WAREHOUSING CREDIT AND SECURITY AGREEMENT
THIS WAREHOUSING CREDIT AND SECURITY AGREEMENT (the "Agreement"),
dated as of July 17, 1997 by and among PREMIER MORTGAGE CORPORATION,
d/b/a PMC MORTGAGE ("PMC") and RF PROPERTIES CORP. ("RF Properties"), each a
corporation organized and existing under the laws of New York, having its
principal office at 00 Xxxxx Xxxxx Xxxx, Xxxxxx Xxxxxxx, Xxx Xxxx 00000 (PMC
and, RF Properties, are hereinafter collectively referred to as the "Company"
or the "Borrower"), PNC MORTGAGE BANK, NATIONAL ASSOCIATION, a national bank
organized under the laws of the United States having an office at 00 Xxxxx
Xxxxxxx Xxxxx, Xxxxxx Xxxxx, Xxxxxxxx 00000 ("PNC") and LASALLE NATIONAL BANK,
a national banking association, having an office at 000 Xxxxx XxXxxxx Xxxxxx,
Xxxxxxx, Xxxxxxxx 60603("LaSalle"), PNC and LaSalle are collectively referred
to in this Agreement as the "Banks" and PNC as agent hereunder for the Banks
is referred to in this Agreement as the "Agent".
WHEREAS, the Company has requested the Banks to extend a revolving
warehousing line of credit to the Company and the parties desire to set forth
herein the terms and conditions under which Advances shall be made and
security shall be provided for the repayment thereof as set forth in this
Agreement;
WHEREAS, the Banks have appointed PNC as agent, and PNC has agreed to
serve as agent for the Banks hereunder;
NOW, THEREFORE, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Defined Terms.
Capitalized terms defined below or elsewhere in this Agreement
(including the Exhibits hereto) shall have the following meanings:
"Adjustable Rate Mortgage (ARM) Loan" means a Mortgage Loan in which
the interest rate is adjusted periodically according to a preselected index.
"Adjusted Tangible Net Worth" means with respect to any Person at any
date, the Tangible Net Worth of such person at such date minus capitalized
service fees, plus that portion of Subordinated Debt with initial term greater
than one year, plus the product obtained by multiplying one hundred basis
points (0.0100) times the principal balance of Mortgage Loans being serviced
at such date by the Company.
"Advance" means a disbursement by the Banks under the Commitment,
including readvances of funds previously advanced to the Company and repaid to
the Banks.
"Advance Request" has the meaning set forth in Section 2.2(b) hereof.
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"Affiliate" has the meaning set forth in Rule 12b-2 of the General
Rules and Regulations under the Exchange Act.
"Agent" has the meaning set forth in the Recitals hereof.
"Agent-Related Persons" means PNC and any successor agent arising
under Section 11.10, together with their officers, directors, employees,
agents and attorneys-in-fact.
"Agreement" means this Warehousing Credit and Security Agreement,
either as originally executed or as it may from time to time be supplemented,
modified or amended.
"Banks" has the meaning set forth in the Recitals hereof.
"Base Rate" has the meaning set forth in Section 2.7 (b) hereof.
"Borrowing" means a borrowing hereunder consisting of Advances made
to the Company on the same day by the Banks under Article II.
"Borrowing Date" means any date on which a Borrowing occurs under
Article II.
"Business Day" means any day excluding Saturday, Sunday and any day
which is a legal holiday under the laws of the State of Illinois.
"Certificate of Sale" means a certificate of sale, sheriff's
certificate, certificate of purchase, trustee's deed or comparable document
under applicable state law, issued to Borrower pursuant to and in accordance
with such applicable state law following the foreclosure sale of real property
securing a Foreclosure Loan to evidence or confirm the purchase of such real
property at such sale (subject to any applicable rights of redemption) by the
Borrower, FHA, VA, or a private mortgage insurance company.
"Closing Date" means the date on which all the conditions precedent
set forth in Section 4.1 are satisfied or waived by the Banks.
"Collateral" has the meaning set forth in Section 3.1 hereof.
"Collateral Documents" has the meaning set forth in Section 2.2(c)
hereof.
"Commitment" means Thirty Million Dollars ($30,000,000) or such
amount to which such limit may be reduced hereunder.
"Company" has the meaning set forth in the Recitals hereof.
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"Conventional Mortgage Loan" means a Mortgage Loan other than a
FHA-insured or VA-guaranteed Mortgage Loan.
"Custodian" means the organization which holds documents relating to
pooled Mortgage Loans on the Company's and GNMA's, FNMA's or FHLMC's behalf.
"Debt" means, with respect to any Person, at any date (a) all
indebtedness or other obligations of such Person which, in accordance with
GAAP, would be included in determining total liabilities as shown on the
liabilities side of a balance sheet of such Person at such date; (b) all
indebtedness or other obligations of such Person for borrowed money or for the
deferred purchase price of property or services; (c) all indebtedness or other
obligations of any other Person for borrowed money or for the deferred
purchase price of property or services in respect of which such Person is
liable, contingently or otherwise, to pay or advance money or property as
guarantor, endorser, or otherwise (except as endorser of negotiable
instruments for collection in the ordinary course of business), or which such
Person has agreed to purchase or otherwise acquire; and (d) all indebtedness
for borrowed money or for the deferred purchase price of property or services
secured by a Lien on any property owned or being purchased by such Person
(even though such Person has not assumed or otherwise become liable for the
payment of such indebtedness) to the extent that such indebtedness would not
be otherwise counted as a liability for purposes of determining the Tangible
Net Worth of such Person and to the extent that such indebtedness does not
exceed the net book value for such property.
"Default" means the occurrence of any event or existence of any
condition which, but for the giving of notice, the lapse of time, or both,
would constitute an Event of Default.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time and any successor statute.
"Event of Default" means any of the conditions or events set forth in
Section 8.1 hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, and any successor statute.
"Federal Funds Rate" means the average weighted rate of interest at
which federal fund transactions with member banks of the Federal Reserve are
traded, as published on the next succeeding Business Day by the Federal
Reserve Bank of New York.
"FHA" means The Federal Housing Administration of the United States
Department of Housing and Urban Development and any successor thereto.
"FHLMC" means The Federal Home Loan Mortgage Corporation and any
successor thereto.
"FICA" means the Federal Insurance Contributions Act.
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"FNMA" means The Federal National Mortgage Association and any
successor thereto.
"Foreclosure Advance Rate" has the meaning set forth in Section
2.1(c) hereof.
"Foreclosure Loan" means a Mortgage Loan with respect to which the
following is accurate and complete (and the Company by requesting an Advance
for such Mortgage Loan shall be deemed to so represent and warrant to the
Banks at and as of the date of such request for an Advance):
(a) the holder of the Mortgage Note relating to such Mortgage Loan
has completed all required actions, and all required judicial judgments,
orders or certificates, if any, have been issued by the court of competent
jurisdiction, such that such holder of such Mortgage Note is the owner is fee
simple absolute of the Property subject to such Mortgage Loan.
(b) all redemption rights or other similar rights or periods pursuant
to which the maker of the Mortgage Note may reclaim the property subject to
the Mortgage Loan or may otherwise reinstate the Mortgage have expired and
terminated; and
(c) the Advance is for the purchase of real property containing
one-to four family residences.
"Foreclosure Receivables" means any and all reimbursement rights and
other rights to payment of the Company, and all amounts payable to the
Company, under, as proceeds of or otherwise in connection with Foreclosure
Loans, including without implied limitation, all claims against VA, FHA or
private mortgage insurance companies, and the proceeds of the related
foreclosure sale.
"GAAP" means generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board and the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession, which are applicable to the circumstances as of the
date of determination.
"Gestation Repo" means a Mortgage Loan eligible for a repurchase
agreement covering the time between the date the issuing Custodian submits
documents to GNMA, FNMA, or FHLMC for initial pool certification and the date
the new security is actually issued.
"GNMA" means Government National Mortgage Association or any
successor thereto.
"Guarantors" means Xxxxxx Xxxxxxxx and Xxxxxx Xxxxxxxx.
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"HUD" means the United States Department of Housing and Urban
Development or any successor thereto.
"Indemnified Liabilities" has the meaning set forth in Section 9.3
hereof.
"Insurer" means FHA, VA or a private mortgage insurer, as applicable.
"Internal Revenue Code" means the Internal Revenue Code of l986, or
any subsequent federal income tax law or laws, as any of the foregoing have
been or may from time to time be amended.
"Investor" means FNMA, FHLMC or GNMA or a financially responsible
private institution (which is deemed acceptable by the Banks in its sole
discretion) purchasing Mortgage Loans from the Company pursuant to a Purchase
Commitment.
"Jumbo Loan" means a Mortgage Loan in excess of applicable FNMA or
FHLMC limits, not to exceed $600,000 without prior written approval of the
Banks.
"Libor Interest Period" means, with respect to any Advance bearing
interest for any Libor Interest Period, in any given month, the rate
determined by the Bank to be the monthly average rate per annum, for the
previous month, offered on the London Interbank Offering Market for eurodollar
deposits in an amount approximately equal to the amount of the Advance, and
for a contract term of one (1) day (overnight), adjusted for the Banks'
reserve requirements and rounded to the next highest 1/16 of 1%.
"Libor" means the period of one day (overnight) commencing on the
date of disbursement of an Advance bearing interest at the Libor and each
successive period of one day (overnight) thereafter; provided, that if a Libor
Interest Period would end on a day which is not a Business Day, it shall end
on the next succeeding Business Day, unless such day falls in the succeeding
calendar month in which case the Libor Interest Period shall end on the next
preceding Business Day. In no event shall any Libor Interest Period end on a
day after the expiration date as set forth in Section 2.9(a).
"Lien" means any lien, mortgage, deed of trust, pledge, security
interest, charge or encumbrance of any kind (including any conditional sale or
other title retention agreement, any lease in the nature thereof, and any
agreement to give any security interest).
"Loan" means an extension of credit by a Bank to the Company under
Article II in the form of an Advance.
"Margin Stock" has the meaning assigned to that term in Regulation U
of the Board of Governors of the Federal Reserve System as in effect from time
to time.
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"Mortgage" means either (1) a first-lien mortgage, deed of trust,
security deed or similar instrument on improved real property; or (2) a
second-lien mortgage, deed of trust, security deed or similar instrument on
improved real property.
"Mortgage Loan" means any loan evidenced by a Mortgage Note,
including a Foreclosure Loan as defined herein. A Mortgage Loan, unless
otherwise expressly stated herein, means a Residential Mortgage Loan.
"Mortgage Loan Documents" means the Mortgage, Mortgage Note, credit
and closing packages, disclosures, and all other files, records and documents
necessary to establish the eligibility of the Mortgage Loans for mortgage
insurance or guarantee by an Insurer or for purchase by an Investor.
"Mortgage Note" means a note secured by a Mortgage and evidencing a
Mortgage Loan.
"Mortgage Note Amount" means the outstanding unpaid principal amount
of a Mortgage Note at the time such Mortgage Note is pledged to the Banks.
"Multiemployer Plan" means a "Multiemployer Plan" as defined in
Section 4001(a)(3) of ERISA which is maintained for employees of the Company
or a Subsidiary of the Company.
"Nonconforming Mortgage Loan" means a Mortgage Loan the original
principal amount of which does not exceed Six Hundred Thousand Dollars
($600,000) and which does not conform to the eligibility requirements of FNMA
or FHLMC with respect to the credit rating of the mortgagor, but which is
underwritten and approved under Investor guidelines prior to funding. ,
"Notes" has the meaning set forth in Section 2.5 hereof.
"Notices" has the meaning set forth in Article XII hereof.
"Officers' Certificate" means a certificate executed on behalf of the
Company by its chief financial officer or its treasurer.
"Person" means and includes natural persons, corporations, limited
partnerships, general partnerships, joint stock companies, joint ventures,
associations, companies, trusts, banks, trust companies, land trusts, business
trusts or other organizations, whether or not legal entities, and governments
and agencies and political subdivisions thereof.
"Plans" has the meaning set forth in Section 5.12 hereof.
"Pledged Mortgages" has the meaning set forth in Section 3.1 (a)
hereof.
"Pro Rata Share" means, as to each of PNC and LaSalle at any time, a
percentage equivalent to fifty percent (50%).
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"Purchase Commitment" means a written commitment, in form and
substance satisfactory to the Banks, issued in favor of the Company by an
Investor pursuant to which that Investor commits to purchase one or more
Mortgage Loans, along with the related correspondent or whole loan purchase
agreement by and between the Company and the Investor, in form and substance
satisfactory to the Banks, governing the terms and conditions of any such
purchases.
"Redemption Amount" has the meaning set forth in Section 3.3 hereof.
"Residential Mortgage Loan" means a Mortgage Loan secured by a
Mortgage covering improved real property containing a one-to four-family
residence.
"Servicing Contracts" means the rights and obligations of the
Company, as servicer, pursuant to the Servicing Contracts identified on
Schedule B attached hereto or made part hereof, as the same may be revised
from time to time, or such other servicing contracts to which Company is or
may be a party, to administer, collect the payments for the reduction of
principal and application of interest, pay taxes and insurance, remit
collected payments, provide foreclosure services, provide full escrow
administration and any other obligations required by any Investor or Insurer
in, of or for the Mortgage Loans pursuant to the Servicing Contracts, together
with the right to receive the servicing fees and any ancillary fees arising
from or connected to the Mortgage Loans.
"Statement Date" has the meaning set forth in Section 4.1(a)(7) hereof.
"Subordinated Debt" means Debt of the Company which has been
subordinated as provided in Sections 4.1(b) or 6.10 hereof.
"Subsidiary" means any corporation, association or other business
entity in which more than fifty percent (50%) of the total voting power or
shares of stock entitled to vote in the election of directors, managers or
trustees thereof is at the time owned or controlled, directly or indirectly,
by any Person or one or more of the other Subsidiaries of that Person or a
combination thereof.
"Tangible Net Worth" means with respect to any Person at any date,
the excess of the total assets over total liabilities of such Person on such
date, each to be determined in accordance with GAAP consistent with those
applied in the preparation of the financial statements referred to in Section
5.4 hereof, plus that portion of Subordinated Debt not due within one year of
such date plus the reserve for loan losses, provided that, for purposes of
this Agreement, there shall be excluded from total assets, those assets of any
Person which the Banks may deem non-acceptable, or, if such Person were a HUD
mortgagee, would be deemed by HUD to be non-acceptable, in calculating
adjusted net worth in accordance with its requirements in effect as of such
date, as such requirements appear in the "Audit Guide for Audit of Approved
Non-Supervised Mortgagees."
"VA" means the Department of Veterans Affairs and any successor
thereto.
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"Wet Settlement" means a closing or settlement of a Residential
Mortgage Loan wherein the Banks are requested to make an advance to the
Company based upon delivery of the Collateral Documents to a third person as
agent for or on behalf of the Banks, but prior to examination of the
Collateral Documents by the Banks.
