1
EXHIBIT 10(A)
THIRD AMENDED AND RESTATED
REVOLVING CREDIT AGREEMENT
dated as of July 25, 1997
by and among
SOURCE ONE MORTGAGE SERVICES CORPORATION
and
THE MORTGAGE AUTHORITY, INC.
and
CENTRAL PACIFIC MORTGAGE COMPANY
and
THE FIRST NATIONAL BANK OF CHICAGO,
individually and as Administrative Agent
and
CERTAIN OTHER LENDERS
2
TABLE OF CONTENTS
PAGE
----
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE I DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
1.3 Accounting Terms and Determinations . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE II BORROWINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
2.1 Availability and Adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
2.2 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
2.3 Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
2.4 Discount Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
2.5 Swingline Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
2.6 Bid Loans, Approved GNMA Letters of Credit, and
Approved Rate Hedging Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . 34
2.7 Rate after Maturity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
2.8 Interest Payment Dates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
2.9 Method of Selecting Rate Options and Interest
Periods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
2.10 Maximum Number of Eurodollar Loans . . . . . . . . . . . . . . . . . . . . . . . . . 38
2.11 Funding Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
2.12 Conversion and Continuation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
2.13 Optional Principal Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
2.14 Required Principal Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
2.15 Method of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
2.16 Notes; Telephonic Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
2.17 General Provisions as to Payments . . . . . . . . . . . . . . . . . . . . . . . . . 42
2.18 Notification of Advances, Interest Rates and
Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
2.19 Lending Installations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
2.20 Non-Receipt of Funds by Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
ARTICLE III CHANGE IN CIRCUMSTANCES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
3.1 Yield Protection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
3.2 Availability of Rate Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
3.3 Funding Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
3.4 Lender Statements; Survival of Indemnity . . . . . . . . . . . . . . . . . . . . . . 46
3.5 Lender Tax Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
ARTICLE IV COLLATERAL AND BORROWING BASE . . . . . . . . . . . . . . . . . . . . . . . . . . 48
-i-
3
TABLE OF CONTENTS
(CONTINUED)
PAGE
----
4.1 Eligible Collateral - Pledged Mortgages . . . . . . . . . . . . . . . . . . . . . . 48
4.2 Eligible Collateral - Repurchased Agency Loans and
Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
4.3 Eligible Collateral - Securities . . . . . . . . . . . . . . . . . . . . . . . . . . 51
4.4 Eligible Collateral - Servicing Sale Receivables . . . . . . . . . . . . . . . . . . 51
4.5 Borrowing Base . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
4.6 Special Representations as to Pledged Warehouse
Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
4.7 Special Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
4.8 Release of Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
4.9 Settlement Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
4.10 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
4.11 Abatement of Security Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
4.12 Transition from Existing Facility . . . . . . . . . . . . . . . . . . . . . . . . . 64
ARTICLE V CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
5.1 Initial Advance (Company and Borrowing
Subsidiaries) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
5.2 Initial Advance (Lenders) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
5.3 All Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
ARTICLE VI REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . 66
6.1 Organization, Corporate Powers, Etc. . . . . . . . . . . . . . . . . . . . . . . . . 66
6.2 Corporate Authority, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
6.3 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
6.4 Government Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
6.5 Valid and Binding Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
6.6 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
6.7 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
6.8 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
6.9 Accuracy of Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
6.10 Accuracy of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . 69
6.11 Investment Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
6.12 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
6.13 Tax Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
6.14 Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
6.15 GNMA, FHA, VA, FNMA, AND FHLMC Eligibility . . . . . . . . . . . . . . . . . . . . . 70
6.16 No Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
-ii-
4
TABLE OF CONTENTS
(CONTINUED)
PAGE
----
ARTICLE VII AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
7.1 Payment of Debts, Taxes, Etc.; Maintenance of
Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
7.2 Preservation of Corporate Existence . . . . . . . . . . . . . . . . . . . . . . . . 72
7.3 Compliance with Laws, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
7.4 Requested Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
7.5 Keeping of Records and Books of Account . . . . . . . . . . . . . . . . . . . . . . 73
7.6 Maintenance of Approvals, Filings and
Registrations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
7.7 Reporting Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
7.8 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
7.9 Maintenance of Net Worth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
7.10 Federal Agency Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
7.11 Approved Investor Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
7.12 Borrowing Base Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
7.13 Further Assurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
7.14 Maintenance of Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
7.15 Payment of Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
ARTICLE VIII NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
8.1 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
8.2 Compliance with Security Agreement . . . . . . . . . . . . . . . . . . . . . . . . . 81
8.3 Mergers; Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
8.4 Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
8.5 Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
8.6 Ratably Secured Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
8.7 Guarantees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
8.8 Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
8.9 Leverage Ratios . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
8.10 Recourse Servicing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
8.11 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
8.12 Credit Requirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
8.13 Affiliate Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
8.14 Conduct of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
8.15 FHA and other Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
8.16 Restricted Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
8.17 Borrowing Subsidiary Liabilities and Secured Debt . . . . . . . . . . . . . . . . . 91
8.18 Funding of Borrowing Subsidiary Mortgage Loans . . . . . . . . . . . . . . . . . . . 91
-iii-
5
TABLE OF CONTENTS
(CONTINUED)
PAGE
----
8.19 Subordinated Debt Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
ARTICLE IX THE AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
9.1 Appointment and Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
9.2 Agent and Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
9.3 Action by Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
9.4 Consultation with Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
9.5 Liability of Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
9.6 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
9.7 Credit Decision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
9.8 Resignation or Removal and Appointment of Successor
Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
9.9 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
9.10 Release of Collateral Documents . . . . . . . . . . . . . . . . . . . . . . . . . . 95
9.11 Knowledge of Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
ARTICLE X DEFAULTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
10.1 Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
10.2 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
10.3 Notice of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
10.4 Application of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
10.5 Letter of Credit Cash Collateral Accounts . . . . . . . . . . . . . . . . . . . . . 102
ARTICLE XI BENEFIT OF AGREEMENT; ASSIGNMENTS;
PARTICIPATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
11.1 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
11.2 Participations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
11.3 Assignments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
11.4 Dissemination of Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
11.5 Tax Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
ARTICLE XII MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
12.1 Immediately Available Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
12.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
12.3 Survival and Termination of Agreement . . . . . . . . . . . . . . . . . . . . . . . 107
12.4 Fees and Expenses of the Lenders . . . . . . . . . . . . . . . . . . . . . . . . . . 107
12.5 Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
12.6 Modification of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
-iv-
6
TABLE OF CONTENTS
(CONTINUED)
PAGE
----
12.7 Non-Waiver of Rights by the Lenders . . . . . . . . . . . . . . . . . . . . . . . . 109
12.8 Dealings with the Company and its Affiliates . . . . . . . . . . . . . . . . . . . . 109
12.9 Changes in GAAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
12.10 Set-Off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
12.11 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
12.12 Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
12.13 Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
12.14 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
12.15 Limitation on Recourse to Borrowing Subsidiaries . . . . . . . . . . . . . . . . . . 111
12.16 Consent of Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112
12.17 Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
SCHEDULE 1 APPLICABLE MARGIN
SCHEDULE 2 FACILITY FEE RATE
EXHIBIT A LIST OF APPROVED INVESTORS
EXHIBIT B BORROWING BASE CERTIFICATE
EXHIBIT C COMMITMENTS AND COMMITMENT PERCENTAGES
EXHIBIT D FORM OF SECURITY AGREEMENT
EXHIBIT E-1 FORM OF NOTE
EXHIBIT E-2 FORM OF DISCOUNT NOTE
EXHIBIT F METHOD OF DETERMINING WEIGHTED AVERAGE
PURCHASE PRICES
EXHIBIT G FORM OF BID LOAN NOTICE
EXHIBIT H FORM OF NEW/MODIFIED COMMITMENT SUPPLEMENT
EXHIBIT I FORM OF NON-LENDER BALANCE BANK SUPPLEMENT
EXHIBIT J FORM OF AP NOTICE
EXHIBIT K FORM OF OPINION LETTER
EXHIBIT L MATERIAL LITIGATION NOT REFERENCED IN
ANNUAL/QUARTERLY REPORTS
EXHIBIT M FORM OF FUNDING AGREEMENT
EXHIBIT N FORM OF TRANSITION MEMORANDUM
-v-
7
THIRD AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT
This THIRD AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT is dated as
of July 25, 1997 by and among SOURCE ONE MORTGAGE SERVICES CORPORATION, a
Delaware corporation (the "Company"), THE MORTGAGE AUTHORITY, INC., a Delaware
corporation ("TMA"), CENTRAL PACIFIC MORTGAGE COMPANY, a California corporation
("CPM"), the lenders identified on the signature pages hereof, and THE FIRST
NATIONAL BANK OF CHICAGO, a national banking association ("First Chicago"),
individually as a Lender and as administrative agent for the Lenders.
RECITALS
This Third Amended and Restated Revolving Credit Agreement amends and
restates in its entirety that certain Second Amended and Restated Revolving
Credit Agreement dated as of November 12, 1996 by and among the Company, TMA,
CPM, First Chicago, and certain other lenders, as amended by that certain First
Amendment to Second Amended and Restated Revolving Credit Agreement dated as of
January 6, 1997 (as so amended, the "Existing Facility").
The revolving credit facility made available to the Company and the
Borrowing Subsidiaries pursuant to this Agreement shall be used (i) for
originating, acquiring, and/or holding residential mortgage loans, mortgage
backed securities, and mortgage servicing rights, (ii) as liquidity backup for
the Company's commercial paper program, and (iii) for general working capital
and corporate purposes. The Company will request Advances hereunder for the
purposes set forth in the preceding sentence, and the Company will distribute
the proceeds of some of the Advances to one or more Borrowing Subsidiaries for
purposes of mortgage loan originations by such Borrowing Subsidiaries. In
addition, up to $1,000,000 of Advances may be requested directly by TMA, and up
to $50,000,000 of Advances may be requested directly by CPM, in each case to
the extent available, subject to all of the terms and conditions contained
herein. Accordingly, the Borrowing Subsidiaries shall be co-makers (with the
Company) of the Notes executed in connection herewith and shall pledge certain
of the Collateral securing the Loans made pursuant to this Agreement.
8
In consideration of the foregoing and for other good and valuable
consideration, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions.
Capitalized terms used in this Agreement shall have the
following meanings:
Additional Required Mortgage Documents: means the instruments and
documents described in Schedule B to the Security Agreement.
Adjusted Consolidated Tangible Net Worth: means, as of any date of
determination thereof, the net worth of the Company and its consolidated
Subsidiaries on a consolidated basis as determined in accordance with GAAP ("Net
Worth"); less the sum (without duplication) of (a) any assets of the Company and
its consolidated Subsidiaries which would be treated as intangibles under GAAP
including, without limitation, any write-up of assets, good-will, research and
development costs, trade-marks, trade names, copyrights, patents and unamortized
debt discount and expenses, and (b) loans or other extensions of credit to
officers of the Company or of any of its consolidated Subsidiaries other than
Mortgage Loans made to such Persons in the ordinary course of business and (c)
the amount of the Net Worth attributable to Capital Securities that have been
contributed to the Company; plus one percent (1%) of the then-current aggregate
outstanding principal balance of all Mortgage Loans then being serviced by the
Company either for its own account with respect to Pledged Items or for others
under Servicing Agreements (excluding Subservicing Agreements) to the extent the
servicing rights relating to such Mortgage Loans have not been capitalized and
are thus not accounted for in the Company's net worth as computed in accordance
with GAAP.
Adjusted Commitment Percentage: means, for each Lender as of any
date, the quotient of (i) such Lender's General Commitment divided by (ii) the
Aggregate Commitment minus the Swingline Commitment, which Adjusted Commitment
Percentage shall initially be as set forth on Exhibit C for each Lender.
-2-
9
Advance: means a borrowing hereunder consisting of the aggregate
amount of Loans made to the Company or any Borrowing Subsidiary by one or more
of the Lenders hereunder pursuant to Article II on any given Advance Date.
Advance Date: means a date on which an Advance is made hereunder.
Advance Notice: is defined in Section 2.9.
Affiliate: means, as to any Person, any other Person directly or
indirectly Controlling, Controlled by or under direct or indirect common
Control with such Person.
Agent: means The First National Bank of Chicago in its capacity as
administrative agent for the Lenders hereunder, and any successor Agent
appointed pursuant to Article IX.
Aggregate Commitment: means, as of any date, the aggregate of the
Lenders' then-current General Commitments and Swingline Commitments.
Agreement: means this Third Amended and Restated Revolving Credit
Agreement, as the same from time to time may be extended, amended,
supplemented, waived or modified.
Alternate Base Rate: means, on any day, a fluctuating rate of
interest per annum equal to the higher of (a) the Published Federal Funds
Effective Rate for such day plus the Applicable Margin, and (b) the Corporate
Base Rate for such day.
Alternate Base Rate Advance: means an Advance which bears interest at
the Alternate Base Rate.
Alternate Base Rate Loan: means a Loan which bears interest at the
Alternate Base Rate.
AP Mortgage: means, on any date, any Pledged Mortgage which has been
identified in an AP Notice and for which the Collateral Agent has not received
the Required Mortgage Documents by such date.
AP Notice: means a written pledge substantially in the form of
Exhibit J to this Agreement executed by the Company or a
-3-
10
Borrowing Subsidiary and delivered by facsimile to the Collateral Agent,
specifically identifying all Mortgage Loans with respect to which the Required
Mortgage Documents are not being delivered on or before the Pledge Date of such
Mortgage Loan.
Applicable Margin: means, with respect to each Rate Option as of any
date, the applicable percentage per annum as set forth on Schedule 1 attached
hereto which is in effect on such date, changing as and when the Company's
then-current unsecured long-term debt rating by either S & P or Xxxxx'x changes
as described therein, for any Eurodollar Interest Period or Discount Period
commencing after the date of such change.
Approved Equity Securities: means readily marketable securities
owned by the Company and approved by the Agent for purposes of inclusion
in the calculation of the Debt Threshold.
Approved GNMA Letter of Credit: means a letter of credit issued by
an Issuing Lender in favor of GNMA as a result of the failure by the Company or
any Borrowing Subsidiary to satisfy all document submission requirements of GNMA
in connection with the certification or re- certification by GNMA of a pool of
Mortgage Loans, which letter of credit (and related reimbursement agreement and
other documentation) has been approved by the Agent pursuant to Section 2.6(b).
Approved GNMA Letter of Credit Obligations: means, as of any date,
all liabilities, whether actual or contingent, as of such date of the Company
and the Borrowing Subsidiaries with respect to Approved GNMA Letters of Credit,
including, without limitation, the undrawn face amount of the then outstanding
Approved GNMA Letters of Credit and the sum of all drawn amounts for which the
Issuing Lenders have not yet been reimbursed.
Approved Investor: means, as of any time, any of the institutions
listed on Exhibit A attached hereto and any other institution approved by the
Agent, provided that any such institutions listed on Exhibit A or previously
approved by the Agent may be eliminated as an Approved Investor by notice to
the Company from the Agent.
Approved Investor Commitment: means a commitment issued by an
Approved Investor to purchase Mortgage Loans, to exchange Securities for
Mortgage Loans or to purchase Securities.
-4-
11
Approved MBS Custodian: is defined in Paragraph 7(b)(2)(iii) of the
Security Agreement.
Approved Rate Hedging Agreement: means a Rate Hedging Agreement
between the Company and a Lender which has been approved by the Agent pursuant
to Section 2.6(c).
Approved Secured Rate Hedging Obligations: means all obligations
under an Approved Rate Hedging Agreement that by the terms of such Approved
Rate Hedging Agreement are secured by the Collateral, subject to the terms set
forth in Section 2.6(c).
Assignment: means a duly executed assignment for the benefit of the
Secured Parties of a Mortgage, of the indebtedness secured thereby, and of all
documents and rights related to the related Mortgage Loan secured by such
Mortgage in accordance with the requirements of the Security Agreement.
Authorized Officer: means, with respect to the Company or a Borrowing
Subsidiary, the president, chairman, chief financial officer, or other officer
of the Company or the Borrowing Subsidiary, as applicable, authorized in
writing to execute any particular statement, certificate or agreement on behalf
of the Company or the Borrowing Subsidiary.
Bailee Letter: means a Bailee Letter substantially in the form of
Exhibit 4 to the Security Agreement.
Balance Bank: means any Lender or Non-Lender Balance Bank which makes
a Discount Advance.
Balance Bank Agreement: means (i) an agreement between each Balance
Bank and the Company which sets forth the fees, charges and other matters
governing Discount Loans requested from such Balance Bank in accordance with
Section 2.4 herein, or (ii) an agreement between the Company and the Swingline
Lender which sets forth the fees, charges and other matters governing Swingline
Buydown Advances requested from the Swingline Lender in accordance with Section
2.5(b).
Bid Lender: is defined in Section 2.6(a).
Bid Loan: is defined in Section 2.6(a).
-5-
12
Bid Loan Notice: means, with respect to each Bid Loan, a notice
executed by the Company and the Bid Lender for such Bid Loan and delivered to
the Agent in the form of Exhibit G hereto.
Bid Rate: means the interest rate applicable to a Bid Loan which is
to be agreed upon by the Company and a Bid Lender and communicated to the Agent
in the Bid Loan Notice for such Bid Loan.
Borrowing Base: is defined in Section 4.5.
Borrowing Base Certificate: means a certificate executed by the
Chief Financial Officer or Treasurer of the Company or other employees of
the Company so authorized in writing, an original of which shall be delivered to
the Agent, by such Chief Financial Officer or Treasurer in substantially the
form attached hereto as Exhibit B.
Borrowing Base Sublimits: is defined in Section 4.5.
Borrowing Subsidiary: means either of The Mortgage Authority, Inc. or
Central Pacific Mortgage Company, each a wholly owned Subsidiary of the Company
in the business of originating, purchasing and selling Mortgage Loans.
Business Day: means (i) with respect to any borrowing, payment or
rate selection regarding a Eurodollar Advance or a Discount Advance, a day
(other than a Saturday or Sunday) on which banks are open for business in
Chicago, Los Angeles and New York and on which dealings in United States dollars
are carried on in the London interbank market and (ii) for all other purposes, a
day (other than a Saturday or Sunday) on which banks are open for business in
Chicago, Los Angeles, New York and Louisville, Kentucky.
Capital Securities: means securities contributed to the capital of
the Company.
Cash Equivalents: means (i) marketable direct obligations issued or
unconditionally guaranteed by the United States Government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within one year from the date of acquisition thereof, (ii)
marketable direct obligations issued by any state of the United
-6-
13
States of America or any political subdivision of any such state or any public
instrumentality thereof maturing within one year from the date of acquisition
thereof and, at the time of acquisition, having the highest rating obtainable
from either S&P or Moody's, (iii) commercial paper maturing no more than 90
days from the date of creation thereof and, at the time of acquisition, having
the highest rating obtainable from either S&P or Moody's, (iv) certificates of
deposit or bankers' acceptances maturing within one year from the date of
acquisition thereof issued by commercial banks organized under the laws of the
United States or any state thereof or the District of Columbia, each having
combined capital and surplus of not less than $500,000,000, and (v) reverse
repurchase obligations having terms not exceeding seven days entered into with
any financial institution meeting the qualifications specified in clause (iv)
above or with any securities dealer approved by the Agent, provided that there
is an investment agreement in effect pursuant to which the underlying
securities are held by a sub-agent for the Collateral Agent and all cash
proceeds are payable directly to the Settlement Account.
Change in Control: means the acquisition by any Person, or two or
more Persons (other than the Parent) acting in concert, of beneficial ownership
(within the meaning of Rule 13d-3 of the Securities and Exchange Commission
under the Securities Exchange Act of 1934) of outstanding shares of voting
stock of the Company at any time if after giving effect to such acquisition (i)
such Person or Persons owns twenty percent (20%) or more of such outstanding
voting stock, and (ii) the Parent does not own more than fifty percent (50%) of
such outstanding shares of voting stock.
Code: means the Internal Revenue Code of 1986, as amended, reformed
or otherwise modified from time to time.
Collateral: means all right, title and interest of the Company or the
Borrowing Subsidiaries, as applicable, of every kind and nature, in and to all
of the following property, assets and rights of the Company or the Borrowing
Subsidiaries wherever located, whether now existing or hereafter arising, and
whether now or hereafter owned, acquired by or accruing or owing to the Company
or any Borrowing Subsidiary, and all proceeds and products thereof:
-7-
14
(i) all Pledged Mortgages;
(ii) all Pledged Securities;
(iii) any commitments or other agreements issued by any
private mortgage insurer or by the FHA or VA to insure or guarantee
any Pledged Mortgage;
(iv) all commitments of FNMA, FHLMC or other Persons to
purchase Pledged Items from the Company or any Borrowing Subsidiary or
exchange Securities with the Company or any Borrowing Subsidiary for
Pledged Items;
(v) any options to sell or purchase Securities, future
contracts, or any other interest rate protection products which
directly or indirectly protect the Company or any Borrowing Subsidiary
against reductions in value of such Pledged Items due to changes in
mortgage interest rates;
(vi) the Settlement Account and any Custodian Settlement
Accounts and any amounts standing to the credit of the Settlement
Account and any Custodian Settlement Accounts then in existence with
Approved MBS Custodians, as described in Paragraph 7(c) of the
Security Agreement;
(vii) all VA Mortgage Loans or FHA Mortgage Loans (plus any
REO or accounts receivable from FHA or VA resulting therefrom,
including guaranty claims against VA and insurance claims against FHA
or HUD) which are repurchased by the Company from Security holders and
pledged to the Collateral Agent as security for the Secured Debt;
(viii) Pledged Servicing Sale Receivables;
(ix) cash and Cash Equivalents held by the Agent or
Collateral Agent as security for the Secured Debt; and
(x) all property and proceeds related to the foregoing,
including without limitation, the right to service Pledged Mortgages
while owned by the Company or any Borrowing Subsidiary, all files,
surveys, certificates, correspondence, appraisals, computer programs,
tapes, disks, cards, accounting records and other records and data of
the Company related to the Pledged Mortgages, all accounts and general
-8-
15
intangibles of whatsoever kind so related and all documents or
instruments delivered to the Agent or the Collateral Agent in respect
of any Pledged Item, 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 Pledged Mortgage.
