to repay the
aggregate principal amount of Swing-Line Loans outstanding on such day; second,
ratably to the Facility 1 Lenders in accordance with the aggregate principal
amounts of their respective outstanding Facility 1 Loans to repay the aggregate
principal amount of Facility 1 Loans due and payable on such day pursuant to
Section 2.8; third, ratably to the Facility 1 Lenders in accordance with the
aggregate principal amounts of
44
-39-
their respective outstanding Facility 1 Loans, to prepay outstanding Facility 1
Loans being prepaid on such day pursuant to Section 2.9; fourth, if a Servicing
Event of Default has occurred and is continuing, to the Servicing Agent to be
disbursed in accordance with Section 2.11 of the Servicing Credit Agreement; and
fifth, the balance, if any, shall be released by the Agent to the Borrowers by
transfer to such account as the Borrowers may direct in writing for such
purpose; provided that if a Potential Default or an Event of Default has
occurred and is continuing, then the Agent shall not release any such amounts to
the Servicing Agent or to the Borrowers and shall hold such amounts in the
Facility 1 Settlement Account until the earlier of (x) the cure of such
Potential Default or Event of Default, in which case such amounts shall be
released to the Servicing Agent or to the Borrowers as described above in this
subsection (d), or (y) the acceleration of the Facility 1 Loans or Swing-Line
Loans, in which case such amounts shall be disbursed in accordance with Section
2.11(h).
(e) Prior to the maturity of the Facility 2 Loans (whether upon
acceleration, upon any date that the Facility 2 Commitments are terminated
pursuant to Section 2.7(b), or otherwise), all amounts received on any day by
the Agent hereunder in respect of principal of Facility 2 Loans or in respect of
Eligible REO Property mortgaged to the Secured Parties or from the Servicing
Agent in respect of the Servicing Collateral, shall be disbursed by the Agent as
follows: first, ratably to the Facility 2 Lenders in accordance with the
aggregate principal amounts of their respective outstanding Facility 2 Loans, to
repay the aggregate principal amount of Facility 2 Loans due and payable on such
day pursuant to Section 2.8; second, ratably to the Facility 2 Lenders in
accordance with the aggregate principal amounts of their respective outstanding
Facility 2 Loans, to prepay outstanding Facility 2 Loans being prepaid on such
day pursuant to Section 2.9; third, if a Servicing Event of Default has occurred
and is continuing, to the Servicing Agent to be disbursed in accordance with
Section 2.11 of the Servicing Credit Agreement; and fourth, the balance, if any,
shall be released by the Agent to the Borrowers by transfer to such account as
the Borrowers may direct in writing for such purpose; provided that if a
Potential Default or an Event of Default has occurred and is continuing, then
the Agent shall not release any such amounts to the Servicing Agent or to the
Borrowers and shall hold such sums as cash collateral until the earlier of (x)
the cure of any Potential Default or Event of Default, in which case such
amounts shall be released to the Servicing Agent or to the Borrowers as
described in this subsection (e), or (y) the acceleration of the Facility 2
Loans, in which case such amounts shall be disbursed in accordance with Section
2.11(h).
(f) Upon the maturity of the Facility 1 Loans (whether upon
acceleration, upon any date that the Facility 1 Commitments are terminated
pursuant to Section 2.7(a), or otherwise), all amounts received by the Agent
hereunder in respect of principal of Facility 1 Loans or Swing-Line Loans or
under the Collateral Agreements, including amounts received by the Agent from
the Facility 1 Settlement Account, and all amounts received from the Servicing
Agent in respect of the Servicing Collateral, shall be disbursed by the Agent as
follows: first, to the Collateral Agent in accordance with the amounts due to
the Collateral Agent, to reimburse the Collateral Agent for all fees, costs and
expenses reasonably incurred by it in connection with a Potential Default or an
Event of Default or otherwise payable to it in its capacity as Collateral Agent
under the Security Agreement; second, to the Agent, to reimburse the Agent for
all fees, costs and expenses reasonably incurred by it in connection with a
Potential Default or an Event of Default, or otherwise payable to it in its
capacity as Agent under the Loan Documents; third, to Bankers Trust to pay all
accrued and unpaid interest on the Swing-Line Loans due hereunder and to repay
45
-40-
the principal of all outstanding Swing-Line Loans; fourth, ratably to the
Facility 1 Lenders in accordance with the amount of interest and Fees on the
Facility 1 Loans due to such Lenders, to pay all accrued and unpaid interest on
and Fees with respect to the Facility 1 Loans due hereunder; fifth, ratably to
the Facility 1 Lenders in accordance with the aggregate principal amounts of
their respective outstanding Facility 1 Loans, to repay all outstanding Facility
1 Loans; sixth, ratably to all of the Facility 2 Lenders in accordance with
their respective unpaid Obligations relating to Facility 2 Loans, to pay all of
their remaining unpaid Obligations relating to Facility 2 Loans; seventh, if a
Servicing Event of Default has occurred and is continuing, to the Servicing
Agent to be disbursed in accordance with Section 2.11 of the Servicing Credit
Agreement; and eighth, provided no Obligations remain unpaid to the Borrowers by
transfer to such account as the Borrowers may direct in writing for such
purpose.
(g) Upon the maturity of the Facility 2 Loans (whether upon
acceleration, upon any date that the Facility 2 Commitments are terminated
pursuant to Section 2.7(b), or otherwise), all amounts received by the Agent
hereunder in respect of principal of Facility 2 Loans or in respect of Eligible
REO Property mortgaged to the Secured Parties or from the Servicing Agent in
respect of the Servicing Collateral, shall be disbursed by the Agent as follows:
first, to the Collateral Agent in accordance with the amounts due to the
Collateral Agent, to reimburse the Collateral Agent for all fees, costs and
expenses reasonably incurred by it in connection with a Potential Default or an
Event of Default or otherwise payable to it in its capacity as Collateral Agent
under the Security Agreement; second, to the Agent, to reimburse the Agent for
all fees, costs and expenses reasonably incurred by it in connection with a
Potential Default or an Event of Default or otherwise payable to it in its
capacity as Agent under the Loan Documents; third, ratably to the Facility 2
Lenders in accordance with the amount of interest on and Fees with respect to
the Facility 2 Loans due to such Lenders, to pay all accrued and unpaid interest
on and Fees with respect to the Facility 2 Loans due hereunder; fourth, ratably
to the Facility 2 Lenders in accordance with the aggregate principal amounts of
their respective outstanding Facility 2 Loans, to repay all outstanding Facility
2 Loans; fifth, to Bankers Trust to pay all accrued and unpaid interest on the
Swing-Line Loans due hereunder and to repay the principal of all outstanding
Swing-Line Loans; sixth, ratably to all of the Facility 1 Lenders in accordance
with their respective unpaid Obligations relating to Facility 1 Loans, to repay
all of their remaining unpaid Obligations relating to Facility 1 Loans; seventh,
if a Servicing Event of Default has occurred and is continuing, to the Servicing
Agent to be disbursed in accordance with Section 2.11 of the Servicing Credit
Agreement; and eighth, provided no Obligations remain unpaid, to the Borrowers
by transfer to such account as the Borrowers may direct in writing for such
purpose.
(h) Upon the maturity of the Loans and all other Obligations
(whether upon acceleration, upon any date that the Commitments are terminated
pursuant to Section 2.7, or otherwise), all amounts in any account of the
Borrower maintained with the Agent and all amounts (other than the amounts
referred to in subsections (f) and (g) above) received by the Agent on account
of the Obligations shall be disbursed by the Agent as follows: first, to the
Collateral Agent in accordance with the amounts due to the Collateral Agent, to
reimburse the Collateral Agent for all fees, costs and expenses reasonably
incurred by it in connection with a Potential Default or an Event of Default or
otherwise payable to it in its capacity as Collateral Agent under the Security
Agreement; second, to the Agent, to reimburse the Agent for all fees, costs and
expenses reasonably incurred by it in connection with a Potential Default or an
Event
46
-41-
of Default or otherwise payable to it in its capacity as Agent under the Loan
Documents; third, to Bankers Trust to pay all accrued and unpaid interest on the
Swing-Line Loans and to repay the principal of all outstanding Swing-Line Loans;
fourth, ratably to the Lenders in accordance with the amount of interest and
Fees due to each Lender, to pay all accrued and unpaid interest and Fees due
hereunder; fifth, ratably to the Lenders in accordance with the aggregate
principal amounts of their respective outstanding Loans, to repay all
outstanding Loans; sixth, ratably to the Lenders in accordance with their
respective unpaid Obligations, to pay all remaining unpaid Obligations; seventh,
if a Servicing Event of Default has occurred and is continuing, to the Servicing
Agent to be disbursed in accordance with Section 2.11 of the Servicing Credit
Agreement; and eighth, to the Borrowers by transfer to such account as the
Borrowers may direct in writing for such purpose.
SECTION 2.12 EURODOLLAR RATE NOT DETERMINABLE; ILLEGALITY OR IMPROPRIETY.
(a) In the event, and on each occasion, that on or before the day
on which the Eurodollar Rate for a Facility 1 Borrowing that is to include
Eurodollar Loans is to be determined, the Agent has determined in good faith
that the Eurodollar Rate cannot be determined for any reason, the Agent shall,
as soon as practicable thereafter, give written notice of such determination to
the Borrowers and the Lenders. Upon any such determination, any request by the
Borrowers for a Eurodollar Loan pursuant to Section 2.2 shall, until the Agent
has advised the Borrowers and the Lenders that the circumstances giving rise to
such notice no longer exist, be deemed to be a request for a Fed Funds Loan.
Each determination by the Agent hereunder shall be conclusive and binding absent
manifest error.
(b) If any Lender determines at any time that the introduction of,
or any change in, any applicable law, rule, regulation, order or decree or in
the interpretation or the administration thereof by any Governmental Authority
charged with the interpretation or administration thereof, or compliance by such
Lender with any request or directive (whether or not having the force of law) of
any such Governmental Authority, shall make it unlawful or improper for such
Lender to make, maintain or fund any Eurodollar Loan as contemplated by this
Agreement, then such Lender shall immediately give notice thereof to the Agent
and the Borrowers describing such illegality or impropriety in reasonable
detail. Effective thirty (30) days after the giving of such notice (or effective
upon such earlier date as required by such Governmental Authority), the
obligation of such Lender to make Eurodollar Loans shall be suspended for the
duration of such illegality or impropriety and, if and when such illegality or
impropriety ceases to exist, such suspension shall cease and such Lender shall
notify the Agent and the Borrowers thereof. If any such change makes it unlawful
or improper for any Lender to maintain any Eurodollar Loan, such Lender shall,
upon the happening of such event, notify the Agent and the Borrowers thereof,
and the Borrowers shall immediately, or if permitted by applicable law, rule,
regulation, order, decree, interpretation, request or directive, no later than
the date permitted thereby, convert each such Eurodollar Loan into a Fed Funds
Loan. If any Lender notifies the Agent and the Borrowers pursuant to this
Section 2.12(b) that it is unlawful or improper for such Lender to make or
maintain Eurodollar Loans but no other Lenders give similar notices, then the
Borrowers may require such Lender to sell, pursuant to Section 8.6(c) all of its
outstanding Loans and Commitments to another Lender (if any other Lender agrees,
in its sole and absolute discretion, to purchase such Loans and Commitments) or
to any other financial institution reasonably acceptable to the Agent that is
willing to make and maintain Eurodollar Loans.
47
-42-
SECTION 2.13 RESERVE REQUIREMENTS; CHANGE IN CIRCUMSTANCES.
(a) Notwithstanding any other provision herein, if after the date
of this Agreement any change in applicable law or regulation or in the
interpretation or administration thereof by any Governmental Authority charged
with the interpretation or administration thereof (whether or not having the
force of law) imposes any tax on or changes the basis of taxation of payments to
any Lender of the principal of or interest on any Eurodollar Loan made by such
Lender or any Fees or other amounts payable hereunder (other than taxes imposed
on the overall net income of such Lender by the jurisdiction in which such
Lender has its principal office or by any political subdivision or taxing
authority therein), or imposes, modifies or deems applicable any reserve,
special deposit or similar requirement against assets of, deposits with or for
the account of or credit extended by such Lender (except any such reserve
requirement that is reflected in the Eurodollar Rate) or imposes on such Lender
any other condition affecting this Agreement or Eurodollar Loans, and the result
of any of the foregoing is to increase the cost to such Lender of making or
maintaining any Eurodollar Loan or to reduce the amount of any sum received or
receivable by such Lender hereunder (whether of principal, interest, fee or
otherwise) in respect thereof by an amount deemed by such Lender to be material,
then the Borrowers shall pay to such Lender such additional amount or amounts as
will compensate such Lender for such additional costs incurred or reduction
suffered. Any amount or amounts payable by the Borrowers to any Lender in
accordance with the provisions of this Section 2.13(a) shall be paid by the
Borrowers to such Lender within ten (10) Business Days of receipt by the
Borrowers from such Lender of a statement setting forth in reasonable detail the
amount or amounts due and the basis for the determination from time to time of
such amount or amounts, which statement shall be conclusive and binding absent
manifest error.
(b) If any Lender has determined that the adoption after the date
hereof of any applicable law, rule or regulation regarding capital adequacy, or
any change therein, or any change in the interpretation or administration
thereof by any Governmental Authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance by such Lender
(or any lending office of such Lender, as the case may be) or by the holding
company of such Lender, as the case may be, with any request or directive
regarding capital adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency, has the effect of reducing the
rate of return on such Lender's capital or on the capital of such Lender's
holding company, as the case may be, as a consequence of such Lender's
obligations under the Loan Documents to a level below that which such Lender or
such Lender's holding company, as the case may be, could have achieved but for
such adoption, change or compliance (taking into consideration such Lender's
policies or such Lender's holding company's policies, as the case may be, with
respect to capital adequacy) by an amount deemed by such Lender to be material,
then from time to time, the Borrowers shall reimburse such Lender or such
Lender's holding company, as the case may be, for such reduction. Any amount or
amounts payable by the Borrowers to any Lender in accordance with the provisions
of this Section 2.13(b) shall be paid by the Borrowers to such Lender within ten
(10) Business Days of receipt by the Borrowers from such Lender of a statement
setting forth in reasonable detail the amount or amounts due and the basis for
the determination from time to time of such amount or amounts, which statement
shall be conclusive and binding absent manifest error.