Section 1.2 Other Definitional Provisions.
1.2(a) Accounting terms not otherwise defined herein shall have the
meanings given them under GAAP.
1.2(b) Defined terms may be used in the singular or the
plural, as the context requires.
ARTICLE II
THE CREDIT
Section 2.1 The Commitment.
2.1(a) Subject to the terms and conditions of this Agreement
and provided no Default has occurred and is continuing, each Bank severally
agrees, from time to time during the period from the date hereof to the
expiration date (unless such period is earlier determined pursuant thereto) to
make Advances to the Company or its designee in an aggregate amount not to
exceed such Bank's Pro Rata Share of the Commitment. The aggregate amount
advanced by each Bank in any one (1) day shall not exceed fifty percent (50%)
of such Bank's Pro Rata Share of the Commitment. Within the Commitment, the
Company may borrow, repay and reborrow. The total principal amount outstanding
for Advances shall not exceed Thirty Million Dollars ($30,000,000).
2.1(b) Advances shall be used by the Company solely for the
purpose of (i) funding the origination of Mortgage Loans; and (ii) for the
purpose of repurchasing and carrying Foreclosure Loans. Advances shall be made
at the request of the Company, in the manner hereinafter provided in Section
2.2 against the pledge of such Mortgage Loans and Foreclosure Loans. Except as
provided in Section 2.2(c)(ii), no Advance shall be made against any Mortgage
Loan which is not covered by a Purchase Commitment. Such Purchase Commitment
shall include a direction by the Company to the Investor of such Mortgage Loan
to pay the purchase price of such Mortgage Loan to the Agent.
2.1(c) With respect to Advances for the origination of
Mortgage Loans, no Advance shall exceed ninety-eight (98%) of the lowest of
(i) the Mortgage Note Amount; (ii) the committed purchase price set forth in
the Purchase Commitment for the related Mortgage Loan which is originated with
the proceeds of such Advance; or (iii) the book value (net investment) of such
Mortgage Loan. Notwithstanding the immediately preceding sentence, with
respect to Advances for the origination of Nonconforming Mortgage Loans and
second-lien Mortgage Loans, no Advance shall exceed ninety-six percent (96%)
of the lowest of (i) the Mortgage Note Amount; (ii) the committed purchase
price set forth in the Purchase Commitment for the related Nonconforming
Mortgage Loan or second-lien Mortgage Loan which is originated with the
proceeds of such Advance; or (iii) the book value (net investment) of such
Nonconforming Mortgage Loan or second-lien Mortgage Loan. Notwithstanding the
immediately preceding two sentences, with respect to Advances for the
repurchasing and carrying of Foreclosure Loans, no Advance shall exceed
seventy percent (70%) (such percentage, as adjusted as hereinafter set forth,
is referred to as the "Foreclosure Advance Rate") of the lesser of (x) the
appraised value of the real property subject to the Mortgage or (y) the
current outstanding principal balance for the related Foreclosure Loan.
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2.1(d) The aggregate amount of Advances made by each Bank
for repurchasing and carrying Foreclosure Loans shall not exceed such Bank's
Pro Rata share of Five Million Dollars ($5,000,000), at any time.
2.1(e) The aggregate amount of Advances made by each Bank
for Jumbo Loans shall not exceed such Bank's Pro Rata Share of Four Million
Five Hundred Thousand Dollars ($4,500,000), at any time.
2.1(f) The aggregate amount of Advances made by each Bank
for Wet Settlement shall not exceed such Bank's Pro Rata Share of Nine Million
Dollars ($9,000,000), at any one time.
2.1(g) The aggregate amount of Advances made by each Bank
for Nonconforming Mortgage and second-lien Mortgage Loans shall not exceed
such Bank's Pro Rata Share of Three Million Dollars ($3,000,000).
Section 2.2 Procedures for Obtaining Advances.
Section 2.2(a) The Company may obtain an Advance hereunder, subject
to the satisfaction of the conditions set forth in Sections 4.1 and 4.2
hereof, upon compliance with the procedures set forth in this Section 2.3.
Section 2.2(b) Requests for Advances shall be initiated by the
Company by delivering to the Agent a completed and signed request for an
Advance (an "Advance Request") on the then current form therefor provided by
the Agent. The current form in use by the Agent for the origination of
Mortgage Loans is set forth in Exhibit C hereto. The current form in use by
the Agent for the purchase and carrying of Foreclosure Loans is set forth in
Exhibit C-1 hereto. The Agent shall have the right to require or supplement
approved forms of Advance Request by giving notice thereof to the Company.
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2.2(c) (i) The procedures to be followed by the Company in
making an Advance Request for the origination of Mortgage Loans, and the
documents relating to the Collateral described in the Advance Request (the
"Collateral Documents") required to be delivered to the Agent, shall consist
of those set forth in the following described Exhibit attached hereto and
hereby made a part hereof: "Procedures and Documentation for Warehousing
Residential Mortgage Loans" as set forth in Exhibit D hereto. Unless the
related Advance is no longer outstanding, the Company shall deliver the
remaining Collateral Documents, as set forth in the aforementioned Exhibit D,
to be furnished to the Agent within five (5) Business Days after the date of
the Wet Settlement; (ii) The procedures to be followed by the Company in
making an Advance Request for the carrying of Foreclosure Loans, and the
Collateral Documents required to be delivered to the Agent, shall consist of
those set forth in the following described Exhibit attached hereto and hereby
made a part hereof: "Procedures and Documentation for Warehousing Residential
Foreclosure Loans" as set forth in Exhibit D-1 hereto; and (iii) The Agent and
Banks shall have the right, on not less than three (3) Business Days' prior
notice to the Company, to modify said Exhibit(s) to conform to current legal
requirements or Banks' practices, and as so modified, said Exhibit(s) shall be
deemed a part hereof.
2.2(d) Before funding any Advance, the Agent shall have a
reasonable time to examine each Advance Request and the Collateral Documents
to be delivered prior to the Advance, as set forth in Exhibits D and D-1
hereto, and may reject such of them as do not meet the requirements of this
Agreement or with respect to Mortgage Loans, or the related Purchase
Commitment.
2.2(e) Upon receipt by the Agent of the Advance Request, the
Agent will notify the Banks of the Borrowing Date, the amount of Advance
requested, the interest rate, and each Bank's Pro Rata Share of the Advance,
as the case may be. No later than 4:00 p.m. (Chicago, Illinois time) on the
day of any funding, each Bank will make the amount of its Pro Rata Share of
each Advance to be made by such Bank on such day available to the Agent in
immediately available funds for the account of the Company at the following
account or such other account as the Agent may specify in writing: PNC
Mortgage Bank, N.A.; Location: _______________________; ABA # _______________
for the account: Warehouse Lending; Reference # _______________ for further
credit Premier Mortgage Corporation.
2.2(f) To make an Advance, the Agent shall wire funds to the
Company or authorize payment of the Company's draft upon compliance by the
Company with the terms of this Agreement; and (ii) immediately thereafter
debit said account for the amount of the Advance and transmit such amount in
accordance with the procedures described herein.
2.2(g) All Advances under this Agreement shall constitute a
single indebtedness and all of the Collateral shall be security for the
performance of all obligations of the Company to the Banks.
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Section 2.3 Payments to Banks and Agent. (a) Unless the Agent
receives notice from a Bank on or prior to the Closing Date or, with respect
to any Borrowing after the Closing Date, prior to or on the date of such
Borrowing, that such Bank will not make available as and when required
hereunder to the Agent for the account of the Company the amount of that
Bank's Pro Rata Share of the Borrowing, the Agent may assume that each Bank
has made such amount available to the Agent in immediately available funds on
the Borrowing Date and the Agent may (but shall not be so required), in
reliance upon such assumption, make available to the Company on such date a
corresponding amount. If and to the extent any Bank shall not have made its
full amount available to the Agent in immediately available funds and the
Agent in such circumstances has made available to the Company such amount,
that Bank shall on the Business Day following such Borrowing Date make such
amount available to the Agent, together with interest at the Federal Funds
Rate for each day during such period. A notice of the Agent submitted to any
Bank with respect to amounts owing under this Section 2.4(a) shall be
conclusive, absent manifest error. If such amount is so made available, such
payment to the Agent shall constitute such Bank's Loan on the date of
Borrowing for all purposes of this Agreement. If such amount is not made
available to the Agent on the Business Day following the Borrowing Date, the
Agent will notify the Company of such failure to fund and, upon demand by the
Agent, the Company shall pay such amount to the Agent for the Agent's account,
together with interest thereon for each day elapsed since the date of such
Borrowing, at a rate per annum equal to the interest rate applicable at the
time of the Loans comprising such Borrowing plus any late charges which may be
payable hereunder.
(b) The failure of any Bank to make any Loan on any Borrowing Date
shall not relieve any other Bank of any obligation hereunder to make a Loan on
such Borrowing Date, but no Bank shall be responsible for the failure of any
other Bank to make the Loan to be made by such other Bank on any Borrowing
Date.
(c) If and to the extent that the Agent has not made a payment to a
Bank as and when due hereunder, then such payment shall be made on the next
Business Day, together with interest at the Federal Funds Rate from the date
due until the date paid.
Section 2.4 Sharing of Payments, Etc. If, other than as expressly
provided elsewhere herein, any Bank shall obtain on account of the Loans made
by it any payment (whether voluntary, involuntary, through the exercise of any
right of set-off, or otherwise) in excess of its Pro-Rata Share (or other
share contemplated hereunder), such Bank shall immediately (a) notify the
Agent of such fact, and (b) pay such amount to the other Bank.
Section 2.5 Notes. The Company's obligation to pay the principal of
and interest on, all Advances made by the Banks shall be evidenced by
promissory notes (the "Notes") of the Company, dated as of the date hereof
substantially in the forms of Exhibit A and A-1 attached hereto. The term
"Notes" shall include all extensions, renewals, and modifications of the Notes
and all substitutions therefor. All terms and provisions of the Notes are
incorporated herein.
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Section 2.6 Interest & Transaction Fees - Advances.
2.6(a) Except for Advances for ARM Loans, the unpaid amount
of each Advance shall bear interest from the date of such Advance until paid
in full at a rate of interest per annum (computed on the basis of a year of
360 days and the actual number of days elapsed) equal to the sum of (i) Libor
plus (ii) two and one quarter percent (2.25%) per annum. The unpaid amount of
each Advance for ARM Loans shall bear interest from the date of such Advance
until paid in full at a rate of interest per annum (computed on the basis of a
year of 360 days and the actual number of days alapsed) equal to the sum of
(i) Libor plus (ii) two percent (2.0%) per annum.
2.6(b) The Company shall pay to the Agent for its own
account (and not for the account of the Banks), a transaction fee equal to
Twenty Dollars ($20.00) for each Advance processed by check and Twenty-Five
Dollars ($25.00) for each Advance processed by wire under the terms of this
Agreement.
2.6(c) Interest on each Advance shall be payable upon the
earlier to occur of (i) thirty (30) days from the date of such Advance; or
(ii) the purchase by an Investor of the Mortgage Loan with respect to which
the Advance was made. Subject to the immediately preceding sentence, all
interest and transaction fees will be deducted from the proceeds remitted from
the Investor to the Banks on each Mortgage Loan, or from proceeds remitted
from VA, FHA or private mortgage insurance companies, and the proceeds of the
related foreclosure sale on each Foreclosure Loan. All accrued interest shall
be due and payable in full upon the earlier of the expiration or termination
date or upon sale of the Mortgage Loan to the Investor.
Section 2.7 Provisions Regarding Libor.
2.7(a) The holder of any Notes is hereby authorized to
record the date and amount of each payment of principal and interest, and
applicable interest rates and other information with respect thereto, on the
schedules annexed to and constituting a part of the Notes and any such
recordation shall constitute prima facie evidence of the accuracy of the
information so recorded; provided, however, that the failure to make a
notation or the inaccuracy of any notation shall not limit or otherwise affect
the obligations of the Company hereunder or thereunder.
2.7(b) If the Agent or any Bank determines (which
determination shall be final and conclusive) that, by reason of circumstances
affecting the interbank eurodollar market generally, deposits in dollars (in
the applicable amounts) are not being offered to banks in the interbank
eurodollar market for the selected term, or adequate means do not exist for
ascertaining the Libor, then the Agent shall give notice thereof to the
Borrower. Thereafter until the Agent notifies the Borrower that the
circumstances giving rise to such suspension no longer exist, (a) the
availability of Advances bearing interest at Libor shall be suspended, and (b)
the interest rate for all Advances then bearing interest at Libor shall be
converted to the Base Rate (as hereinafter defined) at the expiration of the
then current Libor Interest Period.
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In addition, if after the date of this Agreement,
Agent or any Bank shall determine (which determination shall be final and
conclusive) that any enactment, promulgation or adoption of or any change in
any applicable law, rule or regulation, or any change in the interpretation or
administration thereof by a governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or
compliance by the Banks with any guideline, request or directive (whether or
not having the force of law) of any such authority, central bank or comparable
agency shall make it unlawful or impossible for the Banks to make or maintain
or fund Advances based upon Libor, the Agent shall notify the Borrower. Upon
receipt of such notice, until the Agent notifies the Borrower that the
circumstances giving rise to such determination no longer apply, (a) the
availability of Advances based upon Libor shall be suspended, and (b) the
interest rate on all Advances then bearing interest based upon Libor shall be
converted to the Base Rate either (i) on the last day of the then current
Libor Interest Period if the Banks may lawfully continue to maintain Advances
based upon Libor. As used herein, the "Base Rate" shall mean the rate of
interest from time to time established and publicly announced by the Agent in
its sole discretion as its then applicable base rate of interest to be used as
an index in determining actual interest rates to be charged to certain of the
Agent's borrowers. The Base Rate will be adjusted as of the effective date of
each change in the Base Rate.
2.7(c) The Borrower shall indemnify the Agent and each Bank
against all liabilities, losses or expenses (including loss of margin, any
loss or expense incurred in liquidating or employing deposits from third
parties and any loss or expense incurred in connection with funds acquired by
each Bank to fund or maintain Advances bearing interest based upon Libor which
such Bank sustains or incurs as a consequence of any attempt by the Borrower
to revoke (expressly, by later inconsistent notices or otherwise) in whole or
in part any notice given to the Agent or such Bank to request, convert, renew
or repay any such Advance. If any Bank sustains or incurs any such loss, it
shall notify the Borrower of the amount determined by such Banks to be
necessary to indemnify such Bank for such loss or expense (which determination
may include such assumptions, allocations of costs and expenses and averaging
or attribution methods as such Bank deems appropriate). Such amount shall be
due and payable by the Borrower ten (10) days after such notice is given.
Section 2.8 Principal Payments - Advances.