Collateral Agent: means National City Bank of Kentucky or its
successor, as Collateral Agent under the Security Agreement.
Collateral Agent Review Procedure: means the required review steps
set forth in Exhibit 1 to the Security Agreement.
Collateral Transmittal: means a transmittal from the Pledgor to the
Collateral Agent in electronic form and, if required by the Collateral Agent,
written form of the following information for the following submissions or
special treatment of different types of Collateral: (i) the information
described on Exhibit 7 to the Security Agreement for each AP Mortgage covered
by any AP Notice, (ii) the information described on Exhibit 7 to the Security
Agreement (other than the "AP Code") for each Pledged Mortgage not covered by
an AP Notice, or (iii) such information as may be required from time to time by
the Collateral Agent for the different types of Securities for any Pledged
Security.
Commitment: means either a General Commitment or a Swingline
Commitment.
Commitment Percentage: means, for each Lender as of any date, the
quotient of (i) the sum of such Lender's General Commitment and its Swingline
Commitment (if any), divided by (ii) the Aggregate Commitment, which Commitment
Percentage shall initially be as set forth on Exhibit C for each Lender.
Company: means Source One Mortgage Services Corporation, a Delaware
corporation.
Company Trust Receipt: means a trust receipt substantially in the
form of Exhibit 2 to the Security Agreement.
Conforming Mortgage Loan: means a Residential Mortgage Loan that
meets all applicable requirements for sale to FNMA or FHLMC or for guaranty by
GNMA.
-9-
16
Control: means the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of another
entity, whether through the ownership of voting securities, by contract or
otherwise.
Controlled Group: means all members of a controlled group of
corporations and all trades or business (whether or not incorporated) under
common control which, together with the Company, are treated as a single
employer under Section 414(b) or 414(c) of the Code.
Conversion/Continuation Notice: is defined in Section 2.12(iii).
Corporate Base Rate: means a rate per annum equal to the corporate
base rate of interest announced by First Chicago from time to time, changing
when and as such corporate base rate changes.
Credit Documents: means this Agreement, the Security Agreement, the
Notes, the Balance Bank Agreements, any Approved GNMA Letters of Credit and any
related reimbursement agreements, and all other documents and instruments now
or hereafter delivered to the Agent or the Lenders pursuant to or in connection
with the transactions contemplated hereby, and any amendments, supplements,
modifications, renewals, replacements, consolidations, substitutions and
extensions of any of the foregoing.
Credit Indebtedness: means, as of any date, the sum of (i) all
amounts owing under any of the Credit Documents (other than the Balance Bank
Agreements) to any of the Lenders, the Agent, or the Collateral Agent, plus
(ii) to the extent such fees have accrued within the three calendar months
immediately preceding such date, all deficiency fees owing to the Balance Banks
under the Balance Bank Agreements due to the Company's failure to maintain
sufficient deposits with such Balance Banks, plus (iii) the amount of all
Approved Secured Rate Hedging Obligations.
Credit Requirement: means, as of any date, the sum of (A) the
aggregate unpaid principal balance of all Loans then outstanding hereunder plus
(B) the then current amount of Approved Secured Rate Hedging Obligations, plus
(C) the aggregate
-10-
17
face amount of all Outstanding CPNs, plus (D) the then current amount of
Approved GNMA Letter of Credit Obligations.
Custodian Settlement Accounts: is defined in Paragraph 7(c) of the
Security Agreement.
Debt: means, with respect to any Person, as of any date of
determination thereof, without duplication, (i) all obligations of such
Person for borrowed money, including but not limited to money borrowed from any
parent, subsidiary or affiliate of such Person, whether or not evidenced by a
promissory note, (ii) all obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments, (iii) all obligations of such
Person to pay the deferred purchase price of property or services, including
without limitation the obligation of such Person to pay any deferred purchase
price for Servicing Agreements acquired, (iv) all obligations of such Person as
lessee under capital leases, (v) all Debt of others secured by a Lien on any
asset of such Person, whether or not such Debt is assumed by such Person, (vi)
all Debt of others Guaranteed by such Person, (vii) all on-balance-sheet
obligations of such Person under repurchase agreements covering Securities or
pools of Mortgage Loans and (viii) the Approved Secured Rate Hedging
Obligations; provided that Debt shall not include Mortgage Related Indebtedness.
Debt Threshold: is defined in Section 8.5.
Default: means an Event of Default or any event or condition that
with the giving of notice or the passage of time or both would constitute an
Event of Default.
Discount Advance: means an Advance made on a discounted basis by a
Balance Bank, a portion of which (or all of which, in the case of Discount
Advances made by Non-Lender Balance Banks) shall be simultaneously sold to the
other Lenders, all pursuant to Section 2.4 hereof, and to be repaid at the end
of the applicable Discount Loan Period.
Discount Loan: means any Loan constituting a portion of a Discount
Advance.
Discount Loan Period: means, with respect to a Discount Loan, a
period of one month commencing on the Advance Date for
-11-
18
such Discount Loan and ending on the corresponding day in the next month. If a
Discount Loan Period would otherwise end on a day which is not a Business Day,
such Discount Loan Period shall end on the next succeeding Business Day,
provided, however, (i) if said next succeeding Business Day falls in a new
calendar month, such Discount Loan Period shall end on the immediately
preceding Business Day, and (ii) no Discount Loan Period shall extend beyond
the Termination Date.
Discount Note: means, a Note executed and delivered by the Company
and the Borrowing Subsidiaries to each Lender in the form of Exhibit E-2 hereof
which shall evidence the Discount Loans described in Section 2.4 hereof.
Discount Rate: means, with respect to any Discount Loan Period, a
fixed rate of interest equal to the Applicable Margin for Eurodollar Advances
in effect at approximately 11:00 a.m. (London time) two Business Days prior to
the first day of such Discount Loan Period.
Eligible AP Mortgage: is defined in Section 4.1(c).
Eligible Collateral: means, as of any date without duplication, (i)
Eligible Delivered Mortgages, (ii) Eligible AP Mortgages, (iii) Eligible
Pledged Securities, (iv) Eligible Servicing Sale Receivables, (v) Eligible
Repurchased Agency Loans and Receivables, (vi) the balance to the credit of the
Company in the Settlement Account, and (vii) cash and Cash Equivalents held by
the Agent or Collateral Agent as security for the Secured Debt.
Eligible Delivered Mortgage: is defined in Section 4.1(b).
Eligible Mortgage Loan: is defined in Section 4.1(a).
Eligible Pledged Security: is defined in Section 4.3.
Eligible Repurchased Agency Loans and Receivables: is defined in
Section 4.2.
Eligible Servicing Sale Receivables: is defined in Section 4.4.
-12-
19
ERISA: means the Employment Retirement Income Security Act of 1974,
as amended from time to time.
ERISA Affiliate: means any corporation or trade or business which is
a member of the same Controlled Group as the Company.
Eurodollar Advance: means an Advance which bears interest at the
Eurodollar Rate.
Eurodollar Base Rate: means, with respect to a Eurodollar Interest
Period or a Discount Loan Period, the rate determined by the Agent to be the
rate at which deposits in U.S. dollars are offered by First Chicago to
first-class banks in the London interbank market at approximately 11 a.m.
(London time) two Business Days prior to the first day of such Eurodollar
Interest Period or Discount Loan Period, in the approximate amount of (i) the
amount of the Eurodollar Advance or Discount Advance divided by (ii) the number
of Lenders making Loans in connection with such Advance, and having a maturity
approximately equal to such Eurodollar Interest Period or Discount Loan Period.
Eurodollar Interest Period: means, with respect to a Eurodollar
Advance, a period of one, two or three months, as selected by the Company,
commencing on a Business Day selected by the Company pursuant to this
Agreement. Such Eurodollar Interest Period shall end on (but exclude) the day
which corresponds numerically to such date one, two or three months thereafter,
as applicable; provided, however, that if there is no such numerically
corresponding day in such next month, such Eurodollar Interest Period shall end
on the last Business Day of such next month. If a Eurodollar Interest Period
would otherwise end on a day which is not a Business Day, such Eurodollar
Interest Period shall end on the next succeeding Business Day, provided,
however, that (i) if said next succeeding Business Day falls in a new calendar
month, such Eurodollar Interest Period shall end on the immediately preceding
Business Day, and (ii) no Eurodollar Interest Period shall extend beyond the
Termination Date.
Eurodollar Loan: means a Loan which bears interest at a Eurodollar
Rate.
Eurodollar Rate: means, with respect to a Eurodollar Advance and
Eurodollar Loan for the relevant Eurodollar Interest Period, and with respect
to the calculation of the Purchase Price with
-13-
20
respect to any Discount Loan Period, the sum of (i) the quotient of (a) the
Eurodollar Base Rate applicable to such Eurodollar Interest Period or Discount
Loan Period, divided by (b) one minus the Reserve Requirement (expressed as a
decimal) applicable to that Eurodollar Interest Period or Discount Loan Period,
plus (ii) the Applicable Margin in effect two Business Days prior to the first
day of such Eurodollar Interest Period or Discount Loan Period.
Event of Default: means any of the events described in Section 10.1.
Existing Facility: is defined in the first recital of this Agreement.
Facility: means the facility comprised of the Commitments made
available to the Company and (to the extent permitted hereunder) the Borrowing
Subsidiaries pursuant to this Agreement, which facility has an original term of
364 days and an initial Aggregate Commitment of $500,000,000.
Facility Fee Rate: means, as of any date, the percentage per annum
set forth on Schedule 2 attached hereto which is in effect on such date,
changing as and when the Company's long-term unsecured debt rating by either
S&P or Moody's changes as described therein.
Federal Agency: means FHLMC, FNMA, GNMA, FHA or VA.
Federal Funds Advance: means an Advance bearing interest at the
Federal Funds Rate.
Federal Funds Funding Rate: means, with respect to any Federal Funds
Loan for any day, the rate per annum equal to the consensus (or if no consensus
exists, the arithmetic average) of the rates at which reserves are offered by
first-class banks to other first-class banks (at approximately the time at
which the applicable Advance Notice or Conversion/Continuation Notice is
received or the time at which an automatic continuation is deemed to have
occurred) on such day (or if such day is not a Business Day, on the immediately
preceding Business Day) on overnight federal funds transactions with members of
the Federal Reserve System arranged by federal funds brokers, based on quotes
received by the Agent from three federal funds brokers of
-14-
21
recognized standing selected by the Agent in its sole discretion; provided,
however, that in lieu of determining the rate in the foregoing manner, the
Agent may substitute therefor the consensus (or if no consensus exists, the
arithmetic average) of the rates at which reserves are offered by first-class
banks to other first-class banks at 10:00 a.m. (Chicago time) on such day (or
if such day is not a Business Day, on the immediately preceding Business Day)
on overnight federal funds transactions with members of the Federal Reserve
System arranged by federal funds brokers, received by the Agent from three
federal funds brokers of recognized standing selected by the Agent in its sole
discretion.
Federal Funds Loan: means any Loan constituting a portion of a
Federal Funds Advance.
Federal Funds Rate: means, for any day, an interest rate per annum
equal to (i) the Federal Funds Funding Rate for such day, plus (ii) 0.125%
per annum, plus (iii) the Applicable Margin.
Fees: is defined in Section 2.2.
FHA: means the Federal Housing Administration or other agency,
corporation or instrumentality of the United States to which the powers and
duties of the Federal Housing Administration have been transferred.
FHA-Approved Mortgagee: means an institution that is approved by the
FHA to act as a servicer and mortgagee of record with respect to a Mortgage
Loan insured by the FHA.
FHA Mortgage Loan: means a Mortgage Loan that is secured by a first
lien on land and the Single Family Residence constructed thereon and is insured
by FHA.
FHLMC: means the Federal Home Loan Mortgage Corporation or other
agency, corporation or instrumentality of the United States to which the powers
and duties of the Federal Home Loan Mortgage Corporation have been transferred.
FHLMC-Approved Lender: means an institution that is approved by the
FHLMC to act as a lender in connection with the origination of any Mortgage
Loan purchased by the FHLMC.
-15-
22
FHLMC Security: means a security representing an undivided fractional
interest in a pool of Mortgage Loans, which security is issued and guaranteed
as to full and timely payment of interest and full collection of principal by
FHLMC.
First Chicago: means The First National Bank of Chicago, in its
corporate capacity and not as Agent, and its successors and assigns.
FNMA: means the Federal National Mortgage Association or other
agency, corporation or instrumentality of the United States to which the powers
and duties of the Federal National Mortgage Association have been transferred.
FNMA-Approved Lender: means an institution that is approved by the
FNMA to act as a lender in connection with the origination of any Mortgage Loan
purchased by the FNMA.
FNMA Security: means a security representing an undivided fractional
interest in a pool of Mortgage Loans, which security is issued and guaranteed
as to full and timely payment of principal and interest by FNMA.
Fundamental Change: is defined in Section 8.4.
Fundamental Change/Investment Calculation Period: means, in respect
of any Fundamental Change or Investment, the period ending on the date of
consummation of such Fundamental Change or Investment and including the four
most recent consecutive fiscal quarters ending on or prior to the date of
consummation of such Fundamental Change or Investment.
Funded Debt: means as of any date of determination thereof, all Debt
of the Company and its consolidated Subsidiaries (including without limitation
all amounts payable by the Company in connection with the acquisition of any
Servicing Agreements and the amount of all checks, drafts or other items issued
by the Company or any of its consolidated Subsidiaries to fund Mortgage Loans
to the extent such checks, drafts or other items have not been collected upon
and paid), minus (i) all Debt of others Guaranteed by the Company or any of its
consolidated Subsidiaries and (ii) all Debt of others secured by a Lien on any
asset of the Company or any of its consolidated Subsidiaries, unless such Debt
-16-
23
is assumed by the Company or any of its consolidated Subsidiaries.
Funding Agreement: means an agreement by and between the Company and
a Borrowing Subsidiary relating to the methods by which the Company directly
funds certain Mortgage Loans made in such Borrowing Subsidiary's name, the form
of which is attached hereto as Exhibit M.
GAAP: means generally accepted accounting principles as in effect
from time to time.
General Commitment: means, for each Lender as of any date, the
obligation of such Lender to make Loans not exceeding the amount set forth as
its total commitment (excluding any Swingline Commitment) on Exhibit C attached
hereto, as such amount may be modified from time to time pursuant to the terms
hereof, or the amount established in any assignment to a new Lender pursuant to
the terms hereof.
GNMA: means the Government National Mortgage Association or other
agency, corporation or instrumentality of the United States as to which
the powers and duties of the Governmental National Mortgage Association have
been transferred.
GNMA Security: means a security representing an undivided fractional
interest in a pool of Mortgage Loans, which security is issued by the Company
and guaranteed as to full and timely payment of principal and interest by GNMA
without regard as to whether the Company collects any payments on such Mortgage
Loans.
Guaranty: means, with respect to any Person, any obligation,
contingent or otherwise, of such Person directly or indirectly guaranteeing any
Debt of any other Person (a "primary obligor") or in any manner providing for
the payment of any Debt of any primary obligor or otherwise protecting the
holder of such Debt against loss (whether by agreement to keep-well, to
purchase assets, goods, securities or services, to advance or supply funds to
the primary obligor to maintain working capital or equity capital of the
primary obligor or otherwise to maintain the net worth or solvency of the
primary obligor, to take-or-pay or otherwise), provided that the term
"Guarantee" shall not include (i) endorsements for collection or deposit in the
ordinary course of business, (ii) obligations of the Company pursuant to
Recourse
-17-
24
Servicing, (iii) commitments by the Company or any Borrowing Subsidiary to
purchase Mortgage Loans in the ordinary course of business, and (iv)
obligations in the Company's capacity as servicer of Mortgage Loans. The term
"Guarantee" used as a verb has a correlative meaning.
Hazardous Substance: means any hazardous, toxic or dangerous waste,
substance or material subject to regulation under the Comprehensive
Environmental Response, Compensation and Liability Act, as amended, and
federal, state or local so-called "Superfund" or "Superlien" laws, or any other
federal, state or local laws, ordinances, rules or regulations governing or
regulating hazardous materials, pollution, the environment or public health, as
now or at any time hereafter in effect.
HLTV Loan: means a Residential Mortgage Loan that meets all the
requirements for a Nonconforming Mortgage Loan except that it has an original
principal balance greater than 95% of the appraised value of the real estate
and the improvements securing such Mortgage Loan and such Mortgage Loan must
meet all requirements for sale to an Approved Investor pursuant to a commitment
specifically covering such Mortgage Loan.
HUD: means the United States Department of Housing and Urban
Development or other agency, corporation or instrumentality of the United
States to which the powers and duties of the United States Department of
Housing and Urban Development have been transferred.
Investment: means, as applied to any Person, any direct or indirect
purchase or other acquisition by that Person of, or a beneficial interest in,
stock or other securities of any other Person or any option, contract,
certificate or other financial product (including, but not limited to, interest
rate swaps and other hedging instruments), or any direct or indirect loan,
advance or capital contribution by that Person to any other Person, including
all indebtedness and accounts receivable from that other Person which are not
current assets or did not arise from sales to that other Person in the ordinary
course of business. The amount of any Investment shall be determined in
accordance with GAAP.
Issuing Lender: is defined in Section 2.6(b).
-18-
25
Jumbo Mortgage Loan: means a Residential Mortgage Loan that (i)
meets all applicable requirements for sale to FNMA or FHLMC or for guaranty
by GNMA except that the amount of such Mortgage Loan exceeds the amounts
permitted by such requirements, (ii) at the time of origination had a principal
balance that did not exceed 80% of the appraised value of the real estate and
improvements securing such Mortgage Loan, unless private mortgage insurance was
obtained covering such Mortgage Loan, in which case it may have an original
principal balance in excess of 80% but not in excess of 95% of such appraised
value, (iii) has a term of not more than 30 years, (iv) meets all of the
then-current requirements for sale to an Approved Investor purchasing such type
of Mortgage Loan from the Company or Borrowing Subsidiary, and (v) has an
outstanding principal balance on the Pledge Date thereof of less than $1,000,000
in any event.
Lender: means, at any time, any party having a Commitment hereunder
and its successors and permitted assigns.
Lending Installation: means, with respect to a Lender, any office,
branch, subsidiary or affiliate of any Lender.
Lending Sublimits: is defined in Section 2.1(a).
Lien: means, with respect to any asset of any Person, any mortgage,
lien, pledge, charge, security interest or encumbrance of any kind in
respect of such asset. For the purposes of this Agreement, such Person shall be
deemed to hold subject to a Lien any asset that it has acquired or holds subject
to the interest of a vendor or lessor under any conditional sales agreement,
capital lease or other title retention agreement relating to such asset.
Loan: means a loan of money in any amount to the Company or any
Borrowing Subsidiary by a Lender pursuant to this Agreement.
Maximum Special Dividend Amount: is defined in Section 8.16.
MBS Value: means, with respect to any Security, the lowest of (a) the
face amount of such Security, (b) the weighted average purchase price committed
to under those Approved Investor Commitments which could cover such Security,
determined in the manner set forth in Exhibit F, and (c) if so required from
time to time by the Agent, the then-current market value of such
-19-
26
Security as conclusively determined by a third party broker of nationally
recognized standing selected by the Collateral Agent.
Moody's: means Xxxxx'x Investors Service, Inc. or any successor to
its business.
Mortgage: means a mortgage, deed of trust, security deed or similar
instrument purporting to create a first lien or similar interest in real estate
and improvements thereon.
Mortgage Collateral Value: means, with respect to any Mortgage Loan,
the lowest of (A) the unpaid principal balance of such Mortgage Loan on the
Pledge Date therefor, (B) the net acquisition cost of such Mortgage Loan, if
acquired by the Pledgor, (C) the weighted average purchase price (determined on
a weekly basis and expressed as a percentage of par) committed to under those
Approved Investor Commitments which could cover such Mortgage Loan applied to
the unpaid principal balance (as of the Pledge Date) of such Mortgage Loan
determined in the manner set forth in Exhibit F, and (D) the then-current
market value of such Mortgage Loan as conclusively determined by a third party
broker of nationally recognized standing selected by the Collateral Agent.
Mortgage Loan: means a loan of money evidenced by a Mortgage Note and
secured by a Mortgage.
Mortgage Note: means a note evidencing the indebtedness secured by a
Mortgage.
Mortgage-Related Indebtedness: means, with respect to the Company
and its Subsidiaries, any amount arising out of the issuance in the
ordinary course of the mortgage banking business of the Company and its
Subsidiaries of (i) mortgage pools, pass-throughs, participation certificates
and other mortgage-related securities to the extent that such amount would not,
in accordance with GAAP, be shown as indebtedness on a consolidated balance
sheet of the Company and its Subsidiaries as at such date and (ii)
collateralized mortgage obligations and other mortgage-related securities issued
by a Subsidiary of the Company, the payment of principal and interest in respect
of which is secured by a Lien on mortgage loans or other mortgage-related
securities (or other securities in which the Company invests in the ordinary
course of its mortgage banking
-20-
27
business) conveyed to such Subsidiary in an amount reasonably anticipated by
the Company to approximate the amount required to pay the principal and
interest in respect of such collateralized mortgage obligations or other
mortgage-related securities (whether or not such amount would, in accordance
with GAAP, be shown as indebtedness on a consolidated balance sheet of the
Company and its Subsidiaries as at such date).
Negative Security Event: means any date following a Positive
Security Event on which any of the following events occurs: (i) the
Company's long term unsecured debt ratings decrease to a level below "A-", as
rated by S&P, or a level below "A3", as rated by Xxxxx'x, or (ii) the Company's
long-term unsecured debt is no longer rated by both S&P and Xxxxx'x, or (iii) an
Event of Default occurs hereunder, or (iv) any of the Positive Security
Conditions shall cease to be satisfied.