48
-43-
(c) Each Lender agrees to use reasonable efforts to change its
lending office to avoid or minimize (i) any amounts that might otherwise be
payable to such Lender pursuant to this Section 2.13 or pursuant to Section 2.15
or (ii) the effect of any event referred to in Section 2.12(b); provided that
such efforts or change shall not cause the imposition on such Lender of any
additional cost or legal, regulatory or administrative burdens deemed by such
Lender, in its sole discretion, to be material.
(d) Failure on the part of any Lender to demand compensation for
any increased costs or reduction in amounts received or receivable or reduction
in return on capital with respect to any period shall not constitute a waiver of
such Lender's right to demand compensation with respect to such period or any
other period. The protection of this Section 2.13(d) shall be available to any
Lender regardless of any possible contention of the invalidity or
inapplicability of the law, rule, regulation, guideline or other change or
condition that shall have occurred or been imposed.
SECTION 2.14 INDEMNITY.
(a) The Borrowers shall indemnify and hold harmless each Lender
against any and all claims, demands, liabilities, damages, losses, costs,
charges and expenses (including reasonable attorneys' fees) that such Lender
actually sustains or incurs as a consequence of (i) any failure by the Borrowers
to fulfill on the Amendment Effective Date or on the date of any Borrowing
hereunder the applicable conditions set forth in Article III, (ii) any failure
by the Borrowers to borrow any Eurodollar Loan hereunder, to convert any Loan
into a Eurodollar Loan or to continue any Eurodollar Loan for an additional
Eurodollar Interest Period, after irrevocable notice of such borrowing,
conversion or continuation has been given pursuant to Section 2.2, (iii) any
payment, prepayment or conversion of a Eurodollar Loan required by any provision
of this Agreement or otherwise made on a date other than the last day of the
Eurodollar Interest Period applicable thereto or required by the Loan Documents
to be made on a date other than the maturity date applicable thereto, (iv) any
default in payment or prepayment of the principal amount of any Eurodollar Loan
or any part thereof or interest accrued thereon, as and when due and payable (at
the due date thereof, by irrevocable notice of prepayment or otherwise), or (v)
the occurrence of any Event of Default, including, in each such case, any loss
or reasonable expense sustained or incurred in liquidating or employing deposits
from third parties acquired to effect or maintain such Eurodollar Loan or any
part thereof as a Eurodollar Loan. Such loss or reasonable expense shall include
but not be limited to an amount equal to the excess, if any, as reasonably
determined by such Lender, of (A) its cost of obtaining the funds for the
Eurodollar Loan being paid, prepaid or converted or not borrowed, converted or
continued (based on the Eurodollar Rate applicable thereto) for the period from
the date of such payment, prepayment, conversion or failure to borrow, convert
or continue to the last day of the Eurodollar Interest Period, as the case may
be, for such Loan (or, in the case of a failure to borrow, convert, or continue
the Eurodollar Interest Period, as the case may be, for such Loan that would
have commenced on the date of such failure to borrow, convert or continue) over
(B) the amount of interest (as reasonably determined by such Lender) that would
be realized by such Lender in re-employing the funds so paid, prepaid or
converted or not borrowed, converted or continued for such period or Eurodollar
Interest Period, as the case may be. A certificate of any Lender setting forth
in reasonable detail any amount or amounts which such Lender is entitled to
receive
49
-44-
pursuant to this Section 2.14 shall be delivered to the Borrowers and shall be
conclusive and binding absent manifest error.
(b) Nothing in this Section is intended to limit the reimbursement
obligation of the Borrowers contained elsewhere in this Agreement. The
obligations of the Borrowers under this Section shall survive the termination of
this Agreement.
SECTION 2.15 TAXES.
All payments made by the Borrowers under this Agreement and
the other Loan Documents 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, in the case of the Agent, the Collateral
Agent and each Lender, net income taxes and franchise taxes (imposed in lieu of
net income taxes) imposed on the Agent, the Collateral Agent or such Lender, as
the case may be, as a result of a present or former connection between the
jurisdiction of the government or taxing authority imposing such tax and the
Agent, the Collateral Agent or such Lender (excluding a connection arising
solely from the Agent, the Collateral Agent or such Lender having executed,
delivered, performed its obligations or received a payment under, or enforced,
this Agreement or the other Loan Documents) or any political subdivision or
taxing authority thereof or therein (all such non-excluded taxes, levies,
imposts, duties, charges, fees, deductions and withholdings being hereinafter
called "TAXES"). If any Taxes are required to be withheld from any amounts
payable to the Agent, the Collateral Agent or any Lender hereunder or under
other Loan Documents, the amounts so payable to the Agent, the Collateral Agent
or such Lender shall be increased to the extent necessary to yield to the Agent,
the Collateral Agent or such Lender (after payment of all Taxes) interest or any
such other amounts payable hereunder at the rates or in the amounts specified in
this Agreement and the other Loan Documents. Whenever any Taxes are payable by
the Borrowers, as promptly as possible thereafter the Borrowers shall send to
the Agent for its own account or for the account of the Collateral Agent or such
Lender, as the case may be, a certified copy of an original official receipt
received by the Borrowers showing payment thereof. If the Borrowers fail to pay
any Taxes when due to the appropriate taxing authority or fails to remit to the
Agent the required receipts or other required documentary evidence, the
Borrowers shall indemnify the Agent, the Collateral Agent and the Lenders for
any incremental taxes, interest or penalties that may become payable by the
Agent, any Collateral Agent or any Lender as a result of any such failure. The
agreements in this subsection shall survive the termination of this Agreement
and the payment of the Notes and all other amounts payable under the Loan
Documents.
SECTION 2.16 SHARING OF SETOFFS.
Each Lender agrees that if it shall, through the exercise of a
right of banker's lien, setoff or counterclaim against the Borrowers, or
pursuant to a secured claim under Section 506 of Title 11 of the United States
Code or other security or interest arising from, or in lieu of, such secured
claim, received by such Lender under any applicable bankruptcy, insolvency or
other similar law or otherwise, or by any other means, obtain payment (voluntary
or involuntary) in respect of any Obligation as a result of which the unpaid
portion of its Obligations shall be
50
-45-
proportionately less than the unpaid portion of the Obligations of any other
Lender, it shall simultaneously purchase from such other Lender at face value a
participation in the Obligations of such other Lender, so that the aggregate
unpaid amount of the Obligations and such participations in Obligations held by
each Lender shall be in the same proportion to the aggregate unpaid amount of
all Obligations then outstanding as the amount of its Obligations prior to such
exercise of banker's lien, setoff or counterclaim or other event was to the
principal amount of all Obligations outstanding prior to such exercise of
banker's lien, setoff or counterclaim or other event; provided, that if any such
purchase or purchases or adjustments are made pursuant to this Section 2.16 and
the payment giving rise thereto is thereafter recovered, such purchase or
purchases or adjustments shall be rescinded to the extent of such recovery and
the purchase price or prices or adjustments restored without interest. The
Borrowers expressly consent to the foregoing arrangements and agrees that any
Lender holding a participation in an Obligation deemed to have been so purchased
may exercise any and all rights of banker's lien, setoff or counterclaim with
respect to any and all moneys owing by the Borrowers to such Lender by reason
thereof as fully as if such Lender had made a loan directly to the Borrowers in
the amount of such participation.
ARTICLE 3
CONDITIONS TO LOANS
SECTION 3.1 CONDITIONS TO LOANS.
(a) As conditions precedent to the initial disbursement of the
Loans hereunder:
(i) Each Borrower shall have delivered or shall have had
delivered to the Agent, in form and substance and in quantities
reasonably satisfactory to the Agent and its counsel, each of the
following:
(A) this Agreement, duly executed by the parties
hereto;
(B) each of the Security Agreement and the
Servicing Security Agreement and the Power of Attorney for
each Borrower, duly executed (and notarized where required) by
the parties thereto (which Powers of Attorney shall be
"protocolized" under the laws of Puerto Rico by counsel to the
Borrowers, and filed with the Registry of Powers of Attorneys
and Xxxxx by counsel to the Borrowers promptly after the
closing contemplated hereunder);
(C) a duly executed Facility 1 Note for each
Lender with a Facility 1 Commitment and a duly executed
Facility 2 Note for each Lender with a Facility 2 Commitment;
(D) duly executed documents, instruments,
agreements and financing statements, properly executed, deemed
necessary or appropriate by the Agent, in its reasonable
discretion, to create in favor of the Lenders a valid and
perfected first priority security interest
51
-46-
in and lien upon the Collateral and the Eligible Servicing
Receivables and a valid and perfected second priority security
interest in and lien upon the Servicing Collateral (other than
the Eligible Servicing Receivables);
(E) a certified copy of resolutions of the Board
of Directors of each of the Borrowers approving the execution,
delivery and performance of all Loan Documents required to be
delivered by such parties hereunder and the transactions
contemplated therein;
(F) a certificate of the Secretary or an
Assistant Secretary of each of the Borrowers certifying the
names and true signatures of the officers of such parties
authorized to sign the Loan Documents required to be executed
and delivered by such parties hereunder, in each case dated
the Amendment Effective Date;
(G) an opinion of New York counsel and Puerto
Rico counsel for the Borrowers in the form of Exhibit C-1 and
Exhibit C-2, respectively, and covering such other matters as
the Agent may reasonably request, dated the Amendment
Effective Date;
(H) a copy of the Certificate of Incorporation
or other equivalent document available in the applicable
jurisdiction of each of the Borrowers certified by the
appropriate officer of the jurisdiction of such party's
incorporation as of a recent date;
(I) a copy of the Bylaws of each of the
Borrowers, certified by the Secretary or an Assistant
Secretary or other appropriate officer of each such party as
of the Amendment Effective Date as being accurate and
complete;
(J) a certificate of the appropriate officer in
the jurisdiction of incorporation of each of the Borrowers
certifying that such Borrower is in good standing as of a
recent date;
(K) a certificate of an executive officer of
each of the Borrowers, in the form of Exhibits D-1 and Exhibit
D-2, respectively, dated the Amendment Effective Date;
(L) evidence satisfactory to the Agent that the
Facility 1 Settlement Account has been opened;
(M) evidence of (aa) the acceptance by the
Process Agent of its appointment pursuant to Section 8.7 and
(bb) payment of all fees required by the Process Agent for
serving in such capacity;
(N) a letter agreement from the Collateral Agent
pursuant to which the Collateral Agent agrees to serve as
Collateral Agent in connection with the REO Pledges; and
(O) the duly executed Intercreditor Agreement;
52
-47-
(ii) All acts and conditions (including the obtaining of
any necessary regulatory approvals and the making of any required
filings, recordings or registrations) required to be done and performed
and to have happened prior to the execution, delivery and performance
of the Loan Documents and to constitute the same legal, valid and
binding obligations, enforceable in accordance with their respective
terms, shall have been done and performed and shall have happened in
due and strict compliance with all applicable laws or if any of such
have not been done, performed or happened, such has been expressly
disclosed to the Agent and waived by all of the Lenders in writing;
(iii) All documentation, including documentation for
corporate and legal proceedings in connection with the transactions
contemplated by the Loan Documents, shall be reasonably satisfactory in
form and substance to the Agent and its counsel; and
(iv) The Borrowers shall have paid all Fees required to
have been paid under the Loan Documents prior to or on the Amendment
Effective Date.
(b) As additional conditions precedent to the disbursement of all
Loans (including the initial Loans hereunder), at and as of the date of such
disbursement:
(i) The representations and warranties of the Borrowers
contained in the Loan Documents shall be accurate and complete in all
material respects on and as of the date of such disbursement as if made
on and as of such date;
(ii) No Potential Default or Event of Default shall have
occurred and be continuing;
(iii) Following the funding of the requested Loan, the
aggregate principal amount of Loans outstanding hereunder shall not
exceed the limitations set forth in Sections 2.1 and 2.8;
(iv) Since December 31, 1998, no material adverse change
shall have occurred in the business, financial condition or results of
operations of DFC and its Subsidiaries, taken as a whole; and
(v) The Agent shall have received such other documents or
legal opinions as the Agent or any Lender or special counsel to the
Agent may reasonably request, all in form and substance reasonably
satisfactory to the Agent.
By delivering a Notice of Borrowing to the Agent hereunder for any Loan, the
Borrowers shall be deemed to have represented and warranted the accuracy and
completeness of the statements set forth in subsections (i) through (iv) above
as of the date of such Loan.
(c) As conditions precedent to each Facility 2 Tranche B Borrowing
(in addition to those set forth in Sections 3.1(a) and (b) above):
53
-48-
(i) Each Borrower shall have delivered or shall have had
delivered to the Agent, in form and substance and in quantities
reasonably satisfactory to the Agent and its counsel, each of the
following:
(A) all information reasonably requested by the
Agent contained in the files of the Borrowers relating to the
Eligible REO Property to be included in the Facility 2 Tranche
B Borrowing Base;
(B) duly executed REO Demand Note(s);
(C) duly executed REO Mortgages with respect to
all Eligible REO Property to be included in the Facility 2
Tranche B Borrowing Base;
(D) duly executed REO Pledge(s) of the REO
Demand Note(s) to the Agent and the Facility 2 Lenders; and
(E) documentation required under
3.1(a)(i)(F)-(L) above, as applicable to the related Real
Estate Closing, and as is reasonable and customary, and such
other documentation as is also reasonable and customary, in
connection with commercial real estate closings in Puerto Rico
as determined by the Agent's counsel.
(ii) Simultaneously with such Facility 2 Tranche B
Borrowing or as is otherwise customary in commercial real estate
closings in Puerto Rico, the REO Mortgages shall be filed for recording
with the applicable registries.
(iii) The Borrowers shall have paid all taxes, including
mortgage recording and documentary stamp taxes, recording fees and
charges and all other fees and charges of whatever kind in connection
with the applicable Real Estate Closing, including costs and expenses
of the Agent's outside counsel, and evidence thereof shall have been
delivered to the Agent.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
As an inducement to the Agent and each Lender to enter into
this Agreement and to make Loans as provided herein, each of the Borrowers
represents and warrants to the Agent and each Lender that:
SECTION 4.1 CORPORATE EXISTENCE; COMPLIANCE WITH LAW AND CONTRACTUAL
OBLIGATIONS.