2.8(a) The outstanding principal amount of each Advance
shall be payable in full upon the earliest to occur of (i) demand, (ii) the
occurrence of any event described in this Section 2.8(c) hereof with respect
to such Advance or (iii) expiration or termination of the Commitment.
2.8(b) The Company shall have the right to prepay the
outstanding Advances in whole or in part, from time to time, without premium
or penalty or advance notice.
2.8(c) The Company shall be obligated to pay to the Banks,
without the necessity of prior demand or notice from the Banks, and the
Company authorizes the Banks to charge its account for, the amount of any
outstanding Advance against a specific Mortgage Loan, upon the occurrence of
any of the following events:
(1) Sixty (60) calendar days elapse from the date
the Mortgage Loan with respect to which the Advance was made was delivered to
an Investor for examination and purchase, without the purchase being made
unless an extension of an additional thirty (30) calendar days is granted by
the Banks in its sole discretion, in which case repayment would be required
ninety (90) calendar days from the time of the advance;
(2) Ten (10) calendar days elapse from the date
the Investor rejects for purchase the Mortgage Loan with respect to which the
Advance was made;
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(3) One (1) Business Day elapses from the date the
Collateral Documents relating to a Mortgage Loan against which an Advance was
made, were required to be received by the Banks without the actual receipt
thereof, or such Collateral Documents, upon examination by the Banks, are
found not to be in compliance with the requirements of this Agreement or the
related Purchase Commitment;
(4) Ten (10) Business Days elapse from the date a
Collateral Document was delivered to the Company for correction or completion,
without being returned to the Agent;
(5) Except for Foreclosure Loans, a default occurs
under the Mortgage Loan with respect to which such Advance was made and
remains uncured for a period of thirty (30) days;
(6) Ninety (90) days elapse from the date an
Advance was made with respect to a Foreclosure Loan; or
(7) Upon sale of the Mortgage Loan.
Upon making such payment to the Banks, the Company shall be deemed to have
redeemed such Mortgage Loan from pledge, and the Collateral Documents relating
thereto shall be released by the Agent to the Company or to the Investor.
Section 2.9 Expiration and/or Termination of Commitment.
2.9(a) Unless terminated earlier as permitted hereunder, the
Commitment shall expire of its own term, and without the necessity of action
by Agent or the Banks on May 31, 1998.
2.9(b) The Banks shall have the right, without cause, at any
time to terminate this Agreement on not less than sixty (60) days' notice to
the Company.
2.9(c) The Banks shall have the right to terminate this
Agreement and any line of credit extended to the Company pursuant to the terms
of this Agreement, upon any adverse material change in the Company's financial
condition as determined by the Banks in their sole discretion during the term
of this Agreement. Such an adverse change of financial condition will include,
but not be limited to the occurrence of any one or more of the events listed
in Section 8.1 hereto.
2.9(d) The Banks shall have the right from time to time and
in their sole discretion, to extend the term of this Agreement. The length of
any such extension shall also be determined in the Banks' sole discretion.
Such extension may be made subject to the renegotiation of the terms hereunder
and to any other such conditions as the Banks may deem necessary. Under no
circumstances shall such an extension by the Banks be interpreted or construed
as the Banks' forfeiture of any of its rights, entitlements or interest
created hereunder. The Company acknowledges and understands that the Banks are
under no obligation whatsoever to extend the term of this Agreement beyond its
expiration date as originally stated in this Agreement.
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Section 2.10 Method of Making Payments; Reductions in Commitment.
2.10(a) Except as otherwise specifically provided herein,
all payments hereunder shall be received by the Banks on the date when due and
shall be made in lawful money of the United States of America in immediately
available funds at the office of the Agent, at 00 Xxxxx Xxxxxxx Xxxxx, Xxxxxx
Xxxxx, Xxxxxxxx 00000, or at such other place as the Agent or the Banks from
time to time shall designate. Whenever any payment to be made hereunder or
under the Notes shall be stated to be due on a day which 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, the interest thereon shall be
payable at the applicable rate during such extension. Funds received by the
Agent after 2:00 p.m. (Chicago, Illinois time) on a Business Day shall be
deemed to have been paid by the Company on the next succeeding Business Day.
2.10(b) The Company shall have the right, at any time and
from time to time, effective as of the first day of any calendar month, to
terminate in whole or permanently reduce in part, without premium or penalty,
the amount of the Commitment in excess of the then outstanding principal
amount of all Advances hereunder. The Company shall give written notice to the
Agent designating the date of such termination or reduction not less than five
(5) Business Days' prior to the date such termination or reduction is to take
effect, and the amount of any partial reduction of the Commitment shall be in
an aggregate minimum amount of One Million Dollars ($1,000,000) or integral
multiples of One Hundred Thousand Dollars ($100,000) in excess of that amount.
Section 2.11 Late Payment Fees. In the event the Company fails to
make any payment (whether of principal, interest or any other sum) on the date
such payment is due and payable hereunder or under the Notes, and such failure
continues for more than five (5) days, the Company shall pay to the Agent, for
the account of each Bank, upon demand therefor, a late payment fee equal to
five percent (5%) of the amount of such payment.
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Section 2.12 Net Payments; Reduced Return.
2.12(a) All payments with respect to any Advance shall be
made in such amounts as may be necessary in order that all such payments after
withholding for or on account of any present or future taxes, levies, imports,
duties or other similar charges of whatsoever nature imposed by any government
or any political subdivision or taxing authority hereof, other than any taxes
on or measured by the net income of the Banks pursuant to the state, federal
and local tax laws of the jurisdiction where the Banks' principal office or
offices or lending office or offices are located, compensate Banks for any
additional cost or reduced amount receivable of making or maintaining advances
as a result of such taxes, imports, duties or other charges.
2.11(b) If, after the date hereof, any Bank shall have
determined that the adoption 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 any Bank 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 or would have
the effect of reducing the rate of return on any Bank capital as a consequence
of its obligations hereunder to a level below that which any Bank could have
achieved but for such adoption, change or compliance (taking into
consideration the Banks' policies with respect to capital adequacy) by an
amount deemed by any Bank to be material, then from time to time, within 30
days after demand by any Bank the Company shall pay to the Banks such
additional amount or amounts as will compensate the Banks for such reduction.
Compensation due the Banks under this subsection (b) will only accrue after
the Banks has notified the Company of any event of which it has knowledge,
occurring after the date hereof, which will entitle the Banks to compensation
pursuant to this subsection (b). A certificate of the Banks claiming
compensation under this subsection (b) and setting forth the additional amount
or amounts to be paid to it hereunder shall be conclusive in the absence of
manifest error. In determining such amount, the Banks may use any reasonable
averaging and attribution methods.
ARTICLE III
COLLATERAL
Section 3.1 Assignments and Grant of Security Interest. As security
for the payment of the Notes and for the performance of all of the Company's
obligations hereunder, the Company hereby grants to the Agent a security
interest in all rights and interest of the Company in and to the following
described property (collectively, the "Collateral"):
3.1(a) All Mortgage Loans, including all Mortgage Notes and
Mortgages evidencing such Mortgage Loans and the related Mortgage Loan
Documents, which from time to time are delivered, or caused to be delivered,
to the Agent or the Banks (including delivery to a third party on behalf of
the Banks) pursuant hereto or in respect of which an Advance has been made by
the Banks hereunder (the "Pledged Mortgages");
3.1(b) All now existing and hereafter arising rights to the
payment of monies on account of servicing, administration and/or collection
activities pertaining to any Mortgage Loan sold to FNMA or FHLMC identified on
Schedule A, on account of the termination of any such rights, and as
reimbursement for costs and expenses incurred and Advances made by the Company
on account of obligations of the obligors under any Mortgage Loan.
3.1(c) All mortgage insurance and all commitments issued by
Insurers to insure or guarantee any Mortgage Loans included in the Pledged
Mortgages; all Purchase Commitments held by the Company covering the Pledged
Mortgages and all proceeds resulting from the sale thereof to Investors
pursuant thereto; and all personal property, contract rights, servicing and
servicing fees and income, accounts and general intangibles of whatsoever kind
relating to the Pledged Mortgages, said Insurer commitments and the Purchase
Commitments, and all other documents or instruments delivered to the Agent or
the Banks in respect of the Pledged Mortgages, including, without limitation,
the right to receive all insurance proceeds and condemnation awards which may
be payable in respect of the premises encumbered by any Mortgage;
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3.1(d) All Foreclosure Loans and all Certificates of Sale,
including without implied limitation, sheriff's certificates of purchase,
trustees' deeds or comparable documents issued to Company evidencing and
confirming the purchase of real property; VA guarantees, FHA insurance
certificates, private mortgage insurance; VA guarantee and FHA and private
mortgage insurance proceeds payable to or for the account of, or received by
Company relative to the Foreclosure Loans; redemption proceeds; any and all
Foreclosure Receivables, including reimbursement rights or other rights to
payment of Company and all amounts payable to Company, under, as proceeds of
or otherwise in connection with Foreclosure Loans, including without implied
limitation, all claims against FHA, VA, or private mortgage insurers, and
proceeds of the related foreclosure sale;
3.1(e) All right, title and interest of the Company in and
to all files, surveys, certificates, correspondence, appraisals, computer
programs, tapes, discs, cards, accounting records, and other information and
data of the Company relating to the Collateral;
3.1(f) All property of the Company, in any form or capacity
now or at any time hereafter in the possession or direct or indirect control
of the Agent or the Banks (including possession by the parent company,
affiliates or subsidiary of the Banks); and
3.1(g) All products and proceeds of any and all of the
foregoing. In addition to the foregoing grant of a security interest to the
Agent in the Collateral, the Company hereby assigns and delivers to the Agent
all of the following: (i) the Company's right (but not any liabilities of the
company) under all Purchase Commitments now held or hereafter acquired by the
Company covering Pledged Mortgages and all proceeds resulting from the sale of
Pledged Mortgages pursuant thereto; (ii) all rights of the Company (but not
any liabilities of the company) with respect to the Investor; and (iii) the
Company's right under all Certificates of Sale, including without implied
limitation, sheriff's certificates of purchase, trustee's deeds or comparable
documents issued to Company confirming the purchase of real property; and
reimbursement rights or other rights to payment of the company and all amounts
payable to the Company under Pledged Mortgages, including without limitation,
all claims against FHA, VA or private mortgage insurers, and proceeds of the
related foreclosure sale. Should the Collateral be converted into another type
of property or should purchase proceeds from Investors or Foreclosure
Receivables ever be paid or delivered to the Company as a result of the
Company's interest in the Collateral, then in such event all such property,
purchase proceeds or Foreclosure Receivables shall become part of the
Collateral and the Company will pay and deliver to the Banks all of same which
are susceptible of delivery to the Agent or the Banks, properly endorsed or
assigned, should the Agent or the Banks so require. Upon the request of the
Agent or the Banks, the Company shall execute any further document or
instrument requested by the Agent or the Banks to further evidence or
effectuate the assignments set forth in this subparagraph.
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Section 3.2 Delivery of Additional Collateral or Mandatory
Prepayment. In the event that the Agent shall determine at any time that the
value of the Collateral then pledged hereunder (such value being determined at
such time as if then being pledged under Section 3.1 hereof) is less than the
aggregate amount of the Advances then outstanding hereunder, the Company shall
immediately (a) deliver to the Agent for pledge hereunder additional Mortgage
Loans, Purchase Commitments and other related Collateral satisfactory to the
Agent (each valued at that time in accordance with Section 2.1(c) hereof)
and/or cash, in aggregate amounts sufficient to cover the difference between
the value of the Collateral pledged and the aggregate amount of Advances
outstanding hereunder, or (b) repay the Advances in an amount sufficient to
reduce the aggregate balance thereof outstanding to or below the value of the
Collateral pledged hereunder.
Section 3.3 Right of Redemption from Pledge. Provided no Event of
Default has occurred and is continuing, the Company may redeem a Mortgage Loan
from pledge, by either (i) paying, or causing an Investor to pay, to the
Banks, for application to prepayment of the principal balance of the Notes, an
amount (the "Redemption Amount") equal to the then collateral value (each
valued at that time in accordance with Section 2.1(c) hereof) of the Mortgage
Loan to be released, but not less than the amount of the Advance made with
respect to such Mortgage Loan or (ii) delivering substitute Collateral which,
in addition to being acceptable to the Banks in its sole discretion, will when
included with the Collateral, result in a collateral value (as determined in
accordance with Section 2.1 (c) hereof) of all Collateral held by the Banks
which is at least equal to the aggregate outstanding Advances.
Section 3.4 Collection and Servicing Rights. So long as no Event of
Default shall have occurred, the Company shall be entitled to service, receive
and collect directly all sums payable to the Company in respect of the
Collateral, except amounts payable to the Company for the purchase by any
Investor under a Purchase Commitment of any Mortgage Loans which are funded in
whole or in part with the proceeds of any Advance, which amounts shall be paid
directly to the Banks. The Company shall direct each Investor to pay the
amounts payable for the purchase of such Mortgage Loans directly to the Banks.
Following the occurrence of any Event of Default, the Banks shall thereafter
be entitled to service, receive and collect all sums payable to the Company in
respect of the Collateral, and in such case (a) the Banks in its discretion
may, in their own name or in the name of the Company or otherwise, demand, xxx
for, collect or receive any money or property at any time payable or
receivable on account of or in exchange for any of the Collateral, but shall
be under no obligation to do so, (b) the Company shall, if the Banks so
requests, forthwith pay to the Banks at its principal office or such other
place as the Banks may designate all amounts thereafter received by the
Company upon or in respect of any of the Collateral, advising the Banks as to
the source of such funds, and (c) all amounts so received and collected by the
Banks shall be held by it as part of the Collateral.
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Section 3.5 Return of Collateral at End of Commitment. If (i) the
Commitment shall have expired or been terminated, and (ii) no Advances,
interest or other amounts evidenced by the Notes or due under this Agreement
shall be outstanding and unpaid, the Agent and the Banks shall deliver or
release all Collateral in its possession to the Company. The receipt of the
Company for any Collateral released or delivered to the Company pursuant to
any provision of this Agreement shall be a complete and full acquittance for
the Collateral so returned, and the Agent and the Banks shall hereafter be
discharged from any liability or responsibility therefor.
ARTICLE IV
CONDITIONS PRECEDENT
Section 4.1 Initial Advance. The obligation of the Banks to make the
initial Advance is subject to the satisfaction, in the sole discretion of the
Banks, on or before the date thereof of the following conditions precedent:
4.1(a) The Banks shall have received counterparts of the
following, all of which must be satisfactory in form and content to the Agent,
in its sole discretion:
(1) The Notes duly executed by the Company;
(2) The Guarantees, in the form attached hereto as
Exhibit B, duly executed by the Guarantors;
(3) Certified copies of the Company's articles of
incorporation and bylaws, and certificates of good standing dated no less
recently than three (3) months prior to the date of the initial Advance;
(4) A written opinion of counsel to the Company
and the Guarantors (or of separate counsel at the option of the Company and
the Guarantors) in form and content satisfactory to the Banks, dated as of, or
prior to, the date of the initial Advance, addressed to the Banks and the
Agent, substantially in the form attached hereto as Exhibit I.