Nonconforming Mortgage Loan: means a Residential Mortgage Loan that
(i) is neither a Conforming Mortgage Loan nor a Jumbo Mortgage Loan, (ii) at
the time of origination had a principal balance that did not exceed 80% of the
appraised value of the real estate and improvements securing such Mortgage
Loan, unless private mortgage insurance was obtained covering such Mortgage
Loan, in which case it may have an original principal balance in excess of 80%
but not in excess of 95% of such appraised value, or such Mortgage Loan is an
HLTV Loan (iii) has a term of not more than 30 years, (iv) meets all of the
then-current requirements for sale to an Approved Investor purchasing such type
of Mortgage Loan from the Company or any Borrowing Subsidiary, and (v) has an
original principal balance of less than $200,000 in any event.
Non-Lender Balance Bank: means any bank or other financial
institution approved in advance by the Agent and the Company which is not
a Lender hereunder but which is an Affiliate of a Lender and which has executed
a Balance Bank Agreement pursuant to which it has agreed to make Discount
Advances hereunder and sell such Discount Advances to the Lenders pursuant to
Section 2.4.
Note: means promissory notes evidencing amounts that may be advanced
from time to time under this Agreement, (i) in substantially the form of
Exhibit E-1 attached hereto with respect to Loans other than Discount Loans and
Bid Loans, (ii) in
-21-
28
substantially the form of Exhibit E-2 attached hereto with respect to Discount
Loans, and (iii) in a form mutually agreed to between the Company and each Bid
Lender with respect to Bid Loans, each duly executed by the Company and each
Borrowing Subsidiary and payable to the order of a Lender, including any
amendment, modification, renewal or replacement of such promissory notes.
Notice Address: means, as to any Person, the address of such Person
specified in or pursuant to Section 12.2.
Obligations: means any and all amounts due from the Company or any
Borrowing Subsidiary to any of the Lenders, the Agent or the Collateral Agent
hereunder or under the Notes, the Security Agreement or any other Credit
Document.
Outstanding CPN: means, as of any date, each commercial paper note
issued by the Company which has not been presented for payment or for which
payment has not been made in full; provided, however, that as long as there has
not occurred an Event of Default, which Event of Default has not been waived by
the Required Lenders, "Outstanding CPN" shall not include on any date any such
commercial paper note which matures on such date but shall include all such
commercial paper notes to be issued on such date.
Overnight Transaction Advance: means a Swingline Advance which bears
interest at the Overnight Transaction Rate.
Overnight Transaction Effective Rate: means, as of any day for any
Overnight Transaction Advance, a rate of interest per annum determined by First
Chicago in its sole discretion as its overnight transaction loan rate (at
approximately the time at which the applicable Advance Notice or
Conversion/Continuation Notice is received or the time at which an automatic
continuation is deemed to have occurred) for such day (or if such day is not a
Business Day, on the immediately preceding Business Day) for advances in such
amount.
Overnight Transaction Rate: means, with respect to an Overnight
Transaction Advance, a per annum interest rate equal to the sum of the
Overnight Transaction Effective Rate plus the Applicable Margin plus one quarter
of one percent (0.25%).
-22-
29
Parent: means Fund American Enterprises, Inc.
Participants: is defined in Section 11.2(a).
PBGC: means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
Person: means an individual, corporation, limited liability company,
partnership, joint venture, trust or unincorporated organization, or a
government or any agency or political subdivision thereof.
Plan: means an employee pension benefit plan which is covered by
Title IV of ERISA or subject to the minimum funding standards under Section
412 of the Code as to which the Company or any member of the Controlled Group
may have any liability.
Pledge Date: means the date on which a Mortgage Loan or a Security is
first delivered in pledge to the Collateral Agent, provided that (i) the date
of delivery of a Mortgage Loan covered by an AP Notice shall be deemed to be
the date of delivery of such AP Notice even after subsequent delivery of the
related Required Mortgage Documents, and (ii) the "Pledge Date" for all
Collateral previously held by the Collateral Agent under the Existing Facility
shall be deemed to be the date on which such Collateral was first delivered to
the Collateral Agent under the Existing Facility even though such date is prior
to the date of this Agreement.
Pledged Item: means any Pledged Mortgage or Pledged Security.
Pledged Mortgages: means Mortgage Loans that are from time to time
designated by the Company or any Borrowing Subsidiary and the Required Mortgage
Documents in respect of which are required to be delivered to the Collateral
Agent pursuant to any of this Agreement or the Security Agreement, including
all Required Mortgage Documents related thereto.
Pledged Securities: means Securities that are from time to time
designated by the Company or any Borrowing Subsidiary and required to be
delivered to the Collateral Agent pursuant to either this Agreement or the
Security Agreement, whether or not such Pledged Securities are Eligible Pledged
Securities.
-23-
30
Pledged Servicing Sale Receivables: means Servicing Sale Receivables
which are from time to time designated by the Company and pledged to the
Collateral Agent in accordance with this Agreement and the Security Agreement.
Pledgor: is defined in Section 4.6.
Positive Security Conditions: is defined in Section 4.11(a).
Positive Security Event: means any date on which the Agent has
acknowledged in writing that (i) the Company's long-term unsecured debt ratings
are at a level equal to or above "A-", as rated by S&P, and a level equal to or
above "A3", as rated by Xxxxx'x, when either such ratings were previously below
such respective level, and (ii) the Positive Security Conditions are satisfied,
after which date the Lenders' security interest in the Collateral may be abated
at the Company's request pursuant to Section 4.11.
Published Federal Funds Effective Rate: means, for any day, an
interest rate per annum equal to the weighted average of the rates on
overnight federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers on such day, as published for such day (or, if
such day is not a Business Day, for the immediately preceding Business Day) by
the Federal Reserve Bank of New York, or, if such rate is not so published for
any day which is a Business Day, the average of the quotations at approximately
10:00 a.m. (Chicago time) on such day on such transactions received by the Agent
from three Federal funds brokers of recognized standing selected by the Agent in
its sole discretion.
Purchase Price: is defined in Section 2.4(d).
Rate Hedging Agreement: means an agreement, device or arrangement
providing for payments which are related to fluctuations of interest rates,
exchange rates or forward rates, including, but not limited to,
dollar-denominated or cross-currency interest rate exchange agreements, forward
currency exchange agreements, interest rate floor, cap or collar protection
agreements, forward rate currency or interest rate options, puts and warrants.
-24-
31
Rate Option: means the Eurodollar Rate, the Overnight Transaction
Rate, the Federal Funds Rate, the Discount Rate, the Alternate Base Rate, the
Swingline Buydown Rate, or, if available, any Bid Rate.
Recourse Servicing: means any servicing rights under a Servicing
Agreement (other than any Servicing Agreement with GNMA) which obligates the
Company to repurchase Mortgage Loans upon default by the borrower thereunder or
indemnify any party having an interest in such Mortgage Loans against any
principal loss arising from such a default, unless (i) the Company has obtained
and maintains in effect insurance with coverages satisfactory to Agent from an
insurance company having a AAA rating covering the risk of being required to so
indemnify any such party, or (ii) the Company's obligation to indemnify any
party against any principal loss is limited to 10% or less of any such loss.
Regulation D: means Regulation D of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor or
other regulation or official interpretation of said Board of Governors relating
to reserve requirements applicable to member banks of the Federal Reserve
System.
Regulation U: means Regulation U of the Board of Governors of the
Federal Reserve System from time to time in effect and any successor or
other regulation or official interpretation of said Board of Governors relating
to the extension of credit by banks for the purpose of purchasing or carrying
margin stocks applicable to member banks of the Federal Reserve System.
Reinstated Repurchased Agency Loans and Receivables: means Eligible
Repurchased Agency Loans and Receivables which have been reinstated and as to
which (i) the Company shall have delivered to the Collateral Agent the Required
Mortgage Documents and a copy of the insurance or guaranty certificate (and, if
requested by the Agent or Collateral Agent, an original of such certificate and
any other Additional Required Mortgage Documents) related thereto and (ii) no
more than two installments of principal or interest are past due since the
reinstatement of the Mortgage Loan.
REO: means any interest in real property and the improvements thereon
owned by the Company as a result of the
-25-
32
foreclosure or transfer in lieu of foreclosure of a Mortgage Loan.
Reportable Event: means a reportable event as defined in Section 4043
of ERISA and the regulations issued under such section, with respect to a Plan,
excluding, however, such events as to which the PBGC by regulation waived the
requirement of Section 4043(a) of ERISA that it be notified of the occurrence
of such event, provided, however, that a failure to meet the minimum funding
standard of Section 412 of the Code and of Section 302 of ERISA shall be a
Reportable Event regardless of the issuance of any such waiver of the notice
requirement in accordance with either Section 4043(a) of ERISA or Section
412(d) of the Code.
Repurchased Agency Loans and Receivables: means all VA Mortgage
Loans or FHA Mortgage Loans (plus any REO or accounts receivable from FHA or
VA resulting therefrom, including guaranty claims against VA and insurance
claims against FHA or HUD) which were originally repurchased by the Company from
Security holders. In each case such Mortgage Loans (and the REO or accounts
receivable resulting therefrom) shall be valued based solely on (i) the amount
of principal last due under such Mortgage Loan, even after conversion of such
Mortgage Loan to REO, plus (ii) the amount of past-due interest advanced by the
Company on account of such Loan which is guaranteed by VA or insured by FHA;
provided, however, that 90 days after written notice to the Company that the
Required Lenders have elected to exclude past-due interest from such valuation,
such valuation shall cease to include the past-due interest described under
clause (ii).
Required Lenders: means (i) the lenders having two-thirds of the
Aggregate Commitment then in effect, or (ii) if the Commitments have been
terminated, Lenders having at least two-thirds of the aggregate Loans then
outstanding.
Required Mortgage Documents: means the instruments and documents
described in Schedule A to the Security Agreement, as applicable to the
particular Mortgage Loan, which are required to be delivered to the Collateral
Agent and such other instruments and documents described therein as the Agent
or Collateral Agent may request.
Reserve Requirement: means, with respect to the Eurodollar Rate
applicable to a Discount Loan Period or a Eurodollar
-26-
33
Interest Period, the maximum aggregate reserve requirement (including all
basic, supplemental, marginal and other reserves) which is imposed under
Regulation D on eurocurrency liabilities on the date of determination of such
Eurodollar Rate.
Residential Mortgage Loan: means a Mortgage Loan secured by a
Mortgage on a Single Family Residence.
Restricted Payment: means: (i) with respect to the Company, any
payment of any dividends upon any shares of the Company's stock now or
hereafter outstanding, except dividends payable in the stock of the Company,
and any other distribution or other transfer of assets to its stockholders, as
such, (including any repurchase of the Company's stock) whether in cash,
property, or securities, other than the exchange of Subordinated Debt for
Series A Preferred Stock or the purchase at market value from an Affiliate of a
readily marketable security traded on the New York Stock Exchange, American
Stock Exchange or NASDAQ as approved by the Agent; and (ii) any payment of
principal of or interest on the Subordinated Debt, and any amounts deposited
with the trustee under the Subordinated Debt Indenture or otherwise irrevocably
set aside for the benefit of the holders of the Subordinated Debt for the
purpose of defeasance of the Subordinated Debt.
Resulting Entity: means the Company and its consolidated Subsidiaries
after giving effect to any Fundamental Change or Investment.
S&P: means Standard & Poor's Ratings Group or any successor to its
business.
SEC: means the Securities and Exchange Commission (or any successor
entity).
Secured Debt: means the Credit Indebtedness.
Secured Parties: means, collectively, the Lenders, the Non-Lender
Balance Banks (to the extent of any Credit Indebtedness owed to such Non-Lender
Balance Banks), the Agent and the Collateral Agent.
Security: means any FHLMC Security, FNMA Security or GNMA Security.
-27-
34
Security Agreement: means the Third Amended and Restated Security and
Collateral Agency Agreement as of even date herewith, substantially in the form
of Exhibit D attached hereto, by and among the Company, each Borrowing
Subsidiary, the Agent and the Collateral Agent, pursuant to which a security
interest is created in favor of the Collateral Agent for the Secured Parties in
certain Collateral to be pledged pursuant to this Agreement, as the same may,
from time to time, be further supplemented, modified or amended.
Series A Preferred Stock: means the Company's 8.42% Cumulative
Preferred Stock, Series A.
Servicing Agreement: means a written contract of the Company with
another Person to act on behalf of such other Person to, among other things,
receive payments in respect of Mortgage Loans and to service Mortgage Loans,
but shall not include the servicing rights related to (i) any Residential
Mortgage Loans while they constitute Collateral, (ii) any commercial Mortgage
Loans, or (iii) any other Mortgage Loans held for investment by the Company,
Parent or any of their respective Subsidiaries.
Servicing Purchaser: means a Person which has purchased Servicing
Agreements from the Company.
Servicing Sale Receivables: means funds due to the Company from a
Servicing Purchaser in connection with a sale of Servicing Agreements from the
Company to such Servicing Purchaser.
Settlement Account: means the account established pursuant to Section
4.9.
Single Family Residence: means a one to four family dwelling unit,
which may be a condominium unit but which shall not be a mobile home (unless
qualified under an Federal Agency program) or a dwelling unit in a cooperative
apartment building.
Special Dividend: means any Restricted Payment made pursuant to
Section 8.16(b)(ii).
Subordinated Debt: means the principal amount of (but not any
interest on) the unsecured subordinated Debt of the Company outstanding from
time to time (which amount shall not exceed $100,000,000) evidenced by the
Quarterly Income Capital
-28-
35
Securities (Subordinated Interest Deferrable Debentures, Due 2025) of the
Company issued in exchange for certain of the Series A Preferred Stock, the
terms of which unsecured subordinated Debt are set forth in the Subordinated
Debt Indenture; but shall not include any such unsecured subordinated Debt with
respect to which any amounts shall have been deposited with the trustee under
the Subordinated Debt Indenture or otherwise irrevocably set aside for the
benefit of the holders of such Debt for the purpose of defeasance of such Debt.
Subordinated Debt Indenture: means that certain Subordinated
Indenture, dated as of December 1, 1995, as amended or supplemented from time
to time, by and between the Company and IBJ Xxxxxxxxx, as trustee, pursuant to
which the Company has issued or will issue the Subordinated Debt.
Subservicing Agreement: means a Servicing Agreement between the
Company and a Person which does not own the Mortgage Loans being serviced
thereunder but only has servicing or other non-ownership rights with respect
thereto.
Subsidiary: of a Person means (i) any corporation more than 50% of
the outstanding voting securities having ordinary voting power of which shall
at the time be owned or controlled, directly or indirectly, by such Person or
by one or more of its Subsidiaries or by such Person and one or more of its
Subsidiaries, or (ii) any partnership, association, joint venture or similar
business organization more than 50% of the ownership interests having ordinary
voting power of which shall at the time be so owned or controlled. Unless
otherwise expressly provided, all references herein to a "Subsidiary" shall
mean a Subsidiary of the Company.
Swingline Advances: means all Advances made by the Swingline Lender
which are designated by the Company or a Borrowing Subsidiary as Swingline
Advances in the applicable Advance Notice, which Advances may be Overnight
Transaction Advances, Alternate Base Rate Advances or Swingline Buydown
Advances.
Swingline Buydown Advance: means a Loan made pursuant to Section
2.5(b) by the Swingline Lender at the Swingline Buydown Rate.
-29-
36
Swingline Buydown Rate: means a rate to be agreed upon by the Company
and the Swingline Lender to apply to Swingline Buydown Advances pursuant to a
Balance Bank Agreement between the Swingline Lender and the Company.
Swingline Commitment: means, the obligation of the Swingline Lender
to make Swingline Advances hereunder not exceeding $20,000,000.
Swingline Lender: means First Chicago.
Termination Date: means July 24, 1998, or if any such day is not a
Business Day, the next preceding Business Day.
Transferee: is defined in Section 11.4.
Unsecured Leverage Ratio: means as of any date, the applicable
maximum leverage ratio (which changes as and when the Aggregate Commitment
changes) set forth in Section 8.9(b).
VA: means the Veterans Administration or other agency, corporation
or instrumentality of the United States as to which the powers and duties of
the Veterans Administration have been transferred.
VA-Approved Lender: means an institution that is approved by the VA
to act as a lender in connection with the origination of any Mortgage Loan
guaranteed by the VA.
VA Mortgage Loan: means a Mortgage Loan that is secured by a first
lien on land and the Single Family Residence constructed thereon and is
guaranteed by the VA.
1.2 Interpretation.
(a) Words of the masculine gender include correlative
words of the feminine and neuter genders.
(b) Unless the context shall otherwise indicate, words
importing the singular include the plural and vice versa.
(c) Articles and Sections referred to by number mean the
corresponding Articles and Sections of this Agreement.
-30-
37
(d) The terms "hereby," "hereof," "hereto," "herein,"
"hereunder" and any similar terms as used in this Agreement, refer to
this Agreement as a whole unless otherwise expressly stated.
1.3 Accounting Terms and Determinations.
Unless otherwise specified herein, all accounting terms used
herein shall be interpreted, all accounting determinations hereunder shall be
made, and all financial statements required to be delivered hereunder shall be
prepared, in accordance with GAAP, applied on a basis consistent (except for
changes concurred in by the Company's independent public accountants) with the
most recent audited consolidated financial statements of the Company delivered
to the Lenders. To enable the ready and consistent determination of compliance
with the covenants set forth herein, neither the Company nor any Borrowing
Subsidiary will change its fiscal year from a calendar year without (i) advance
written notice to the Lenders, (ii) providing interim financial reports
certified by the Company, by the dates that such reports would have been
required prior to such change, and (iii) providing an interim audited financial
statement if more than fifteen (15) months will have elapsed between annual
audited financial statements as a result of such change.
ARTICLE II
BORROWINGS
2.1 Availability and Adjustments.
(a) Agreement to Lend. Subject to subparagraphs (1)
through (4) below (the "Lending Sublimits"), each Lender severally
agrees to make Loans to the Company and participate in purchases of
Discount Advances (and, to the extent and not to exceed the amounts
provided in the second Recital of this Agreement and in no event to
exceed the maximum amount of the Swingline Commitment, the Swingline
Lender agrees to make Swingline Advances to the Borrowing
Subsidiaries) on the terms and conditions set forth in this Agreement
from time to time through the Business Day immediately preceding the
Termination Date, provided that, on any date, after giving effect to
such Loans and all other Loans that the Company or any Borrowing
Subsidiary has requested be made on such date:
-31-
38
(1) the aggregate principal balance then outstanding
under all Loans made by any Lender under this Agreement
(excluding the aggregate principal balance then outstanding of
any Bid Loans made by such Lender and any portion of Discount
Advances made by such Lender which have been sold or, will on
such date be simultaneously sold, to the other Lenders under
Section 2.4) shall not at any time exceed the sum of (i) such
Lender's then-current General Commitment, and (ii) such
Lender's then-current Swingline Commitment, if any;
(2) the aggregate principal balance of all Loans
outstanding under this Agreement plus the aggregate face
amount of all Outstanding CPNs shall not at any time exceed
the then-current Aggregate Commitment;
(3) the Credit Requirement shall not exceed the
Borrowing Base;
(4) except as otherwise set forth in Section 2.5(c),
the aggregate principal balance of all Swingline Advances
outstanding under this Agreement at any time shall not exceed
the Swingline Commitment.
Subject to the terms hereof, the Company and the Borrowing
Subsidiaries may borrow, repay and reborrow amounts hereunder.
(b) Optional Increases in Aggregate Commitments. The
Company shall have the right to increase the Aggregate Commitment, but
not to an amount in excess of $750,000,000, by obtaining additional
Commitments, either from one or more of the Lenders or another lending
institution provided that (A) the Agent has approved the identity of
any such new Lender, (B) any such new Lender assumes all of the rights
and obligations of a "Lender" hereunder, and (C) the Agent has
received a " New/Modified Commitment Supplement" in the form of
Exhibit H attached hereto, which supplement shall be executed by the
Company, each Borrowing Subsidiary, the Agent and any Lender modifying
its Commitment thereby. Each New/Modified Commitment Supplement shall
be deemed to amend Exhibit C to the extent necessary to reflect any
changes in the Commitments hereunder, and the Agent shall promptly
-32-
39
deliver a copy of such supplement to each Lender whose Commitment
Percentage is affected thereby.
(c) Optional Reductions in Aggregate Commitments. The
Company shall have the right to reduce the Aggregate Commitment upon
ten Business Days' prior written notice to the Agent, provided that
such voluntary reductions shall be made only in multiples of
$10,000,000. Upon a reduction of the Aggregate Commitment pursuant to
the preceding sentence, each Lender's General Commitment shall be
decreased pro rata in accordance with such Lender's Adjusted
Commitment Percentage. On or before the effective date of any such
reduction, the Company shall, if necessary, repay sufficient Loans to
prevent the remaining outstanding Loans hereunder, after giving effect
to such permanent reduction, from exceeding the Lending Sublimits.
2.2 Fees.
The Company shall pay the following fees (the "Fees"):
(a) Facility Fee. A facility fee based on the Aggregate
Commitment from time to time, calculated at the Facility Fee Rate,
changing when and as such rate changes, expressed as a per diem rate
on the actual Aggregate Commitment for each day during the preceding
full or partial calendar quarter, payable in arrears, on or before the
fifth Business Day of each calendar quarter and on the Termination
Date. This fee shall be allocated among the Lenders on a pro rata
basis in accordance with their respective Commitments (including any
Swingline Commitment) on each day during such quarter.
(b) Amendment Fee. An amendment fee of $1,000 to each
Lender for each amendment to this Agreement requested solely by the
Company during the remaining portion of calendar year 1997, and each
amendment requested solely by the Company in excess of two (2)
amendments during a subsequent calendar year.
(c) Other Fees Payable to Agent. Any fees payable to the
Agent pursuant to any applicable letter agreements between the Agent
and the Company.
-33-
40
(d) Collateral Agent Fees. Collateral Agent fees payable
to Collateral Agent for its services rendered pursuant to the Security
Agreement as agreed to by the Company and the Collateral Agent from
time to time.
(e) Fees Payable in Connection with Discount Loans or
Swingline Buydown Advances. Any deficiency fees owing to the Balance
Banks or the Swingline Lender under the Balance Bank Agreements due to
the Company's failure to maintain sufficient deposits with such
Balance Banks or the Swingline Lender and any other fees owing under
the Balance Bank Agreements.