Each Borrower (a) is duly organized, validly existing and in
good standing as a corporation under the laws of the Commonwealth of Puerto Rico
and in each jurisdiction where its ownership of property or conduct of business
requires such qualification, except where the failure to be so qualified would
not have a Material Adverse Effect; (b) has the corporate power and authority
and the legal right to own and operate its property and to conduct business in
the
54
-49-
manner in which it does and proposes so to do; and (c) is not in violation of
any Requirement of Law or any Contractual Obligation if such violation could
have a Material Adverse Effect.
SECTION 4.2 CORPORATE POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS.
Each Borrower has the corporate power and authority to
execute, deliver and perform the Loan Documents to which it is a party and has
taken all necessary corporate action to authorize the execution, delivery and
performance of such Loan Documents. Such Loan Documents have been duly executed
and delivered on behalf of such Borrower and constitute legal, valid and binding
obligations of such Borrower enforceable against it in accordance with their
respective terms, except as enforceability may be limited by applicable
bankruptcy, insolvency and other similar laws affecting creditors' rights
generally and by general principles of equity.
SECTION 4.3 NO LEGAL OR CONTRACTUAL BAR.
The execution, delivery and performance of the Loan Documents,
including the creation and perfection of the security interests contemplated
hereunder and thereunder, the borrowings of Loans hereunder and the use of the
proceeds thereof, do not and will not (a) violate any Requirement of Law or any
Contractual Obligation of either Borrower or any of its Subsidiaries, (b) except
as contemplated by this Agreement and the Collateral Agreements, require any
license, consent, authorization, approval or any other action by, or any notice
to or filing or registration with, any Governmental Authority or any other
Person or (c) result in the creation or imposition of any Lien on any asset of
either Borrower or any of its Subsidiaries except as contemplated by the Loan
Documents. Without limiting the scope of the preceding representation, no
Take-Out Commitments assigned to the Secured Parties prohibit assignment thereof
to the Secured Parties.
SECTION 4.4 FINANCIAL INFORMATION.
(a) The consolidated and consolidating statement of financial
condition of DFC and its consolidated Subsidiaries as at December 31, 1998 and
the related consolidated and consolidating statements of income and cash flows
for the fiscal year then ended, including in each case the related schedules and
notes, reported on by PricewaterhouseCoopers LLP, true copies of which have been
previously delivered to each of the Lenders, are complete and correct and fairly
present the consolidated and consolidating financial condition of DFC and its
consolidated Subsidiaries as at the date thereof and the consolidated and
consolidating results of operations and cash flows for such period, in
accordance with GAAP applied on a consistent basis.
(b) The unaudited consolidated and consolidating statement of
financial condition of each Borrower and its consolidated Subsidiaries as at
March 31, 1999, and the related unaudited combined statements of income and cash
flows for the three months then ended, certified by the chief financial officer
of DFC, true copies of which have been previously delivered to each of the
Lenders, are complete and correct and fairly present the consolidated and
consolidating financial condition of DFC and its consolidated Subsidiaries as at
the date thereof and the consolidated and consolidating results of operations
and cash flows for such period in conformity with GAAP
55
-50-
applied on a basis consistent with the financial statements referred to in
subsection (a) of this Section 4.4, subject to normal year-end audit
adjustments.
(c) Neither Borrower has any material liability of any kind,
whether accrued, contingent, absolute, determined, determinable or otherwise,
and no condition, situation or set of circumstances exists that could be
reasonably expected to result in such a liability, in each case that is not
reflected in the financial statements referred to in Section 4.4(b) or in the
most recent financial statements delivered to the Agent and the Lenders pursuant
to Section 5.1(a)(i) or (ii) (other than liabilities permitted hereunder and
incurred after the date of such most recent financial statements and to be
reflected in the next financial statements to be delivered to the Agent and the
Lenders pursuant to Section 5.1 (a)(i) or (ii)).
(d) Since December 31, 1998, no material adverse change has
occurred in the business, financial condition or results of operations of DFC
and its Subsidiaries, taken as a whole.
SECTION 4.5 NO MATERIAL LITIGATION.
Except as set forth on Exhibit K, no litigation, investigation
or proceeding of or before any arbitrator or Governmental Authority is pending
or, to the knowledge of either Borrower, threatened by or against such Borrower
or any of its Subsidiaries, or against any of such Borrower's or any such
Subsidiary's properties or revenues that, if adversely determined, could alone,
or with any other litigation, investigation or proceeding, affect the business,
financial condition or results of operations of such Borrower and its
Subsidiaries, taken as a whole, in excess of the Material Amount or could have a
Material Adverse Effect.
SECTION 4.6 TAXES.
Each Borrower and each of its Subsidiaries have filed or
caused to be filed all tax returns that are required to be filed and have paid
all taxes shown to be due and payable on such returns or on any assessments made
against them or any of their property other than taxes and assessments that are
being contested in good faith by appropriate proceedings and as to which such
Borrower or such Subsidiary has established adequate reserves in conformance
with GAAP.
SECTION 4.7 INVESTMENT COMPANY ACT.
Neither Borrower is an "investment company" within the meaning
of the Investment Company Act of 1940, as amended.
56
-51-
SECTION 4.8 SUBSIDIARIES.
DFC has no Subsidiaries as of the Amendment Effective Date
other than DMC, Doral Bank, Centro Hipotecario de Puerto Rico, Inc., First
Florida Realty Corporation, Doral Securities, Inc., Doral Bank FSB, Doral Money,
Inc. and Doral Capital, Inc.. DFC owns, directly or through another Subsidiary
of DFC, one hundred percent (100%) of the stock of each such Subsidiary, and all
of the stock of each such Subsidiary has been duly issued and is fully paid and
nonassessable. DMC has no Subsidiaries as of the Amendment Effective Date.
SECTION 4.9 USE OF PROCEEDS.
The proceeds of all Facility 1 Tranche A Loans shall be used
by the Borrowers solely for the purpose of financing Eligible Gestation Mortgage
Loans and Eligible Mortgage-Backed Securities. The proceeds of all Facility 1
Tranche B Loans shall be used by the Borrowers solely for the purpose of
originating, acquiring or financing Eligible Conforming Mortgage Loans and/or
Eligible Non-Conforming Mortgage Loans. The proceeds of all Swing-Line Loans
shall be used by the Borrowers solely for the purpose of originating, acquiring
or financing Eligible Gestation Mortgage Loans, Eligible Mortgage-Backed
Securities, Eligible Conforming Mortgage Loans and/or Eligible Non-Conforming
Mortgage Loans. The proceeds of all Facility 2 Tranche A Loans shall be used by
the Borrowers solely to make advances (or to refinance advances previously made
by either Borrower) resulting in the creation of Eligible Servicing Receivables.
The proceeds of all Facility 2 Tranche B Loans shall be used by the Borrowers
solely to provide financing of the Eligible REO Property. The proceeds of
Facility 2 Tranche C Loans shall be used by the Borrowers for general working
capital purposes.
SECTION 4.10 ERISA.
(a) No Prohibited Transactions, Accumulated Funding Deficiencies, withdrawals
from Multiemployer Plans or Reportable Events have occurred with respect to any
Plans or Multiemployer Plans that, in the aggregate, could subject either
Borrower or any of such Borrower's Subsidiaries to any material tax, penalty or
other liability where such tax, penalty or liability is not covered in full, for
the benefit of such Borrower or such Subsidiary, by insurance; (b) no notice of
intent to terminate a Plan has been filed, nor has any Plan been terminated
under Section 4041 of ERISA, nor has the PBGC instituted proceedings to
terminate, or appoint a trustee to administer, a Plan and no event has occurred
or condition exists that might constitute grounds under Section 4042 of ERISA
for the termination of, or the appointment of a trustee to administer, any Plan;
(c) the present value of all benefits liabilities (as defined in Section
4001(a)(16) of ERISA) under all Plans (based on the actuarial assumptions used
to fund the Plans) does not exceed the assets of the Plans; and (d) the
execution, delivery and performance by Borrowers of the Loan Documents and the
borrowing of the Loans hereunder and the use of the proceeds thereof will not
involve any Prohibited Transaction.
SECTION 4.11 SECURITY INTERESTS.
The security interests created in favor of the Lenders under
the Security Agreement, subject to the terms of the Intercreditor Agreement,
constitute valid and perfected first priority security interests in the
Collateral and the Eligible Servicing Receivables, and the Collateral is not and
will not be subject to any other Liens except as permitted by Section 5.2(a).
The security interests created in favor of the Lenders under the Servicing
Security Agreement,
57
-52-
subject to the terms of the Intercreditor Agreement, constitute valid and
perfected second priority security interests in the Servicing Collateral (other
than the Eligible Servicing Receivables), and the Servicing Collateral is not
and will not be subject to any other Liens except as permitted by Section
5.2(a).
SECTION 4.12 AGENCY APPROVALS.
Each Borrower is a FHLMC approved Seller/Servicer, a HUD
Direct Endorsement Lender and a VA approved Lender in good standing. DFC is also
a FNMA approved Seller/Servicer and a GNMA approved Issuer/Servicer.
SECTION 4.13 SOLVENCY.
Each Borrower is able to pay its debts as they mature. The
aggregate estimated fair market value of each Borrower's assets is greater than
such Borrower's liabilities (including contingent, subordinated, unmatured and
unliquidated liabilities and any and all Obligations hereunder). Each Borrower
has capital sufficient to carry on the business and transactions in which it is
engaged and all business and transactions in which it is about to engage.
SECTION 4.14 MINIMUM SERVICING PORTFOLIO.
As of the date of this Agreement, the Mortgage Loans in the
Servicing Portfolio have an aggregate outstanding principal balance of not less
than $4,000,000,000.
SECTION 4.15 YEAR 2000 COMPLIANCE.
All Information Systems and Equipment are Year 2000 Compliant.
ARTICLE 5
COVENANTS
SECTION 5.1 AFFIRMATIVE COVENANTS.
Each Borrower hereby covenants and agrees that, as long as any
Obligations remain unpaid or any Lender has any Commitment hereunder, the
Borrowers shall:
(a) Reports to Agent. Furnish or cause to be furnished to the
Agent (with sufficient numbers of copies for each Lender which the Agent shall
forward to each Lender within a reasonable time after receipt thereof):
(i) Annual Financial Statements. As soon as available and
in any event within ninety-five (95) days after the end of each fiscal
year of DFC, a consolidated and consolidating statement of financial
condition of DFC and its consolidated Subsidiaries as at the end of
such year and the related consolidated and consolidating statements of
income and cash flows of DFC and its consolidated Subsidiaries for such
fiscal year, setting forth in each case in comparative form the figures
for the previous fiscal year, all in reasonable detail and accompanied
by a report thereon of PricewaterhouseCoopers
58
-53-
LLP or other independent public accountants of comparable recognized
national standing, which report shall be unqualified as to scope of
audit and shall state that such financial statements present fairly the
consolidated and consolidating financial condition as at the end of
such fiscal year, and the consolidated and consolidating results of
operations and cash flows for such fiscal year, of DFC and its
consolidated Subsidiaries in accordance with GAAP consistently applied;
(ii) Quarterly Financial Statements. As soon as available
and in any event within fifty (50) days after the end of each fiscal
quarter of DFC, a consolidated and consolidating statement of financial
condition of DFC and its consolidated Subsidiaries as at the end of
such fiscal quarter and the related consolidated and consolidating
statements of income and cash flows of DFC and its consolidated
Subsidiaries for such fiscal quarter, setting forth in each case in
comparative form the figures for the previous fiscal quarter, all in
reasonable detail and certified by the chief financial officer of DFC
that they present fairly the consolidated and consolidating financial
condition as at the end of such fiscal quarter, and the consolidated
and consolidating results of operations and cash flows for such fiscal
quarter, of DFC and its consolidated Subsidiaries in accordance with
GAAP consistently applied, subject to normal year-end adjustments;
(iii) Monthly Financial Statements. Upon thirty (30) days'
notice from the Agent (such notice to be given no earlier than the
first day of a month to receive a statement for the previous month), a
consolidated and consolidating statement of financial condition of DFC
and its consolidated Subsidiaries as at the end of the previous month
and the related consolidated and consolidating statements of income and
cash flows of DFC and its consolidated Subsidiaries for such month
setting forth in each case in comparative form the figures for the
previous month, all in reasonable detail and certified by the chief
financial officer of DFC that they are complete and correct and that
they present fairly the consolidated and consolidating financial
condition as at the end of such month, and the consolidated and
consolidating results of operations for such month and such portion of
the fiscal year, of DFC and its consolidated Subsidiaries in accordance
with GAAP consistently applied (subject to normal year-end
adjustments);
(iv) No Default/Compliance Certificate. Together with the
financial statements required pursuant to subsections (i) and (ii)
above, a certificate of the chief financial officer or chief accounting
officer of DFC (A) to the effect that, based upon a review of the
activities of DFC and its Subsidiaries and such financial statements
during the period covered thereby, no Event of Default or Potential
Default exists, or if an Event of Default or a Potential Default
exists, specifying the nature thereof and the Borrowers' proposed
response thereto, and (B) demonstrating in reasonable detail compliance
with Section 5.3 as at the end of such fiscal year or such fiscal
quarter, as applicable;
(v) Audit Reports. Upon request by the Agent, copies of
each HUD Single Family Audit Report and FNMA and FHLMC audit reports on
each Borrower and its operations;
59
-54-
(vi) Notice of Default or Misrepresentation. (a) Promptly
after obtaining knowledge of the occurrence of an Event of Default or a
Potential Default, a certificate of the chief financial officer or
chief accounting officer of DFC specifying the nature thereof and DFC's
or DMC's proposed response thereto and (b) at any time that any
representation, warranty or other information contained in any
statement or certificate required to be delivered hereunder or any
representation or warranty deemed to have been made hereunder shall
prove to be false or misleading in any material way, promptly after
obtaining knowledge thereof give notice thereof to the Agent describing
how such representation, warranty or information is misleading.