(5) An original resolution of the board of
directors of each of PMC and RF Properties, certified as of the date of the
initial Advance by its corporate secretary, authorizing the execution,
delivery and performance of this Agreement and the Notes, and all other
instruments or documents to be delivered by the Company pursuant to this
Agreement;
(6) A certificate of the Company's corporate
secretary as to the incumbency and authenticity of the signatures of the
officers of the Company executing this Agreement and the Notes and each
Advance Request and all other instruments or documents to be delivered
pursuant hereto (the Agent being entitled to rely thereon until a new such
certificate has been furnished to the Banks);
(7) Original independently audited financial
statements of the Company (and their Subsidiaries, on a consolidated basis)
for the most recent fiscal year end containing a balance sheet and related
statements of income and retained earnings (the "Statement Date") and changes
in financial position for the period ended on the Statement Date, all prepared
in accordance with GAAP applied on a basis consistent with prior periods and
acceptable to the Banks;
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(8) Financial statements of the Guarantors, signed
by them, dated no less recently than three (3) months prior to the date of the
initial Advance;
(9) Copies of the certificates, documents or other
written instruments which evidence the Company's eligibility described in
Section 5.13 hereof, all in form and substance satisfactory to the Agent;
(10) Copies of the Company's errors and omissions
insurance policy or mortgage impairment insurance policy and blanket bond
coverage policy, or certificates in lieu of policies, all in form and content
satisfactory to the Agent, showing compliance by the Company as of the date of
the initial Advance with the related provisions of Section 6.8 hereof;
(11) With respect to each Advance, a copy of
irrevocable instructions to the Investor stating that payment for the Mortgage
Loan will be remitted to the Banks in the form of Exhibit J;
(12) A power of attorney in the form of Exhibit K;
and
(13) A Master Bailee Agreement for Foreclosure
Loans in the form of Exhibit L.
4.1(b) At the sole discretion of the Banks, the Banks may
require any director, officer or shareholder of the Company, all Affiliates of
the Company or of any Subsidiary of the Company, and each of the Guarantors,
to whom or to any of whom the Company shall be indebted as of the date of this
Agreement, to execute a Subordination of Debt Agreement, in the form of
Exhibit F hereto; and the Banks shall have received an executed copy of said
Subordination of Debt Agreement, certified by the corporate secretary of the
Company to be true and complete and in full force and effect as of the date of
the Advance.
Section 4.2 Each Advance. The obligation of the Banks to make the
initial and each subsequent Advance is subject to the satisfaction, in the
sole discretion of the Banks, as of the date of each such Advance, of the
following additional conditions precedent:
4.2(a) The Company shall have delivered to the Agent the
Advance Request, and Collateral Documents called for under, and shall have
satisfied the procedures set forth in, Sections 2.2(a) through 2.2(b) hereof
and the applicable Exhibits hereto described in those Sections. All items
delivered to the Banks must be satisfactory to the Banks in form and content,
and the Banks may reject such of them as do not meet the requirements of this
Agreement or of the related Purchase Commitment as provided in Section 2.2(c).
4.2(b) The Agent shall have received evidence satisfactory
to it as to the due filing and recording in all appropriate offices of all
financing statements and other instruments as may be necessary to perfect the
security interest of the Agent in the Collateral under the Uniform Commercial
Code of the State of Illinois or other applicable law.
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4.2(c) The representations and warranties of the Company
contained in Article V hereof shall be true and correct in all material
respects as if made on and as of the date of each Advance.
4.2(d) The Company and the Guarantors shall have performed
all agreements to be performed by them hereunder and under the Guaranty,
respectively, and after giving effect to the requested Advance, there shall
exist no Default hereunder.
4.2(e) The Company shall not have (i) incurred any material
liabilities, direct or contingent, other than in the ordinary course of its
business, since the dates of the Company's most recent financial statements
theretofore delivered to the Banks or (ii) experienced any other material
adverse change in its business or operations.
4.2(f) The Banks shall have received from counsel for the
Company or for the Guarantors or both, if requested by the Banks in its sole
discretion, an updated opinion, in form and substance satisfactory to the
Banks, addressed to the Banks and dated as of the date of such Advance,
covering such of the matters set forth in Section 4.1(a)(4) hereto as the
Banks may reasonably request.
Acceptance of the proceeds of the requested Advance by the
Company shall be deemed a representation by the Company that all conditions
set forth in this Section 4.2 shall have been satisfied as of the date of such
Advance.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
In order to induce the Banks to enter into this Agreement and make
each Advance the Company hereby represents and warrants to the Banks, as of
the date of this Agreement and as of the date of each Advance Request, that:
Section 5.1 Organization; Good Standing; Subsidiaries. The Company
and each Subsidiary of the Company is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation, has the full legal power and authority to own its property and
to carry on its business as currently conducted and is duly qualified as a
foreign corporation to do business and is in good standing in each
jurisdiction in which the transaction of its business makes such qualification
necessary, except in jurisdictions, if any, where a failure to be in good
standing has no material adverse effect on the business, operations, assets or
financial condition of the Company or any such Subsidiary. The Company has no
Subsidiaries except as set forth on Exhibit G hereto. Exhibit G sets forth the
name of each such Subsidiary, place of incorporation, each state in which
qualified as a foreign corporation, and the percentage ownership of the
capital stock of each such Subsidiary by the Company.
21
Section 5.2 Authorization and Enforceability. The Company has the
power and authority to execute, deliver and perform this Agreement, the Notes
and all other documents contemplated hereby or thereby. The Guarantors each
have the power and capacity to execute, deliver and perform the Guarantees.
The execution, delivery and performance by the Company of this Agreement, the
Notes and all other documents contemplated hereby or thereby and the making of
the borrowing hereunder and thereunder, have been duly and validly authorized
by all necessary corporate action on the part of the Company (none of which
actions have been modified or rescinded, and all of which actions are in full
force and effect) and do not and will not conflict with or violate any
provision of law or of the articles of incorporation or by-laws of the
Company, conflict with or result in a breach of or constitute a default or
require any consent under, or result in the creation of any Lien upon any
property or assets of the Company, or result in or require the acceleration of
any indebtedness of the Company pursuant to any agreement, instrument or
indenture to which the Company is a party or by which the Company or its
property may be bound or affected. This Agreement, the Notes and all other
documents contemplated hereby or thereby and the Guarantees constitute legal,
valid, and binding obligations of the Company or of the Guarantors,
respectively, enforceable in accordance with their respective terms, except as
limited by bankruptcy, insolvency or other such laws affecting the enforcement
of creditors' rights.
Section 5.3 Approvals. The execution and delivery of this Agreement,
the Notes and all other documents contemplated hereby or thereby and the
performance of the Company's obligations hereunder and thereunder do not
require any license, consent, approval or other action of any state or federal
agency or governmental or regulatory authority.
Section 5.4 Financial Condition. The balance sheet of the Company
(and, if applicable, its Subsidiaries, on a consolidated basis) as at the
Statement Date, and the related statements of income and changes in
shareholders' equity for the fiscal year ended on the Statement Date,
heretofore furnished to the Banks, fairly present the financial condition of
the Company (and its Subsidiaries) as at the Statement Date and the results of
its operations for the fiscal period ended on the Statement Date. The Company
had, on the Statement Date, no liabilities, direct or indirect, fixed or
contingent, matured or unmatured, known or unknown, or liabilities for taxes,
long-term leases or unusual forward or long-term commitments not disclosed by,
or reserved against in, said balance sheet and related statements, and at the
present time there are no material unrealized or anticipated losses from any
loans, advances or other commitments of the Company except as heretofore
disclosed to the Banks in writing. Said financial statements were prepared in
accordance with GAAP applied on a consistent basis throughout the periods
involved. Since the Statement Date, there has been no material adverse change
in the business, operations, assets or financial condition of the Company (and
its Subsidiaries), nor is the Company aware of any state of facts which (with
or without notice or lapse of time or both) would or could result in any such
material adverse change.
Section 5.5 Litigation. There are no actions, claims, suits or
proceedings pending, or to the knowledge of the Company, threatened or
reasonably anticipated against or affecting the Company or any Subsidiary of
the Company in any court or before any arbitrator or before any government
commission, board, bureau or other administrative agency which, if adversely
determined, may reasonably be expected to result in any material and adverse
change in the business, operations, assets, licenses, qualifications or
financial condition of the Company as a whole.
22
Section 5.6 Compliance with Laws. Neither the Company nor any
Subsidiary of the Company is in violation of any provision of any law, or of
any judgment, award, rule, regulation, order, decree, writ or injunction of
any court or public regulatory body or authority which might have a material
adverse effect on the business, operations, assets or financial condition of
the Company as a whole.
Section 5.7 Regulation U. The Company is not engaged principally, or
as one of its major activities, in the business of extending credit for the
purpose of purchasing or carrying Margin Stock, and no part of the proceeds of
any Advances made hereunder will be used to purchase or carry any Margin Stock
or to extend credit to others for the purpose of purchasing or carrying any
Margin Stock.
Section 5.8 Investment Company Act. The Company is not an "investment
company," or a company controlled by an "investment company," within the
meaning of the Investment Company Act of 1940, as amended.
Section 5.9 Payment of Taxes. The Company has filed or caused to be
filed all federal, state and local income, excise, property and other tax
returns with respect to the operations of the Company and its Subsidiaries
which are required to be filed, all such returns are true and correct, and the
Company has paid or caused to be paid all taxes as shown on such returns or on
any assessment, to the extent that such taxes have become due.
Section 5.10 Agreements. Neither the Company nor any Subsidiary of
the Company is a party to any agreement, instrument or indenture or subject to
any restriction materially and adversely affecting its business, operations,
assets or financial condition, except as disclosed in the financial statements
described in Section 5.4 hereof. Neither the Company nor any Subsidiary of the
Company is in default in the performance, observance or fulfillment of any of
the obligations, covenants or conditions contained in any agreement,
instrument, or indenture which default could have a material adverse effect on
the business, operations, properties or financial condition of the Company as
a whole. No holder of any indebtedness of the Company or of any of its
Subsidiaries has given notice of any asserted default thereunder, and no
liquidation or dissolution of the Company or of any of its Subsidiaries and no
receivership, insolvency, bankruptcy, reorganization or other similar
proceedings relative to the Company or of any of its Subsidiaries or any of
its properties is pending, or to the knowledge of the Company, threatened.
Section 5.11 Title to Properties. The Company and each Subsidiary of
the Company has good, valid, insurable (in the case of real property) and
marketable title to all of its properties and assets (whether real or
personal, tangible or intangible) reflected on the financial statements
described in Section 5.4 hereof, except for such properties and assets as have
been disposed of since the date of such financial statements as no longer used
or useful in the conduct of its business or as have been disposed of in the
ordinary course of business, and all such properties and assets are free and
clear of all Liens except as disclosed in such financial statements.
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Section 5.12 ERISA. All plans ("Plans") of a type described in
Section 3(3) of ERISA in respect of which the Company or any Subsidiary of the
Company is an "Employer", as defined in Section 3(8) of ERISA, are in
substantial compliance with ERISA, and none of such Plans is insolvent or in
reorganization, has an accumulated or waived funding deficiency within the
meaning of Section 412 of the Internal Revenue Code, and neither the Company
nor any Subsidiary of the Company has incurred any material liability
(including any material contingent liability) to or on account of any such
Plan pursuant to Sections 4062, 4063, 4064, 4201 or 4204 of ERISA; and no
proceedings have been instituted to terminate any such plan, and no condition
exists which presents a material risk to the Company or a Subsidiary of the
Company of incurring a liability to or on account of any such Plan pursuant to
any of the foregoing Sections of ERISA.
Section 5.13 Eligibility. The Company meets the application criteria
set forth in the Warehouse Line Application. The Company has all state and
local permits, licenses, approvals, registrations and qualifications which it
is required to have in order to make, purchase, sell or service the Mortgage
Loans. The Company, if approved, is qualified and in good standing as a lender
or seller/servicer, as set forth below, and meets all requirements applicable
to its status as such:
5.13(a) GNMA approved issuer and servicer of Mortgage Loans
guaranteed by GNMA.
5.13(b) HUD approved lender, eligible to originate,
purchase, hold, sell and service FHA-insured Mortgage Loans (and to
participate in HUD's Direct Endorsement Mortgage Insurance Program).
5.13(c) FNMA approved seller/servicer of Mortgage Loans,
eligible to originate, purchase, hold, sell, and service Mortgage Loans to be
sold to FNMA.
5.13(d) FHLMC approved seller/servicer of Mortgage Loans,
eligible to originate, purchase, hold, sell and service Mortgage Loans to be
sold to FHLMC.
5.13(e) Lender in good standing under the VA loan guarantee
program eligible to originate (on an "automatic" basis), purchase, hold, sell
and service VA-guaranteed Mortgage Loans.
Section 5.14 Special Representations Concerning Collateral. The
Company hereby represents and warrants to the Banks, as of the date of this
Agreement and as of the date of each Advance Request, that:
5.14(a) The Company owns the Collateral free and clear of
any lien, security interest, charge or encumbrance except for the security
interest created by this Agreement. No effective financing statement or other
instrument similar in effect covering all or any part of the Collateral is on
file in any recording office, except such as may have been filed in favor of
Banks or the Agent relating to this Agreement. The Company has no trade name.
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5.14(b) This Agreement, together with possession of the
Mortgage Note and a duly filed financing statement, creates a valid and
perfected first priority security interest in the Collateral, securing the
payment of the Obligations, and all filings and other actions necessary or
desirable to perfect and protect such security interest have been duly taken
or shall be taken at the time of the initial Advance hereunder.
5.14(c) No authorization, approval or other action by, and
no notice to or filing with, any governmental authority or regulatory body is
required (and has not been obtained, delivered or filed, as applicable) either
(i) for the grant by the Company of the security interest granted hereby or
for the execution, delivery or performance of this Agreement by the Company or
(ii) for the perfection of or the exercise by Banks or the Agent of its rights
and remedies hereunder, other than the filing of a financing statement which
has been duly executed by the Company and delivered to The Agent for filing.
5.14(d) The principal office of the Company for purposes of
Section 9-103 of the Uniform Commercial Code is located at the address set
forth on the first page of this Agreement.
5.14(e) Each Mortgage Loan conforms to the requirements and
the specifications set forth in the applicable Purchase Commitment and the
related regulations, rules, requirements and/or handbooks of the applicable
Investor and is eligible for sale to and insurance or guaranty by,
respectively, the applicable Investor and the applicable insurer.