2.3 Advances.
(a) Types of Advances. Each Advance hereunder shall
consist of Loans made from one or more of the Lenders and requested by the
Company or a Borrowing Subsidiary in accordance with Section 2.9. Subject to
the terms and conditions herein, Eurodollar Advances, Alternate Base Rate
Advances and Federal Funds Advances shall be generally available as permitted
by the Lending Sublimits. Discount Advances shall be available only as
provided in Section 2.4. Swingline Advances shall be available as provided in
Section 2.5. Bid Loans shall be available as provided in Section 2.6.
Notwithstanding anything to the contrary contained in this Agreement, at any
time during the continuance of a Default the Agent may (and at the direction of
the Required Lenders shall) declare by notice to the Company that no Advance
may be made as, converted into or continued as a Eurodollar Advance or a
Discount Advance, and each such Advance shall automatically be converted into a
Federal Funds Advance at the expiration of the interest period applicable
thereto.
(b) Rate Options. Eurodollar Advances, Alternate Base
Rate Advances, Federal Funds Advances, Swingline Buydown Advances and Overnight
Transaction Advances shall accrue interest at the Eurodollar Rate, the
Alternate Base Rate, the Federal Funds Rate, the Swingline Buydown Rate and the
Overnight Transaction Rate, respectively. Discount Advances shall not bear
interest but shall be made on a discounted basis by one or more Balance Banks
and shall be sold to the other Lenders in accordance with Section 2.4.
-34-
41
(c) Funding of Advances. Discount Advances, Swingline
Advances and Bid Loans shall be funded by the Lenders as provided in Sections
2.4, 2.5 and 2.6, respectively. All other Advances shall be funded on a pro
rata basis among all Lenders in accordance with each Lender's Adjusted
Commitment Percentage.
(d) Reallocation of Swingline Advances. Upon the
election of the Swingline Lender at any time, all outstanding Swingline
Advances (including Swingline Advances made pursuant to Section 2.5(c) below)
designated by the Swingline Lender shall be reallocated among all Lenders in
accordance with each Lender's Adjusted Commitment Percentage, and each such
Swingline Advance shall thereafter be deemed for all purposes a Federal Funds
Advance. Notwithstanding the preceding sentence or any other provision of this
Agreement, no portion of any Swingline Advance shall be reallocated to any
Lender to the extent such reallocation would cause such Lender's share of the
aggregate unpaid principal amount of all Loans (other than Bid Loans) then
outstanding under this Agreement to exceed its General Commitment hereunder.
(e) Reallocation Upon Default. Automatically after the
occurrence of an Event of Default described in Section 10.1(k) and upon the
request of any Lender during the continuance of any other Event of Default, (i)
all Swingline Advances made in accordance with this Agreement, Federal Funds
Advances and Alternate Base Rate Advances (excluding Bid Loans) shall be
immediately reallocated among all Lenders in accordance with each Lender's
Commitment Percentage, and each Swingline Advance shall thereafter be deemed
for all purposes a Federal Funds Advance, and (ii) each Eurodollar Advance and
Discount Advance shall, upon the expiration of the interest period applicable
thereto, automatically be converted into a Federal Funds Advance and
reallocated among all Lenders in accordance with each Lender's Commitment
Percentage. Each Lender holding less than its Commitment Percentage of all
Advances (excluding Bid Loans) shall at the times set forth for reallocations
in the preceding sentence immediately purchase for cash and at face value such
participations in the Notes held by other Lenders, and make such other
adjustments, as may be needed to cause each Lender to hold its Commitment
Percentage of the Advances hereunder (other than Bid Loans made by such
Lender). Notwithstanding the preceding provisions of this Section 2.3(e) or
any other provision of this Agreement, no Lender shall be required to so
purchase such
-35-
42
participations to the extent that such purchase would cause such Lender's share
of the aggregate unpaid principal amount of all Loans (other than Bid Loans)
then outstanding under this Agreement to exceed its Commitment hereunder.
2.4 Discount Advances.
(a) Funding of Discount Loans. Subject to the terms and
conditions herein (including the Lending Sublimits) and the terms and
conditions of any Balance Bank Agreement, the Company may request a Discount
Advance from any Balance Bank; provided that Discount Advances shall be made
only on the tenth day of each calendar month or, if such tenth day is not a
Business Day, on the next succeeding Business Day thereafter.
(b) Discounted Advance. Each Discount Loan made available
hereunder shall not bear interest but shall instead be funded to the Company at
a discount ("Balance Bank Discount") from the principal amount repayable by the
Company at the end of the applicable Discount Loan Period (the "Face Amount")
calculated to yield to the Balance Bank, when the Face Amount is repaid in full
at the end of the applicable Discount Loan Period, a per annum return on the
amount advanced equal to the Discount Rate for the applicable Discount Loan
Period. The full Face Amount of each Discount Advance shall then be repaid by
the Company at the expiration of the applicable Discount Loan Period.
Accordingly, each Discount Advance shall bear no interest prior to the
expiration of the applicable Discount Loan Period. The amount of the Discount
Advance actually disbursed to the Company on the Advance Date therefor (which
amount shall necessarily be less than the Face Amount) shall be equal to the
amount requested by the Company in the Advance Notice requesting such Discount
Advance, and the Face Amount shall be determined by the Agent based on the
Balance Bank Discount. From and after the expiration of such Discount Loan
Period, each Discount Loan constituting a portion of such Discount Advance not
repaid shall bear interest on its Face Amount at the rate set forth in Section
2.7.
(c) Balance Bank Agreement. Discount Advances are based upon
the expectation that the Company will maintain average daily qualifying
balances with the applicable Balance Bank during the applicable Discount Loan
Period. The Agent will collect and disburse the Discount Advances, but shall
not be obligated to
-36-
43
confirm any matters with respect to balances maintained with Balance Banks or
to collect any fees or amounts charged by Balance Banks with regard to such
balances. Each Balance Bank shall with the Company's agreement impose its own
requirements upon the Company in dealing with deviations in actual balances
from projected balances. All such matters shall be governed by separate
Balance Bank Agreements between each such Balance Bank and the Company, and the
Agent shall have no responsibility therefor. No Discount Advance shall be
available from a particular Balance Bank until (i) the Company and such Balance
Bank have executed and delivered a Balance Bank Agreement and so advised the
Agent in writing, and (ii) in the case of a Non-Lender Balance Bank, such
Non-Lender Balance Bank shall have executed either this Agreement or a
Non-Lender Balance Bank Supplement in the form of Exhibit I hereto agreeing to
be bound by the terms of this Section 2.4.
(d) Ratable Purchase by All Lenders. A portion of each
Discount Advance (or, in the case of Non-Lender Balance Banks, the entire
Discount Advance made in accordance with the terms of this Agreement), shall be
sold simultaneously with the funding by the Balance Bank to the other Lenders
(each a "Purchasing Lender") on a pro rata basis in accordance with each such
Lender's Adjusted Commitment Percentage. Each Purchasing Lender hereby agrees
to purchase and acquire, prior to funding, for cash at the Purchase Price and
without recourse to the Balance Bank, its Adjusted Commitment Percentage share
of such Discount Advance (as to each Purchasing Lender, such amount shall be a
Discount Loan by such Lender). The purchase price ("Purchase Price") payable
by each Purchasing Lender shall be calculated to yield such Lender upon payment
at the end of the applicable Discount Loan Period of its Discount Loan a per
annum return on the Purchase Price equal to the Eurodollar Rate which would
have been applicable for a one month Eurodollar Interest Period ending on the
same date as such Discount Loan Period. Each Balance Bank hereby irrevocably
agrees to sell and assign, without recourse, such portion of every Discount
Advance made by such Balance Bank (or, in the case of Non-Lender Balance Banks,
the entire amount of each such Discount Advance) to each Purchasing Lender at
the applicable Purchase Price. Each Balance Bank (other than Non-Lender
Balance Banks) shall retain its Adjusted Commitment Percentage share of the
Face Amount of each Discount Advance, which shall constitute a Discount Loan
owing to the Balance Bank.
-37-
44
(e) Minimum Amounts; Funding. Each Discount Advance shall be
requested by the Company in accordance with Section 2.9. On the Advance Date
for each such Discount Advance, subject to the other provisions hereof and upon
receipt by the Agent for the account of the Balance Bank from each of the
Purchasing Lenders of the aggregate Purchase Price required to be made
available by such Lenders, the Balance Bank will make the full Discount Advance
available to the Agent for the account of the Company in the manner specified
in Section 2.11. On the Advance Date for each such Discount Advance, each
Purchasing Lender will make available to the Agent for the account of the
Balance Bank in immediately available funds an amount equal to the Purchase
Price for the share of such Discount Advance being purchased by such Lender
from the Balance Bank.
(f) Consent to Assignment. The Company hereby acknowledges
and consents to the assignment of Discount Loans by each Balance Bank to the
other Lenders, as contemplated by this Section 2.4. The Company and the Agent
shall treat each Purchasing Lender with respect to its share of each Discount
Advance as if such share of such Discount Advance had originally been made by
such Purchasing Lender directly to the Company as a Discount Loan.
(g) Discount Notes. The Discount Loans owing to each Lender
shall be evidenced by a single master promissory note of the Company in the
full amount of such Lender's Commitment, substantially in the form of Exhibit
E-2 (a "Discount Note") executed and delivered prior to the initial Discount
Advance, payable to the order of such Lender and representing from time to time
the obligation of the Company to pay the aggregate Face Amount of all Discount
Loans then owed to such Lender.
2.5 Swingline Advances.
(a) In General. Subject to the terms and conditions
herein, the Company and each Borrowing Subsidiary may request Swingline
Advances from the Swingline Lender on a non-pro rata basis, and such Swingline
Advance shall be funded to the Company or a Borrowing Subsidiary, as
applicable, by the Swingline Lender on the Advance Date therefor. As set forth
in, but subject to the provisions of, Sections 2.3(d) and (e), Swingline
Advances shall be reallocated among the Lenders (i) automatically after the
occurrence of an Event of Default described in Section
-38-
45
10.1(k), (ii) upon the request of any Lender during the continuance of any
other Event of Default, and (iii) upon the election of the Swingline Lender
made at any time.
(b) Swingline Buydown Advances. Swingline Buydown Advances
are based upon the expectation that the Company will maintain average daily
qualifying balances with the Swingline Lender while any Swingline Buydown
Advance is outstanding. The Swingline Lender shall with the Company's
agreement impose its own requirements upon the Company in dealing with
deviations in actual balances from projected balances. All such matters shall
be governed by a Balance Bank Agreement between the Swingline Lender and the
Company.
(c) Swingline Advances to Pay Amounts Due to Swingline
Lender. If any amounts are advanced by the Swingline Lender to cover checks or
wire transfers from Company or Borrowing Subsidiary accounts maintained with
the Swingline Lender when there are insufficient funds in such accounts to
cover the applicable check or wire transfer and sufficient funds are not
deposited in the applicable account before the close of business on the day on
which the applicable check or wire transfer request is honored, then the
Company shall be deemed to have requested, and the Swingline Lender may (but
shall not be obligated to) elect to make, a Swingline Advance at the Alternate
Base Rate to pay such overdraft amount (even if such a Swingline Advance would
cause the aggregate amount of all outstanding Swingline Advances to exceed the
Swingline Commitment); provided however, that (i) the Swingline Lender shall
not make any such Swingline Advance to the extent such Advance would cause the
Credit Requirement to exceed the Borrowing Base, and (ii) the reallocations of
any such Swingline Advances among the Lenders shall be as set forth in, but
subject to the provisions of, Sections 2.3(d) and (e).
2.6 Bid Loans, Approved GNMA Letters of Credit, and Approved Rate
Hedging Agreements.
(a) Special Bids. The Company may, at any time, solicit a
bid from any Lender on a non-pro rata basis for a loan (a "Bid Loan") in such
amount and accruing interest at such rate as may be bid to the Company by such
Lender for interest periods of 1 to 45 days. Such Lender, in its sole
discretion, may make such a bid for a Bid Loan. The Company will be under no
obligation to accept any such bid, but may accept any one, or
-39-
46
more than one, of such bids. A Lender whose bid has been accepted by the
Company shall be referred to as a "Bid Lender". The Company and each Bid
Lender shall execute and submit a Bid Loan Notice in the form of Exhibit G
hereto to the Agent concurrently with the Advance Notice for such Bid Loan.
(b) Approved GNMA Letters of Credit. The Company may, at any
time, request that any Lender issue a letter of credit in favor of GNMA as a
result of the failure by the Company or any Borrowing Subsidiary to satisfy all
document submission requirements of GNMA in connection with the certification
or re-certification by GNMA of a pool of Mortgage Loans. If a Lender agrees to
issue such a letter of credit and desires that such letter of credit be ratably
secured (along with the other Credit Indebtedness) by the Collateral, such
Lender shall submit to the Agent a copy of the proposed letter of credit and
copies of any related reimbursement agreement or other related documentation.
If (i) the Agent approves such letter of credit and other documentation (which
approval shall not be unreasonably withheld), and (ii) the letter of credit
expires by its terms on a date which is prior to the Termination Date, then
such letter of credit shall constitute an Approved GNMA Letter of Credit and
such Lender shall constitute an "Issuing Lender". No such letter of credit
shall be considered an Approved GNMA Letter of Credit if its inclusion as an
Approved GNMA Letter of Credit would, at the time of issuance, cause any
Lending Sublimit to be exceeded. The Company and the applicable Issuing Lender
shall promptly notify the Agent upon (i) the expiration, cancellation or
honoring of any Approved GNMA Letter of Credit, and (ii) the payment by the
Company or the applicable Borrowing Subsidiary of any amounts due to the
Issuing Lender in respect of any Approved GNMA Letter of Credit Obligations.
No Issuing Lender nor the Company shall amend or renew any Approved GNMA Letter
of Credit or any related reimbursement agreement or other related document
without the prior written consent of the Agent (which consent shall not be
unreasonably withheld).
(c) Approved Rate Hedging Agreements. The Company may, from
time to time, request that one or more Lenders enter into Rate Hedging
Agreements with the Company. If a Lender agrees to enter into such an
agreement and desires all or a portion of the Company's obligations thereunder
to be ratably secured by the Collateral, such Lender shall submit to the Agent
a copy of the proposed Rate Hedging Agreement and copies of any related
-40-
47
documentation. If (i) the Agent approves such Rate Hedging Agreement, (ii)
such Rate Hedging Agreement terminates automatically on or before the
Termination Date or provides for the release of the Collateral (or the transfer
or liquidation of Collateral in the amount of the Approved Secured Rate Hedging
Obligations) at such time, and (iii) such Rate Hedging Agreement specifies the
maximum amount of obligations thereunder that will be secured by the
Collateral, then such Rate Hedging Agreement shall be an Approved Rate Hedging
Agreement and the obligations thereunder, up to the stated maximum, shall be
Approved Secured Rate Hedging Obligations hereunder, subject to the limitation
that the maximum aggregate Approved Secured Rate Hedging Obligations at any
time shall not exceed $25,000,000.
(d) Additional Commitment. Each Bid Lender's commitment
under an accepted special bid, each Issuing Lender's issuance of an Approved
GNMA Letter of Credit and each Rate Hedging Agreement entered into by a Lender
shall be in addition to such Lender's Commitment and shall not reduce such
Lender's obligation to continue to fund its Adjusted Commitment Percentage of
any other Advance.
(e) Notes. Each Bid Loan owing to each Bid Lender shall not
be evidenced by the Notes executed and delivered in the form of Exhibit E-1 and
E-2, but shall instead be evidenced by an additional promissory note or notes
in a form mutually agreed to by the Company and such Bid Lender. The Agent
shall have no responsibility to confirm the existence or substance of such
additional promissory notes.
2.7 Rate after Maturity.
Any Advance not paid at maturity, whether by acceleration or
otherwise, and any other amount not paid when due hereunder shall bear interest
until paid in full at a rate per annum equal to the Alternate Base Rate plus
two percent (2.0%) per annum; provided, however, that such interest rate after
maturity shall in no event be less than the interest rate that was in effect
with respect to such Advance prior to maturity.
2.8 Interest Payment Dates.
Interest shall accrue at the relevant rate for each day from
the day on which the proceeds of such Advance are made
-41-
48
available to the Company or a Borrowing Subsidiary. Interest accrued on each
Advance other than a Eurodollar Advance, a Discount Loan (which does not accrue
interest prior to maturity), or a Bid Loan shall be payable on the first to
occur of (i) the first Business Day of the immediately following calendar
month, commencing with the first such date to occur after the date hereof, or
(ii) at maturity of the Facility, whether due to acceleration or otherwise.
Interest accrued on each Eurodollar Advance shall be payable on the first to
occur of (i) the last day of each Eurodollar Interest Period, or (ii) any date
on which any such Eurodollar Advance is prepaid, whether due to acceleration or
otherwise, or (iii) the Termination Date. Interest on Bid Loans shall be
payable on the first to occur of (i) the last day of the applicable interest
period for such Bid Loan as set forth in the Bid Loan Notice, (ii) any date on
which such Bid Loan is prepaid whether due to acceleration or otherwise or
(iii) the Termination Date. Interest and Fees shall be calculated for actual
days elapsed on the basis of a 360-day year. Interest shall be payable for the
day an Advance is made. Interest shall not be payable for the day of any
payment on the amount paid if payment is received prior to noon (Chicago time)
at the place of payment. If any payment of principal of or interest on an
Advance shall become due on a day which is not a Business Day, such payment
shall be made on the next succeeding Business Day and, in the case of a
principal payment, such extension of time shall be included in computing
interest in connection with such payment.
2.9 Method of Selecting Rate Options and Interest Periods.
Subject to the terms hereof, for each Advance hereunder the
Company (or a Borrowing Subsidiary or the Company on behalf of a Borrowing
Subsidiary in the case of Swingline Advances to be borrowed by a Borrowing
Subsidiary) shall give the Agent irrevocable notice (an "Advance Notice") not
later than (i) 10:00 a.m. (Chicago time) on the proposed Advance Date for each
Bid Loan or Federal Funds Advance, (ii) noon (Chicago time) on the proposed
Advance Date for each Alternate Base Rate Advance (other than Swingline
Advances), (iii) 3:00 p.m. (Chicago time) on the proposed Advance Date for
each Overnight Transaction Advance, (iv) 4:00 p.m. (Chicago time) on the
proposed Advance Date for each Swingline Advance which is an Alternate Base
Rate Advance or a Swingline Buydown Advance, and (v) 11:00 a.m. (Chicago time)
-42-
49
three (3) Business Days before the Advance Date for each Eurodollar Advance and
each Discount Advance, specifying:
(a) the Advance Date, which shall be a Business Day, of
such Advance,
(b) the aggregate amount of such Advance, which shall be
in an amount equal to $5,000,000 or a whole multiple
of $1,000,000 in excess thereof, except that (i)
Swingline Advances other than Overnight Transaction
Advances shall have no minimum amount and need not be
in multiples of $1,000,000, and (ii) Overnight
Transaction Advances shall be in a minimum amount
equal to $100,000 but need not be in multiples of
$1,000,000.
(c) the type of such Advance,
(d) the interest period applicable to such Advance, if
applicable,
(e) if such Advance is a Discount Advance, the Balance
Bank or Balance Banks for such Advance and, if
applicable, the portion of such Discount Advance
allocated to each such Balance Bank,
(f) if such Advance is a Bid Loan, the Bid Lender for
such Bid Loan,
(g) if such Advance is a Swingline Advance, which entity
(i.e. the Company or a particular Borrowing
Subsidiary) is the borrower of such Advance, and
(h) what portion, if any, of such Advance is to be used
solely for the purpose of repaying maturing
commercial paper.
Notwithstanding the foregoing, the Agent may also agree, in its sole
discretion, to accept (A) an Advance Notice requesting a Swingline Advance
which is an Alternate Base Rate Advance or Swingline Buydown Advance or (B) a
Bid Loan Notice at any time up until the close of the Agent's business day.
Delivery of an Advance Notice, whether by telephone or in writing, shall
constitute a representation and warranty that, after giving
-43-
50
effect to the amount of the Advance being requested, (i) the then-current
Borrowing Base is equal to or greater than the Credit Requirement, and (ii) no
Lending Sublimit shall be exceeded. Changes in the rate of interest on that
portion of any Advance maintained as an Alternate Base Rate Advance will take
effect simultaneously with each change in the Alternate Base Rate. The
interest rate on each Overnight Transaction Advance or Federal Funds Advance
shall be recalculated daily for each day that such Overnight Transaction
Advance or Federal Funds Advance is continued under Section 2.12(ii). Each
Eurodollar Advance shall bear interest for each day from and including the
first day of the Eurodollar Interest Period applicable thereto to (but not
including) the last day of such Eurodollar Interest Period at the interest rate
determined as applicable to such Advance. The Company shall select Eurodollar
Interest Periods and Discount Loan Periods with respect to Eurodollar Advances
and Discount Loans so that it is not necessary to pay a Eurodollar Advance or
Discount Loan prior to the last day of the applicable Eurodollar Interest
Period or Discount Loan Period, as the case may be, in order to make the
mandatory repayment on the Termination Date. Any change in the Applicable
Margin shall be effective immediately with respect to the interest rates on any
Loans outstanding other than Discount Loans. Changes in the Applicable Margin
relating to Discount Loans shall not affect Discount Loans outstanding at the
time of any such change but shall be effective with respect to any Discount
Loans made after the date of any such change.
2.10 Maximum Number of Eurodollar Loans.
The Company may not request an additional Eurodollar Advance
if the making of such Advance would result in any Lender holding Eurodollar
Loans having more than six (6) different Eurodollar Interest Periods at any
given time.
2.11 Funding Procedures.
Not later than 2:00 p.m. (Chicago time) on each Advance Date,
each Lender shall make available its Loan or Loans (including Bid Loans), in
funds immediately available in Chicago to the Agent at its address specified
pursuant to Article XII, provided that Swingline Advances may be funded at any
time up to (i) the close of the Swingline Lender's business day so long as
First Chicago is both the Agent and the sole Swingline Lender, or
-44-
51
(ii) 4:00 p.m. (Chicago time) if First Chicago is not both the Agent and the
sole Swingline Lender. The Agent will make the funds so received from the
Lenders available to the Company or a Borrowing Subsidiary, as applicable, at
the Agent's aforesaid address, subject to the provisions of Article V.