(vii) Loss of Qualification. Promptly after the occurrence
thereof, notice of any Mortgage Loan or Mortgage-Backed Security
included in the Facility 1 Borrowing Base, that ceases to qualify as an
Eligible Mortgage Loan or Eligible Mortgage-Backed Security, as the
case may be;
(viii) Litigation. Promptly after the occurrence thereof,
notice of the institution of or any material adverse development in any
action, suit or proceeding or any governmental investigation or any
arbitration, before any court or arbitrator or any governmental or
administrative body, agency or official, against either Borrower or any
material property of any thereof, in each case if such action, suit,
proceeding, investigation or arbitration could result in a liability to
the Borrowers in excess of the Material Amount;
(ix) ERISA. In connection with ERISA:
(A) Promptly and in any event within ten (10)
Business Days after either Borrower knows or has reason to
know of the occurrence of a Reportable Event with respect to a
Plan with regard to which notice must be provided to the PBGC,
a copy of such materials required to be filed with the PBGC
with respect to such Reportable Event and in each such case a
statement of the chief financial officer of such Borrower
setting forth details as to such Reportable Event and the
action that such Borrower proposes to take with respect
thereto;
(B) Promptly and in any event within ten (10)
Business Days after either Borrower knows or has reason to
know of any condition existing with respect to a Plan that
presents a material risk of termination of such Plan,
imposition of an excise tax, requirement to provide security
to such Plan or occurrence of other liability by the
applicable Borrower or any ERISA Affiliate, a statement of the
chief financial officer of the applicable Borrower describing
such condition;
(C) At least ten (10) Business Days prior to the
filing by any plan administrator of a Plan of a notice of
intent to terminate such Plan, a copy of such notice;
(D) Promptly and in no event more than ten (10)
Business Days after the filing thereof with the Secretary of
the Treasury, a copy of any application by
60
-55-
either Borrower or an ERISA Affiliate for a waiver of the
minimum funding standard under section 412 of the Code;
(E) Upon request by the Agent from time to time,
copies of each annual report that is filed on Internal Revenue
Service Form 5500, together with certified financial
statements for any Plan (if any) as of the end of such year
and actuarial statements on Schedule B to such Form 5500;
(F) Promptly and in any event within ten (10)
Business Days after it knows or has reason to know of any
event or condition that might constitute grounds under section
4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Plan, a statement of the chief
financial officer of the applicable Borrower describing such
event or condition;
(G) Promptly and in no event more than ten (10)
Business Days after receipt thereof by either Borrower or any
ERISA Affiliate, a copy of each notice received by such
Borrower or an ERISA Affiliate concerning the imposition of
any withdrawal liability under section 4202 of ERISA; and
(H) Promptly after receipt thereof a copy of any
notice either Borrower or any ERISA Affiliate may receive from
the PBGC or the Internal Revenue Service with respect to any
Plan or Multiemployer Plan; provided that this subparagraph
(H) shall not apply to notices of general application
promulgated by the PBGC or the Internal Revenue Service;
(x) Borrowing Base, Commitment Status and Servicing
Reports.
(A) On Monday of each week, and on such other
days as the Agent may reasonably request, a Facility 1
Borrowing Base Certificate and a Facility 2 Tranche A
Borrowing Base Certificate, in each case prepared by the
Borrowers and dated as of the Friday preceding such Monday or
as of such other day;
(B) As soon as available and in any event no
later than five (5) days after the end of each month, and on
such other days as the Agent may reasonably request, a Hedging
Inventory Report, dated as of the last day of such month or as
of such other day;
(C) As soon as available and in any event no
later than forty-five (45) days after the end of each
six-month period ended June 30 and December 31 of each year,
commencing with the six-month period ending June 30, 1999, a
Pledged Servicing Portfolio Report dated as of the last day of
such six-month period;
(D) As soon as available and in any event no
later than forty-five (45) days after the end of each
six-month period ended June 30 and December 31 of each year,
commencing with the six-month period ending June 30, 1999, a
Pledged Servicing Valuation Report, dated as of the last day
of each such six-month period; provided, that the Agent shall
have the right to request additional
61
-56-
Pledged Servicing Valuation Reports at such times as it deems
necessary or desirable, which reports shall be prepared at the
expense of the Lenders;
(E) On the first Business Day of each month, and
on such other days as the Agent may reasonably request, a
report, in form and substance reasonably satisfactory to the
Agent, prepared by the Borrowers, on the aging of Mortgage
Loans included in the Facility 1 Borrowing Base;
(F) On the first Business Day of each month, and
in connection with any Real Estate Closing, and on such other
days as the Agent may reasonably request, a Facility 2 Tranche
B Borrowing Base Certificate, dated as of the preceding
Business Day;
(G) As soon as available and in any event no
later than thirty (30) days after the end of each quarterly
period ended March 31, June 30, September 30 and December 31
of each year, commencing with the quarterly period ending June
30, 1999, a Recourse Servicing Portfolio Report dated as of
the last day of such quarterly period; and
(H) As soon as available and in any event no
later than thirty (30) days after the end of each quarterly
period ended March 31, June 30, September 30 and December 31
of each year, commencing with the quarterly period ending June
30, 1999, a Recourse Servicing Portfolio Statistics Report
dated as of the last day of such quarterly period;
(xi) Certificating Custodian. Promptly after a replacement
of any Certificating Custodian, notice thereof together with copies of
the Agency Custodial Agreements appointing a successor Certificating
Custodian; and
(xii) Other Information. Promptly, such additional
financial and other information, including financial statements of the
Borrowers or any of its Subsidiaries or any Approved Investor (other
than FNMA or FHLMC), and such information regarding the Collateral or
the Servicing Collateral as any Lender, through the Agent, may from
time to time reasonably request, including such information as is
necessary for any Lender to grant participations of its interests in
Loans hereunder or to enable another financial institution to become a
signatory hereto.
(b) Maintenance of Existence and Properties; Compliance with Laws;
Maintenance of Agency Status. (i) Except as provided in Section 5.2(e), preserve
and maintain, and cause each of its Subsidiaries to preserve and maintain, its
corporate existence and all rights, privileges, licenses, approvals, franchises,
properties and assets material to the normal conduct of its business; comply,
and cause each of its Subsidiaries to comply, in all material respects with all
Contractual Obligations and Requirements of Law, except when the failure to
maintain the existence of any such Subsidiary or to so comply would not have a
Material Adverse Effect; and (ii) except as permitted under Section 5.2(l),
preserve and maintain at all times its status as a FHLMC approved
Seller/Servicer, a HUD Direct Endorsement Lender and a VA approved
62
-57-
Lender in good standing and, with respect to DFC, its status as a FNMA approved
Seller/Servicer and as a GNMA approved Issuer/Servicer.
(c) Inspection of Property; Books and Records; Discussions. (i)
Keep, and cause each of its Subsidiaries to keep, proper books of record and
account in which full, true and correct entries in conformity with GAAP and all
Requirements of Law shall be made of all dealings and transactions in relation
to its business and activities, and, (ii) permit representatives of the Agent
and the Lenders (at no cost to such Borrower unless a Potential Default or an
Event of Default has occurred and is continuing) to visit and inspect any of its
properties and examine and make copies from any of its books and records during
normal business hours, upon reasonable advance notice and as often as may
reasonably be desired by the Agent, and to discuss the business, operations,
properties and financial and other condition of such Borrower and its
Subsidiaries with officers of such parties, and, with their independent
certified public accountants (if a representative of DFC or DMC shall have been
given the right upon reasonable notice to be present by phone or in person), and
with the consent of such Borrower, which consent shall not be unreasonably
withheld, with employees of the Borrowers.
(d) Insurance. Maintain or cause to be maintained with financially
sound and reputable insurers, insurance with respect to its properties and
business, and the properties and business of its Subsidiaries, against loss or
damage of the kinds customarily insured against by reputable companies in the
same or similar businesses, such insurance to be of such types and in such
amounts (with such deductible amounts) as is customary for such companies under
similar circumstances, including errors and omissions coverage and fidelity
coverage in form and substance acceptable under Agency guidelines, and furnish
the Agent on request evidence of all such insurance.
(e) Payment of Taxes and Claims, Etc. Pay, and cause each of its
Subsidiaries to pay, (i) all taxes, assessments and governmental charges imposed
upon it or upon its property, and (ii) all genuine claims (including claims for
labour, materials, supplies or services) that might, if unpaid, become a Lien
upon its property, unless, in each case, the validity or amount thereof is being
contested in good faith by appropriate proceedings and such Borrower or such
Subsidiary has maintained adequate reserves in accordance with GAAP with respect
thereto or has posted a bond in respect thereof satisfactory to the Required
Lenders.
(f) GNMA Acknowledgment Agreement. Obtain, execute and deliver an
Acknowledgment Agreement from GNMA relating to the acknowledgment of the
Servicing Collateral Agent's security interest in the GNMA Servicing Portfolio,
if and when requested by the Agent in its sole discretion.
(g) Further Documents. Execute and deliver or to cause to be
executed and delivered to the Agent or the Collateral Agent on behalf of the
Lenders from time to time such confirmatory or supplementary security
agreements, financing statements, reaffirmations and consents and such other
documents, instruments or agreements as the Agent may reasonably request, that
are in the Agent's reasonable judgment necessary or desirable to obtain for the
Agent on behalf of the Lenders the benefit of the Loan Documents, the Collateral
and the Servicing Collateral.
63
-58-
(h) Recording. Cause each Power of Attorney to be "protocolized"
under the laws of Puerto Rico and filed in the Registry of Powers of Attorneys
and Xxxxx, pay any and all fees and charges in connection therewith, and provide
evidence of such protocolization and filing to the Agent promptly thereafter.
(i) Year 2000 Compliance. Ensure that their respective Information
Systems and Equipment are at all times after the date of this Agreement Year
2000 Compliant, except insofar as the failure to do so will not result in a
Material Adverse Effect, and shall notify the Agent promptly upon detecting any
failure of the Information Systems and Equipment to be Year 2000 Compliant. In
addition, the Borrowers shall provide the Agent with such information about
their respective year 2000 computer readiness (including, without limitation,
information as to contingency plans, budgets and testing results) as the Agent
may reasonably request.
SECTION 5.2 NEGATIVE COVENANTS OF EACH BORROWER.
Each Borrower hereby covenants and agrees that, as long as any
Obligations remain unpaid or any Lender has any Commitment hereunder, such
Borrower shall not, directly or indirectly:
(a) Liens. Create, incur, assume or suffer to exist, or permit any
Subsidiary to create, incur, assume or suffer to exist, any Lien upon the
Collateral, the Servicing Collateral or the Servicing Portfolio, whether now
owned or hereafter acquired, except in favor of the Secured Parties under the
Security Agreement, other than:
(i) Liens or charges for current taxes, assessments or
other governmental charges that are not delinquent or which remain
payable without penalty;
(ii) Liens, deposits or pledges made to secure statutory
obligations, surety or appeal bonds, or bonds for the release of
attachments or for stay of execution, or to secure the performance of
bids and tenders or for purposes of like general nature in the ordinary
course of business of such Borrower or such Subsidiary;
(iii) the interests of FNMA and FHLMC with respect to the
servicing rights relating to the underlying Mortgage Loans in the
Pledged Servicing Portfolio as set forth in acknowledgment agreements
with such Agencies and the interests of GNMA as set forth in the GNMA
Guide;
(iv) involuntary Liens relating to liabilities not in
excess of $100,000 in the aggregate for each Borrower; provided that
such Borrower or such Subsidiary is making a diligent effort to remove
such Liens as soon as practicable; and
(v) a first priority Lien on the Servicing Collateral
(other than the Eligible Servicing Receivables, in which the Lenders
have a first priority security interest) in favor of the Servicing
Collateral Agent under the Servicing Security Agreement, subject to the
terms of the Intercreditor Agreement.
(b) Change of Business. Except as permitted under Section 5.2(e),
engage in any type of business that is unrelated to (i) the mortgage banking and
lending business and the
64
-59-
servicing of Mortgage Loans, or (ii) any related financial services business
(including, without limitation, any activity permitted for banks, savings
associations, or savings and loan or bank holding companies), or permit any of
DFC's Subsidiaries to engage in any type of business other than financial
services (including, without limitation, any activity permitted for banks,
savings associations, or savings and loan or bank holding companies); provided
that the Borrowers may create one or more Subsidiaries for the purposes of
acquiring, developing and holding real property to be leased principally to DFC
and DFC's other Subsidiaries.
(c) Acquisitions. Except as permitted under Section 5.2(e),
purchase or acquire, or permit any of its Subsidiaries to purchase or acquire,
or incur liability for the purchase or acquisition of, or permit any of its
Subsidiaries or to incur liability for the purchase or acquisition of, any or
all of the assets or business of any Person (whether such purchase or
acquisition shall be by means of merger, stock purchase, asset purchase or
otherwise) other than (i) purchases and acquisitions in the ordinary course of
business as currently conducted and (ii) other purchases and acquisitions
relating to the mortgage banking and lending business and the servicing of
Mortgage Loans or other financial services (including, without limitation, any
activity permitted for banks, savings associations, or savings and loan or bank
holding companies).
(d) Transactions with Affiliates. Enter into, or permit any of its
Subsidiaries directly or indirectly to enter into, any transaction (including
the purchase, sale, lease or exchange of any property, the making or borrowing
of any loan or the rendering of any service) with any Affiliate on terms that
are less favorable to such Borrower or such Subsidiary than those that might be
obtained at the time from Persons who are not Affiliates, other than the Master
Purchase, Servicing and Collections Agreement dated as of September 15, 1993
with Doral Bank, the Amended and Restated Master Production Agreement among DFC,
DMC and Doral Bank dated as of October 1, 1995, as amended by the First
Amendment to Master Production Agreement, dated as of March 1, 1996, and the
Master Servicing and Collection Agreement between DFC and Doral Bank, dated as
of October 1, 1995, as amended by the First Amendment to Master Servicing and
Collection Agreement, dated as of March 1, 1996, each as in effect on such
respective dates.