5.14(f) The Mortgage Loan Documents have been duly executed
by the mortgagor and create valid and legally binding obligations of the
mortgagor, enforceable in accordance with their terms, except as may be
limited by bankruptcy or other laws affecting the enforcement of creditors'
rights generally, and there are no rights of rescission, set-offs,
counterclaims or other defenses with respect thereto. The full original
principal amount of each Mortgage Loan (net of any discounts) has been fully
advanced or disbursed to the mortgagor named therein. There is no requirement
for future advances and, except for loans insured under Section 203(K) of the
National Housing Act, any and all requirements as to completion of any on-site
or off-site improvements and as to disbursements of any escrow funds therefor
have been satisfied. To Company's knowledge and except as disclosed to Banks,
there is no default, breach, violation or event of acceleration existing under
the Mortgage or the related Mortgage Note, and no event has occurred which,
with the passage of time or with notice and the expiration of any grace or
cure period, would constitute a default, breach, violation or event of
acceleration; and the Company has not waived any default, breach, violation or
event of acceleration. The terms of the Mortgage Loan have in no way been
waived, impaired, changed or modified. To Company's knowledge and except as
disclosed to Banks, all tax identifications and property descriptions are
legally sufficient; tax segregation, where required, has been completed. All
taxes, governmental assessments, insurance premiums, water, sewer and
municipal charges, leasehold payments or ground rents which previously became
due and owing have been paid, or an escrow of funds has been established in an
amount sufficient to pay for every such item which remains unpaid.
5.14(g) Each of the Mortgage Loans has been originated, made
and serviced in material compliance with all industry standards, applicable
Investor and Insurer requirements and all applicable federal, state and local
statutes, regulations and rules, including, without limitation, the Federal
Truth-in-Lending Act of 1968, as amended, and Regulation Z thereunder, the
Federal Fair Credit Reporting Act, the Federal Equal Credit Opportunity Act,
the Federal Real Estate Settlement Procedures Act of 1974, as amended, and
Regulation X thereunder, and all applicable usury, licensing, real property,
consumer protection and other laws. All applicable federal, state and local
laws, regulations and rules relative to the Foreclosure Loans, the
Certificates of Sale and insurance and guarantee proceeds in connection with
the Foreclosure Loans will be fully complied with.
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5.14(h) Each Conventional Mortgage Loan is insured as to
payment defaults by a policy of primary mortgage guaranty insurance in the
amount required where applicable, and by an insurer approved, by the
applicable Investor and all provisions of such primary mortgage guaranty
insurance policy have been and are being complied with, such policy is in full
force and effect, and all premiums due thereunder have been paid. Each
Mortgage Loan which is represented by the Company to have, or to be eligible
for, FHA insurance is insured, or eligible to be insured, pursuant to the
National Housing Act. Each Mortgage Loan which is represented by the Company
to be guaranteed, or to be eligible for guaranty, by the VA is guaranteed, or
eligible to be guaranteed, under the provisions of Chapter 37 of Title 38 of
the United States Code. As to each FHA insurance certificate or each VA
guaranty certificate, the Company has complied with applicable provisions of
the insurance for guaranty contract and federal statutes and regulations, all
premiums or other charges due in connection with such insurance or guarantee
have been paid, there has been no act or omission which would or may
invalidate any such insurance or guaranty, and the insurance or guaranty is,
or when issued, will be, in full force and effect with respect to each
Mortgage Loan. There are no defenses, counterclaims, or rights of setoff
affecting the Mortgage Loans or affecting the validity or enforceability of
any private mortgage insurance or FHA insurance applicable to the Mortgage
Loans or any VA guaranty with respect to the Mortgage Loans.
5.14(i) Each of the Mortgage Loans presently is covered by a
policy of hazard insurance (and flood insurance and insurance against other
insurable risks and hazards as required by the applicable Investor and the
agreements applicable to such Mortgage Loans), in amounts not less than
outstanding principal balance of the Mortgage Loans or such maximum lesser
amount as permitted by applicable law, all in a form usual and customary in
the industry and which is in full force and effect, and all amounts required
to have been paid under any such policy have been paid; and all taxes,
assessments, ground rents or other applicable charges or fees due and payable
as to each Mortgage Loan have been paid. Each Loan is covered by a valid and
assignable, full fee, life of loan tax service contract, in full force and
effect.
5.14(j) A valid and enforceable title policy currently in
full force and effect has been issued for each Mortgage Loan in an amount not
less than the original principal amount of such Mortgage Loan, which title
policy insures that the Mortgage relating thereto is either (i) a valid first
lien on the property therein described and that the mortgaged property is free
and clear of all encumbrances and liens having priority over the first lien of
the Mortgage, and otherwise in compliance with the requirements of the
applicable Investor; or (ii) if the Mortgage Loan is insured under Title I of
the National Housing Act, a valid second lien on the property therein
described and that the mortgaged property is free and clear of all
encumbrances and liens (other than the first lien) having priority over the
second lien of mortgage, and otherwise in compliance with the requirements of
the applicable Investor.
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5.14(k) All escrow/custodial accounts have been established
in accordance with the requirements of FHA, VA and the applicable Investor and
Insurer and all other applicable laws and by the terms of the related
Mortgages.
5.14(l) There are no accrued liabilities of the Company with
respect to the Mortgage Loans.
5.14(m) The Company, all prior servicers and, if different,
the originating mortgagee, have performed all obligations required of them to
be performed under or pursuant to each of the Servicing Contracts and related
requirements of the applicable Investor and Insurer and each other document or
agreement relating to the Mortgage Loans by which the Company is bound, and no
event has occurred and is continuing which, under the provisions of any such
Servicing Contracts and related requirements of the applicable Investor or
other document or agreement, but for the passage of time or the giving of
notice, or both, would constitute an event of default thereunder.
5.14(n) The books, records, accounts and reports of the
Company with respect to the Mortgage Loans and Servicing Contracts have been
prepared and maintained in accordance with all applicable Investor and Insurer
requirements.
Section 5.l5 Warehouse Line Application. All of the information set
forth in the Warehouse Line Application is true, accurate and complete.
ARTICLE VI
AFFIRMATIVE COVENANTS
The Company agrees that so long as the Commitment is outstanding or
there remain any obligations of the Company to be paid or performed under this
Agreement or under the Notes, the Company shall:
Section 6.1 Payment of Notes. Punctually pay or cause to be paid the
principal and interest on and all other amounts due and payable hereunder and
under the Notes in accordance with the terms hereof and thereof.
Section 6.2 Financial Statements and Other Reports. Deliver to the
Banks:
6.2(a) Upon request by the Banks, as soon as available and
in any event within thirty (30) days after each calendar month, statements of
income and changes in shareholders' equity of the Company (and, if applicable,
its Subsidiaries, on a consolidated basis) for the immediately preceding
month, and related balance sheet as of the end of the immediately preceding
month, all in reasonable detail and certified by the chief financial officer
of the Company, subject, however, to year-end audit adjustments.
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6.2(b) As soon as available and in any event within sixty
(60) days after the close of each of the first three fiscal quarters of the
Company in each fiscal year: statements of income and changes in shareholders'
equity of the Company (and, if applicable, its Subsidiaries, on a consolidated
basis) for the period from the beginning of such fiscal year to the end of
such fiscal quarter, and the related balance sheet as at the end of such
fiscal quarter, all in reasonable detail and certified by the chief financial
officer of the Company, subject, however, to year-end audit adjustments.
6.2(c) As soon as available and in any event within ninety
(90) days after the close of each fiscal year: a statement of income and
changes in shareholders' equity of the Company (and, if applicable, its
Subsidiaries, on a consolidated basis) for such year, the related balance
sheet as at the end of such year (setting forth in comparative form the
corresponding figures for the preceding fiscal year), all in reasonable detail
and accompanied by an opinion of an accounting firm reasonably satisfactory to
the Banks, or other independent public accountants of recognized standing
selected by the Company and acceptable to the Banks, as to said financial
statements and a certificate signed by the chief financial officer of the
Company stating that said financial statements fairly present the financial
condition and results of operations of the Company (and, if applicable, its
Subsidiaries) as at the end of, and for, such year.
6.2(d) Together with each delivery of financial statements
pursuant to Sections 6.2(b) and 6.2(c) hereof, an Officer's Certificate
stating that the signatory or signatories thereto have reviewed the terms of
this Agreement and have made, or caused to be made under their supervision, a
review in reasonable detail of the transactions and conditions of the Company
(and, if applicable, its Subsidiaries) during the accounting period covered by
such financial statements and that such review has not disclosed the existence
during or at the end of such accounting period, and that the signatory or
signatories thereto do not have knowledge of the existence as of the date of
the Officer's Certificate, of any Default or if any Default existed or exists,
specifying the nature and period of the existence thereof and what action the
Company has taken, is taking and proposes to take with respect thereto.
6.2(e) As soon as available and in any event within ninety
(90) days after the close of each fiscal year of the Company, current
financial statements and the most recently filed federal and state income tax
returns of the Guarantors, signed by them, and dated not more than ninety (90)
days prior to the date of required delivery to the Banks hereunder.
6.2(f) Such other reports in respect of the Mortgage Loans
or Foreclosure Loans, in such detail and at such times as the Banks in their
discretion may request at any time or from time to time.
6.2(g) Copies of all regular or periodic financial and other
reports, if any, which the Company shall file with the Securities and Exchange
Commission or any governmental agency successor thereto.
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6.2(h) Copies of all audits, examinations and reports
concerning the operations of the Company from any Investor, Insurer or
licensing authority.
6.2(i) Any and all changes to the information set forth in
the Warehouse Line Application to assure that the same continues to be true,
accurate and complete.
6.2(j) From time to time, with reasonable promptness, such
further information regarding the business, operations, properties or
financial condition of the Company as the Banks may reasonably request.
All financial statements and reports furnished to the Banks
hereunder shall be prepared in accordance with GAAP, applied on a basis
consistent with that applied in preparing the financial statements as at, and
for the period ended, the Statement Date (except to the extent otherwise
required to conform to good accounting practice).
Section 6.3 Maintenance of Existence; Conduct of Business. Preserve
and maintain its corporate existence in good standing and all of its rights,
privileges, licenses, qualifications and franchises necessary or desirable in
the normal conduct of its business, including, without limitation, its
eligibility as an approved lender and issuer as described under Section 5.13
hereof; conduct its business in an orderly and efficient manner; maintain a
net worth of acceptable assets as required by its Investors at any and all
times for maintaining the Company's status as a FHA approved lender; and make
no change in the nature or character of its business or engage in any business
in which it was not engaged on the date of this Agreement.
Section 6.4 Compliance with Applicable Laws. Comply with the
requirements of all applicable laws, rules, regulations and orders of any
governmental authority and prudent industry standards, a breach of which could
materially adversely affect its business, operations, assets, or financial
condition or which could materially adversely impair the ability of Company to
perform its obligation hereunder, except where contested in good faith and by
appropriate proceedings.
Section 6.5 Inspection of Properties and Books. Permit authorized
representatives of the Agent and Bank, their parent companies or affiliates to
discuss the business, operations, assets and financial condition of the
Company and its Subsidiaries with their officers and employees and to examine
their books of account and make copies or extracts thereof, all at such
reasonable times as the Agent and Banks may request. The Company will provide
its accountants with a copy of this Agreement promptly after the execution
hereof and will instruct its accountants to answer candidly and fully any and
all questions that the officers of the Banks or any authorized representatives
of the Banks may address to them in reference to the financial condition or
affairs of the Company and its Subsidiaries. The Company may have its
representatives in attendance at any meetings between the officers or other
representatives of the Banks and the Company accountants held in accordance
with this authorization.
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Section 6.6 Notice. Give prompt written notice to the Banks of (a)
any action, suit or proceeding instituted by or against the Company or any of
its Subsidiaries in any federal or state court or before any commission or
other regulatory body (federal, state or local, domestic or foreign), or any
such proceedings threatened against the Company or any of its Subsidiaries in
a writing containing the details thereof, (b) the filing, recording or
assessment of any federal, state or local tax lien against it, or any of its
assets or any of its Subsidiaries, (c) the occurrence of any Event of Default
hereunder or the occurrence of any Default and continuation thereof for five
(5) days, (d) the actual or threatened suspension, revocation or termination
of the Company's eligibility, in any respect, as an approved lender, and
issuer as described under Section 5.13 hereof, (e) the suspension, revocation
or termination of any existing credit or investor relationship made to the
Company to facilitate the sale and/or origination of residential mortgages,
(f) the transfer or loss of any Servicing Contract to which the Company is a
party, or which is held for the benefit of the Company, and the reason for
such transfer or loss, if known to the Company, (g) any demand by any Investor
or Insurer for either the repurchase of a mortgage loan or indemnification and
(h) any other action, event or condition of any nature which may lead to or
result in a material adverse effect upon the business, operations, assets, or
financial condition of the Company and its Subsidiaries or which, with or
without notice or lapse of time or both, would constitute a default under any
other agreement, instrument or indenture to which the Company is a party or to
which the Company, its properties or assets may be subject.
Section 6.7 Payment of Debt, Taxes, etc. Pay and perform all
obligations of the Company, and cause to be paid and performed all obligations
of its Subsidiaries, promptly and in accordance with the terms thereof and pay
and discharge or cause to be paid and discharged promptly all taxes,
assessments and governmental charges or levies imposed upon the Company or its
Subsidiaries or upon their respective income, receipts or properties before
the same shall become past due, as well as all lawful claims for labor,
materials and supplies or otherwise which, if unpaid, might become a Lien or
charge upon such properties or any part thereof; provided, however, that the
Company and its Subsidiaries shall not be required to pay taxes, assessments
or governmental charges or levies or claims for labor, materials or supplies
for which the Company or its Subsidiaries shall have obtained an adequate bond
or adequate insurance or which are being contested in good faith and by proper
proceedings which are being reasonably and diligently pursued.
Section 6.8 Insurance. Will maintain (a) errors and omissions
insurance or mortgage impairment insurance and blanket bond coverage, with
such companies and in such amounts as satisfy prevailing FNMA, GNMA or FHLMC
requirements applicable to a qualified mortgage originating institution, and
(b) liability insurance and fire and other hazard insurance on its properties,
with responsible insurance companies approved by the Banks, in such amounts
and against such risks as is customarily carried by similar businesses
operating in the same vicinity; and (c) within thirty (30) days after notice
from the Banks, will obtain such additional insurance as the Banks shall
reasonably require, all at the sole expense of the Company. Copies of all such
policies shall be furnished to the Banks without charge upon request of the
Banks.