Notwithstanding the foregoing, the Agent may also agree, in its sole
discretion, to accept delivery of Bid Loan funds and to make such funds
available to the Company at any time up to the close of the Agent's business
day.
2.12 Conversion and Continuation.
(i) The Company may elect from time to time, subject to
the provisions of Sections 2.3(a), 2.9 and 2.10 and the Lending
Sublimits to convert all or any part of any Advance (other than a Bid
Loan or Discount Advance) into a different type of Advance, provided
that any conversion of any such Eurodollar Advance shall be made on,
and only on, the last day of the applicable Eurodollar Interest
Period. Discount Advances and Bid Loans are payable on the last day
of the applicable Discount Loan Period or Bid Loan period and may be
repaid out of new Advances hereunder but may not be converted directly
to a different type of Advance.
(ii) Alternate Base Rate Advances shall continue as the
same type of Advances unless and until such Advances are converted
into a different form of Advance in accordance with the terms hereof.
Federal Funds Advances shall continue as Federal Funds Advances unless
and until (a) such Advances are converted into a different form of
Advance in accordance with the terms hereof or (b) the Company has
paid any such Federal Funds Advance prior to 10:00 a.m. (Chicago time)
on any Business Day or given the Agent written notice before 10:00
a.m. (Chicago time) on any Business Day that such Federal Funds
Advance will be repaid on such Business Day. Overnight Transaction
Advances and Swingline Buydown Advances shall continue as Overnight
Transaction Advances and Swingline Buydown Advances, respectively,
unless and until (a) such Advances are converted into a different form
of Advance in accordance with the terms hereof or (b) the Company or a
Borrowing Subsidiary, as applicable, has paid any such Overnight
Transaction Advance or Swingline Buydown Advance prior to 3:00 p.m.
(Chicago time) on any Business Day or given the Agent written notice
before 3:00 p.m. (Chicago
-45-
52
time) on any Business Day that such Overnight Transaction Advance or
Swingline Buydown Advance will be repaid on such Business Day. If the
Company so notifies the Agent that it will be paying a Federal Funds
Advance, Overnight Transaction Advance or Swingline Buydown Advance on
any Business Day and fails to do so, such Advance shall be converted
into an Alternate Base Rate Advance. Eurodollar Advances shall
continue until the end of the then-applicable Eurodollar Interest
Period therefor, at which time each such Advance shall be
automatically converted to a Federal Funds Advance, unless the Company
shall have given the Agent notice in accordance with Section 2.12(iii)
requesting that, at the end of such Eurodollar Interest Period, such
Advance continue as a Eurodollar Advance for a specified Eurodollar
Interest Period or be converted to a different type of Advance.
(iii) The Company shall give the Agent irrevocable notice
(a "Conversion/Continuation Notice") of each conversion of an
Alternate Base Rate Advance, a Federal Funds Advance, a Swingline
Buydown Advance or an Overnight Transaction Advance or conversion or
continuation of a Eurodollar Advance not later than (i) 10:00 a.m.
(Chicago time) on the date of the requested conversion or
continuation, in the case of a conversion into a Federal Funds
Advance, Alternate Base Rate Advance, Overnight Transaction Advance or
Swingline Buydown Advance, or (ii) 11:00 a.m. (Chicago time) at least
three Business Days prior to the date of the requested conversion into
or continuation of a Eurodollar Loan, specifying: (1) the requested
date (which shall be a Business Day) of such conversion or
continuation; (2) the amount and type of the Advance to be converted
or continued; (3) the amount and type(s) of Advance(s) into which such
Advance is to be converted or continued; and (4) in the case of a
conversion into or continuation of a Eurodollar Advance, the duration
of the Eurodollar Interest Period applicable thereto.
2.13 Optional Principal Payments.
All or any portion of Alternate Base Rate Advances, Overnight
Transaction Advances, Swingline Buydown Advances and Federal Funds Advances may
be paid without penalty or premium on any Business Day provided that such
repayments are made by (i) 10:00 a.m. (Chicago time) with respect to Federal
Funds Advances,
-46-
53
(ii) noon (Chicago time) with respect to Alternate Base Rate Advances, or (iii)
3:00 p.m. (Chicago time) with respect to Overnight Transaction Advances and
Swingline Buydown Advances. A Eurodollar Advance or Discount Loan may not be
paid prior to the last day of the applicable Eurodollar Interest Period or
Discount Loan Period, as the case may be; provided, however, that the Company
shall compensate the Lenders for any funding losses and/or loss of profits
incurred as a result of any voluntary prepayment (if accepted) or involuntary
prepayment of any such Advance prior to the last day of the applicable
Eurodollar Interest Period or Discount Loan Period. Bid Loans may not be
prepaid unless the applicable Bid Lender has agreed otherwise and notified the
Agent of such agreement. All optional principal payments shall be applied to
the type of Advance designated by the Company when making such payment,
provided that any payments received during the continuance of an Event of
Default shall be applied on a pro rata basis to all Advances then outstanding
(with the portion applicable to Eurodollar Loans or Discount Loans to be
applied to such Loans either immediately or at the end of the relevant
Eurodollar Interest Period or Discount Loan Period at the option of the
Company).
2.14 Required Principal Payments.
(a) Payments Related to Borrowing Base. On any date that
the Credit Requirement is in excess of the then-current Borrowing Base, the
Company shall make a mandatory payment to the Agent for the benefit of the
Lenders in the amount of such excess. Such payment shall be allocated pro rata
among the Lenders in accordance with the amounts of their outstanding Loans
hereunder.
(b) Final Payment on Termination Date. The outstanding
principal balance of all Advances not repaid earlier, together with any accrued
and unpaid interest and Fees, unless required to be paid earlier pursuant to
the terms hereof, shall be due and payable on the Termination Date.
2.15 Method of Payment.
All payments of principal, interest, and Fees hereunder
(including any payments related to Bid Loans) shall be made in immediately
available funds to the Agent at the Agent's address specified pursuant to
Article XII, or at any other Lending
-47-
54
Installation of the Agent specified in writing by the Agent to the Company on
the date due by 1:00 p.m. (Chicago time) with respect to all Advances other
than Swingline Advances and by 3:00 p.m. (Chicago time) with respect to
Swingline Advances. Notwithstanding the foregoing, if the Company or a
Borrowing Subsidiary fails to repay or give the Agent notice of repayment of a
Federal Funds Advance before 10:00 a.m. (Chicago time) or an Overnight
Transaction Advance before 3:00 p.m. (Chicago time) on the Business Day that
the Company or the Borrowing Subsidiary intends to repay such Advance, any
payment of such Advance received by the Agent on such Business Day after the
time required for payment or notice shall be deemed to have been received by
the Agent at the opening of business on the following Business Day. Each
payment delivered to the Agent for the account of any Lender shall be delivered
promptly by the Agent to such Lender in the same type of funds which the Agent
received at its address specified pursuant to Article XII or at any Lending
Installation specified in a notice received by the Agent from such Lender. The
Agent is hereby authorized to charge the account of the Company maintained with
First Chicago for each payment of principal, interest and fees as it becomes
due hereunder.
2.16 Notes; Telephonic Notices.
Each Lender is hereby authorized to record the principal
amount of each of its Loans and each repayment on the schedules attached to its
Notes provided, however, that the failure to so record or any error in such
recording shall not affect the Company's or any Borrowing Subsidiary's
obligations hereunder or under such Notes. The Company and each Borrowing
Subsidiary each hereby authorizes the Lenders and the Agent to extend, continue
or convert Advances, effect Rate Option selections and to transfer funds to or
for the account of the Company or the applicable Borrowing Subsidiary based on
telephonic notices (confirmed promptly thereafter by facsimile) made by any
person or persons the Agent or any Lender in good faith believes to be acting
on behalf of the Company or the applicable Borrowing Subsidiary. The Company
and each Borrowing Subsidiary each agrees to deliver promptly to the Agent a
written confirmation, if such confirmation is requested by the Agent or any
Lender, of each telephonic notice signed by an officer of the Company or the
Borrowing Subsidiary, as applicable, authorized in writing to do so. If the
written confirmation differs in any material respect
-48-
55
from the action taken by the Agent and the Lenders, the records of the Agent
and the Lenders shall govern absent manifest error.
2.17 General Provisions as to Payments.
(a) The Company (or the applicable Borrowing Subsidiary
with respect to Loans borrowed by a Borrowing Subsidiary) shall make
each payment of principal or interest on the Loans and shall pay all
Fees not later than the times stated in Section 2.15. The Agent shall
promptly distribute to each Lender its share of each payment of
principal or interest or fees received by the Agent for the account of
such Lender.
(b) Amounts paid to or held by the Agent for the payment
of Loans shall not be deemed paid to a Lender until received by such
Lender by the later of 3:00 p.m. (Chicago time) or the close of
business on such date. If amounts are received by the Agent from the
Company or a Borrowing Subsidiary prior to the applicable times stated
in Section 2.15 and the Agent fails to make a Lender's portion of such
amount available to such Lender by close of business on such date,
neither the Company nor such Borrowing Subsidiary shall have any
obligation to pay any further interest on such payment and the Agent
shall pay to such Lender interest on such payment to the date paid to
such Lender by the Agent at a rate per annum equal to the then-current
Published Federal Funds Effective Rate.
2.18 Notification of Advances, Interest Rates and Prepayments.
Promptly after receipt thereof, the Agent will notify each
Lender by facsimile of the contents of each Advance Notice,
Conversion/Continuation Notice, and repayment notice received by it hereunder.
Not later than one Business Day prior to the Advance Date for each Eurodollar
Advance or Discount Loan, the Agent will notify by facsimile each Lender and
the Company of the interest rate applicable to each Eurodollar Advance, the
Face Amount of each Discount Advance and the Purchase Price to be paid by each
Lender for its share of such Discount Advance promptly upon determination of
such interest rate, Face Amount and Purchase Price. When any Advances are
outstanding or have been requested at the Federal Funds Rate or the Alternate
Base Rate
-49-
56
the Agent will give each Lender and the Company prompt notice by facsimile of
each change in such rate.
2.19 Lending Installations.
Each Lender may book its Loans at any Lending Installation
selected by such Lender and may change its Lending Installation from time to
time. All terms of this Agreement shall apply to any such Lending Installation
and the Notes shall be deemed held by each Lender for the benefit of such
Lending Installation. Each Lender may, by facsimile or written notice to the
Agent and the Company, designate a Lending Installation through which Loans
will be made by it and for whose account Loan payments are to be made.
Notwithstanding the foregoing, no Lender may transfer its Loans to another
Lending Installation if such transfer would cause the Company to incur
additional indemnification costs under Section 3.1 hereof, and if after a
Lender transfers its Loans to another Lending Installation the Company incurs
additional indemnification costs under Section 3.1 hereof as a result of such
transfer, such Loans shall be transferred back to the original Lending
Installation.
2.20 Non-Receipt of Funds by Agent.
(a) Unless the Company, a Borrowing Subsidiary or a Lender,
as the case may be, notifies the Agent prior to the close of business on the
Business Day immediately preceding the date on which it is required to make
payment to the Agent of (i) in the case of a Lender, the proceeds of a Loan or
(ii) in the case of the Company or a Borrowing Subsidiary, a payment of
principal, interest or fees to the Agent for the account of the Lenders, that
it does not intend to make such payment, the Agent may assume that such payment
has been made or will be made on the date required. The Agent may, but shall
not be obligated to, make the amount of such payment available to the intended
recipient in reliance upon such assumption. If such Lender, the Company or the
Borrowing Subsidiary, as the case may be, has not in fact made or does not make
when due such payment to the Agent, the recipient of such payment shall, on
demand by the Agent, repay to the Agent the amount so made available together
with interest thereon in respect of each day during the period commencing on
the date such amount was so made available by the Agent until the date the
Agent recovers such amount at a rate per annum equal to (i) in the case of
repayment by a Lender, the
-50-
57
Published Federal Funds Effective Rate for such day or (ii) in the case of
repayment by the Company or a Borrowing Subsidiary, the interest rate
applicable to the relevant Loan. If a Lender fails to pay the Agent as
provided in the preceding sentence, the Company shall pay such amount to the
Agent upon demand plus interest (at the rate applicable to the applicable
Advance) to the date of repayment (but not including such date if payment is
received prior to the deadlines established in Section 2.15).
(b) Neither the Agent nor any Lender shall incur any
liability to the Company or any Borrowing Subsidiary in acting upon any
telephonic notice referred to in this Agreement which the Agent or such Lender
believes in good faith to have been given by a duly authorized officer or other
person authorized to borrow on behalf of Company or the Borrowing Subsidiary or
for otherwise acting in good faith under this Section 2.20. Upon the funding
of Loans by the Lenders in accordance with this Agreement (including
satisfaction of all conditions thereto) pursuant to any telephonic notice (with
confirmation promptly thereafter by facsimile), the Company (or the applicable
Borrowing Subsidiary with respect to Advances borrowed by a Borrowing
Subsidiary) shall have effected a borrowing hereunder. An Advance Notice (or
telephonic notice in lieu thereof) shall be irrevocable and the Company or the
Borrowing Subsidiary, as applicable, shall be bound to effect a borrowing in
accordance therewith.
(c) If the Agent fails to make any Loan funds received
from a Lender available to the Company for any reason and does not return such
Loan funds to such Lender on the same Business Day such funds were received by
the Agent, the Agent shall pay to such Lender, upon demand, interest from the
date such funds are received by the Agent from such Lender, provided such funds
were received prior to the deadlines for receipt set forth in Section 2.11
until the date such corresponding amount is either made available by the Agent
to the Company within the time limits of Section 2.11 or so returned to such
Lender, at the rate per annum equal to the then-current Published Federal Funds
Effective Rate and the Company shall have no responsibility to such Lender with
respect to such funds until they are so made available to the Company by the
Agent.
(d) Nothing in this Section 2.20 shall relieve any Lender
from its obligation to fund its share of any Advance, prejudice any rights the
Company may have against any Lender as a
-51-
58
result of such Lender's failure to make the amount of its Loan available to the
Company or obligate any Lender to fund any other Lender's share of any Advance.
ARTICLE III
CHANGE IN CIRCUMSTANCES
3.1 Yield Protection.
If, after the date of this Agreement, the adoption of any law
or any governmental or quasi-governmental rule, regulation, policy, guideline
or directive (whether or not having the force of law), or any change in any
existing or future law, rule, regulation, policy, guideline or directive or the
interpretation or administration thereof, or the compliance of any Lender
therewith,
(i) subjects any Lender or any applicable Lending
Installation to any tax, duty, charge or withholding on or from
payments due from the Company or any Borrowing Subsidiary, or changes
the basis of taxation of payments to any Lender in respect of its
Loans or other amounts due it hereunder (excluding any tax imposed
with respect to the overall net income of any Lender or its Lending
Installation, any franchise taxes imposed on any such Lender or
Lending Installation to the extent such franchise taxes are in lieu of
net income taxes), or
(ii) imposes or increases or deems applicable any
reserve, assessment, insurance charge, special deposit or similar
requirement against assets of, deposits with or for the account of, or
credit extended by, any Lender or any applicable Lending Installation
(other than reserves and assessments taken into account in determining
the interest rate applicable to Eurodollar Advances or Discount
Loans), or
(iii) affects the amount of capital required or expected
to be maintained by any Lender or Lending Installation or any
corporation controlling any Lender or Lending Installation and such
Lender determines the amount of capital required is increased by or
based upon the existence of this Agreement or its obligation to make
or maintain Loans hereunder or of commitments of this type, or
-52-
59
(iv) imposes any other condition which requires any
Lender or any applicable Lending Installation to make any payment
calculated by reference to the amount of loans held or interest
received by it in an amount deemed material by such Lender,
and the result of any of the foregoing is to increase the cost to such Lender
or Lending Installation of making, renewing or maintaining its Commitment or
any Loan or to reduce any amount receivable in respect thereof or to reduce the
rate of return on the capital of such Lender or Lending Installation or any
Person controlling such Lender or Lending Installation as it relates to credit
facilities in the nature of that evidenced by this Agreement, then the Company
shall pay such Lender that portion of such increased expense incurred
(including, in the case of Section 3.1(iii), any reduction in the rate of
return on capital to an amount below that which it could have achieved but for
such law, rule, regulation, policy, guideline or directive and after taking
into account such Lender's policies as to capital adequacy) or reduction in an
amount received which such Lender determines is attributable to making, funding
and maintaining its Loans and its Commitment to the extent such expenses or
reductions arise from and after the date which is 90 days before receipt by the
Company of demand for payment by such Lender. Notwithstanding the foregoing,
if any of the foregoing circumstances otherwise giving rise to the yield
protection provisions of this Section are imposed solely against a single
Lender as a result of circumstances or conditions which apply solely to that
Lender and not generally to lenders domiciled in the jurisdiction of such
Lender's domicile, then the yield protection provisions of this Section shall
not apply with respect to such circumstances.
3.2 Availability of Rate Options.
If any Lender determines that maintenance of any of its
Eurodollar Loans or Discount Loans at a suitable Lending Installation would
violate any applicable law, rule, regulation or directive, whether or not
having the force of law, the Agent shall suspend the availability of the
affected Rate Option and require any Eurodollar Advances or Discount Loans
outstanding at the affected Rate Option to be repaid immediately upon demand;
or if the Required Lenders determine that deposits of a type or maturity
appropriate to match fund Eurodollar Advances or
-53-
60
Discount Loans are not available, the Agent shall suspend the availability of
the affected Rate Option with respect to any such Loans or Advances made after
the date of any such determination. If the Required Lenders determine that the
Eurodollar Rate or the Discount Rate does not accurately reflect the cost of
making a Eurodollar Advance or Discount Loan at such Rate Option, then, if for
any reason whatsoever the provisions of Section 3.1 are inapplicable, the Agent
shall suspend the availability of the affected Rate Option with respect to any
Eurodollar Advance or Discount Loan made after the date of any such
determination.
3.3 Funding Indemnification.
If any payment of a Eurodollar Advance or Discount Loan occurs
on a date which is not the last day of the applicable Eurodollar Interest
Period or Discount Loan Period, whether because of acceleration, prepayment or
otherwise, or if a Eurodollar Advance, Overnight Transaction Advance, Federal
Funds Advance, Swingline Buydown Advance or Discount Loan is not made,
continued or established by conversion on the date specified by the Company or
a Borrowing Subsidiary for any reason other than default by the Lenders, the
Company will indemnify each Lender for any loss or cost incurred by it
resulting therefrom, including, without limitation, any loss or cost in
liquidating or employing deposits acquired to fund or maintain such Eurodollar
Advance or Discount Loan.
3.4 Lender Statements; Survival of Indemnity.
To the extent reasonably possible, each Lender shall designate
an alternate Lending Installation with respect to its Eurodollar Advances and
Discount Loans to reduce any liability of the Company to such Lender under
Section 3.1 or to avoid the unavailability of a Rate Option under Section 3.2,
so long as such designation is not to the economic detriment of such Lender and
does not impose any increased regulatory burdens on such Lender. Each Lender
shall deliver to the Agent and the Company a written statement of such Lender
as to the amount due, if any, under Section 3.1 or 3.3. Such written statement
shall set forth in reasonable detail the calculations upon which such Lender
determined such amount and shall be final, conclusive and binding on the
Company in the absence of manifest error. Determination of amounts payable
under such Sections in connection with a Eurodollar Advance or Discount Loan
shall be calculated as though
-54-
61
each Lender funded its related Loan through the purchase of a deposit of the
type and maturity corresponding to the deposit used as a reference in
determining the Eurodollar Rate or Discount Rate applicable to such Loan,
whether in fact that is the case or not. The amount specified in the written
statement shall be payable within 15 days after receipt by the Company of the
written statement. The obligations of the Company under Sections 3.1 and 3.3
shall survive payment of the Obligations and termination of this Agreement. In
the event any Lender is affected by any of the events described in Section 3.1
or 3.2 the Company shall have the right, if no Default then exists, to repay in
full all Credit Indebtedness owed to such Lender provided that the Company has,
with the approval of the Agent (not to be unreasonably withheld), arranged to
substitute a replacement lender for the full amount of such Lender's
Commitment.
3.5 Lender Tax Agreement.
Each Lender that is not incorporated under the laws of the
United States of America or a state thereof shall:
(i) deliver to the Company and the Agent (A) two duly
completed copies of the United States Internal Revenue Service Form
1001 or 4224, or successor applicable form, as the case may be, and
(B) an Internal Revenue Service Form W-8 or W-9, or successor
applicable form, as the case may be;
(ii) deliver to the Company and the Agent two further copies
of any such form or certification on or before the date that any such
form or certification expires or becomes obsolete and after the
occurrence of any event requiring a change in the most recent form
previously delivered by it to the Company; and
(iii) obtain such extension of time for filing and complete
such forms or certifications as may reasonably be requested by the
Company or the Agent;
unless in any such case an event (including, without limitation, any change in
treaty, law or regulation) has occurred prior to the date on which any such
delivery would otherwise be required which renders all such forms or any
certifications required hereby inapplicable or which would prevent such Lender
from duly completing and delivering any such form or making such
-55-
62
certification with respect to it and such Lender so advises the Company and the
Agent. Such Lender shall certify (i) in the case of Form 1001 or 4224
delivered in accordance with this Section 3.5, that it is entitled to receive
payments under this Agreement without deduction or withholding of any United
States federal income taxes and (ii) in the case of a Form W-8 or W-9, that it
is entitled to an exemption from United States backup withholding tax. Each
Person that shall become a Lender or a Participant pursuant to Article XI
shall, upon the effectiveness of the related transfer, be required to provide
all of the forms and statements required pursuant to this Section, provided
that in the case of a Participant such Participant shall also furnish all such
required forms and statements to the Lender from which the related
participation shall have been purchased as well as to the Company and the
Agent.