(e) Consolidation, Merger, Sale of Assets, Etc. (i) Enter into any
merger, consolidation or amalgamation, including any such transaction with a
regulated banking entity or that results in either Borrower becoming a
Subsidiary of a regulated banking entity (other than of DFC), (ii) liquidate,
wind-up or dissolve itself (or suffer or permit any of the foregoing to occur),
or (iii) sell, lease, assign, transfer or otherwise dispose of, or permit any of
its Subsidiaries to sell, lease, assign, transfer or otherwise dispose of, more
than twenty-five percent (25%) of its assets, whether now owned or hereafter
acquired, based on the book value of all such assets as set forth in the last
audited financial statement of such Borrower, provided that the following shall
be permitted so long as no Potential Default or an Event of Default has occurred
and is continuing or would result therefrom:
(A) DFC may merge or consolidate with another
Person where DFC is the surviving entity;
65
-60-
(B) DMC may merge with any other wholly-owned
Subsidiary of DFC that is principally engaged in the mortgage
banking business where DMC is the surviving entity;
(C) the Borrowers may sell assets in the
ordinary course of business at fair market value (it being
expressly agreed and understood that the sale or other
disposition of Mortgage-Backed Securities and of Mortgage
Loans with or without servicing released is in the ordinary
course of business and that, subject to Section 2.8, the
Borrowers may sell all or a portion of their servicing rights
to the extent and in the manner permitted by Sections 5.2(d)
and (h) and by the Security Agreement). Notwithstanding the
foregoing, DMC may be merged into, become consolidated with or
become a Subsidiary of any Person (other than DFC) that is a
regulated banking entity so long as (x) DFC (aa) becomes the
sole borrower under the Loan Documents and affirms the same
pursuant to documentation reasonably satisfactory to Lenders
and Agent and (bb) satisfies all the representations,
warranties and covenants hereunder, including the financial
covenants, without DMC being included in its consolidated and
consolidating financial statements; (y) no Potential Default
or Event of Default exists at the time of such event and after
giving effect thereto; and (z) such event does not have a
Material Adverse Effect; and
(D) the Borrowers may sell all of the
outstanding stock or assets of Centro Hipotecario de Puerto
Rico, Inc..
(f) VA Guaranties and FHA Insurance. Commit any act that would
invalidate any VA guarantee or FHA insurance relating to any Mortgage Loan
pledged to the Secured Parties as Collateral under the Security Agreement if,
after giving effect to such action, the then aggregate outstanding principal
amount of the Facility 1 Loans and Swing-Line Loans would be less than the
Collateral Value of the Facility 1 Borrowing Base.
(g) ERISA. Take, or permit any of its Subsidiaries to take, any of
the following actions:
(i) Terminate or withdraw from any Plan so as to result
in any material liability to the PBGC;
(ii) Engage in or permit any Person to engage in any
Prohibited Transaction involving any Plan that would subject such
Borrower or any of its Subsidiaries to any material tax, penalty or
other liability;
(iii) Incur or suffer to exist any material Accumulated
Funding Deficiency, whether or not waived, involving any Plan;
(iv) Allow or suffer to exist any event or condition that
presents a risk of incurring a material liability to the PBGC;
(v) Amend any Plan so as to require the posting of
security in a material amount under section 401(a)(29) of the Code; or
66
-61-
(vi) Fail to make payments required under section 412(m)
of the Code and section 302(e) of ERISA that would subject such
Borrower or any of its Subsidiaries to any material tax, penalty or
other liability.
(h) Transfer to Affiliates. Subject to the proviso in subsection
(e) above, sell, assign or otherwise transfer any of its assets to any Affiliate
of a Borrower without the prior written consent of the Required Lenders, or
permit any of its Subsidiaries to sell, assign or otherwise transfer any of
their respective assets, to any Affiliate of a Borrower without the prior
written consent of the Required Lenders other than (i) inter-company dividends
to Borrowers or Borrowers' Subsidiaries, and (ii) sales or other dispositions of
Mortgage Loans and Mortgage-Backed Securities, with or without servicing
released, in the ordinary course of business and at fair market value; provided
that (aa) any Subsidiary of a Borrower may, subject to subsection (e) above,
sell, assign or otherwise transfer any of their respective assets to such
Borrower, (bb) DMC may, subject to subsection (e) above, sell, assign or
otherwise transfer its assets to DFC, and (cc) DFC may make capital investments
in its Subsidiaries.
(i) Subsidiaries. Form or cause to be formed after the date hereof
any Subsidiaries of the Borrowers without notice thereof to the Agent prior to
or promptly after such formation.
(j) Margin Regulations. Use any or all of the proceeds of any Loan
(i) to purchase or carry Margin Stock or extend credit to others for the purpose
of purchasing or carrying Margin Stock or (ii) in any manner that will violate
or be inconsistent with the provisions of any regulation of the Board.
(k) Hedging Policy. Fail to comply in all material respects with
the Hedging Policy, change the Hedging Policy in any material way, or terminate
the Hedging Policy, in each case without prior notice to the Agent.
(l) Agency Approvals. Fail to maintain the Agency approvals
described in Section 4.12 as a result of a change in business plan of the
Borrower without the prior consent of the Agent and Lenders thereto, which
consent shall not be unreasonably withheld as long as no Material Adverse Effect
would result therefrom.
(m) Custody Account. Take any action that would cause the
custodial account maintained with the Collateral Agent into which Book-Entry
MBSs relating to Mortgage Loans included in the Facility 1 Tranche A Borrowing
Base shall be issued to cease to be in effect.
(n) Negative Pledges. Unless (i) the Facility 2 Commitments and
the Servicing Commitments have been terminated by the Borrowers, (ii) all
Facility 2 Loans and related Obligations and Servicing Loans and Servicing
Obligations have been repaid or paid, respectively, by the Borrowers, (iii) no
Potential Default or Event of Default has occurred and is continuing, and (iv)
the Borrowers and the Lenders have agreed upon the terms and conditions upon
which this Agreement and the Facility 1 Commitments shall remain in effect (as
contemplated in Section 2.7(b)), agree with any Person or Persons (other than
with the Lenders pursuant to this Agreement and the Servicing Lenders pursuant
to the Servicing Credit Agreement) not to create, incur, assume or suffer to
exist, or permit any Subsidiary to create, incur, assume or suffer to exist, any
Lien upon the Servicing Portfolio or any rights relating
67
-62-
thereto, including, without limitation, any rights to receive payments in
connection with the Servicing Portfolio (including, without limitation, any
reimbursement of principal and interest advances, taxes and insurance advances
and any other servicing advances).
(o) Recourse Obligations. In the case of DFC, without the prior
written consent of the Agent, acting at the direction of the Required Lenders,
enter into any transaction whereby (i) DFC sells Mortgage-Backed Securities or
Mortgage Loans and remains obligated to repurchase (whether conditionally or
unconditionally) such Mortgage-Backed Securities or Mortgage Loans or has
retained other recourse obligations with respect thereto, or (ii) DFC assumes or
otherwise incurs recourse obligations with respect to Mortgage-Backed Securities
or Mortgage Loans included in its Servicing Portfolio, if, in either case, in
the reasonable judgment of the management of DFC, the aggregate obligations of
DFC in connection with such transaction and all previous transactions of the
type described in clauses (i) and (ii) above for which DFC is then obligated
could, if DFC is required to perform such obligations, result in a decrease in
DFC's Book Net Worth by a Material Amount.
SECTION 5.3 ADDITIONAL NEGATIVE COVENANTS.
Each Borrower hereby covenants and agrees that, as long as any
Obligations remain unpaid or any Lender has any Commitment hereunder, such
Borrower shall not at any time, directly or indirectly:
(a) Total Liabilities. Permit DFC on a consolidated basis
(excluding any Subsidiaries that are not primarily engaged primarily in the
business of mortgage banking as reasonably determined by the Agent) to incur
Total Liabilities in excess of the sum of (i) one hundred percent (100%) of
"Cash" or "Cash equivalents"; (ii) ninety-five percent (95%) of the sum of
"Mortgage Loans held for sale", "Mortgage-backed securities held for trading"
(but excluding "interest only securities" included therein), and "Securities
available for sale"; (iii) ninety percent (90%) of "Accrued interest
receivable"; (iv) ninety percent (90%) of "Securities held to maturity" provided
that such securities are tax-exempt investments for the Borrowers, including
GNMA, FNMA and FHLMC mortgage-backed securities, collateralized mortgage
obligations that are backed by GNMA, FNMA or FHLMC mortgage-backed securities
and are rated AAA by Standard & Poor's Corporation and by Xxxxx'x Investors
Service, and securities issued by the United States Treasury or an agency of the
United States Government; (v) eighty percent (80%) of "prepaid and other assets"
(excluding investment in any Subsidiary of either Borrower) and mortgage-backed
securities that are not tax-exempt and rated AAA by Standard & Poor's
Corporation and by Xxxxx'x Investors Service (including collateralized mortgage
obligations); (vi) fifty percent (50%) of the sum of (A) "Property, leasehold
improvements and equipment" and (B) "Real estate held for sale"; (vii)
sixty-five percent (65%) of "interest only securities"; (viii) one percent
(1.0%) of the principal amount of Mortgage Loans owned by Persons not affiliated
with DFC or DMC or any of their Affiliates (unless covered by a Permitted
Affiliate Servicing Agreement) for which DFC or DMC owns the direct servicing
rights (excluding subservicing); and (ix) eighty percent (80%) of "loans
receivable". All quoted terms used in the preceding sentence shall have the same
meanings, and shall continue to be calculated and classified in the same manner,
as the terms used in the statement of financial condition of DFC and its
consolidated Subsidiaries referred to in Section 4.4(a).
68
-63-
(b) Adjusted Tangible Net Worth. Permit Adjusted Tangible Net
Worth at any time to be less than $180,000,000.
(c) Book Net Worth. Permit Book Net Worth at any time to be less
than $217,000,000.
(d) Minimum Servicing Portfolio. Permit DFC on a consolidated
basis (excluding any Subsidiaries that are not primarily engaged in the business
of mortgage banking as reasonably determined by the Agent) to maintain a
Servicing Portfolio with an aggregate outstanding principal balance of less than
$4,000,000,000 or such lesser amount as shall be agreed by the Lenders in their
sole discretion.
ARTICLE 6
EVENTS OF DEFAULT
SECTION 6.1 EVENTS OF DEFAULT.
If one or more of the following events (each an "EVENT OF
DEFAULT") shall have occurred and be continuing:
(a) Payments. (i) The Borrowers shall fail to pay when due
(whether at scheduled maturity, upon mandatory repayment or otherwise) any
principal of any Note; or (ii) the Borrowers shall fail to pay within three (3)
Business Days after the due date thereof any interest on any Note or any other
Obligation;
(b) Covenants Without Notice. The Borrowers shall fail to observe
or perform any covenant or agreement contained in Sections 5.1(b)(i), 5.1(f),
5.2 or 5.3; provided that any violation of Section 5.2(a) that is attributable
to the existence of an involuntary Lien on the Collateral or the Servicing
Collateral (other than an involuntary Lien expressly permitted by Section
5.2(a)) shall not constitute an Event of Default until thirty (30) days after
the imposition thereof if at all times during such thirty (30) day period the
Borrowers are making a diligent effort by appropriate means to remove such Lien
and the existence of such Lien will not have a Material Adverse Effect);
(c) Covenants With Seven Business Day Grace Period. The Borrowers
shall fail to observe or perform any covenant or agreement contained in Sections
5.1(a), 5.1(b)(ii) or 5.1(c)(ii), and such failure shall remain unremedied for
seven (7) Business Days after oral notice thereof to an Authorized Officer
(which shall be confirmed in writing (which may be by facsimile) before the end
of such seven (7) Business Day period);
(d) Covenants With Thirty Day Grace Period. The Borrowers shall
fail to observe or perform any covenant or agreement contained in any Loan
Document, other than those referred to in Sections 6.1(a), (b) or (c), and, if
capable of being remedied, such failure shall remain unremedied for thirty (30)
days after the earlier of (i) either Borrower's obtaining knowledge thereof or
(ii) notice thereof shall have been given to an Authorized Officer by any Lender
or the Agent before the end of such thirty (30) day period); provided that if
such failure is capable of
69
-64-
being remedied but only in a period of more than thirty (30) days, then such
failure shall not constitute an Event of Default until sixty (60) days after the
earlier of the above dates if each Borrower is making a diligent effort by
appropriate means to observe or perform such covenant and there is otherwise no
Material Adverse Effect as a result of such delay;
(e) Representations. Any representation, warranty or statement
made or deemed to be made by either Borrower or any of their respective officers
under or in connection with any Loan Document shall have been inaccurate,
incomplete or incorrect in any respect when made or deemed to be made and such
inaccuracy, incompleteness or incorrectness could have a Material Adverse
Effect;
(f) Non-Payment of Other Indebtedness. Either Borrower shall fail
to make any payment of principal of or interest on any of its Indebtedness
(other than the Obligations) exceeding the Material Amount in the aggregate when
due (whether at stated maturity, by acceleration, on demand or otherwise) after
giving effect to any applicable grace period;
(g) Defaults Under Other Agreements. Either Borrower shall fail to
observe or perform any covenant or agreement contained in any agreement or
instrument relating to any of its Indebtedness (other than the Obligations) in
excess of the Material Amount in the aggregate within any applicable grace
period, or any other event shall occur if the effect of such failure or other
event is to accelerate, or to permit the holder of such Indebtedness or any
other Person to accelerate, the maturity of such Indebtedness; or any such
Indebtedness shall be required to be prepaid (other than by a regularly
scheduled required prepayment) in whole or in part prior to its stated maturity;
(h) Bankruptcy. Either Borrower shall commence a voluntary case
concerning itself under Title 11 of the United States Code entitled "Bankruptcy"
as now or hereafter in effect, or any successor thereto (the "BANKRUPTCY CODE");
or any involuntary case is commenced against either Borrower and the petition is
not dismissed within sixty (60) days after commencement of the case; or a
custodian (as defined in the Bankruptcy Code) is appointed for, or takes charge
of, all or any substantial part of the property of either Borrower; or either
Borrower commences any other proceeding under any reorganization, arrangement,
adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or
similar law or there is commenced against either Borrower any such proceeding
that remains undismissed for a period of sixty (60) days; or either Borrower is
adjudicated insolvent or bankrupt; or any order of relief or other order
approving any such case or proceeding is entered; or either Borrower shall fail
to pay, or shall state that it is unable to pay, or shall be unable to pay, its
debts generally as they become due; or either Borrower shall call a meeting of
its creditors with a view to arranging a composition or adjustment of its debts;
or either Borrower shall by any act or failure to act indicate its consent to,
approval of or acquiescence in any of the foregoing; or any corporate action is
taken by either Borrower for the purpose of effecting any of the foregoing;
(i) Money Judgment. A judgment or order for the payment of money
in excess of the Material Amount shall be rendered against either Borrower and
such judgment or order shall continue unsatisfied (in the case of a money
judgment) and in effect for a period of thirty (30) days during which execution
shall not be effectively stayed or deferred (whether by action of a court, by
agreement or otherwise);
70
-65-
(j) ERISA. (i) Any Reportable Event or a Prohibited Transaction
shall occur with respect to any Plan; (ii) a notice of intent to terminate a
Plan under section 4041 of ERISA shall be filed; (iii) a notice shall be
received by the plan administrator of a Plan that the PBGC has instituted
proceedings to terminate a Plan or appoint a trustee to administer a Plan; (iv)
any other event or condition shall exist that might, in the opinion of the
Required Lenders, constitute grounds under section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Plan; (v) the
Borrowers or any ERISA Affiliate shall withdraw from a Multiemployer Plan under
circumstances that the Required Lenders determine could have a material adverse
effect on the financial condition of either Borrower; and in case of the
occurrence of any event or condition described in clauses (i) through (v) above,
such event or condition together with all other such events or conditions, if
any, could subject either Borrower to any tax, penalty or other liabilities in
the aggregate material in relation to the business, operations, property or
financial or other condition of either Borrower;
(k) Loan Documents. Any of the Loan Documents shall cease for any
reason to be in full force and effect, a breach by the Borrowers under any of
the Acknowledgement Agreements shall occur, or any action shall be taken by any
Person to terminate, revoke or discontinue, or to assert the invalidity or
unenforceability of, any of the Loan Documents;
(l) Security Interests. The Lenders shall cease for any reason,
other than in accordance with the terms of the Security Agreement or the
Servicing Security Agreement, to have valid and perfected security interests in
the Collateral or the Servicing Collateral, respectively (with the priority as
set forth in Section 4.11), or any Person shall take any action to discontinue
or to assert the invalidity or unenforceability of such security interests; or
(m) Servicing Event of Default. A Servicing Event of Default shall
occur;
THEN, the Agent shall notify the Lenders of such Event of Default and may, and
upon the written request of the Required Lenders, shall, by written notice to
the Borrowers, take any or all of the following actions: (A) declare the
Commitments terminated, whereupon the Commitments of each Lender shall terminate
immediately without any other notice of any kind; and (B) declare the principal
of and any accrued interest on the Loans, and all other Obligations to be,
whereupon the same shall become, forthwith due and payable without presentment,
demand, protest or other notice of any kind, all of which are hereby waived by
the Borrowers; provided that, if an Event of Default specified in Section 6.1(h)
shall occur, the Commitments shall terminate and all Obligations shall become
immediately due and payable automatically without the giving of any such notice
and without presentment, demand, protest or other notice of any kind, all of
which are hereby waived by the Borrowers.