Section 6.9 Insured Closings. To the extent permitted by applicable
state law, will obtain and maintain in effect at all times an insured closing
letter from each title insurance company from which mortgagee title insurance
is procured, indemnifying and holding the Company harmless from and against
the failure of the agents and approved title attorneys of such title insurance
companies to comply with the written closing instructions of the Company as to
the Mortgage Loans pledged hereunder and will provide the Banks with evidence
of the same from time to time upon request. The Company agrees to indemnify
and hold the Banks harmless from and against any loss, including reasonable
attorneys' fees and costs, attributable to the failure of such title insurance
company, agent or approved attorney to comply with the disbursement or
instruction letter or letters of the Company or of the Banks relating to such
Mortgage Loan. The Banks shall have the right to pre-approve the closing
instructions of the Company to the title insurance company, agent or attorney
in any case where the Mortgage Loan to be created at settlement is intended to
be warehoused by the Company pursuant hereto.
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Section 6.10 Subordination of Certain Indebtedness. Will cause any
indebtedness of the Company, incurred after the date of this Agreement, to any
shareholder, director or officer of the Company, or to any Affiliate of the
Company or of any Subsidiary of the Company, or to the Guarantors, to be
subordinated to all obligations of the Company under this Agreement and the
Notes, by the execution of a Subordination of Debt Agreement in the form of
Exhibit F hereto and will deliver to the Banks an executed copy of said
Agreement, certified by the corporate secretary of the Company to be true and
complete and in full force and effect.
Section 6.11 Other Loan Obligations. Will perform all obligations
under the terms of each loan agreement, note, mortgage, security agreement or
debt instrument by which the Company is bound or to which any of its property
is subject, and will promptly notify the Banks in writing of the cancellation
or reduction of any of its other mortgage warehousing lines of credit or
agreements with any other lender.
Section 6.12 Use of Proceeds of Advances . Will use the proceeds of
each Advance solely for the purpose of financing Mortgage Loans or
repurchasing and carrying Foreclosure Loans.
Section 6.13 Special Affirmative Covenants Concerning Collateral.
6.13(a) The Company warrants and will defend the right,
title and interest of the Banks in and to the Mortgage Loans against the
claims and demands of all persons whomsoever.
`
6.13(b) The Company shall service or cause to be serviced
all Mortgage Loans in accordance with the standard requirements of the issuers
of the respective Purchase Commitments covering the same and all applicable
governmental requirements, including without limitation taking all actions
necessary to enforce the obligations of the obligors under such Mortgage
Loans. The Company shall service or cause to be serviced all Mortgage Loans in
accordance with all applicable requirements of the issuers of the respective
Purchase Commitments covering the same. The Company shall hold all escrow
funds collected in respect of Mortgage Loans in trust, without commingling the
same with non-custodial funds, and apply the same for the purposes for which
such funds were collected.
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6.13(c) The Company shall execute and deliver to the Agent
such Uniform Commercial Code financing statements with respect to the
Collateral as the Agent and the Bank may request. The Company shall also
execute and deliver to the Agent such further instruments of sale, pledge or
assignment or transfer, and such powers of attorney, as required by the Agent
and the Banks, and shall do and perform all matters and things necessary or
desirable to be done or observed, for the purpose of effectively creating,
maintaining and preserving the security and benefits intended to be afforded
the Banks under this Agreement. The Agent and the Banks shall have all the
rights and remedies of a secured party under the Uniform Commercial Code of
the State of Illinois, or any other applicable law, in addition to all rights
provided for herein.
6.13(d) The Company shall notify the Banks within two (2)
Business Days of any default under, or of the termination of, or the rejection
for purchase under, any Purchase Commitment relating to any Mortgage Loan.
6.13(e) The Company will promptly comply in all respects
with the terms and conditions of all Purchase Commitments, and all extensions,
renewals and modifications or substitutions thereof or thereto. The Company
will cause to be delivered to the Investor the Mortgage Loans to be sold under
each Purchase Commitment not later than the earlier of three (3) Business Days
prior to the expiration thereof or three (3) Business Days prior to the
deadline for acquisition of the Mortgage Loan by the Investor thereunder.
6.13(f) The Company shall maintain, at its principal office
or in a regional office approved by the Banks, or in the office of a computer
service bureau engaged by the Company and approved by the Banks, and, upon
request, shall make available to the Banks the originals, or copies in any
case where the original has been delivered to the Banks, or to an Investor, of
its Mortgage Note and Mortgages included in Mortgage Loans, Purchase
Commitments, and all related Mortgage Loan documents and instruments, and all
files, surveys, certificates, correspondence, appraisals, computer programs,
tapes, discs, cards, accounting records and other information and data
relating to the Collateral.
6.13(g) Upon the request of the Banks, the Company shall
direct that all payments due the Company on Foreclosure Receivables be sent
directly to the Agent (subject to applicable FHA and VA requirements) for
deposit.
ARTICLE VII
NEGATIVE COVENANTS
The Company agrees that so long as the Commitment is outstanding or
there remain any obligation of the Company to be paid or performed hereunder
or under the Notes, the Company shall not, either directly or indirectly,
without the prior written consent of the Banks:
Section 7.1 Indebtedness. Incur, assume, guarantee, endorse, or
otherwise become liable for the obligation of any person or entity except by
endorsement of negotiable instruments for deposit or collection in the
ordinary course of business.
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Section 7.2 Sale or Pledge of Servicing Contracts. Sell, pledge or
grant a security interest in any existing or future Servicing Contracts of the
Company pursuant to the terms of this Agreement, or omit to take any action
required to keep all such Servicing Contracts in full force and effect.
Section 7.3 Merger; Sale of Assets; Acquisitions; Change in Control;
Change of Senior Management. Liquidate, dissolve, consolidate or merge or
sell, transfer or otherwise dispose of, any substantial part of its assets,
nor acquire substantially all of the assets of another, nor permit a change in
any of the following: (a) ownership, beneficially or of record, of more than
ten percent (10%) of the voting stock of Company; (b) ownership, beneficially
or of record, of more than ten percent (10%)of the voting stock of any company
which controls the Company; or (c) senior management of Company or any company
which controls the Company: Notwithstanding the foregoing provisions, nothing
in the Agreement shall be deemed to prohibit the Company from entering into an
initial public offering of not more than forty percent (40%) of the company's
common stock, provided that not more than five percent (5%) of such stock may
be sold to or held by any one person or entity.
Section 7.4 Deferral of Subordinated Debt. Pay in advance of the
stated maturity thereof any Subordinated Debt of the Company or, if an Event
of Default hereunder shall have occurred, make any payment of any kind
thereafter on such Subordinated Debt until all obligations of the Company
hereunder and under the Notes have been paid and performed in full.
Section 7.5 Loss of Eligibility. Take, or fail to take, any action
that would cause the Company to lose all or any part of its status as an
eligible lender, as described under Section 5.13 hereof.
Section 7.6 Debt to Adjusted Tangible Net Worth Ratio. Permit the
ratio of its Debt to its Adjusted Tangible Net Worth (for the Company and its
Subsidiaries determined, on a consolidated basis) at any time to exceed 12.0
to 1.0.
Section 7.7 Minimum Adjusted Tangible Net Worth. Permit the Adjusted
Tangible Net Worth of the Company and its Subsidiaries, determined on a
consolidated basis at any time to be less than Two Million Five Hundred
Thousand Dollars ($2,500,000).
Section 7.8 Maximum Portfolio Delinquency. Permit more than five
percent (5%) of the total outstanding balance of the Mortgage Loans serviced
by the Company under Servicing Contracts to be more than thirty (30) days past
due, at any one time or otherwise in default.
Section 7.9 Investments, Acquisitions, Loans, Advances and
Guarantees. Directly or indirectly, make, retain or have outstanding any
investments (whether through purchase of stock or obligations or otherwise)
in, or loans or advances to, any Affiliate, or acquire all or any substantial
part of the assets or business of any Affiliate, or be or become liable as
endorser, guarantor, surety or otherwise for any debt, obligation or
undertaking of any Affiliate.
Section 7.10 Dividends and Distributions. Declare any dividend or
incur any liability or make any other payment or distribution of cash or other
property or assets to the holders of the Company's stock (a) which exceeds, in
any calendar year, in the aggregate, forty percent (40%) of the prior year's
net income ( as determined in accordance with GAAP), (b) if an Event of
Default exists and is continuing, or (c) if such declaration or incurrence of
liability would cause an Event of Default to exist.
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Section 7.11 Special Negative Covenants Concerning Collateral.
7.12(a) Except for Foreclosure Loans, the Company shall not
amend or modify, or waive any of the terms and conditions of, or settle or
compromise any claim in respect of, any Mortgage Loan pledged hereunder.
7.12(b) The Company shall not sell, assign, transfer or
otherwise dispose of, or grant any option with respect to, or pledge or
otherwise encumber (except pursuant to this Agreement) any of the Collateral
or any interest therein.
7.12(c) The Company shall not make any compromise,
adjustment or settlement in respect of any of the Collateral or accept other
than cash in payment or liquidation of the Collateral.
ARTICLE VIII
DEFAULTS; REMEDIES
Section 8.1 Events of Default. The occurrence of any of the following
conditions or events shall be an event of default ("Event of Default"):
8.1(a) Failure to pay the principal of any Advance when due,
whether at stated maturity, by acceleration, or otherwise; or failure to pay
any installment of interest on any Advance or any other amount due under this
Agreement when due; or
8.1(b) Failure of the Company or any of its Subsidiaries to
pay, or any default in the payment of any principal or interest on, any other
indebtedness or in the payment of any contingent obligation beyond any period
of grace provided; or breach or default with respect to any other material
term of any other indebtedness or of any loan agreement, note, mortgage,
security agreement, indenture or other agreement relating thereto, if the
effect of such failure, default or breach is to cause, or to permit the holder
or holders thereof (or a trustee on behalf of such holder or holders) to
cause, indebtedness of the Company or its Subsidiaries in the aggregate amount
of $100,000 or more to become or be declared due prior to its stated maturity
(upon the giving or receiving of notice, lapse of time, both, or otherwise);
or
8.1(c) Failure of the Company to perform or comply with any
term or condition applicable to it contained in Sections 6.1 through 6.13,
inclusive, or 7.1 through 7.11, inclusive, of this Agreement; or
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8.1(d) Any of the Company's representations or warranties
made herein or in any statement or certificate at any time given by the
Company in writing pursuant hereto or in connection herewith shall be false in
any material respect on the date as of which made; or
8.1(e) The Company shall default in the performance of or
compliance with any term contained in this Agreement other than those referred
to above in subsections 8.1(a), (c) or (d) and such default shall not have
been remedied or waived within thirty (30) days after receipt of notice from
the Banks of such default; or
8.1(f) (1) A court having jurisdiction shall enter a decree
or order for relief in respect of the Company or any of its Subsidiaries or of
the Guarantors in an involuntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, which decree or
order is not stayed; or (2) any other similar relief shall be granted under
any applicable federal or state law; or a decree or order of a court having
jurisdiction for the appointment of a receiver, liquidator, sequestrator,
trustee, custodian or other officer having similar powers over the Company or
any of its Subsidiaries or of the Guarantors, or over all or a substantial
part of their respective property, shall have been entered; or the involuntary
appointment of an interim receiver, trustee or other custodian of the Company
or any of its Subsidiaries or of the Guarantors for all or a substantial part
of their respective property; or the issuance of a warrant of attachment,
execution or similar process against any substantial part of the property of
the Company or any of its Subsidiaries or of the Guarantors, and the
continuance of any such events in this clause (2) for sixty (60) days unless
dismissed, bonded off or discharged; or
8.1(g) The Company or any of its Subsidiaries or the
Guarantors shall have an order for relief entered with respect to it or
commence a voluntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, or shall consent to the entry of an
order for relief in an involuntary case, or to the conversion to an
involuntary case, under any such law, or shall consent to the appointment of
or taking possession by a receiver, trustee or other custodian for all or a
substantial part of its property; the making by the Company or any of its
Subsidiaries or the Guarantors of any assignment for the benefit of creditors;
or the inability or failure of the Company or any of its Subsidiaries or of
the Guarantors, or the admission by the Company or any of its Subsidiaries or
the Guarantors in writing of its inability to pay its debts as such debts
become due; or
8.1(h) Any money judgment, writ or warrant of attachment, or
similar process involving in any case an amount in excess of $25,000 shall be
entered or filed against the Company or any of its Subsidiaries or the
Guarantors or any of their respective assets and shall remain undischarged,
unvacated, unbonded or unstayed for a period of thirty (30) days or in any
event later than five (5) days prior to the date of any proposed sale
thereunder; or
8.1(i) Any order, judgment or decree shall be entered
against the Company decreeing the dissolution, liquidation or split up of the
Company and such order shall remain undischarged or unstayed for a period in
excess of twenty (20) days; or
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8.1(j) Any Plan maintained by the Company or any of its
Subsidiaries shall be terminated within the meaning of Title IV of ERISA or a
trustee shall be appointed by an appropriate United States district court to
administer any Plan, or the Pension Benefit Guaranty Corporation (or any
successor thereto) shall institute proceedings to terminate any Plan or to
appoint a trustee to administer any Plan if as of the date thereof the
Company's liability or any such Subsidiary's liability (after giving effect to
the tax consequences thereof) to the Pension Benefit Guaranty Corporation (or
any successor thereto) for unfunded guaranteed vested benefits under the Plan
exceeds the then current value of assets accumulated in such Plan by more than
$25,000 (or in the case of a termination involving the Company or any of its
Subsidiaries as a "substantial employer" (as defined in Section 4001(a)(2) of
ERISA) the withdrawing employer's proportionate share of such excess shall
exceed such amount); or
8.1(k) The Company or any of its Subsidiaries as employer
under a Multiemployer Plan shall have made a complete or partial withdrawal
from such Multiemployer Plan and the plan sponsor of such Multiemployer Plan
shall have notified such withdrawing employer that such employer has incurred
a withdrawal liability in an annual amount exceeding $25,000; or
8.1(l) The Company shall purport to disavow its obligations
hereunder or shall contest the validity or enforceability hereof; or the
Banks' security interest in any portion of the Collateral shall become
unenforceable or otherwise impaired; provided that, subject to the Banks'
approval, no Event of Default shall occur as a result of such impairment if
all Advances made against any such Collateral shall be paid in full within ten
(10) days of the date of such impairment.
Section 8.2 Remedies.
8.2(a) Upon the occurrence of any Event of Default described
in Section 8.1(f) or (g) the unpaid principal amount of and accrued interest
on the Notes shall automatically become due and payable, without presentment,
demand or other requirements of any kind, all of which are hereby expressly
waived by the Company.
8.2(b) Upon the occurrence of any Event of Default (other
than those described in Section 8.1(f) or (g)), the Banks may, by written
notice to the Company declare all or any portion of the Advances to be due and
payable whereupon the same shall forthwith become due and payable, together
with all accrued interest thereon, and the obligation of the Banks to make
Advances shall thereupon terminate.