ARTICLE IV
COLLATERAL AND BORROWING BASE
4.1 Eligible Collateral - Pledged Mortgages.
(a) "Eligible Mortgage Loan" means a Pledged Mortgage
which:
(i) has been originated less than 360 days prior to
inclusion in the Borrowing Base;
(ii) is a Conforming Mortgage Loan, a Jumbo Mortgage
Loan or a Nonconforming Mortgage Loan;
(iii) has been included in the Borrowing Base for
180 days or less after the Pledge Date thereof;
(iv) is not financed under an agreement to repurchase
or otherwise pledged to secure any Debt other than the Credit
Indebtedness pursuant to the Security Agreement;
(v) has been duly executed and delivered by the
parties thereto at a closing;
(vi) is valid and enforceable in accordance with its
terms, without defense or offset;
-56-
63
(vii) has not been modified or amended and has not
had any requirements thereof waived except as permitted by Federal
Agency requirements;
(viii) is subject to and complies with the delivery
requirements of an Approved Investor Commitment to purchase such
Pledged Mortgage;
(ix) has been correctly described in the Collateral
Transmittal submitted to the Collateral Agent in respect of such
Pledged Mortgage; and
(x) has been fully funded to the mortgagor or to an
escrow or closing agent by wire transfer, transmittal through the
"Automated Clearing House" or any similar private clearing house for
interbank transfers of funds, cashier's check or a cleared check or
draft;
and as to which the representations and warranties contained in Section 4.6
relating thereto are true and correct as of the Pledge Date of such Mortgage
Loan and as of each day thereafter as if made on each such date.
(b) "Eligible Delivered Mortgage" means an Eligible
Mortgage Loan as to which:
(i) the Collateral Agent has received and continues
to hold the Required Mortgage Documents and, if requested by the
Agent or the Collateral Agent, the Additional Required Mortgage
Documents for such Pledged Mortgage, other than those documents and
instruments which are in the possession of a Person to whom delivery
was made pursuant to a Bailee Letter or a Company Trust Receipt;
(ii) not more than 45 days have passed after the day
on which the Mortgage Note for such Pledged Mortgage was delivered,
pursuant to a Bailee Letter, to an Approved Investor other than one
created under a government housing program which is not a Federal
Agency for examination and purchase without such Mortgage Note being
returned to the Collateral Agent; and not more than 75 days have
passed after the day on which the Mortgage Note for such Pledged
Mortgage was delivered, pursuant to a Bailee Letter, to an Approved
Investor created under a government housing program which is
-57-
64
not a Federal Agency for examination and purchase without such
Mortgage Note being returned to the Collateral Agent;
(iii) no Approved Investor has paid the purchase
price or delivered the Securities due to the Company on account of
such Pledged Mortgage;
(iv) not more than 15 days have passed after the
date on which any document relating to such Pledged Mortgage was
sent, pursuant to a Company Trust Receipt, to the Company or a
Borrowing Subsidiary for correction of clerical or other
non-substantial documentation problems in preparation of such document
without such documentation being returned to the Collateral Agent
properly corrected;
(v) no installment of principal or interest on such
Pledged Mortgage is more than one payment past due; and
(vi) such Mortgage Loan constitutes a first lien on
the premises described therein.
(c) "Eligible AP Mortgage" means an AP Mortgage which is
an Eligible Mortgage Loan and as to which:
(i) the information described on Exhibit 7 to the
Security Agreement regarding such AP Mortgage was contained in a
Collateral Transmittal submitted to the Collateral Agent on the same
date as the applicable AP Notice;
(ii) the proceeds thereof have been funded (or, on
the date of the Advance supported by the applicable AP Notice,
are being funded) by wire transfer or cashier's check, cleared check or
draft or other form of immediately available funds to the escrow or
closing agent for such AP Mortgage;
(iii) the Pledgor expects such AP Mortgage to close
and become a valid lien securing actual indebtedness by funding to the
order of the mortgagor thereunder;
(iv) not more than ten (10) Business Days have
passed since the delivery of the AP Notice therefor (and if more than
five (5) Business Days have passed since the delivery of such AP
Notice, the Borrowing Base Sublimit set forth in Section 4.5(x) has
been satisfied);
-58-
65
(v) neither the Company nor the applicable Borrowing
Subsidiary has delivered to the Collateral Agent any documents which
purport to be Required Mortgage Documents for such AP Mortgage;
(vi) the proceeds thereof have not been returned to
the Company or a Borrowing Subsidiary from the escrow or closing agent
for such Pledged Mortgage;
(vii) neither the Company nor any Borrowing
Subsidiary has learned that such AP Mortgage will not be closed and
funded to the order of the mortgagor; and
(viii) upon recordation such Mortgage Loan will
constitute a first lien on the premises described therein.
4.2 Eligible Collateral - Repurchased Agency Loans and Receivables.
"Eligible Repurchased Agency Loans and Receivables" means
Repurchased Agency Loans and Receivables as to which:
(i) payments are more than 90 days past due when
repurchased by the Company;
(ii) no notice or other indication has been given by
FHA or VA challenging the obligation of FHA or VA to pay the full
amount due on any insurance or guaranty certificate in connection with
such Mortgage Loans (and in the good-faith estimation of the Company,
no such challenge is forthcoming);
(iii) the repurchased Mortgage Loan does not have any
payments more than 720 days past due (unless the borrower of such
repurchased Mortgage Loan filed a voluntary bankruptcy petition or had
an involuntary bankruptcy petition filed against it while the payments
on such Mortgage Loan were past due, in which case such 720 day period
shall be extended to 1080 days);
(iv) not more than 120 days have passed since the
foreclosure sale or transfer in lieu of foreclosure with respect to
the repurchased Mortgage Loan;
-59-
66
(v) not more than 180 days have passed since the
reinstatement of the repurchased Mortgage Loan; and
(vi) the repurchased Mortgage Loan shall not be a
Mortgage Loan which in the good faith estimation of the Company
is deemed to be a "no bid" candidate under the current VA practice,
provided that such estimation by the Company may take into account the
amount of any buy down of the principal balance of such Mortgage Loan
which (i) has actually been made by the Company, or (ii) is anticipated
to be made by the Company, provided that the amount of any such
anticipated buy down shall be deducted from the Mortgage Collateral
Value of such Repurchased Agency Loan and Receivable for determining
the portion of the Borrowing Base attributable to such Repurchased
Agency Loans and Receivables.
4.3 Eligible Collateral - Securities.
"Eligible Pledged Security" means a Pledged Security:
(i) which is covered by an Approved Investor
Commitment;
(ii) as to which the Collateral Agent has received such
evidence as may be required under the Security Agreement to confirm
the existence of the security interest in favor of the Collateral
Agent for the benefit of the Lenders in such Pledged Security; and
(iii) which has been included in Collateral for 90
days or less after the Pledge Date therefor.
4.4 Eligible Collateral - Servicing Sale Receivables.
"Eligible Servicing Sale Receivables" means Pledged Servicing
Sale Receivables as to which:
(i) the Agent and Collateral Agent have received a
complete executed copy of the related purchase agreement and written
confirmation from the Servicing Purchaser as to the amount of such
Servicing Sale Receivable;
-60-
67
(ii) the Servicing Purchaser of the applicable sold
Servicing Agreements either (A) has a long term unsecured debt rating
of at least A- from S&P or A3 from Xxxxx'x, or (B) has been approved
by the Agent;
(iii) the Agent has reasonably determined that the
counterparties to the sold Servicing Agreements have or will consent
to the sale of such Servicing Agreements to the Servicing Purchaser,
if such consent is required;
(iv) the Company has assigned its rights to such
Servicing Sale Receivables to the Collateral Agent for the benefit of
the Secured Parties pursuant to an assignment in form and content
satisfactory to the Agent;
(v) the Servicing Purchaser of the applicable sold
Servicing Agreements has executed an agreement in form and
content satisfactory to the Agent pursuant to which the Servicing
Purchaser has agreed to (A) pay such Servicing Sale Receivables
directly to the Collateral Agent for the benefit of the Secured
Parties, and (B) provide simultaneous written notice to the Agent and
the Collateral Agent of any claims made against or notices given to the
Company which would constitute an offset to or reduction in the amount
of such Servicing Sale Receivable; and
(vi) the Servicing Sale Receivables have been
included in Eligible Collateral for 150 days or less;
provided, however, that (1) Eligible Servicing Sale Receivables shall not
include any "holdback" amounts or deferred installments of the purchase price
payable by such Servicing Purchaser which are not payable to the Company within
150 days after the initial payment to the Company for the sale of such
Servicing Agreements to such Servicing Purchaser, (2) Eligible Servicing Sale
Receivables shall not include any "holdback" amounts or deferred installments
of the purchase price payable by such Servicing Purchaser which are subject to
withholding or offset on account of the performance of the servicing being sold
or any failure, breach or other deficiency in the performance of the Company
after the date of such sale other than any such deferred payments which are
conditioned only on (x) the Company obtaining consents from the counterparty to
the sold Servicing Agreements approving the sale of such Servicing Agreements
to the Servicing Purchaser
-61-
68
or (y) the Company's continuing to take customary ordinary-course actions
relating to origination and servicing of Mortgage Loans (e.g. obtaining pool
certifications, refraining from defaulting under Servicing Agreements, etc.),
and (3) any offset to or reduction in the amount of such Servicing Sale
Receivable claimed by the Servicing Purchaser (to the extent not already
deducted from Eligible Servicing Sale Receivables pursuant to the preceding
provisions) shall, at the election of the Agent, the Collateral Agent or the
Required Lenders, reduce the amount of such Servicing Sale Receivable which
qualifies as an Eligible Servicing Sale Receivable, with such reduction to be
effective immediately unless the Company in good faith contests the amount or
validity of such offset or reduction, and with such reduction to be effective
30 days after the claim of offset or reduction with respect to any amount which
is contested in good faith by the Company.
4.5 Borrowing Base.
The term "Borrowing Base" means, as of any date, the sum of
the amounts determined by applying the percentages set forth below to the
respective values of the categories of Collateral described in subparagraphs
(a) - (g) below (without duplication as any asset is converted from one
category to another):
(a) one hundred percent (100%) of the balance to the
credit of the Company in the Settlement Account;
(b) one hundred percent (100%) of the value of the cash
and Cash Equivalents held by the Collateral Agent (or a sub-agent of
the Collateral Agent) and in which the Collateral Agent has a
perfected first priority security interest as security for the Secured
Debt, as conclusively determined by the Collateral Agent and reported
to the Agent daily based on the value of such cash and Cash
Equivalents as of the close of trading on the preceding Business Day;
(c) ninety-eight percent (98%) of the Mortgage Collateral
Value of each Eligible Delivered Mortgage;
(d) ninety-eight percent (98%) of the Mortgage Collateral
Value of each Eligible AP Mortgage;
-62-
69
(e) ninety-eight percent (98%) of the MBS Value of each
Eligible Pledged Security;
(f) ninety percent (90%) of the value of Eligible
Repurchased Agency Loans and Receivables (as determined in accordance
with the definition of Repurchased Agency Loans and Receivables) as
determined pursuant to information provided by the Company to the
Collateral Agent on the first Business Day of each week based on the
value of such Eligible Repurchased Agency Loans and Receivables as of
the close of trading on the preceding Business Day; and
(g) seventy-five percent (75%) of the amount of Eligible
Servicing Sale Receivables.
The maximum amount that can be credited toward the Borrowing
Base from certain categories of assets shall be limited as follows
(collectively, the "Borrowing Base Sublimits") so that the portion of the
Borrowing Base:
(i) attributable to Jumbo Mortgage Loans shall not
exceed twenty-five percent (25%) of the Aggregate Commitment;
(ii) attributable to all Nonconforming Mortgage Loans
shall not exceed five percent (5%) of the Aggregate Commitment and the
amount attributable to Nonconforming Mortgage Loans which are also
HLTV Loans shall not exceed two and one half percent (2.5%) of the
Aggregate Commitment;
(iii) attributable to Jumbo Mortgage Loans with
Mortgage Collateral Values on the Pledge Date therefor in excess
of $600,000 shall not exceed two percent (2%) of the Aggregate
Commitment;
(iv) attributable to Repurchased Agency Loans and
Receivables other than Reinstated Repurchased Agency Loans and
Receivables shall not exceed at any time the lesser of (A)
$200,000,000, and (B) forty percent (40%) of the Aggregate Commitment;
(v) attributable to Reinstated Repurchased Agency
Loans and Receivables shall not exceed at any time five percent (5%)
of the Aggregate Commitment;
-63-
70
(vi) attributable to REO and accounts receivable
(including proceeds of FHA insurance or VA guaranties) acquired in
connection with a foreclosure sale or a transfer in lieu of
foreclosure of Repurchased Agency Loans and Receivables shall not
exceed seven and one-half percent (7.5%) of the Aggregate Commitment;
(vii) for the first five and last five Business
Days in any calendar month, attributable to AP Mortgages shall not
exceed thirty-five percent (35%) of the Aggregate Commitment;
(viii) for any day other than the first five and
last five Business Days of any calendar month, attributable to AP
Mortgages shall not exceed twenty-five percent (25%) of the Aggregate
Commitment;
(ix) attributable to Eligible Delivered Mortgages
which were sent, pursuant to a Company Trust Receipt, to the Company
or a Borrowing Subsidiary for correction of clerical or other
non-substantial documentation problems in preparation of such document
without such documentation being returned to the Collateral Agent
properly corrected shall not exceed two percent (2%) of the Aggregate
Commitment;
(x) attributable to AP Mortgages as to which the
Collateral Agent has not received the Required Mortgage Documents
within five Business Days of the Pledge Date therefor shall not exceed
one percent (1%) of the Aggregate Commitment;
(xi) attributable to Eligible Mortgage Loans which
have been included in the Borrowing Base for more than 90 days shall
not exceed five percent (5%) of the Aggregate Commitment;
(xii) attributable to Eligible Mortgage Loans which
were originated more than 180 days prior to the Pledge Date therefor
shall not exceed five percent (5%) of the Aggregate Commitment; and
(xiii) attributable to Eligible Servicing Sale
Receivables shall not exceed ten percent (10%) of the Aggregate
Commitment.
-64-
71
4.6 Special Representations as to Pledged Warehouse Collateral.
By delivering or causing the delivery of any Mortgage Loan,
Security or AP Notice to the Collateral Agent in pledge under the Security
Agreement the Company or the applicable Borrowing Subsidiary, as applicable
(each such entity, with respect to any Pledged Item delivered or caused to be
delivered by such entity, is referred to herein as the "Pledgor"), shall be
deemed to have represented and warranted with respect to such Pledged Item,
that:
(1) Such Pledged Item constitutes Eligible Collateral;
(2) The Pledgor is the legal and equitable owner and
holder of such Pledged Item and has full power and authority to pledge
such Pledged Item. Such Pledged Item constitutes Eligible Collateral,
has been duly and validly pledged to the Collateral Agent, is subject
to no contractual restriction on the creation of a Lien thereon, and
is subject to no Lien other than the lien of the Security Agreement in
favor of the Secured Parties. Each commitment of a Person to purchase
Pledged Items from the Pledgor (including Approved Investor
Commitments) has been duly and validly issued to the Pledgor, has been
duly and validly pledged to the Collateral Agent and is subject to no
Lien other than the lien of the Security Agreement in favor of the
Secured Parties.
(3) Each Pledged Mortgage has been or will be promptly
duly recorded where necessary and complies with all applicable state
or local recording, registration and filing laws and regulations.
(4) There are no defenses, counterclaims or offsets of
any nature whatsoever with respect to such Pledged Mortgage or the
indebtedness evidenced and secured thereby or with respect to any
Required Mortgage Document and, other than the related Required
Mortgage Documents and Additional Required Mortgage Documents, there
are no instruments or documents evidencing, securing or guaranteeing
payment of the indebtedness constituting such Pledged Mortgage.
(5) Each requirement of any federal, state or local law
including, without limitation, usury, truth-in-lending, real
-65-
72
estate settlement procedures, consumer credit protection, equal credit
opportunity or disclosure laws (including environmental disclosure
laws imposing obligations on mortgagees) applicable to such Pledged
Item has been complied with in all material respects.
(6) The Company is the servicer for each such Pledged
Mortgage (unless the Agent has been advised to the contrary in writing
and the Agent approved such other arrangement).
(7) The representation set forth in Section 6.15 is
reaffirmed as of the Pledge Date.
(8) Each Assignment (i) has been duly authorized by all
necessary corporate action by the Pledgor, duly executed and delivered
by the Pledgor and is the legal, valid and binding obligation of the
Pledgor enforceable in accordance with its terms and (ii) complies
with all applicable laws including all applicable recording, filing
and registration laws and regulations and is adequate and legally
sufficient for the purpose intended to be accomplished thereby,
including, without limitation, the assignment of all of the rights,
powers and benefits of the Pledgor as mortgagee.
(9) So long as the Collateral Agent complies with the
procedures set forth in the Security Agreement relating to possession
of Collateral (and assuming recordation of Assignments in states in
which such recordation is necessary for the perfection of the
Collateral Agent's security interest in the applicable Mortgage Loans)
and, in the case of book-entry Securities, notations of ownership
related thereto, the Collateral Agent, for the benefit of the Secured
Parties, will have a valid and perfected first priority security
interest in such Pledged Item and all proceeds, products and profits
derived therefrom, including, without limitation, all moneys, goods,
insurance proceeds and other tangible or intangible property received
upon liquidation thereof.
(10) The Pledgor has complied with all laws, rules and
regulations in respect of such Pledged Mortgage if it is insured by
FHA or guaranteed by VA and the related insurance or guarantee is in
full force and effect. All such Mortgage Loans comply in all respects
with all applicable requirements for purchase under the FNMA standard
form of selling contract
-66-
73
for FHA insured and VA guaranteed loans and any supplement thereto
then in effect.
(11) To the extent that any applicable requirements of any
law or any governmental rule, regulation, policy, guideline or
directive (whether or not having the force of law), or any
interpretation thereof, including, without limitation, the provisions
of Title XI of the Financial Institutions Reform, Recovery and
Enforcement Act of 1989, as amended, reformed or otherwise modified
from time to time, and any rules promulgated to implement such
provisions (collectively, "Appraisal Regulations") require Pledgor to
have received (or require that the Lenders require Pledgor to receive)
an appraisal on the property underlying such Pledged Mortgage, such an
appraisal has been be obtained and such appraisal meets the
requirements of all such Appraisal Regulations.
(12) All fire and casualty policies covering the premises
encumbered by each Pledged Mortgage (i) name the Pledgor as the
insured under a standard mortgagee clause not less favorable in
coverage to the mortgagee than is customarily used in the state where
such premises is located, (ii) are in full force and effect, and (iii)
afford insurance against fire and such other risks as are usually
insured against in the broad form of extended coverage insurance from
time to time available, as well as insurance against flood hazards as
required by FHA or VA.
(13) To the best of the Pledgor's knowledge without
investigation, no Person has transported, released, emitted,
discharged, leached, dumped or disposed of any Hazardous Substance
onto or into any portion of the premises encumbered by a Pledged
Mortgage except in material compliance with all applicable federal,
state, foreign and local laws, rules, regulations and orders.
(14) If a Borrowing Subsidiary is the Pledgor, the Pledged
Item was funded by the Company and is shown on the Company's (rather
than the Borrowing Subsidiary's) balance sheet pursuant to the Funding
Agreement.
By pledging any Repurchased Agency Loans and Receivables to the
Collateral Agent under the Security Agreement the Company
-67-
74
shall be deemed to have represented and warranted that such Repurchased Agency
Loans and Receivables were purchased by the Company in compliance with all
regulations of the Federal Agency which issued or guaranteed the Security
relating to the pool from which the Repurchased Agency Loans and Receivables
were repurchased.
If any representation or warranty contained in this Section is
inaccurate or shall cease to be true with respect to any Pledged Item to which
such representation and warranty applies, such Pledged Item shall not
constitute an Eligible Mortgage Loan or an Eligible Pledged Security, but the
breach of such representation and warranty shall not constitute an Event of
Default.
4.7 Special Covenants.
(a) The Pledgor warrants and will defend the right, title
and interest of the Agent and the Collateral Agent in and to all
Pledged Items and all other items of Collateral against the claims and
demands of all other Persons.
(b) The Pledgor shall not materially amend or modify, or
waive any of the material terms and conditions of, or settle or
compromise any material claim in respect of, any Collateral or any
rights related to any of the foregoing.
(c) The Pledgor 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 or the
Security Agreement), any of the Collateral or any interest therein,
except as provided in Section 4.8 with respect to releases of
Collateral.
(d) The Pledgor shall service all Pledged Mortgages which
are the subject of Approved Investor Commitments in accordance with
the standard requirements of the issuers of such Approved Investor
Commitments and all applicable FHA and VA requirements. The Pledgor
shall service all Mortgage Loans which are the subject of Pledged
Securities in accordance with the standard requirements of the Federal
Agency issuing or guaranteeing such Securities and all applicable FHA
and VA requirements. The Company shall service all Mortgage Loans
which are the subject of any
-68-
75
Servicing Agreements in accordance with the standard requirements of
the other party to such Servicing Agreements and all applicable FHA
and VA requirements.
(e) The Company shall promptly notify the Agent and the
Collateral Agent of any material default under any Servicing
Agreement, and in its normal daily reporting to the Collateral Agent,
the Company will include information identifying to the best knowledge
of the Company defaults under any Pledged Mortgages.
(f) The Pledgor shall hold all escrow funds collected in
respect of Pledged Mortgages and Mortgage Loans which are the subject
of Pledged Securities in trust, in accordance with all Federal Agency
requirements and standards relating thereto, and apply the same for
the purposes for which such funds were collected.
(g) The Pledgor shall observe and perform all of its
obligations in connection with each Approved Investor Commitment
related to any Pledged Item. Within forty-eight (48) hours after a
request therefor by the Collateral Agent or Agent, a copy of each
Approved Investor Commitment certified by the Pledgor, or if requested
by the Collateral Agent or Agent at any time after an Event of Default
has occurred, the originals of such Approved Investor Commitments
shall be delivered to the Collateral Agent or Agent.
(h) The Company or the applicable Borrowing Subsidiary,
as applicable, shall promptly notify the Agent and the Collateral
Agent if and when the Company or the applicable Borrowing Subsidiary
receives any prepayment arising from or relating to any Pledged
Mortgage and hold the same in trust, as security for the Secured
Parties, until such Mortgage Loan is removed from the Borrowing Base
in accordance with this Agreement or, if an Event of Default has
occurred and is continuing under this Agreement, then immediately
remit to the Collateral Agent such prepayments (and all interest and
earnings thereon or with respect thereto).