ARTICLE 7
THE AGENT
SECTION 7.1 APPOINTMENT OF AGENT.
Each Lender hereby designates Bankers Trust Company as Agent
to act as herein specified. Each Lender hereby irrevocably authorizes, and each
holder of any Note by the acceptance of a Note shall be deemed irrevocably to
authorize, the Agent to take such action on
71
-66-
its behalf under the provisions of this Agreement and the other Loan Documents
and any other instruments and agreements referred to herein or therein and to
exercise such powers and to perform such duties hereunder or thereunder as are
specifically delegated to or required of the Agent by the terms hereof and
thereof and such other powers as are reasonably incidental thereto. The Agent
may perform any of its duties hereunder or thereunder by or through its agents
or employees.
SECTION 7.2 NATURE OF DUTIES OF AGENT.
The Agent shall have no duties or responsibilities except
those expressly set forth in this Agreement and the other Loan Documents.
Neither the Agent nor any of its officers, directors, employees or agents shall
be liable for any action taken or omitted hereunder or thereunder or in
connection herewith or therewith, unless caused by its or their gross negligence
or wilful misconduct as evidenced by a final judgment of a court of competent
jurisdiction. The duties of the Agent shall be mechanical and administrative in
nature; the Agent shall not have by reason of this Agreement or any other Loan
Document a fiduciary relationship in respect of any Lender; and nothing in this
Agreement or any other Loan Document, express or implied, is intended to or
shall be so construed as to impose upon the Agent any obligations in respect of
this Agreement or any other Loan Document except as expressly set forth herein
or therein.
SECTION 7.3 LACK OF RELIANCE ON AGENT.
(a) Independently and without reliance upon the Agent, each
Lender, to the extent it deems appropriate, has made and shall continue to make
(i) its own independent investigation of the financial condition and affairs of
each Borrower and its Affiliates in connection with the taking or not taking of
any action in connection herewith and (ii) its own appraisal of the
creditworthiness of each Borrower and its Affiliates, and, except as expressly
provided in this Agreement, the Agent shall have no duty or responsibility,
either initially or on a continuing basis, to provide any Lender with any credit
or other information with respect thereto, whether coming into its possession
before the making of the Loans or at any time or times thereafter.
(b) The Agent shall not be responsible to any Lender for any
recitals, statements, information, representations or warranties herein or in
any document, certificate or other writing delivered in connection with this
Agreement or any other Loan Document or for the execution, effectiveness,
genuineness, validity, enforceability, collectibility, priority or sufficiency
of this Agreement or any other Loan Document or for the sufficiency of the
Collateral or the Servicing Collateral or the validity, perfection or priority
of any security interest in the Collateral or the Servicing Collateral or the
financial condition of each Borrower or its Affiliates or be required to make
any inquiry concerning either the performance or observance of any of the terms,
provisions or conditions of this Agreement or any other Loan Document, or the
financial condition of each Borrower or its Affiliates, or the existence or
possible existence of any Potential Default or Event of Default.
SECTION 7.4 CERTAIN RIGHTS OF AGENT.
If the Agent shall request instructions from the Required
Lenders, the Required Facility 1 Lenders or the Required Facility 2 Lenders with
respect to any act or action (including
72
-67-
the failure to act) in connection with this Agreement or any other Loan
Document, the Agent shall be entitled to refrain from such act or taking such
action unless and until the Agent shall have received instructions from the
Required Lenders, the Required Facility 1 Lenders or the Required Facility 2
Lenders, as the case may be; and the Agent shall not incur liability to any
Lender by reason of so refraining. Without limiting the foregoing, no Lender
shall have any right of action whatsoever against the Agent as a result of the
Agent acting or refraining from acting hereunder or under any other Loan
Document in accordance with the instructions of the Required Lenders, the
Required Facility 1 Lenders or the Required Facility 2 Lenders, as the context
may require. The provisions of this Section 7.4 are not intended to supersede
the provisions of Section 8.2 that require all of the Lenders to approve certain
actions under the Loan Documents.
SECTION 7.5 RELIANCE BY AGENT.
The Agent shall be entitled to rely, and shall be fully
protected in relying, upon any notice, believed by it to be genuine and correct
and to have been signed, sent or made by the proper Person. The Agent may
consult with legal counsel (including with the consent of DFC, which consent
shall not be unreasonably withheld, counsel for DFC or DMC), independent public
accountants (including those retained by DFC or DMC if a representative of DFC
or DMC, as applicable, shall have been given the right upon reasonable notice to
be present by phone or in person during such consultation) and other experts
selected by it and shall not be liable for any action taken or omitted to be
taken by it in good faith in accordance with the advice of such counsel,
accountants or experts.
SECTION 7.6 INDEMNIFICATION OF AGENT.
To the extent the Agent is not reimbursed and indemnified by
DFC or DMC, each Lender will reimburse and indemnify the Agent, in proportion to
its respective Commitments (before giving effect to any termination of the
Commitments pursuant to the terms of this Agreement) from and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses (including reasonable attorneys' fees and disbursements)
or disbursements of any kind or nature whatsoever which may be imposed on,
incurred by or asserted against the Agent in performing its duties hereunder and
under the other Loan Documents, in any way relating to or arising out of this
Agreement or the other Loan Documents; provided that no Lender shall be liable
for any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting from the
Agent's gross negligence or wilful misconduct as evidenced by a final judgment
of a court of competent jurisdiction.
SECTION 7.7 AGENT IN ITS INDIVIDUAL CAPACITY.
With respect to its obligation to lend under this Agreement,
the Loans made by it and the Notes issued to it, the Agent shall have the same
rights and powers hereunder as any other Lender or holder of a Note and may
exercise the same as though it were not performing the duties specified herein;
and the terms "Lenders," "Required Lenders," "Required Facility 1 Lenders,"
"Required Facility 2 Lenders", "holders of Notes" or any similar terms shall,
unless the context clearly otherwise indicates, include the Agent in its
individual capacity. The Agent may
73
-68-
accept deposits from, lend money to, and generally engage in any kind of
banking, trust, financial advisory or other business with each Borrower or any
Affiliate of the Borrowers as if it were not performing the duties specified
herein, and may accept fees and other consideration from the Borrowers and any
Affiliates of the Borrowers for services in connection with this Agreement and
the other Loan Documents and otherwise without having to account for the same to
the Lenders.
SECTION 7.8 HOLDERS OF NOTES.
The Agent may deem and treat the payee of any Note as the
owner thereof for all purposes hereof unless and until a written notice of the
assignment or transfer thereof shall have been filed with the Agent. Any
request, authority or consent of any Person who, at the time of making such
request or giving such authority or consent, is the holder of any Note shall be
conclusive and binding on any subsequent holder, transferee or assignee of such
Note or of any Note or notes issued in exchange therefor.
SECTION 7.9 SUCCESSOR AGENT.
(a) The Agent may resign as Agent hereunder at any time by giving
written notice thereof to the Lenders and the Borrowers if (i) it believes that
its duties hereunder present an actual or potential conflict of interest with
any other business of the Agent or (ii) it determines at any time that the
introduction of, or any change in, any applicable law, rule, regulation, order
or decree or in the interpretation or administration thereof by any Governmental
Authority charged with the interpretation or administration thereof, or
compliance by the Agent with any request or directive (whether or not having the
force of law) of any such Authority, shall make it unlawful or improper for the
Agent to continue as Agent hereunder. Upon any such resignation or any removal
of the Agent pursuant to Section 7.9(b), the Required Lenders shall have the
right, upon five (5) days' notice to the Borrowers, to appoint a successor
Agent, which shall be a Lender. If no successor Agent shall have been so
appointed by the Required Lenders, and shall have accepted such appointment,
within thirty (30) days after the retiring Agent's giving of notice of
resignation, then, upon five (5) days' notice to the Borrowers, the retiring
Agent may, on behalf of the Lenders, appoint a successor Agent, which shall be a
bank which maintains an office in the United States, or a commercial bank
organized under the laws of the United States of America or of any State
thereof, or any Affiliate of such bank, having a combined capital and surplus of
at least $250,000,000.
(b) The Agent may be removed by the unanimous vote of all the
Lenders hereunder (not including the vote of the Agent if the Agent is also a
Lender hereunder) if (i) the Agent has engaged in wilful misconduct with respect
to its obligations and duties hereunder as evidenced by a final judgment of a
court of competent jurisdiction and (ii) has failed to cure such wilful
misconduct after sixty (60) days notice by the Lenders to the Agent of such
wilful misconduct.
(c) Any resignation or removal of the Agent hereunder shall be
effective only upon the acceptance of any appointment as Agent hereunder by a
successor Agent. Upon such acceptance, such successor Agent shall succeed to and
become vested with all the rights, powers, privileges and duties of the retiring
Agent, and the retiring Agent shall be discharged from its duties and
obligations under this Agreement and the other Loan Documents. After any
retiring
74
-69-
Agent's resignation hereunder as Agent, the provisions of this Article VII shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was Agent under this Agreement.
ARTICLE 8
MISCELLANEOUS PROVISIONS
SECTION 8.1 NOTICES.
(a) Except as otherwise expressly set forth herein, all notices,
requests and other communications to any party hereunder shall be in writing
(including telecopy or similar teletransmission or writing) and shall be given
to such party at its address or telecopy number set forth on Exhibit I hereto or
such other address or telecopy number as such party may hereafter specify by
notice to the Agent and the Borrowers. Each such notice, request or other
communication shall be effective (a) if given by telecopy, when such telecopy is
transmitted to the telecopy number specified herein and the receipt thereof is
confirmed by the recipient or (b) if sent by overnight courier (with all charges
paid) providing for confirmation of delivery, then upon confirmation of delivery
by such courier; provided that notices to the Agent pursuant to Article II shall
not be effective until received.
(b) Any notice required to be given to one or more Borrowers
hereunder or under any other Loan Document shall be effective if delivered to
DFC, it being the intent that notice to DFC is effective notice to both
Borrowers. In connection therewith, DMC hereby irrevocably appoints DFC as its
agent to receive any and all notices hereunder and under any other Loan Document
and such appointment is coupled with an interest. In addition to the foregoing,
the Agent and the Lenders shall be entitled, but shall not be required, to rely
on notice from either Borrower as constituting notice from both Borrowers.
SECTION 8.2 AMENDMENTS, ETC.
No amendment or waiver of any provision of any Loan Document,
nor consent to any departure by the Borrowers therefrom, shall in any event be
effective unless the same shall be in writing and signed by the Borrowers and
the Required Lenders, and then such amendment, waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given; provided that (a) notwithstanding anything else contained herein, no
amendment, waiver or consent shall, unless in writing and signed by all the
Lenders, do any of the following: (i) waive or change Section 5.2(e) or any of
the conditions specified in Article III, (ii) except as provided in Sections
8.6(g) and 8.6(h), increase the aggregate Commitments of the Lenders or subject
the Lenders to any additional obligations, (iii) reduce the principal of, or
interest on, the Notes or reduce any fees payable to the Lenders hereunder, (iv)
postpone any date fixed for any payment in respect of principal of, or interest
on, the Notes, or the payment of any fees payable hereunder, or waive any Event
of Default under Section 6.1(a), (v) change the percentage of the Commitments,
the definitions of "Required Lenders," "Collateral Value of the Facility 1
Tranche A Borrowing Base," "Collateral Value of the Facility 1 Tranche B
Borrowing Base," "Collateral Value of the Facility 2 Tranche A Borrowing Base,"
"Collateral Value of the Facility 2 Tranche B Borrowing Base," "Collateral Value
of the Pledged Servicing Portfolio", "Eligible Conforming Mortgage Loan,"
"Eligible Gestation Mortgage Loan," "Eligible Mortgage-Backed Security,"
75
-70-
"Eligible Mortgage Loan," "Eligible Non-Conforming Mortgage Loan," "Eligible REO
Property" or "Eligible Servicing Receivable" (or any definitions contained in
such definitions), or the number or identity of Lenders that is required for any
or all of the Lenders to take any action hereunder, (vi) release the Lien of the
Lenders on any of the Collateral or the Servicing Collateral, except as provided
in the Security Agreement or the Servicing Security Agreement, respectively, or
(vii) amend this Section 8.2 or Section 8.6; (b) no amendment, waiver or consent
shall, unless in writing and signed by the Agent, affect the rights or duties of
the Agent under this Agreement or any other Loan Document; and (c) no amendment,
waiver or consent shall, unless in writing and signed by Bankers Trust, amend,
waive or modify Section 2.1(e) or Section 2.4(c), (d) or (e) or otherwise affect
the rights or obligations of Bankers Trust with respect to Swing-Line Loans.