8.2(c) Upon the occurrence of any Event of Default, the
Banks may also do any one or more or all of the following:
(1) Foreclose upon or otherwise enforce its
security interest in and Lien on all of the Collateral or on any portion
thereof to secure all payments and performance of obligations owed by the
Company under this Agreement.
(2) Notify all obligors of Collateral or on any
portion thereof that the Collateral has been assigned to the Banks and that
all payments thereon are to be made directly to the Banks or such other party
as may be designated by the Banks; settle, compromise, or release, in whole or
in part, any amounts owing on the Collateral, any such obligor or Investor or
any portion of the Collateral, on terms acceptable to the Banks; enforce
payment and prosecute any action or proceeding with respect to and any and all
Collateral; and where any such Collateral is in default, foreclose on and
enforce security interests in, such Collateral by any available judicial
procedure or without judicial process and sell property acquired as a result
of any such foreclosure.
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(3) Act, or contract with a third party to act, as
servicer of all or any item of Collateral requiring servicing and perform all
obligations required in connection with Purchase Commitments, such third
party's fees to be paid by the Company.
(4) Exercise all rights and remedies of a secured
creditor under the Uniform Commercial Code of the State of Illinois or the
state in which the Collateral is located, including but not limited to selling
the Collateral at public or private sale. The Banks shall give the Company not
less than ten (10) days' notice of any such public sale or of the date after
which private sale may be held. The Company agrees that ten (10) days' notice
shall be reasonable notice. At any such sale the Collateral may be sold as an
entirety or in separate parts, as the Banks may determine. The Banks may,
without notice or publication, adjourn any public or private sale or cause the
same to be adjourned from time to time by announcement at the time and place
fixed for the sale, and such sale may be made at any time or place to which
the same may be so adjourned. In case of any sale of all or any part of the
Collateral on credit or for future delivery, the Collateral so sold may be
retained by the Banks until the selling price is paid by the purchaser
thereof, but the Banks shall not incur any liability in case of the failure of
such purchaser to take up and pay for the Collateral so sold and, in case of
any such failure, such Collateral may again be sold upon like notice. The
Banks may, however, instead of exercising the power of sale herein conferred
upon it, proceed by a suit or suits at law or in equity to collect all amounts
due upon all or any portion of the Collateral or to foreclose the pledge and
sell all or any portion of the Collateral under a judgment or decree of a
court or courts of competent jurisdiction, or both.
(5) Proceed against the Company on the Notes or
against the Guarantors under the Guarantees or both.
(6) Pursue any rights and/or remedies available at
law or in equity against the Company or the Guarantors or both.
8.2(d) The Banks shall incur no liability as a result of the
sale of the Collateral, or any part thereof, at any private sale. The Company
hereby waives any claims it may have against the Banks arising by reason of
the fact that the price at which the Collateral may have been sold at such
private sale was less than the price which might have been obtained at a
public sale or was less than the aggregate amount of the outstanding Advances
and the unpaid interest accrued thereon, even if the Banks accepts the first
offer received and does not offer the Collateral, or any part thereof, to more
than one offeree.
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8.2(e) The Company waives any right to require the Banks to
(1) proceed against any Person, (2) proceed against or exhaust all or any of
the Collateral or pursue its rights and remedies as against the Collateral in
any particular order, or (3) pursue any other remedy in its power. The Banks
shall not be required to take any steps necessary to preserve any rights of
the Company against holders of mortgages prior in lien to the Lien of any
Mortgage included in the Collateral or to preserve rights against prior
parties.
8.2(f) The Banks may, but shall not be obligated to, advance
any sums or do any act or thing necessary to uphold and enforce the Lien and
priority of, or the security intended to be afforded by, any Mortgage included
in the Collateral, including, without limitation, payment of delinquent taxes
or assessments and insurance premiums. All advances, charges, costs and
expenses, including reasonable attorneys' fees and disbursements, incurred or
paid by the Banks in exercising any right, power or remedy conferred by this
Agreement, or in the enforcement hereof, together with interest thereon, at
the rate of interest specified in the Notes, from the time of payment until
repaid, shall become a part of principal balance outstanding under the Notes.
8.2(g) No failure on the part of the Banks to exercise, and
no delay in exercising, any right, power or remedy provided hereunder, at law
or in equity shall operate as a waiver thereof; nor shall any single or
partial exercise by the Banks of any right, power or remedy provided
hereunder, at law or in equity preclude any other or further exercise thereof
or the exercise of any other right, power or remedy. Without intending to
limit the foregoing, all defenses based on the statute of limitations are
hereby waived by the Company. The remedies herein provided are cumulative and
are not exclusive of any remedies provided at law or in equity.
Section 8.3 Application of Proceeds. The proceeds of any sale or
other enforcement of the Banks' security interest in all or any part of the
Collateral shall be applied by the Banks:
First, to the payment of the costs and expenses of such sale
or enforcement, including reasonable compensation to the Banks' agents and
counsel, and all expenses, liabilities and advances made or incurred by or on
behalf of the Banks in connection therewith;
Second, to the payment of any other amounts due (other than
principal and interest) under the Notes or this Agreement;
Third, to the payment of interest accrued and unpaid on the
Notes;
Fourth, to the payment of the outstanding principal balance
of the Notes; and
Finally, to the payment to the Company, or to its successors
or assigns, or as a court of competent jurisdiction may direct, of any surplus
then remaining from such proceeds. If the proceeds of any such sale are
insufficient to cover the costs and expenses of such sale, as aforesaid, and
the payment in full of the Notes and all other amounts due hereunder, the
Company shall remain liable for any deficiency.
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Section 8.4 Agent Appointed Attorney-in-Fact. The Agent, on behalf of
the Banks are hereby appointed the attorney-in-fact of the Company, with full
power of substitution, for the purpose of carrying out the provisions hereof
and taking any action and executing any instruments which the Banks may deem
necessary or advisable to accomplish the purposes hereof, which appointment as
attorney-in-fact is irrevocable and coupled with an interest. Without limiting
the generality of the foregoing, the Agent shall have the right and power to
give notices of the Banks' security interest in the Collateral to any Person,
either in the name of the Company or in its own name, to endorse all Mortgage
Loans payable to the order of the Company, or to receive, endorse and collect
a11 checks made payable to the order of the Company representing any payment
on account of the principal of or interest on, or the proceeds of sale of, any
of the Mortgage Loans or and to give full discharge for the same.
Section 8.5 Right of Set-Off. If the Company shall default in the
payment of the Notes, any interest accrued thereon, or any other sums which
may become payable hereunder when due, or in the performance of any of its
other obligations or liabilities under this Agreement, the Banks, shall have
the right, at any time and from time to time, without notice, to set-off and
to appropriate or apply any and all deposits of money or property or any other
indebtedness at any time held or owing by the Banks or a parent company,
affiliate or subsidiary of the Banks, to or for the credit of the account of
the Company against and on account of the obligations and liabilities of the
Company under the Notes and this Agreement, irrespective of whether or not the
Banks shall have made any demand hereunder and whether or not said obligations
and liabilities shall have matured, provided, however, that the aforesaid
right of set-off shall not apply to any deposits of escrow monies being held
on behalf of the mortgagors under Mortgage Loans or other third parties.
Section 8.6 Reasonable Assurances. If, at any time during the term of
the Agreement, Banks has reason to believe that Company is not conducting its
business in accordance with, or otherwise is not satisfying: (i) all
applicable statutes, regulations, rules, and notices of federal, state, or
local governmental agencies or instrumentalities, all applicable requirements
of Investors and Insurers and prudent industry standards or (ii) all
applicable requirements of Banks, as set forth in this Agreement, then, Banks
shall have the right to demand, pursuant to written notice from Banks to
Company specifying with particularity the alleged act, error or omission in
question, reasonable assurances from Company that such a belief is in fact
unfounded, and any failure of Company to provide to Banks such reasonable
assurances in form and substance reasonably satisfactory to Banks, within the
time frame specified in such written notice shall itself constitute an Event
of Default hereunder. Company hereby authorizes Banks to take such actions as
may be necessary or appropriate to confirm the continued eligibility of
Company for Advances hereunder, including without limitation (i) ordering
credit reports and (ii) contacting mortgagors, licensing authorities and
Investors or Insurers.
ARTICLE IX
REIMBURSEMENT OF EXPENSES; INDEMNITY
The Company shall:
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Section 9.1 Cost of Enforcement. Pay all out-of-pocket costs and
expenses of the Banks or the Agent, including reasonable attorney's fees, in
connection with the enforcement of this Agreement, the Notes, and other
documents and instruments related hereto and the making and repayment of the
Advances and the payment of interest thereon.
Section 9.2 Payments of Taxes. Pay, and hold the Banks, the Agent and
any holder of the Notes harmless from and against, any and all present and
future stamp, documentary and other similar taxes with respect to the
foregoing matters and save the Banks and the holder or holders of the Notes
harmless from and against any and all liabilities with respect to or resulting
from any delay or omission to pay such taxes.
Section 9.3 Indemnification. Indemnify, pay and hold harmless the
Banks or the Agent and any of its officers, directors, employees or agents and
any subsequent holder of the Notes from and against any and all liabilities,
obligations, losses, damages, penalties, judgments, suits, costs, expenses and
disbursements of any kind whatsoever (the "Indemnified Liabilities")
(excluding any such Indemnified Liabilities resulting from failure by the
Banks to perform any of its obligations under this Agreement, the Notes, or
any other document referred to herein as established in a suit between the
Company and the Banks which may be the same suit in which indemnification is
being sought hereunder by the Banks) which may be imposed upon, incurred by or
asserted against the Banks or such holder in any way relating to or arising
out of this Agreement, the Notes, or any other document referred to herein or
any of the transactions contemplated hereby or thereby to the extent that any
such Indemnified Liabilities result (directly or indirectly) from (i) the
inaccuracy or incompleteness of any representation or warranty made by the
Company in this Agreement or any schedule, statement, Exhibit or certificate
furnished by the company pursuant to this Agreement or (ii) the failure by the
Company to observe or perform any term or provision of this Agreement or of
any agreement executed in connection herewith, including without limitation
any claims made, or any actions, suits or proceedings commenced or threatened,
by or on behalf of any creditor (excluding the Banks and the holder or holders
of the Notes), security holder, shareholder, mortgagor, customer (including,
without limitation, any person or entity having any dealings of any kind with
the Company), trustee, director, officer, employee and/or agent of the Company
acting in such capacity, the Company or any governmental regulatory body or
authority (excluding the Office of the Comptroller of the Currency, the
Federal Deposit Insurance Corporation and any other banking regulatory body or
authority having jurisdiction over the Banks).
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ARTICLE X
DELIVERIES OF COLLATERAL DOCUMENTS
The Banks exclusively shall deliver Pledged Mortgages to the Investor
under the Purchase Commitment with respect thereto for its examination and
purchase, against a bailee letter substantially in the form attached hereto as
Exhibit H. The Banks may deliver any document relating to the Collateral to
the Company for correction or completion against a properly executed trust
receipt in the form approved by the Banks with instructions to the Company to
either return the corrected document to the Banks within ten (10) Business
Days after such delivery or redeem the Mortgage Loan from pledge. In the case
of deliveries of Pledged Mortgages by the Banks, the Company shall deliver to
the Banks a letter, to accompany the delivery, confirming the security
interest of the Banks and designating the Banks as payee under any Purchase
Commitment.
ARTICLE XI
THE AGENT
Section 11.1 Appointment and Authorization. Each Bank hereby
irrevocably (subject to Section 11.9) appoints, designates and authorizes the
Agent to take such action on its behalf under the provisions of this Agreement
and to exercise such powers and perform such duties as are expressly delegated
to it by the terms of this Agreement, together with such powers as are
reasonably incidental thereto. Notwithstanding any provision to the contrary
contained elsewhere in this Agreement, the Agent shall not have any duties or
responsibilities, except those expressly set forth herein, nor shall the Agent
have or be deemed to have any fiduciary relationship with any Bank, and no
implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or otherwise exist against the
Agent. Without limiting the generality of the foregoing sentence, the use of
the term "agent" in this Agreement with reference to the Agent is not intended
to connote any fiduciary or other implied (or express) obligations arising
under agency doctrine of any applicable law. Instead, such term is used merely
as a matter of market custom, and is intended to create or reflect only an
administrative relationship between independent contracting parties.
Section 11.2 Delegation of Duties. The Agent may execute any of its
duties under this Agreement or by or through agents, employees or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agent or attorney-in-fact that it selects with
reasonable care.
Section 11.3 Liability of Agent. None of the Agent-Related Persons
shall (a) be liable for any action taken or omitted to be taken by any of them
under or in connection with this Agreement or the transactions contemplated
hereby (except for its own gross negligence or willful misconduct); (b) be
responsible in any manner to any of the Banks for any recital, statement,
representation or warranty made by the Company, or any officer thereof,
contained in this Agreement, or in any certificate, report, statement or other
document referred to or provided for in, or received by the Agent under or in
connection with, this Agreement, or the validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement, or for any failure of the
Company to perform its obligations hereunder or thereunder. No Agent-Related
Person shall be under any obligation to any Bank to ascertain or to inquire as
to the observance or performance of any of the agreements contained in, or
conditions of, this Agreement, or to inspect the properties, books or records
of the Company.
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Section 11.4 Reliance by Agent. (a) The Agent shall be entitled to
rely, and shall be fully protected in relying, upon any writing, resolution,
notice, consent, certificate, affidavit, letter, telegram, facsimile, telex or
telephone message, statement or other document or conversation believed by it
to be genuine and correct and to have been signed, sent or made by the proper
Persons, and upon advice and statements of legal counsel (including counsel to
the Company), independent accountants and other experts selected by the Agent.
The Agent shall be fully justified in failing or refusing to take any action
under this Agreement unless it shall first receive such advice or concurrence
of the Banks as it deems appropriate and, if it so requests, it shall first be
indemnified to its satisfaction by the Banks against any and all liability and
expense which may be incurred by it by reason of taking or continuing to take
any such action. The Agent shall in all cases be fully protected in acting, or
in refraining from acting, under this Agreement in accordance with a request
or consent of the Banks and such request and any action taken or failure to
act pursuant thereto shall be binding upon the Banks.
11.4(b) Consent by Banks. For purposes of determining
compliance with the conditions specified in Section 4.1, each Bank that has
executed this Agreement shall be deemed to have consented to, approved or
accepted or to be satisfied with, each document or other matter either sent by
the Agent to such Bank for consent, approval, acceptance or satisfaction, or
required thereunder to be consented to or approved by or acceptable or
satisfactory to the Bank.