(i) The Pledgor shall not withdraw or seek to withdraw or
substitute or seek to substitute any Pledged Item except as provided
herein and in the Security Agreement.
-69-
76
(j) The Pledgor shall cooperate with the Agent, the
Lenders and the Collateral Agent and any of their respective
representatives in any review or inspection of the Pledged Mortgages,
the property subject to any Pledged Mortgage, and make available to
such person any books and records relating to such Collateral as well
as the appropriate employees of the Pledgor for the purpose of
discussing the same, all at such time during business hours as may be
reasonably requested by the Agent, any Lender or the Collateral Agent.
(k) The Pledgor shall not cease to have the approval of
any Federal Agency or any private mortgage insurer (unless, in the
case of a private mortgage insurer, such failure to maintain such
approval shall not cause any Eligible Collateral which is required for
the Company to be in compliance with Section 8.12 to cease to qualify
as Eligible Collateral) which it has on the date hereof or become
ineligible as a FHA-Approved Mortgagee, FHLMC-Approved Lender,
FNMA-Approved Lender or VA-Approved Lender.
(l) The Pledgor shall not waive or otherwise modify any
material term of, or fail to perform its material obligations under,
any Required Mortgage Document or Pledged Mortgage or release any
security or obligor, or, through any activity or inactivity, cause any
Pledged Mortgage which shall have been eligible for FHA insurance to
become ineligible for FHA insurance or for purchase in accordance with
an Approved Investor Commitment related to such Pledge Mortgage.
(m) The Pledgor shall do, execute, acknowledge and
deliver, or cause to be done, executed, acknowledged and delivered,
all such other acts, instruments and transfers (including, without
limitation, Assignments) as the Agent or the Collateral Agent may
reasonably request from time to time in order to create and maintain a
perfected first priority security interest in the Collateral in favor
of the Secured Parties and to create, maintain and preserve the
security and benefits intended to be afforded by this Agreement and
the Security Agreement, subject to no prior or equal security
interest, lien, charge or encumbrance, or agreement purporting to
grant to any Person a security interest in the Collateral (provided,
however, that unless an Event of Default is continuing or the Required
Lenders have requested otherwise, consents to assignments of options,
futures
-70-
77
contracts or other interest rate protection products in favor of the
Lenders from the counterparties thereto shall not be required to be
obtained).
(n) With respect to Repurchased Agency Loans and
Receivables, upon the request of the Collateral Agent or Agent the
Company shall have executed and provided any and all documentation
required by the Collateral Agent or Agent (including, but not limited
to, all Required Mortgage Documents, the insurance or guaranty
certificate applicable to such Mortgage Loan, and evidence
satisfactory to the Collateral Agent and Agent of the amounts advanced
by the Company in connection with such Mortgage Loan) to perfect the
Lenders' security interest in such Repurchased Agency Loans and
Receivables.
(o) Upon the request of the Required Lenders, the Company
and each Borrowing Subsidiary agree that the Company and each
Borrowing Subsidiary shall require the closing agents for AP Mortgages
to enter into escrow or other agreements regarding the monies used to
fund such AP Mortgages.
4.8 Release of Collateral.
In addition to the releases of Collateral provided for in
Sections 7(a)-(e) of the Security Agreement, upon the request of the Company
delivered from time to time to the Agent and the Collateral Agent, the Agent
shall authorize the Collateral Agent to release Collateral specified in such
notice from the lien of this Agreement, if, but only if, (i) at the time of
such release no Event of Default exists and no notice of a Default has been
issued that has not been cured, and (ii) any payment under Section 2.14(a)
which may be required (based on information relating to the Borrowing Base
supplied to the Agent by the Collateral Agent) as a result of such release has
been made (or contemporaneously with such release shall be made) so that the
release of such Collateral will not create a violation of any Lending Sublimit
or Borrowing Base Sublimit. Notwithstanding the foregoing, following an Event
of Default pledged Cash Equivalents which are the subject of reverse repurchase
obligations can be released in connection with the terms of the applicable
reverse repurchase agreement, and Pledged Items can be released in connection
with the sale of such Pledged Items pursuant to an
-71-
78
Approved Investor Commitment existing at the time of occurrence of the Event of
Default if, in either case, the proceeds of such sale are deposited into the
Settlement Account.
4.9 Settlement Account.
There has been established with the Agent, for the benefit of
the Secured Parties, a "cash collateral" account of the Company #19-19210
("Settlement Account") into which shall be deposited all cash proceeds from the
sale of any Pledged Item and any payments made by a Servicing Purchaser in
connection with Pledged Servicing Sale Receivables. Only the Agent shall have
access to the Settlement Account. Prior to the occurrence of a Default, to the
extent that, as determined by the Agent, the amounts in the Settlement Account
are not needed to keep the Borrowing Base equal to or greater than the Credit
Requirement, the Company may request that the Agent release funds from the
Settlement Account, which funds shall be applied by the Agent as directed by
the Company. Upon the occurrence of an Event of Default (and during the
continuance thereof) all amounts then on deposit in the Settlement Account, and
any deposits made in the Settlement Account during the continuance of such
Event of Default, shall be withdrawn by the Agent from the Settlement Account
and shall be applied to the Credit Indebtedness in accordance with the
provisions of Paragraph 18 of the Security Agreement and Section 10.4 of this
Agreement.
4.10 Termination.
If all Commitments shall have expired or been terminated
pursuant to the express terms hereof and no Credit Indebtedness shall be
outstanding, the Agent shall promptly deliver or cause to be delivered all cash
in the Settlement Account and all other Collateral to the Company. The receipt
by the Company of any cash in the Settlement Account and of all Pledged Items
returned or delivered to the Company pursuant to any provision of this
Agreement shall be a complete and full acquittance for the Pledged Items so
delivered, and the Agent, Collateral Agent and the Lenders shall thereafter be
discharged from any liability or responsibility therefor.
4.11 Abatement of Security Interest.
-72-
79
(a) Positive Security Event. If a Positive Security Event
occurs prior to the Termination Date and no Event of Default has occurred and
is continuing, the security interest created under the Security Agreement and
this Agreement in the Collateral shall be abated at the request of the Company
and shall not be effective so long as no Event of Default exists and each of
the following conditions exist: (i) the Company shall have and maintain a
ratio of (1) Funded Debt less Subordinated Debt to (2) Adjusted Consolidated
Tangible Net Worth plus Subordinated Debt, calculated monthly on a three-month
rolling average basis, of not more than the applicable Unsecured Leverage
Ratio; (ii) the total Debt of the Company, excluding Subordinated Debt, shall
not exceed the Debt Threshold; and (iii) neither the Company nor either
Borrowing Subsidiary shall have, or permit to occur, any Lien upon their assets
other than as permitted under Section 8.11 (other than Section 8.11(o)). The
conditions under clauses (i) - (iii) of the preceding sentence are referred to
herein collectively as the "Positive Security Conditions". The Collateral
Agent shall, at the request of the Company and after the Agent has confirmed to
the Collateral Agent that a Positive Security Event has occurred and all
Positive Security Conditions are satisfied, execute and deliver such UCC-3
financing statements as may be required to evidence the abatement of any
security interest that shall previously have been perfected by means of the
filing of financing statements. As a condition to such abatement, the Company
and each Borrowing Subsidiary shall execute such UCC-1 financing statements and
other documentation as the Collateral Agent may request to permit the security
interest in the Collateral to be reinstated and perfected by the Collateral
Agent without further action by the Company or any Borrowing Subsidiary if a
Negative Security Event should occur thereafter. Although the Company and
Borrowing Subsidiaries shall continue to deliver Mortgage Loan files and other
information and documents to the Collateral Agent (in a custodial capacity) as
set forth in the Security Agreement even while the security interest is abated,
so long as the security interest is abated the Company shall perform all of the
obligations of the Collateral Agent as set forth in the Security Agreement with
respect to determining the Borrowing Base. If any of the Positive Security
Conditions shall cease to exist at any time after a Positive Security Event,
such occurrence shall constitute a Negative Security Event.
-73-
80
(b) Negative Security Event. If, following a Positive
Security Event, a Negative Security Event occurs, the Facility shall again be
secured in accordance with the terms herein unless and until the Required
Lenders agree to the contrary. If the Facility again becomes secured pursuant
to the preceding sentence, the Company (with respect to Collateral owned by the
Company) and each Borrowing Subsidiary (with respect to Collateral owned by
such Borrowing Subsidiary) shall be deemed to have automatically (i) re-pledged
and re-granted to the Collateral Agent for the benefit of the Secured Parties a
first priority security interest in the Collateral to secure payment of the
Secured Debt, (ii) consented to the Collateral Agent's filing of the UCC-1
financing statements and dating and otherwise completing, filing and/or
recording, if necessary, any other documentation previously provided by the
Company or such Borrowing Subsidiary pursuant to the provisions of Section
4.11(a) above, and (iii) reaffirmed its appointment of the Collateral Agent to
act as its bailee pursuant to the provisions of Section 9-305 of the Uniform
Commercial Code of any applicable state, and the Collateral Agent (upon receipt
of notice from the Credit Agent that a Negative Security Event has occurred)
shall be deemed to have been informed of and accepted such appointment.
Notwithstanding the foregoing, the Company may, in accordance with the terms of
the succeeding sentence, request that the Required Lenders consent to the
Facility again becoming unsecured despite the occurrence of a Negative Security
Event. If the Company so desires that the Facility again become unsecured
following a Negative Security Event (even though no Positive Security Event has
occurred since the occurrence of the Negative Security Event), it shall notify
each Lender in writing of such desire within thirty days after the occurrence
of the Negative Security Event (which notice shall identify the facts giving
rise to the Negative Security Event), and the Facility shall again become
unsecured (A) if and only if the Required Lenders so consent within thirty days
after such notification from the Company (a "Negative Event Waiver") and (B)
only so long as no further Negative Security Event (i.e. no Negative Security
Event other than the event referred to in the Company's notice) has occurred
and is continuing. If the Company's long term unsecured debt ratings decline
further below "A-" as rated by S&P or "A3" as rated by Xxxxx'x, or if any other
Negative Security Event occurs after the Company has obtained a Negative Event
Waiver, the Facility shall again become secured in accordance with this Section
unless the Company obtains another Negative Event Waiver
-74-
81
in accordance with the terms of the preceding sentence. Finally, if a Positive
Security Event occurs subsequent to the occurrence of a Negative Security
Event, the Facility shall become unsecured at the request of the Company,
subject to and in accordance with the terms and conditions set forth in Section
4.11(a) above.
(c) Lending Restrictions. If and during such time as the
Credit Indebtedness hereunder may be unsecured in accordance with Section
4.11(a), all Advances requested by the Company or any Borrowing Subsidiary
shall continue to meet the Lending Sublimits and shall be subject to the
conditions precedent set forth in Article V (other than conditions precedent
requiring the Collateral Agent to have a perfected security interest in the
Collateral).
4.12 Transition from Existing Facility.
The Pledge Date and all other relevant delivery dates and time
periods with respect to the determination of Eligible Collateral shall be
calculated to include any delivery dates or holding periods prior to the date
hereof during which Collateral was being held by the Collateral Agent (or was
the subject of an AP Notice), had been delivered to an Approved Investor or had
been redelivered to the Company under the Existing Facility.
ARTICLE V
CONDITIONS PRECEDENT
Each Advance may be made only if the following conditions
precedent are met:
5.1 Initial Advance (Company and Borrowing Subsidiaries).
Prior to the initial Advance hereunder, the Company and each
Borrowing Subsidiary shall have delivered, or caused to be delivered, to the
Agent:
(a) Copies of this Agreement duly executed by the Company
and each Borrowing Subsidiary for each Lender and the Agent.
-75-
82
(b) A Security Agreement duly executed by the Company and
each Borrowing Subsidiary in the form attached hereto as Exhibit D.
(c) Notes payable to the order of each Lender duly
executed by the Company and each Borrowing Subsidiary in the form
attached hereto as Exhibits E-1 and E-2, respectively plus, in the
case of a Bid Lender, in the form approved by such Lender.
(d) Certificates of the Secretaries of the Company and
each Borrowing Subsidiary dated such date, (i) accompanied by and
certifying true and correct copies of the Articles of Incorporation
and By-laws of the Company and each Borrowing Subsidiary and
resolutions of their Boards of Directors authorizing the Company and
the Borrowing Subsidiaries to execute, deliver and perform this
Agreement, the Security Agreement and all other documents executed by
the Company or any Borrowing Subsidiary in connection herewith and
(ii) confirming the incumbency and signatures of those officers of the
Company and each Borrowing Subsidiary authorized to execute this
Agreement, the Security Agreement and the Notes and otherwise act on
behalf of the Company or any Borrowing Subsidiary hereunder or under
the Security Agreement.
(e) The opinion of counsel to the Company and the
Borrowing Subsidiaries, in substantially the same form and substance
as the opinion letter attached hereto as Exhibit K attached hereto and
covering such other matters as the Agent may reasonable request,
together with appropriate good standing certificates for the Company
and each Borrowing Subsidiary.
(f) Executed UCC-1 and UCC-3 Financing Statements as the
Agent may reasonably request.
(g) A letter from the Company to each lender under the
Existing Facility which is not a Lender hereunder providing for the
terms of payment of the loans outstanding under the Existing Facility
payable to such lenders.
(h) An agreement in substantially the form of Exhibit N
hereto between the Company and the Agent on behalf of the lenders
under the Existing Facility that remain as Lenders under this
Agreement, and the Lenders under the Existing Facility who are not
Lenders under this Agreement as to the repayment or conversion of
loans outstanding to the Company under the Existing Facility, the
treatment of any interest and fees accrued thereon, and the
cancellation of all commitments under the Existing Facility.
-76-
83
(i) Evidence that the Company and each Borrowing
Subsidiary have paid all fees required to be paid hereunder and under
the Security Agreement on or before the date of the first Advance.
(j) Such other documents as the Agent may reasonably
request.
5.2 Initial Advance (Lenders).
On or before the date of the initial Advance hereunder, the
Lenders shall have delivered, or caused to be delivered, to the Agent and the
Agent shall in turn, have delivered, or caused to be delivered, to the Company
and each Borrowing Subsidiary one or more counterparts of this Agreement
executed by the Lenders.
5.3 All Advances.
On the date of each Advance, the Company and each Borrowing
Subsidiary shall be in compliance with all the terms and provisions set forth
herein and in the Security Agreement on their part to be observed or performed;
the representations and warranties of the Company and the Borrowing
Subsidiaries set forth in Articles IV and VI shall be true and correct in all
material respects on such date as if made on and as of such date (provided,
however that the representation and warranty contained in Section 6.6(c) shall
not apply to (i) conversions or continuations of Advances pursuant to Section
2.12, or (ii) Advances requested by the Company solely for the purpose of
repaying maturing commercial paper); and no Default shall have occurred and be
continuing on such date. On each Advance Date the Company and each Borrowing
Subsidiary shall be deemed to have represented and warranted to the Lenders
that no violation of the requirements set forth in the preceding sentence
exists on such date after giving effect to the requested Advance. Prior to
making an Advance (including any Bid Loan) available to the Company or any
Borrowing Subsidiary under Section 2.11 on any day, the Agent shall have (i)
received notice from the Collateral Agent of the amount of the Borrowing Base
for such day, (ii) received notice from the issuing and paying agent for the
Outstanding CPNs as described in Section 7.7(o) confirming the aggregate face
amount of Outstanding CPNs for such day, and (iii) confirmed, based solely upon
the information contained in such notices, the amount of Advances
then-outstanding, and the Company's and the Borrowing Subsidiaries'
certifications contained in the preceding sentence as to all other facts, that
the Borrowing Base will be greater than or equal to the Credit Requirement on
such date after giving effect to such Advance.
-77-
84
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
The Company and each Borrowing Subsidiary represents and
warrants to the Lenders that:
6.1 Organization, Corporate Powers, Etc.
The Company and each Borrowing Subsidiary is a corporation
duly incorporated, validly existing, in good standing and authorized to
exercise its corporate powers, rights and privileges under the laws of the
jurisdiction in which it is incorporated, is qualified to do business and is in
good standing in all jurisdictions where failure to be so qualified and in good
standing would have a material adverse effect upon its business, operations or
financial condition, and has all requisite corporate power and authority, to
conduct its business, to own its properties and to execute and deliver, and to
perform all of its obligations under, this Agreement, the Security Agreement
and the Notes; and each Borrowing Subsidiary is a wholly-owned Subsidiary of
the Company.
6.2 Corporate Authority, Etc.
The execution, delivery and performance by the Company and
each Borrowing Subsidiary of this Agreement, the Security Agreement and the
Notes have been duly authorized by all necessary corporate action and do not
and will not (i) violate any existing provision of any law, rule, regulation
(including, without limitation, Regulation U or X of the Board of Governors of
the Federal Reserve System or the rules and regulations of the SEC or any
regulatory commission of any jurisdiction), order, writ, judgment, injunction,
decree, determination or award currently in effect having applicability to the
Company or any of its Affiliates or of the charter or by-laws of the Company or
of any of its Affiliates, (ii) result in a breach of or constitute a default
under any indenture or loan or credit agreement or any other agreement, lease
or instrument to which the Company or any of its Affiliates is a party or by
which the Company or any of its Affiliates or any of their respective
properties may be bound or affected, or (iii) result in, or require, the
creation or imposition of any mortgage, deed of trust, assignment, pledge,
lien, security interest or other charge or encumbrance of any nature upon or
with respect to any of the respective properties of the Company or any of its
Affiliates (other than that arising hereunder or under the Security Agreement
with respect to the Collateral); and neither the Company nor any of its
Affiliates is in material default under any such law, rule, regulation, order,
writ, judgment, injunction, decree, determination or award or any such
indenture, agreement, lease or instrument.
-78-
85
6.3 Compliance with Laws.
The Company and each of its Affiliates are in compliance with
the requirements of all applicable laws, rules, regulations and orders of any
governmental authority, non-compliance with which would, singly or in the
aggregate, materially and adversely affect their respective business or credits
including but not limited to financial condition and operations.
6.4 Government Approvals.
No authorization, consent, approval, license, exemption of or
filing or registration with any existing court or governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign, is
or will be necessary for the valid execution, delivery and performance by the
Company and each Borrowing Subsidiary of, or the enforceability of, this
Agreement, the Security Agreement and the Notes.
6.5 Valid and Binding Obligations.
This Agreement, the Security Agreement and the Notes
constitute legal, valid and binding obligations of the Company and each
Borrowing Subsidiary enforceable against the Company and each Borrowing
Subsidiary in accordance with their respective terms, subject to bankruptcy and
similar laws and other general restrictions on creditor's rights and equitable
principles (whether applied in an action at law or a suit in equity).
6.6 Financial Statements.
(a) The balance sheet of the Company and its Subsidiaries
as of December 31, 1996 (which is presented in the Company's annual
report) and the related statements of income and changes in financial
position for the fiscal year then ended, copies of which have been
heretofore furnished to each of the Lenders, fairly present, in
conformity with GAAP, the financial condition of the Company and its
Subsidiaries as of such date and the results of the operations and
changes in financial position of the Company and its Subsidiaries for
such fiscal year.
(b) The quarterly financial statements of the Company and
its Subsidiaries submitted to the SEC or the Agent since the date of
the December 31, 1996 annual financial statements referred to in
clause (a) above fairly present, in conformity with GAAP, the
financial condition of the Company and its Subsidiaries as of the
applicable dates of such statements and the results of the operations
and changes in financial position of the Company and its Subsidiaries
for the periods to which such statements relate.
-79-
86
(c) Since the date of the December 31, 1996 statements
there has been no material adverse change, taken as a whole, in the
business, financial position, or operations of either the Company or
any Subsidiary.
6.7 Litigation.
Except as disclosed on Exhibit L attached hereto and as
otherwise set forth in the Company's annual report referred to in Section
6.6(a), there are no actions, suits or proceedings pending or, to the knowledge
of the Company or any Borrowing Subsidiary after reasonable investigation,
threatened against or affecting the Company or any of its Affiliates or any of
their respective properties before any court, arbitrator or governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign (including, without limitation, the SEC or any regulatory commission of
any jurisdiction), which, if determined adversely to the Company or any
Affiliate, as the case may be, would be reasonably likely to, singly or in the
aggregate, have a material adverse effect on the financial condition, or on the
respective properties or operations, of the Company and its Affiliates or the
transactions contemplated by this Agreement, the Security Agreement and the
Notes.
6.8 Use of Proceeds.
The Company and the Borrowing Subsidiaries will use the
proceeds of the Loans solely for (i) the purposes described in the recitals
hereto, (ii) the funding or purchasing of Mortgage Loans, (iii) the payment of
principal, interest, fees, expenses, and other obligations described in or
contemplated by this Agreement, (iv) payment of Debt of the Company existing on
the date hereof, and (v) such other purposes as may be permitted under this
Agreement. No part of the proceeds of any Loan will be used to purchase or
carry, or to reduce or retire, any indebtedness incurred to purchase or carry,
any margin stock (within the meaning of Regulations U and X of the Board of
Governors of the Federal Reserve System) or to extend credit to others for the
purpose of purchasing or carrying any margin stock and neither the Company nor
any Borrowing Subsidiary is engaged in purchasing or carrying margin stock.
6.9 Accuracy of Information.
All written information supplied by the Company or any
Borrowing Subsidiary to the Lenders relating to the Company and its Affiliates
was true, complete and accurate in all material respects when made, and there
has been no material adverse change in the financial condition of the Company
and its Affiliates from the time such information was provided to the Lenders.
-80-
87
6.10 Accuracy of Representations and Warranties.
The representations and warranties of the Company and the
Borrowing Subsidiaries contained in each other document delivered in connection
with this Agreement are, or when such document is delivered will be, true and
correct in all material respects when made.
6.11 Investment Company.
Neither the Company nor any Borrowing Subsidiary is an
"investment company" or a company "controlled" by an "investment company"
within the meaning of the Investment Company Act of 1940, as amended, or an
"investment adviser" within the meaning of the Investment Advisers' Act of
1940, as amended.