SECTION 8.3 NO WAIVER; REMEDIES CUMULATIVE.
No failure or delay on the part of the Agent or any Lender in
exercising any right or remedy hereunder or under any other Loan Document and no
course of dealing between the Borrowers, on the one hand, and the Agent or any
Lender, on the other hand, shall operate as a waiver thereof, nor shall any
single or partial exercise of any right or remedy hereunder or under any other
Loan Document preclude any other or further exercise thereof or the exercise of
any other right or remedy hereunder or thereunder. The rights and remedies
expressly provided herein and in the other Loan Documents are cumulative and not
exclusive of any rights or remedies that the Agent or any Lender would otherwise
have. No notice to or demand on the Borrowers not required hereunder or under
the other Loan Documents in any case shall entitle the Borrowers to any other or
further notice or demand in similar or other circumstances or constitute a
waiver of the rights of the Agent or any Lender to any other or further action
in any circumstances without notice or demand.
SECTION 8.4 PAYMENT OF EXPENSES, ETC.
The Borrowers shall:
(a) pay all reasonable out-of-pocket costs and expenses of the
outside legal counsel of the Agent in connection with the preparation, execution
and delivery of, this Agreement and the other Loan Documents, and any amendment,
modification or supplement hereof or thereof, including the documentation
required pursuant to Section 3.1(c) and the closings contemplated thereunder,
and (ii) pay all reasonable out-of-pocket costs and expenses of the Agent and
each Lender in the preservation of rights under, enforcement of, and, after the
occurrence of a Potential Default or an Event of Default, any refinancing, the
renegotiating or the restructuring of, this Agreement and the other Loan
Documents and the documents and instruments referred to herein and therein
including in connection with any bankruptcy, insolvency, liquidation,
reorganization or similar proceeding and any amendment, waiver or consent
relating hereto and thereto (including the reasonable fees and disbursements of
counsel (including allocated costs of internal counsel) for the Agent and, in
the case of enforcement, for each of the Lenders);
(b) pay and hold the Agent and each of the Lenders harmless from
and against any and all present and future stamp and other similar taxes with
respect to the foregoing matters and
76
-71-
save the Agent and each Lender harmless from and against any and all liabilities
with respect to or resulting from any delay or omission to pay such taxes; and
(c) indemnify the Agent and each Lender, and their respective
officers, directors, employees, representatives and agents from, and hold each
of them harmless against, any and all out-of-pocket costs, losses, liabilities,
claims, damages or expenses actually incurred by any of them (whether or not any
of them is designated a party thereto) arising out of or by reason of any
investigation, litigation or other proceeding related to any actual or proposed
use by the Borrowers of the proceeds of any of the Loans or the Borrowers'
entering into and performing of the Loan Documents to which they are a party,
including the reasonable fees and disbursements of counsel (including allocated
costs of internal counsel) incurred in connection with any such investigation,
litigation or other proceeding; provided that neither the Agent nor any Lender
shall have the right to be indemnified hereunder for its own gross negligence or
wilful misconduct as evidenced by a final judgment of a court of competent
jurisdiction. If and to the extent that the obligations of the Borrowers under
this Section 8.4 are unenforceable for any reason, the Borrowers hereby agrees
to make the maximum contribution to the payment and satisfaction of such
obligations that is permissible under applicable law.
SECTION 8.5 RIGHT OF SETOFF.
Subject to Section 2.16, in addition to and not in limitation
of all rights of offset that any Lender may have under applicable law, for so
long as any Event of Default has occurred and is continuing and whether or not
any Lender has made any demand or the Obligations have matured, such Lender
shall have the right to appropriate and apply to the payment of the Obligations
all deposits (general or special, time or demand, provisional or final) then or
thereafter held by, and other indebtedness or property then or thereafter owing
to the Borrowers by, such Lender, whether or not related to any Loan Document or
any transaction hereunder.
SECTION 8.6 BENEFIT OF AGREEMENT.
(a) This Agreement shall be binding upon and inure to the benefit
of and be enforceable by the respective successors and assigns of the parties
hereto; provided that neither of the Borrowers may assign or transfer any of its
interest or delegate any of its obligations under the Loan Documents without the
prior written consent of the Lenders and any such assignment or transfer without
the prior written consent of the Lenders shall be null and void.
(b) Subject to the provisions of Section 2.13(c), any Lender may
make, carry or transfer Loans at, to or for the account of, any of its branch
offices or the office of an Affiliate of such Lender.
(c) Subject to the limitations set forth below, no Lender may
assign its rights or delegate its obligations under this Agreement and the other
Loan Documents and the Intercreditor Agreement to any other financial
institution without the prior consent of the Agent and, unless an Event of
Default has occurred and is continuing, the Borrowers (such consent not to be
unreasonably withheld); provided that (i) no Lender may make an assignment
hereunder to a Person (other than an Affiliate of such Lender or an existing
Lender) that is not a financial institution, (ii) each assignment of all or a
portion of a Lender's Commitments shall include a
77
-72-
corresponding portion of such Lender's Loans, (iii) no Lender may assign less
than $10,000,000 of its Commitments in any single assignment, and (iv) an
assignment fee in the amount of $3,500 for each assignment hereunder shall be
payable to the Agent by the applicable assignee. Any assignment or delegation
specifically prohibited by the preceding sentence shall be null and void.
Notwithstanding the foregoing, any Lender may assign its rights and delegate its
obligations under this Agreement and the other Loan Documents and the
Intercreditor Agreement to any Affiliate of such Lender without notice to or
consent by the Borrowers, the Agent, or any other Person, provided the fee set
forth in the proviso to the immediately preceding sentence shall be paid. Each
assignment by a Lender hereunder shall be made pursuant to an Assignment and
Acceptance in substantially the form of Exhibit R hereto. In the case of an
assignment by a Lender, upon the effective date of such assignment as set forth
in the Assignment and Acceptance executed by such Lender, the assignee shall
have, to the extent of such assignment (unless otherwise provided thereby), the
same rights and benefits as it would have if it were a Lender under the Loan
Documents and the Intercreditor Agreement and the holder of a Note and, if the
assignee has expressly assumed, for the benefit of the Borrowers, the assignor
Lender's obligations hereunder and under the other Loan Documents and the
Intercreditor Agreement, such assignor Lender shall be relieved of its
obligations hereunder to the extent of such assignment and assumption.
(d) Each Lender may transfer, grant or assign participations in
all or any part of such Lender's interests and obligations hereunder pursuant to
this Section to another financial institution, provided that (i) such Lender
shall remain a "Lender" for all purposes of this Agreement and the transferee of
such participation shall not constitute a Lender hereunder and (ii) no
participant under any such participation shall have rights to approve any
amendment to or waiver of this Agreement or any other Loan Document except to
the extent such amendment or waiver would (x) extend the final scheduled
maturity of any of the Loans or the Commitment in which such participant is
participating, (y) reduce the interest rate (other than as a result of waiving
the applicability of any post-default increases in interest rates) or Fees
applicable to any of the Loans or Commitments or postpone the payment of any
thereof or (z) release any Collateral or Servicing Collateral except as provided
in the Security Agreement or the Servicing Security Agreement, respectively. In
the case of any such participation, the participant shall not have any rights
under this Agreement or any of the other Loan Documents (the participant's
rights against the granting Lender in respect of such participation to be those
set forth in the agreement with such Lender creating such participation) and all
amounts payable by the Borrowers hereunder shall be determined as if such Lender
had not sold such participation, provided that such participant shall be
entitled to receive additional amounts under Sections 2.13, 2.14 and 2.15 on the
same basis as if it were a Lender.
(e) Any Lender may furnish any information concerning the
Borrowers and its Affiliates in the possession of such Lender from time to time
to Affiliates, participants and assignees, and prospective participants and
assignees, of such Lender. No Lender or its Affiliates may furnish such
information to any prospective assignee or participant without the prior written
consent of DFC, which consent will not be unreasonably withheld. Any prospective
assignee or participant shall be required to execute a confidentiality agreement
in the form of Exhibit L before receiving any such information.
78
-73-
(f) Any Lender may at any time pledge all or any portion of its
rights under the Loan Documents to a Federal Reserve Bank without notice to or
consent of either Borrower, the Agent or any other Lender. No such pledge shall
release the transferor Lender from its obligations hereunder.
(g) So long as no Potential Default or Event of Default has
occurred and is continuing, the Borrowers may at any time propose that one or
more commercial banks (each, an "APPLICANT LENDER") become an additional Lender
hereunder. At such time, the Borrowers shall notify each of the Lenders of (i)
the identity of such Applicant Lender, (ii) the proposed increase in the
aggregate Commitments resulting from the addition of such Applicant Lender as a
Lender hereunder, and (iii) such Applicant Lender's proposed Commitments (which
must be not less than $15,000,000 in the case of a Facility 1 Commitment and not
less than $1,000,000 in the case of a Facility 2 Commitment). Upon the Applicant
Lender's addition as a Lender hereunder, such Applicant Lender shall become a
party to this Agreement and the Intercreditor Agreement and a Lender hereunder
and under the other Loan Documents and the Intercreditor Agreement, shall be
entitled to all rights, benefits and privileges accorded a Lender under this
Agreement and under the other Loan Documents and the Intercreditor Agreement,
and shall be subject to all obligations of a Lender under this Agreement and
under the other Loan Documents and the Intercreditor Agreement.
(h) The addition of any Applicant Lender as a Lender hereunder
shall become effective upon the occurrence of each of the following events:
(i) the Agent shall have given its prior written consent
to such Applicant Lender, which consent shall not be unreasonably
withheld, delayed or conditioned;
(ii) such Applicant Lender, the Borrowers and the Agent
shall have mutually agreed on the date (the "ADJUSTMENT DATE") on which
such Applicant Lender shall become a Lender hereunder and under the
other Loan Documents and the Intercreditor Agreement; and
(iii) on such Adjustment Date:
(A) such Applicant Lender, the Borrowers and the
Agent shall execute and deliver to each of the other
signatories thereto an Additional Lender Agreement in
substantially the form of Exhibit Q hereto, the Agent shall
deliver a copy of such executed Additional Lender Agreement
and a copy of the Commitment Notice attached as Schedule I
thereto to each of the Lenders, and the Commitments of each of
the Lenders shall be modified as set forth in such Commitment
Notice;
(B) the Borrowers shall execute and deliver to
such Applicant Lender (x) a duly executed Facility 1 Note
and/or a duly executed Facility 2 Note, as the case may be,
(y) a reliance letter from counsel to the Borrowers addressed
to such Applicant Lender and in form and substance
satisfactory to such Applicant Lender, providing that such
Applicant Lender may rely on any opinion letters of
79
-74-
such counsel addressed to the existing Lenders, as if such
opinion letters were addressed directly to such Applicant
Lender, and (z) certified copies of the resolutions of the
Board of Directors of each of the Borrowers evidencing the
authorization of such Borrower to enter into such Additional
Lender Agreement and consummate the transactions and matters
contemplated thereby; and
(C) no Potential Default or Event of Default
shall have occurred and be continuing as of such date.
SECTION 8.7 GOVERNING LAW; SUBMISSION TO JURISDICTION.
(a) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER AND UNDER THE NOTES SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED
BY THE LAWS OF THE STATE OF NEW YORK.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT
OR THE OTHER LOAN DOCUMENTS TO WHICH EITHER BORROWER IS A PARTY MAY BE BROUGHT
IN XXX XXXXXX XX XXX XXXXX XX XXX XXXX LOCATED IN NEW YORK COUNTY OR OF THE
UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND, BY
EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE BORROWERS HEREBY ACCEPTS
FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE
JURISDICTION OF THE AFORESAID COURTS. THE PARTIES HERETO HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVE TRIAL BY JURY, AND, TO THE MAXIMUM EXTENT PERMITTED BY
APPLICABLE LAW, EACH OF THE BORROWERS HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON
THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
BRINGING OR MAINTAINING OF ANY SUCH ACTION OR PROCEEDING IN SUCH RESPECTIVE
JURISDICTIONS.
(c) EACH OF THE BORROWERS IRREVOCABLY AND UNCONDITIONALLY CONSENTS
TO THE SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION
OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL,
POSTAGE PREPAID, TO EACH SUCH BORROWER AT ITS SAID ADDRESS, SUCH SERVICE TO
BECOME EFFECTIVE THIRTY (30) DAYS AFTER SUCH MAILING. IN ADDITION, EACH BORROWER
HEREBY IRREVOCABLY APPOINTS CT CORPORATION, 0000 XXXXXXXX, XXX XXXX, XXX XXXX
00000 (THE "PROCESS AGENT") TO RECEIVE, FOR IT AND ON ITS BEHALF, SERVICE OF
PROCESS IN ANY PROCEEDINGS OR ACTIONS IN NEW YORK. IF FOR ANY REASON THE PROCESS
AGENT IS UNABLE TO ACT AS SUCH, EACH BORROWER WILL PROMPTLY NOTIFY THE AGENT AND
WITHIN THIRTY (30) DAYS APPOINT A SUBSTITUTE PROCESS AGENT ACCEPTABLE TO THE
AGENT.
80
-75-
(d) NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE AGENT OR ANY
LENDER TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE
LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST EITHER BORROWER IN ANY OTHER
JURISDICTION.
(e) EACH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE
MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER
IN ANY LEGAL ACTION OR PROCEEDING REFERRED TO IN THIS SECTION 8.7, ANY SPECIAL,
EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES. THIS WAIVER IS MADE KNOWINGLY AND
VOLUNTARILY.
SECTION 8.8 COUNTERPARTS.