Section 11.5 Notice of Default. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default,
except with respect to defaults in the payment of principal, interest and fees
required to be paid to the Agent for the account of the Banks, unless the
Agent shall have received written notice from a Bank or the Company referring
to this Agreement, describing such Default or Event of Default and stating
that such notice is a "notice of default". The Agent will notify the Banks of
its receipt of any such notice. The Agent shall take such action with respect
to such Default or Event of Default as may be requested by the Banks in
accordance with Article VIII; provided, however, that unless and until the
Agent has received any such request, the Agent may (but shall not be obligated
to) take such action, or refrain from taking such action, with respect to such
Default or Event of Default as it shall deem advisable or in the best interest
of the Banks.
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Section 11.6 Credit Decision. Each Bank acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it, and that
no act by the Agent hereinafter taken, including any review of the affairs of
the Company and its Subsidiaries, shall be deemed to constitute any
representation or warranty by any Agent-Related Person to any Bank. Each Bank
represents to the Agent that it has, independently and without reliance upon
any Agent-Related Person and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition and
credit worthiness of the Company and its Subsidiaries, and all applicable bank
regulatory laws relating to the transactions contemplated hereby, and made its
own decision to enter into this Agreement and to extend credit to the Company
hereunder. Each Bank also represents that it will, independently and without
reliance upon any Agent-Related Person and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis appraisals and decisions in taking or not taking action under
this Agreement and to make such investigations as it deems necessary to inform
itself as to the business, prospects, operations, property, financial and
other condition and credit worthiness of the Company. Except for notices,
reports and other documents expressly herein required to be furnished to the
Banks by the Agent, the Agent shall not have any duty or responsibility to
provide any Bank with any credit or other information concerning the business,
prospects, operations, property, financial and other condition of credit
worthiness of the Company which may come into the possession of any of the
Agent-Related Persons.
Section 11.7 No Responsibility for Loans, Recitals, Etc. Neither the
Agent nor any Agent-Related Person shall (i) be responsible for or have any
duty to ascertain, inquire into or verify any recitals, reports, statements,
representations or warranties contained in this Agreement or any other
documents or furnished pursuant hereto or thereto; (ii) be responsible for any
Loans hereunder; (iii) be bound to ascertain or inquire as to the performance
or observance of any of the terms of this Agreement or any other documents
pursuant thereto; (iv) be responsible for the satisfaction of any condition
specified in Article IV, except receipt of items required to be delivered to
the Agent; (v) be responsible for the validity, effectiveness, genuineness or
enforceability of this Agreement or any other documents; or (vi) be
responsible for the creation, attachment, perfection or priority of any
security interests or liens purported to be granted to the agent or any of the
Banks pursuant to this Agreement or any other documents.
Section 11.8 Indemnification of Agent. Whether or not the
transactions contemplated hereby are consummated, the Banks shall indemnify
upon demand the Agent-Related Persons (to the extent not reimbursed by or on
behalf of the Company and without limiting the obligation of the Company to do
so), pro rata, from and against any and all Indemnified Liabilities; provided,
however, that no Bank shall be liable for the payment to the Agent-Related
Persons of any portion of such Indemnified Liabilities resulting solely from
such Person's gross negligence or willful misconduct. Without limitation of
the foregoing, each Bank shall reimburse the Agent upon demand for its ratable
share of any costs or out-of-pocket expenses (including attorney costs)
incurred by the Agent in connection with the preparation, execution, delivery,
administration, modification, amendment or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect
of rights or responsibilities under, this Agreement, or any document
contemplated by or referred to herein, to the extent that the Agent is not
reimbursed for such expenses by or on behalf of the Company. The undertaking
in this Section shall survive the payment of all obligations hereunder and the
resignation or replacement of the Agent.
Section 11.9 Agent in Individual Capacity. PNC may make loans to,
issue letters of credit for the account of, accept deposits from, acquire
equity interests in and generally engage in any kind of banking, trust,
financial advisory, underwriting or other business with the Company as though
were not the Agent hereunder and without notice to or consent of the Banks.
The Banks acknowledge that, pursuant to such activities, PNC may receive
information regarding the Company (including information that may be subject
to confidentiality obligations in favor of the Company) and acknowledge that
the Agent shall be under no obligation to provide such information to them.
With respect to its Loans, PNC shall have the same rights and powers under
this Agreement as any other Bank and may exercise the same as though it were
not the Agent, and the terms "Bank" and "Banks" include PNC in its individual
capacity.
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Section 11.10 Successor Agent. The Agent may, and at the request of
the Banks and the Company, shall, resign as Agent upon 30 days' notice to the
Banks. If the Agent resigns under this Agreement, the Banks shall appoint a
successor agent for the Banks which successor agent shall be approved by the
Company. If no successor agent is appointed prior to the effective date of the
resignation of the Agent, the Agent may appoint, after consulting with the
Banks and the Company, a successor agent. Upon the acceptance of its
appointment as successor agent hereunder, such successor agent shall succeed
to all the rights, powers and duties of the retiring Agent and the term
"Agent" shall mean such successor agent and the retiring Agent's appointment,
powers and duties as Agent shall be terminated. After any retiring Agent's
resignation hereunder as Agent, the provisions of this Article IX and Article
XI shall inure to its benefit as to any actions taken or omitted to be taken
by it while it was Agent under this Agreement. If no successor agent has
accepted appointment as Agent by the date which is 30 days following a
retiring Agent's notice of resignation, the retiring Agent's resignation shall
nevertheless thereupon become effective and the Banks shall perform all of the
duties of the Agent hereunder until such time, if any, as the Banks appoint a
successor agent as provided for above.
ARTICLE XII
MISCELLANEOUS
Section 12.1 Relationship of Parties. The relationship between Banks
and the Company is limited to that of creditor/secured party, on the one hand,
and borrower, on the other hand. The provisions herein for compliance with
financial covenants and delivery of financial statements, are intended solely
for the benefit of Banks to protect its interests as lender in assuring
performance of the obligations hereunder, and nothing contained in this
Agreement shall be construed as permitting or obligating Banks to act as a
financial or business advisor or consultant to the Company, as permitting or
obligating the Banks to control the Company or to conduct the Company's
operations, as creating any joint venture, agency, fiduciary, trustee, or
other relationship between the parties other than as explicitly and
specifically stated in this Agreement. The Company acknowledges that it has
had the opportunity to obtain the advice of experienced counsel of its own
choosing in connection with the negotiation and execution of this Agreement
and to obtain the advice of such counsel with respect to all matters contained
herein. The Company further acknowledges that it is experienced with respect
to financial and credit matters and has made its own independent decision to
execute and deliver this Agreement.
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Section 12.2 Recourse. The Company acknowledges and agrees that it is
fully liable for repayment of all Advances and all sums due hereunder or under
the Notes and for performance of all obligations contained in this Agreement.
Section 12.3 Notices. All notices, demands, consents, requests and
other communications required or permitted to be given or made hereunder
(collectively, "Notices") shall, except as otherwise expressly provided
hereunder, be in writing and shall be delivered in person or telegraphed or
mailed, first class, return receipt requested, postage prepaid, or by
overnight delivery service or by telecopy or other telecommunications device
addressed to the respective parties hereto at their respective addresses
hereinafter set forth or, as to any such party, at such other address as may
be designated by it in a Notice to the other. All Notices shall be
conclusively deemed to have been properly given or made when duly delivered,
in person or by overnight delivery service or by telecopy or other
telecommunications device, or if mailed on the third Business Day after being
deposited in the mails or when delivered to the telegraph company, addressed
as follows:
if to the Company: Premier Mortgage Corporation
00 Xxxxx Xxxxx Xxxx
Xxxxxx Xxxxxxx, Xxx Xxxx 00000
Attn: Xxxxxx Xxxxxxxx
Telecopy No. (000) 000-0000
if to PNC or the Agent: PNC Mortgage Bank, N.A.
00 Xxxxx Xxxxxxx Xxxxx
Xxxxxx Xxxxx, XX 0000x
Attn: Warehouse Lending
Telecopy No: (847) 918-53l6
if to LaSalle: LaSalle National Bank
000 Xxxxx XxXxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
Section 12.4 Terms Binding Upon Successors; Survival. The terms and
provisions of this Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns. All
representations, warranties, covenants and agreements herein contained on the
part of the Company shall survive the making of any Advance and the execution
of the Notes, and shall be effective so long as the Commitment is outstanding
or there remains any obligation of the Company hereunder or under the Notes to
be paid or performed.
Section 12.5 Assignment. This Agreement may not be assigned by the
Company. Neither PNC nor Lasalle shall transfer or assign its respective
interest in this Agreement, the Notes or its interest in any Collateral
hereunder without the prior written consent of the other Bank.
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Section 12.6 Amendments. This Agreement may be modified or amended by
the Banks at any time upon 30 days notice to the Company. Such modification or
amendment will not take effect if, within fifteen (15) days from the date of
such notice, the Banks receives a written objection to such modification or
amendment from the Company. If no such objection is received by the Banks such
modification or amendment will automatically become effective upon the 30th
day from the date of such notice by the Banks.
Section 12.7 No Waiver; Remedies Cumulative. No failure or delay on
the part of the Company or the Banks or any holder of the Notes in exercising
any right, power or privilege hereunder and no course of dealing between the
Company and the Banks or the holder of the Notes shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, power or
privilege hereunder or under the Notes preclude any other or further exercise
thereof or the exercise of any other right, power or privilege hereunder. The
rights and remedies herein expressly provided are cumulative and not exclusive
of any rights or remedies which the Company or the Banks or the holder of the
Notes would otherwise have. No notice to or demand on the Company in any case
shall entitle the Company to any other or further notice or demand in similar
or other circumstances or constitute a waiver of the rights of the Banks or
the holder of the Notes to any other or further action in any circumstances
without notice or demand.
Section 12.8 Invalidity. In case any one or more of the provisions
contained in this Agreement shall for any reason be held to be invalid,
illegal, or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provisions hereof, and this
Agreement shall be construed as if such invalid, illegal or unenforceable
provision had not been included.
Section 12.9 Participations. The Banks may from time to time sell or
otherwise grant participations in the Commitment and the Notes, and the holder
of any such participation, if the participation agreement so provides, (i)
shall, with respect to its participation, be entitled to all of the rights of
the Banks and (ii) may exercise any and all rights of setoff or banker's lien
with respect thereto, in each case as fully as though the Company were
directly indebted to the holder of such participation in the amount of such
participation; provided, however, that the Company shall not be required to
send or deliver to any of the participants other than the Banks any of the
materials or notices required to be sent or delivered by it under the terms of
this Agreement, nor shall it have to act except in compliance with the
instructions of the Banks.
Section 12.10 Integration. This Agreement, together with the Notes,
and other documents executed pursuant to the terms hereof, constitute the
entire agreement between the parties hereto, with respect to the subject
matter hereof.
Section 12.11 Additional Instruments, etc. The Company shall execute
and deliver such further instruments and shall do and perform all matters and
things necessary or expedient to be done or observed for the purpose of
effectively creating, maintaining and preserving the security and benefits
intended to be afforded by this Agreement.
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Section 12.12 GOVERNING LAW AND CONSENT TO JURISDICTION. 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 ILLINOIS, WITHOUT REFERENCE TO ITS PRINCIPLES OF CONFLICTS OF
LAW. IN THE EVENT OF ANY LITIGATION ARISING OUT OF THIS AGREEMENT, THE COMPANY
AGREES THAT THE SUBSTANTIVE LAW OF THE STATE OF ILLINOIS SHALL APPLY,
INCLUDING, WITHOUT LIMITATION, ALL PROVISIONS RELATING TO THE RIGHTS AND
REMEDIES OF THE OWNER OR HOLDER OF THE NOTES AGAINST ANY SECURITY THEREFOR
AND/OR THE COMPANY. THE COMPANY HEREBY CONSENTS TO JURISDICTION WITHIN THE
STATE OF ILLINOIS FOR PURPOSES OF SUCH LITIGATION. NOTHING HEREIN CONTAINED,
HOWEVER, SHALL PREVENT ANY OWNER OR HOLDER OF THE NOTES FROM BRINGING ANY
ACTION OR EXERCISING ANY RIGHTS AGAINST ANY SECURITY OR AGAINST THE COMPANY OR
AGAINST ANY PROPERTY OF THE COMPANY WITHIN ANY OTHER JURISDICTION OR STATE.
INITIATING SUCH PROCEEDING OR TAKING SUCH ACTION IN ANY OTHER JURISDICTION OR
STATE SHALL NOT, HOWEVER, CONSTITUTE A WAIVER OF THE AGREEMENT CONTAINED
HEREIN THAT THE LAWS OF THE STATE OF ILLINOIS SHALL GOVERN THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER.
Section 12.13 Company Information. The Company hereby authorizes the
Banks to provide any Affiliate of the Banks with information regarding the
Company, including copies of documents, financial statements, corporate
records and reports, obtained by the Banks from the Company or any other
entity during the course of the negotiation or administration of this
Agreement.
Section 12.14 WAIVER OF JURY TRIAL. THE COMPANY HEREBY (I) COVENANTS
AND AGREES NOT TO ELECT A TRIAL BY JURY OR ANY ISSUE TRIABLE OF RIGHT BY A
JURY, AND (II) WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY
SUCH RIGHT SHALL NOW OR HEREAFTER EXIST. THIS WAIVER IS INTENDED TO ENCOMPASS
INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A JURY
TRIAL WOULD OTHERWISE ACCRUE. THE BANKS ARE HEREBY AUTHORIZED AND REQUESTED TO
SUBMIT THIS AGREEMENT TO ANY COURT HAVING JURISDICTION OVER THE SUBJECT MATTER
AND THE PARTIES HERETO, SO AS TO SERVE AS CONCLUSIVE EVIDENCE OF THE COMPANY'S
HEREIN CONTAINED WAIVER OF THE RIGHT TO JURY TRIAL. FURTHER, THE COMPANY
HEREBY CERTIFIES THAT NO REPRESENTATIVE OR AGENT OF THE BANKS IS (INCLUDING
THE BANK'S COUNSEL) HAS REPRESENTED, EXPRESSLY OR OTHERWISE, TO ANY OF THE
UNDERSIGNED THAT THE BANK WILL NOT SEEK TO ENFORCE THIS WAIVER OF RIGHT TO
JURY TRIAL PROVISION.
Section 12.15 Counterparts. This Agreement may be executed in two or
more counterparts, all of which shall be deemed to constitute one and the same
Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date first above written.
PNC MORTGAGE BANK, N.A., Individually and
as Agent
By:
------------------------------------
Its:
------------------------------------
LASALLE NATIONAL BANK
By:
------------------------------------
Its:
------------------------------------
PREMIER MORTGAGE CORPORATION
By:
------------------------------------
Its:
------------------------------------
RF PROPERTIES CORP.
By:
------------------------------------
Its:
------------------------------------
WITNESS my hand and official seal this _____ day of __________________, 19___.
------------------------------------
Notary Public
My Commission Expires:
--------------
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