This Agreement may be executed in any number of counterparts
and by the different parties hereto on separate counterparts, each of which when
so executed and delivered shall be an original, but all of which shall together
constitute one and the same instrument.
SECTION 8.9 HEADINGS DESCRIPTIVE.
The headings of the several sections and subsections of this
Agreement, and the Table of Contents, are inserted for convenience only and
shall not in any way affect the meaning or construction of any provision of this
Agreement.
SECTION 8.10 SURVIVAL OF REPRESENTATIONS AND INDEMNITIES.
All covenants, agreements, representations and warranties made
herein and in any certificate delivered pursuant hereto shall survive the making
by the Lenders of the Loans and the execution and delivery to the Agent for the
account of the Lenders of the Notes regardless of any investigation made by the
Agent or the Lenders and of the Agent's and any Lender's access to any
information and shall continue in full force and effect so long as any
Obligation is outstanding and unpaid. The Borrowers' obligations under Sections
2.13, 2.14, 2.15 and 8.4 and under any other indemnification provisions of the
Loan Documents and each Lender's obligations under Sections 7.6 and 8.12 and
under any other indemnification provisions of the Loan Documents shall survive
the termination of this Agreement for any reason whatsoever and payment of the
Notes.
SECTION 8.11 SEVERABILITY.
In case any one or more of the provisions contained in this
Agreement or the Notes should be invalid, illegal or unenforceable in any
respect in any jurisdiction, the validity, legality and enforceability of such
provisions shall not be affected or impaired in any other jurisdiction, nor
shall the remaining provisions contained herein and therein in any way be
affected or impaired thereby.
81
-76-
SECTION 8.12 INDEMNIFICATION OF COLLATERAL AGENT.
To the extent that the Collateral Agent is not reimbursed and
indemnified by the Borrowers pursuant to the applicable Security Agreement, each
Lender will reimburse and indemnify the Collateral Agent, in proportion to the
unpaid principal amount of its outstanding Loans, or if no Loans are then
outstanding, in proportion to its Commitments, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses (including reasonable attorneys' fees and disbursements) or
disbursements of any kind or nature whatsoever that may be imposed on, incurred
by or asserted against the Collateral Agent in performing its duties under the
Loan Documents, in any way relating to or arising out of the Loan Documents;
provided that no Lender shall be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from the Collateral Agent's gross negligence
or wilful misconduct as evidenced by a final judgment of a court of competent
jurisdiction. The Collateral Agent shall be entitled to rely on the provisions
of this Section 8.12 as if it were a party to this Agreement.
SECTION 8.13 JOINT AND SEVERAL NATURE OF THE OBLIGATIONS.
The Borrowers agree that any and all of the Obligations of the
Borrowers hereunder and under each other Loan Document shall be the joint and
several obligation of each of them notwithstanding any absence herein or therein
of a reference such as "jointly and severally" with respect to any such
obligation.
SECTION 8.14 CERTAIN WAIVERS.
Each of the Borrowers agrees that its joint and several
liability under this Agreement and each of the other Loan Documents shall be
absolute, unconditional and irrevocable irrespective of:
(a) any lack of validity, legality or enforceability of the
Obligations of the other Borrower or any other Person under this Agreement or
any other Loan Document;
(b) the failure of any Lender:
(i) to assert any claim or demand or to enforce any right
or remedy against the other Borrower or any other Person (including any
guarantor) under the provisions of this Agreement or any other Loan
Document or otherwise, or
(ii) to exercise any right or remedy against any guarantor
of, or Collateral or Servicing Collateral securing, any Obligations;
(c) any change in the time, manner or place or payment of, or in
any other term of, all or any of the Obligations, or any other extension,
compromise or renewal of any Obligation with respect to the other Borrower or
any other Person;
(d) any reduction, limitation, impairment or termination of any of
the Obligations of the other Borrower or any other Person for any reason,
including any claim of waiver, release, surrender, alteration or compromise, and
the liability of each of the Borrowers shall not be subject to (and each of them
hereby waives any right to or claim of) any defense or setoff, counterclaim,
recoupment or termination whatsoever by reason of the invalidity, illegality,
non-
82
-77-
genuineness, irregularity, compromise, unenforceability of, or any other event
or occurrence affecting, any of the Obligations of the other Borrower or any
other Person;
(e) any rescission, waiver, amendment or other modification of, or
any consent to departure from, any of the Obligations of the other Borrower or
any other Person under the terms of this Agreement or any other Loan Document;
(f) any exchange, release or non-perfection of any Collateral or
Servicing Collateral, or any release, amendment or waiver of, or consent to
departure from, any guaranty or other agreement from the other Borrower or any
other Person, securing any of the Obligations; or
(g) any other circumstances which might otherwise constitute a
defense available to, or a legal or equitable discharge of, the other Borrower
or any surety or any guarantor. Each of the Borrowers waives any right to
require that any resort be made by any Lender to any of the Collateral or the
Servicing Collateral.
SECTION 8.15 SUBROGATION, ETC.
At any time that a payment is made by either Borrower with
respect to the Obligations, such Borrower shall have a right of contribution
against the other Borrower in the maximum amount permitted by applicable law,
which right of contribution shall be subject to adjustment at the time of any
subsequent payment with respect to the Obligations; provided, that the maximum
aggregate liability of either Borrower with respect to such contribution rights
of the other Borrower shall not exceed the maximum amount of liability that such
first Borrower can incur without rendering such contribution rights void or
voidable under applicable law relating to fraudulent conveyance or fraudulent
transfers, and not for any greater amount, and provided further, that neither
Borrower will exercise any such contribution rights or any other rights which it
may acquire by reason of any payment made hereunder, whether by way of rights of
subrogation, reimbursement or otherwise, until the prior payment, in full and in
cash, of all Obligations and the termination of all Commitments. Any amount paid
to either Borrower on account of any payment made hereunder prior to the payment
in full of all Obligations other than intercompany payments or reimbursements
made in the ordinary course of the businesses of each Borrower shall be held in
trust for the benefit of the Agent and the Lenders and shall immediately be paid
to the Agent and credited and applied against the Obligations, whether matured
or unmatured, in accordance with the terms of this Agreement and the other Loan
Documents. In furtherance of the foregoing, for so long as any Obligation or any
Commitment remains outstanding, each Borrower shall refrain from taking any
action or commencing any proceeding against the other Borrower (or its
successors or assigns, whether in connection with a bankruptcy proceeding or
otherwise) to recover any amounts in respect of payments made under this
Agreement to the Agent and the Lenders.
SECTION 8.16 CONFIDENTIALITY.
Each Lender agrees not to disclose, without the prior written
consent of the Borrowers, any of the financial information or other information
of the Borrowers or any Affiliate of either of the Borrowers, designated in
writing by either Borrower as "confidential" and obtained under or in connection
with this Agreement or any of the other Loan Documents.
83
-78-
Notwithstanding the foregoing, each Lender may disclose such information: (a) as
is permitted under Section 8.6; (b) as is required by law or by subpoena or
similar court order, or by any governmental, regulatory or supervisory authority
or official or as otherwise required to be provided by the Lender in the
ordinary course of its business; (c) to counsel to such Lender in connection
with the transactions contemplated by this Agreement and the other Loan
Documents; (d) to independent auditors and other advisers retained by such
Lender; and (e) to the Agent or the Collateral Agent as contemplated by this
Agreement and the other Loan Documents. In addition, unless specifically
prohibited by applicable law or court order, each Lender shall, to the extent
practical, notify the Borrowers of any subpoena or similar court order or of any
request by any governmental, regulatory or supervising authority or official
(other than any such request in connection with an examination of the financial
condition of such Lender by such authority) for disclosure of any such
information prior to disclosure of such information so that the Borrowers may
seek an appropriate protective order. Notwithstanding the foregoing, the Lenders
shall have no obligation to keep any such information confidential if such
information (i) becomes generally available to the public other than as a result
of the disclosure by any Lender in violation of this Section 8.16, (ii) is
available to any Lender on a non-confidential basis prior to its disclosure to
such Lender by the Borrower or, if applicable, by the Lender from whom such
Lender has purchased its participation or assignment, or (iii) becomes available
to any Lender on a non-confidential basis from a source other than the Borrower
or, if applicable, the Lender from whom such Lender has purchased its
participation or assignment; and any Lender may disclose any such information in
connection with any litigation to which such Lender is party relating to this
Agreement or any of the other Loan Documents.
SECTION 8.17 EFFECTIVENESS.
(a) This Agreement shall become effective as of the date (the
"AMENDMENT EFFECTIVE DATE"), on which each of the following conditions have been
satisfied to the satisfaction of the Agent:
(i) the Borrowers shall have delivered to the Agent, in
form and substance and in quantities reasonably satisfactory to the
Agent and its counsel, all of the instruments and documents described
in Section 3.1(a);
(ii) the Borrowers shall have paid all Fees and other
Obligations required to have been paid under the Original Credit
Agreement, this Agreement and the other Loan Documents prior to or on
the Amendment Effective Date;
(iii) all conditions precedent set forth in Section 3.1(b)
shall have been satisfied at and as of such date (both before and after
giving effect to this Agreement and the other Loan Documents); and
(iv) all acts and conditions (including the obtaining of
any necessary regulatory approvals and the making of any required
filings, recordings or registrations) required to be done and performed
and to have happened prior to the execution, delivery and performance
of this Agreement and the other Loan Documents and for the same to
constitute the legal, valid and binding obligations of the Borrowers,
enforceable in accordance with their respective terms, shall have been
done and performed and shall
84
-79-
have happened in due and strict compliance with all applicable laws or
if any of such have not been done, performed or happened, such has been
expressly disclosed to the Agent and waived by all of the Lenders in
writing.
(b) If each of the above conditions has been satisfied, on the
Amendment Effective Date, all Loans of each Type outstanding under the Original
Credit Agreement shall remain outstanding and shall be deemed to be Loans of the
same Type under this Agreement governed by the terms hereof. Upon receiving the
Notes delivered pursuant to subsection (a)(i) above, each Lender that was a
party to the Original Credit Agreement shall promptly cancel its promissory note
delivered under the Original Credit Agreement and return such promissory note to
the Borrowers. No failure of a Lender to cancel or return such promissory note
shall affect the validity of the new Notes delivered hereunder.
SECTION 8.18 RATIFICATION; NO NOVATION.
Except as set forth herein and therein, all Loan Documents are
hereby ratified and confirmed in all respects. The term Loan Documents, as used
in the Loan Documents, shall mean the Loan Documents as amended hereby and
thereby. The parties do not intend for this Agreement or any of the other Loan
Documents to effect, nor does this Agreement or any of the Loan Documents
constitute, a novation of the obligations of the Borrowers evidenced by the
Original Credit Agreement and the Loan Documents referred to therein. This
Agreement and the other Loan Documents constitute an amendment and restatement
of the terms governing such obligations.
SECTION 8.19 INTEGRATION.
This Agreement and the other Loan Documents represent the
entire agreement of the Borrowers, the Agent and the Lenders with respect to the
subject matter hereof and thereof, and there are no promises, undertakings,
representations or warranties by the Agent or any Lender relative to the subject
matter hereof or thereof not expressly set forth or referred to herein or in the
other Loan Documents.
SECTION 8.20 WAIVER OF JURY TRIAL.
THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVE TRIAL BY JURY IN ANY ACTION OR PROCEEDING WITH RESPECT TO THE SUBJECT
MATTER OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
85
-80-
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the day and year first above written.
DORAL FINANCIAL CORPORATION,
as a Borrower
By: /s/ Xxxxx X. Xxxxx
--------------------------------------
Xxxxx X. Xxxxx
Executive Vice President and Treasurer
DORAL MORTGAGE CORPORATION,
as a Borrower
By: /s/ Xxxxx X. Xxxxx
--------------------------------------
Xxxxx X. Xxxxx
Executive Vice President
Facility 1 Commitment: BANKERS TRUST COMPANY,
$60,250,000 as Agent and as a Lender
Facility 2 Commitment:
$1,750,000 By: /s/ Xxxxx X. XxXxxx
---------------------------------
Name: Xxxxx X. XxXxxx
---------------------------------
Title: Managing Director
---------------------------------
Facility 1 Commitment: FIRST UNION NATIONAL BANK,
$40,000,000 as a Lender
Facility 2 Commitment:
$1,000,000 By: /s/ R. Xxxxxx Xxxx
---------------------------------
Name: R. Xxxxxx Xxxx
---------------------------------
Title: Vice President
---------------------------------
Facility 1 Commitment: BANKBOSTON, N.A.,
$32,000,000 as a Lender
Facility 2 Commitment:
$1,000,000 By: /s/ Xxxx X. Xxxxxxxxxxx
---------------------------------
Name: Xxxx X. Xxxxxxxxxxx
---------------------------------
Title: Vice President
---------------------------------
86
-81-
Facility 1 Commitment: THE BANK OF NEW YORK,
$28,000,000 as a Lender
Facility 2 Commitment:
$1,000,000 By: /s/ Xxxxxx X. Xxxxx
---------------------------------
Name: Xxxxxx X. Xxxxx
---------------------------------
Title: Vice President
---------------------------------
Facility 1 Commitment: NATIONAL CITY BANK OF KENTUCKY,
$27,000,000 as a Lender
Facility 2 Commitment:
$1,000,000 By: /s/ Xxxxxx X. Xxxxxx
---------------------------------
Name: Xxxxxx X. Xxxxxx
---------------------------------
Title: Vice President
---------------------------------
Facility 1 Commitment: CREDIT LYONNAIS, NEW YORK BRANCH,
$24,250,000 as a Lender
Facility 2 Commitment:
$750,000 By: /s/ W. Xxx Xxxxxxx
---------------------------------
Name: W. Xxx Xxxxxxx
---------------------------------
Title: Vice President
---------------------------------
Facility 1 Commitment: HIBERNIA NATIONAL BANK,
$19,250,000 as a Lender
Facility 2 Commitment:
$750,000 By: /s/ Xxxxxxxxx X. Xxxxx
---------------------------------
Name: Xxxxxxxxx X. Xxxxx
---------------------------------
Title: Assistant Vice President
---------------------------------
Facility 1 Commitment: COLONIAL BANK,
$19,250,000 as a Lender
Facility 2 Commitment:
$750,000 By: /s/ Xxx X. Xxxxxxx
---------------------------------
Name: Xxx X. Xxxxxxx
---------------------------------
Title: Senior Vice President
---------------------------------