6.12 ERISA.
Each Plan is in compliance in all material respects with the
applicable provisions of ERISA, the Code and any other applicable Federal or
state law; and to the best of its knowledge no event or condition is occurring
or exists with respect to any Plan concerning which the Company or any
Borrowing Subsidiary would be under an obligation to furnish a report to the
Lenders in accordance with Section 7.7(h).
6.13 Tax Returns.
The Company and each of its Affiliates has filed or caused to
be filed all material federal, state and local tax returns which, to its
knowledge, are required to be filed and has paid or caused to be paid all
material taxes as shown on such returns or on any assessment received by it, to
the extent that such taxes have become due, except taxes the validity of which
is being contested in good faith by appropriate proceedings and for which
adequate reserves shall have been set aside on its books.
6.14 Full Disclosure.
No event has occurred and no circumstance exists as a result
of which any information, statement, or representation concerning the Company
or any Borrowing Subsidiary that has been provided to the Lender by the Company
or any Borrowing Subsidiary in connection herewith would include an untrue
statement of a material fact or omit to state any material fact or any fact
necessary to make the information, statements or representation contained
therein, in the light of the circumstances under which they were made, not
misleading.
-81-
88
6.15 GNMA, FHA, VA, FNMA, AND FHLMC Eligibility.
(a) The Company is: (i) an FHA-Approved Mortgagee in good
standing, a VA-Approved Lender, a FHLMC-Approved Lender and a
FNMA-Approved Lender and meets all eligible requirements of law and
governmental regulation so as to be eligible to originate, purchase,
hold and service Mortgage Loans insured by FHA and to issue any
Security; (ii) an approved seller and servicer in good standing of
Mortgage Loans to each Federal Agency; and (iii) an approved issuer
and servicer in good standing of FHLMC, FNMA and GNMA Securities and
meets all FHLMC, FNMA and GNMA requirements, requirements of law and
governmental regulations so as to be able to issue FHLMC, FNMA and
GNMA Securities and to service the Mortgage Loans that secure such
Securities.
(b) Each Borrowing Subsidiary is: (i) an FHA-Approved
Mortgagee in good standing, a VA-Approved Lender, a FHLMC-Approved
Lender and a FNMA-Approved Lender and meets all eligible
requirements of law and governmental regulation so as to be eligible
to originate, purchase and hold Mortgage Loans insured by FHA and to
issue any Security; (ii) an approved seller in good standing of
Mortgage Loans to each Federal Agency; and (iii) an approved issuer in
good standing of FHLMC, FNMA and GNMA Securities and meets all FHLMC,
FNMA and GNMA requirements, requirements of law and governmental
regulations so as to be able to issue FHLMC, FNMA and GNMA Securities.
6.16 No Defaults.
No Default has occurred and is continuing.
ARTICLE VII
AFFIRMATIVE COVENANTS
The Company and the Borrowing Subsidiaries covenant and agree
with the Lenders that, so long as this Agreement shall remain in effect and so
long as any amounts are outstanding under the Notes or this Agreement, unless
the Required Lenders shall otherwise consent in writing, the Company will, and
the Borrowing Subsidiaries (except with respect to the covenants set forth in
Sections 7.7 (other than subsections (a), (e), (g), (p) and (q) of Section
7.7), 7.9 and 7.12, which shall apply only to the Company) will:
7.1 Payment of Debts, Taxes, Etc.; Maintenance of Insurance.
(a) Pay all debts and perform all obligations, and cause
each of its Subsidiaries to pay all debts and perform all obligations,
promptly and in accordance with the terms
-82-
89
thereof and pay and discharge, and cause each of its Subsidiaries to
pay and discharge, all taxes, assessments and governmental charges or
levies imposed upon it or upon its income or profits, or upon any
properties belonging to it, prior to the date on which penalties
attach thereto, and all lawful claims, which, if unpaid, might become
a lien or charge upon any properties of the Company, a Borrowing
Subsidiary or of such other Subsidiary, provided that none of the
Company, any Borrowing Subsidiary or any other Subsidiary shall be
required to pay any such tax, assessment, charge, levy or claim which
is being contested in good faith and by appropriate proceedings and
such contest shall operate to stay any material adverse effect of such
lien or charge;
(b) Use its best efforts to adhere to customary practices
and standards in the industry insofar as adherence to such practices
and standards would require the Company or a Borrowing Subsidiary, as
applicable, to cause obligors whose indebtedness is secured by Pledged
Mortgages to comply with the provisions of such Pledged Mortgages with
respect to the payment of real estate taxes and insurance premiums in
connection with the real estate securing such indebtedness; and
(c) Maintain, and cause each of its Subsidiaries to
maintain, insurance on its properties and other insurance in amounts
and types and with provisions and insurers as shall be satisfactory to
the Required Lenders, and at all times furnish to any Lender (upon
written request by such Lender) copies of its, and each of its
Subsidiaries', current Mortgage Bankers Blanket Bond and of its, and
each of its Subsidiaries', insurance policy containing errors and
omissions coverage or mortgage impairment coverage, and providing, in
the case of Mortgage Bankers Blanket Bonds, to the extent possible,
that they are not cancelable without thirty days' prior written notice
to the Agent.
7.2 Preservation of Corporate Existence.
Preserve and maintain, and cause each of its Subsidiaries
which is a material part of the Company's overall business operations to
preserve and maintain, its corporate existence, rights, franchises and
privileges in the jurisdiction of its incorporation, and qualify and remain
qualified as a foreign corporation in each jurisdiction in which such
qualification is necessary in view of its business operations or the ownership
of its properties.
-83-
90
7.3 Compliance with Laws, Etc.
Comply, and cause each of its Subsidiaries to comply, with the
requirements of all applicable laws, rules, regulations and orders of any
governmental authority, non-compliance with which would be reasonably likely
to, singly or in the aggregate, materially adversely affect its business or
credit, unless the same shall be contested by the Company, a Borrowing
Subsidiary or such other Subsidiary, as the case may be, in good faith and by
appropriate proceedings and such contest shall operate to stay the material
adverse effect of any such non-compliance.
7.4 Requested Information. At any reasonable time and from time
to time, on reasonable prior notice furnish to the Agent, any requesting Lender
or any agents or representatives thereof, or permit such agents or
representatives to examine and make copies of, the records and books of account
of, and visit the properties of, the Company, the Borrowing Subsidiaries or any
of their Subsidiaries and, so long as representatives of the Company (as chosen
by senior management of the Company) accompany the Agent or any such other
Lender, the Company's Affiliates, and to discuss the affairs, finances and
accounts of the Company, its Subsidiaries and such Affiliates with any of its
officers.
7.5 Keeping of Records and Books of Account.
Keep or cause to be kept adequate records and books of account
in which complete entries will be made in accordance with generally accepted
accounting principles, consistently applied (except for changes concurred in by
the Company's independent auditors) reflecting all financial transactions of
the Company and its Subsidiaries.
7.6 Maintenance of Approvals, Filings and Registrations.
At all times maintain in effect, renew and comply with, and
cause each of its Subsidiaries to effect, renew and comply with all the terms
and conditions of all consents, licenses, approvals and authorizations as may
be necessary under any applicable law or regulation for the execution, delivery
and performance of this Agreement, the Security Agreement and the Notes and to
make this Agreement and such other documents legal, valid, binding and
enforceable.
7.7 Reporting Requirements.
Furnish to the Agent for distribution to each Lender:
(a) As soon as possible after becoming aware (i) of the
occurrence of any Default, or (ii) that any of the representations and
warranties contained in Article IV or Article VI has ceased to be true
and correct at any time
-84-
91
since the last Advance hereunder (or, if no Advance has taken place,
the execution and delivery of this Agreement), telephone advice
confirmed in writing within three (3) Business Days by a statement of
the president or other Authorized Officer of the Company setting forth
the details thereof and the action which the Company proposes to take
with respect thereto.
(b) As soon as available and in any event within ninety
(90) days after the end of each fiscal year of the Company, a
consolidating and consolidated balance sheet of the Company and its
Subsidiaries as of the end of such fiscal year and the related
statements of income and changes in financial position of the Company
and its Subsidiaries including cash flow statements for such fiscal
year on a consolidating and consolidated basis, setting forth in each
case in comparative form the figures for the previous fiscal year, all
reported in accordance with GAAP and audited and unqualified by Ernst
& Young or other independent public accountants of nationally
recognized standing.
(c) As soon as available and in any event within
forty-five (45) days after the end of each fiscal quarter of the
Company, a consolidating and consolidated balance sheet of the Company
and its Subsidiaries as of the end of such quarter and the related
statements of income for such quarter and for the portion of the
Company's fiscal year ended at the end of such quarter, all certified
(subject to normal quarter-end adjustments) as to fairness of
presentation, generally accepted accounting principles and consistency
by the chief financial officer of the Company.
(d) Simultaneously with the delivery of each set of
financial statements referred to in clauses (b) and (c) above, a
certificate of the chief financial officer of the Company (A) setting
forth in reasonable detail the calculations required to establish
whether the Company was in compliance with the requirements of
Sections 7.9, 8.5, 8.6, 8.9, 8.10, 8.16, and 8.17 and, if then
applicable, the Positive Security Conditions and (B) stating whether
there exists on the date of such certificate any Default and, if any
Default then exists, setting forth the details thereof and the action
which the Company is taking or proposes to take with respect thereto.
(e) Promptly after the commencement thereof, notice of
(i) any action or proceeding which has more than a remote possibility
of a determination adverse to the Company or its Subsidiaries (a
"Non-Frivolous Action") 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
-85-
92
such Non-Frivolous Action threatened against the Company or any of its
Subsidiaries in writing, which, if adversely determined, would have a
material adverse effect upon the business, assets or financial
condition of the Company, any Borrowing Subsidiary or any other
mortgage banking affiliate of the Company, and (ii) any other action,
event or condition of any nature which may lead to or result in a
material adverse effect upon the business, assets or financial
condition of the Company or any Borrowing Subsidiary or which, with or
without notice or lapse of time or both, would constitute a default
under any other material contract, instrument or agreement to which
the Company or any Borrowing Subsidiary is a party or by which the
Company, any Borrowing Subsidiary or their properties or assets may be
bound or subject.
(f) As soon as possible after becoming aware of any
change in the Company's long-term unsecured debt ratings as rated by
S&P or Xxxxx'x, a copy of the S&P or Xxxxx'x publication of such
ratings or other written confirmation of such ratings.
(g) Such other information, financial or otherwise,
respecting the Collateral and the Company's or any Borrowing
Subsidiary's financial statements and condition as the Agent or any
Lender may from time to time reasonably request.
(h) As soon as possible, and in any event within thirty
(30) days after the Company knows or has reason to know that any of
the events or conditions enumerated below with respect to any Plan
have occurred or exist, a statement signed by an Authorized Officer of
the Company setting forth details respecting such event or condition
and the action, if any, which the Company or, to the best knowledge of
the Company, any ERISA Affiliate proposes to take with respect
thereto; provided, however, that if such event or condition is
required to be reported or notice thereof given to PBGC, such
statement, together with a copy of the relevant report or notice to
PBGC, shall be furnished to the Agent within ten (10) days after it is
reported or notice thereof given to PBGC:
(i) the occurrence of any Reportable Event;
(ii) the filing under Section 4041 of ERISA of a
notice of intent to terminate any Plan or the termination of
any Plan;
(iii) the institution by PBGC of proceedings
under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Plan; or
-86-
93
(iv) the complete or partial withdrawal by the
Company, any Subsidiary or any ERISA Affiliate from a Plan, or
the receipt by the Company, any Subsidiary or any ERISA
Affiliate of notice from a Plan that it is in reorganization
or insolvency pursuant to Section 4241 or 4245 of ERISA or
that it intends to terminate or has terminated under Section
4041A of ERISA, if such withdrawal, reorganization, insolvency
or termination has resulted or may reasonably be expected to
result in any liability of the Company, any Subsidiary or any
ERISA Affiliate to the PBGC in connection with such Plan or to
such Plan.
(i) Promptly after the request of the Agent, copies of
each annual report filed pursuant to Section 104 of ERISA with respect
to each Plan (including, to the extent required by Section 104 of
ERISA, the related financial and actuarial statements and opinions and
other supporting statements, certifications, schedules and information
referred to in Section 103 of ERISA) and each annual report filed with
respect to each Plan under Section 4065 of ERISA.
(j) As soon as available but in any event within thirty
(30) days after the end of each calendar quarter, a servicing report
and analysis which shall show the status of all mortgages serviced by
the Company or any Borrowing Subsidiary including those which are
delinquent, all in such form and detail and including such additional
information as the Agent may reasonably request. Such servicing
report shall show separately information concerning any mortgages or
securities with respect to which there is recourse to the Company or
any Borrowing Subsidiary.
(k) As soon as available but in any event within thirty
(30) days after the end of each calendar quarter, a production
information report and a secondary marketing report for such quarter
satisfactory to the Agent.
(l) Promptly upon receipt, a copy of any notice from any
Federal Agency or any private mortgage insurer to the effect that it
is or is contemplating withdrawing its approval of the Company or any
Borrowing Subsidiary as a FHA-Approved Mortgagee, FHLMC- Approved
Lender, FNMA-Approved Lender or VA-Approved Lender or as an approved
seller and servicer for FNMA, FHLMC and GNMA.
(m) Promptly after the Company's or any Subsidiary's
acquisition or creation of a new Subsidiary, written notice of such
event, which notice shall set forth the details of such event, the
percentage of capital stock owned by the Company or any other
Subsidiary, and the jurisdiction of incorporation of such new
Subsidiary.
-87-
94
(n) Promptly after the sending or filing thereof, copies
of all such proxy statements, financial statements and reports which
the Company sends to its stockholders, and copies of all regular,
periodic and special reports (other than Form 8-K reports containing
only the distribution reports relating to the Fireman's Fund Mortgage
Corporation Agency MBS Multi-Class Pass-Through Certificates, which
the Company need send to the Agent only and which the Agent shall make
available to the other Lenders upon request) and all final
prospectuses which the Company files with the SEC (if applicable), or
any governmental authority which may be substituted therefor, any
Federal Agency, or any other governmental agency.
(o) On each Business Day, a statement from the issuing and
paying agent for the Outstanding CPNs setting forth the aggregate face
amount of the Outstanding CPNs being issued on such Business Day,
being repaid on such Business Day and remaining outstanding at the end
of such Business Day, all in a form satisfactory to the Agent, which
statement need be transmitted to the Agent only.
(p) As soon as available and in any event within
forty-five (45) days after the end of each fiscal quarter of the
Company and each Borrowing Subsidiary, a list showing (i) each
individual Guaranty for which the maximum potential liability is in
excess of $1,000,000 of the Company or any Borrowing Subsidiary then
in effect (and the amounts thereof) and (ii) the aggregate amount of
all other Guarantees of the Company or any Borrowing Subsidiary then
in effect, certified as true and correct by Authorized Officers of the
Company and Borrowing Subsidiary. Individual Guaranties shall be
reported under clause (i) if the potential liability could exceed
$1,000,000 even though the then current outstanding Indebtedness which
is guaranteed is less than $1,000,000. Such report shall include the
maximum amount guaranteed and the then current outstandings (showing
"none" if there are no current outstandings). If there are no
Guaranties to be reported, a report shall still be furnished
indicating no such Guaranties exist.
(q) Such other information respecting the business,
properties or the condition or operation of the Company or its
Subsidiaries, financial or otherwise, as the Agent or any Lender may
from time to time reasonably request.
(r) Notice of the occurrence of any of the following events,
immediately upon the Company's acquisition of knowledge thereof: (i)
the occurrence of an "Event of Default" (as defined in Article Five of
the Subordinated Debt Indenture), (ii) the deferral by the Company of
any quarterly installment of interest on the Subordinated Debt, (iii)
the
-88-
95
acceleration of the entire principal amount of any series of
securities issued under the Subordinated Debt Indenture, (iv) the
execution of any amendment or supplement to the Subordinated Debt
Indenture, or (v) the resignation or removal of the trustee under the
Subordinated Debt Indenture, or any change in the notice address of
such trustee.
7.8 Indemnification.
Pay, and protect, indemnify and save harmless, the Agent, the
Collateral Agent, each of the Lenders and the Affiliates of each of the
foregoing and, in their capacity as such, their respective officers, directors,
shareholders, controlling persons, employees, agents and servants from and
against all liabilities, losses, claims, damages, penalties, causes of action,
suits, costs and expenses (including, without limitation, attorneys' fees and
expenses) or judgments of any nature arising from the default of the Company or
any Borrowing Subsidiary in the performance of their respective agreements,
rights or obligations contained in this Agreement, the Security Agreement, the
Notes or any other instrument or agreement entered into by the Company or any
Borrowing Subsidiary in connection herewith or therewith or arising out of this
Agreement or the transactions contemplated herein; provided, that neither the
Company nor any Borrowing Subsidiary shall have any obligation hereunder to the
Agent, the Collateral Agent or any Lender or any other Person indemnified
pursuant to this Section 7.8 with respect to indemnified liabilities arising
from (1) the gross negligence or willful misconduct of such Person indemnified
pursuant to this Section 7.8, or (2) legal proceedings commenced against the
Agent, the Collateral Agent or any Lender by any other Lender or any
Participant. If any action, suit or proceeding arising from any of the
foregoing is brought against the Agent, the Collateral Agent or any Lender or
any other person indemnified pursuant to this Section 7.8, the Company and each
Borrowing Subsidiary will, if within a reasonable time requested in writing to
do so and at its expense, resist and defend such action, suit or proceeding or
cause the same to be resisted and defended by counsel designated by the Company
or Borrowing Subsidiary (which counsel shall be satisfactory to the party being
indemnified). The obligations of the Company and the Borrowing Subsidiaries
under this Section 7.8 shall survive any termination of this Agreement.
7.9 Maintenance of Net Worth.
At all times, maintain the sum of (x) Adjusted Consolidated
Tangible Net Worth plus (y) Subordinated Debt in an amount at least equal to
the sum of:
(i) $355,000,000, plus
-89-
96
(ii) fifty percent (50%) of the positive cumulative quarterly
increases, if any, in Adjusted Consolidated Tangible Net Worth of the
Company after July 1, 1997 (computed without regard to any increase or
decrease resulting from (1) the contribution or distribution of
Capital Securities, (2) cash equity contributions to the Company, (3)
the receipt of proceeds of issuances of stock of the Company, (4) the
exchange of Subordinated Debt for Series A Preferred Stock, (5) the
payment of Restricted Payments) for each calendar quarter beginning
with calendar quarter beginning July 1, 1997, less
(iii) the amount of Special Dividends paid.
7.10 Federal Agency Approvals.
Maintain its status as a FHA-Approved Mortgagee, remain
eligible to obtain VA guaranties of Mortgage Loans and remain approved by each
Federal Agency as a seller/servicer.
7.11 Approved Investor Commitments.
Maintain all of its Mortgage Loans included in Collateral and
all other Mortgage Loans owned by the Company or any Borrowing Subsidiary, as
applicable, which satisfy the delivery requirements of any then-current
Approved Investor Commitments to purchase Mortgage Loans or to exchange
Securities for Mortgage Loans held by the Company or any Borrowing Subsidiary
(in each case, other than any Mortgage Loans held by the Company or a Borrowing
Subsidiary solely for investment) in compliance with such Approved Investor
Commitments and perform all of its obligations in connection with such
commitments.
7.12 Borrowing Base Certificate.
Within the first ten (10) days of each month, and within three
Business Days after any request therefor by the Agent, deliver to the Agent a
Borrowing Base Certificate (which shall include the Company's reconciliation of
any discrepancies from the Collateral Agent's reports on the status of Eligible
Collateral at the end of the preceding month), together with a certificate of
the chief financial officer or other Authorized Officer of the Company
confirming compliance with Sections 7.9, 8.5, 8.9, and 8.12 and, if then
applicable, with the Positive Security Conditions. Each regular monthly
Borrowing Base Certificate shall contain information as of the close of
business on the final Business Day of the preceding month. Any Borrowing Base
Certificate delivered pursuant to the request of the Agent shall contain
information as of the close of business on the day on which the Agent requested
such Borrowing Base Certificate. Notwithstanding the two preceding sentences,
information contained in such Borrowing Base Certificates relating to
-90-
97
Eligible Repurchased Agency Loans and Receivables may be as of the latest dates
on which the Company calculated the value of Eligible Repurchased Agency Loans
and Receivables; provided that such calculations shall be made at least once
per week. An Authorized Officer of each Borrowing Subsidiary shall certify as
to the accuracy of each Borrowing Base Certificate with respect to Collateral
reflected therein which is owned by such Borrowing Subsidiary.
7.13 Further Assurance.
As from time to time requested by the Agent and agreed upon by
the Required Lenders, at the cost and expense of the Company, execute and
deliver to the Agent all such documents and instruments and do all such other
acts and things as may be reasonably required to enable the Lenders to exercise
and enforce their rights under this Agreement and to realize thereon, and as
may be necessary to validate, preserve and protect the position of the Lenders
under this Agreement. With respect to those elements of Collateral as to which
the Lenders' security interest may not be perfected by delivery to the
Collateral Agent with the Security Agreement or the filing of a UCC-1 financing
statement, including but not limited to the Approved Investor Commitments and
any options, futures contracts or other interest rate protection products, the
Company and/or the applicable Borrowing Subsidiary, as requested by the Agent
at the direction of the Required Lenders, shall execute and deliver possession
of such elements of the Collateral to the Agent, have the interest of the
Lenders therein recorded on the books of any institution holding such assets
for the Company or the applicable Borrowing Subsidiary, obtain consents to
assignment in favor of the Lenders from the counterparties thereto or take such
other actions as may be necessary to perfect the security interest of the
Lenders therein (provided, however, that unless an Event of Default is
continuing or the Required Lenders have requested otherwise, consents to
assignments of options, futures contracts or other interest rate protection
products in favor of the Lenders from the counterparties thereto shall not be
required).
7.14 Maintenance of Properties.
Do all things necessary to maintain, preserve, protect and
keep its properties in good repair, working order and condition, and make all
necessary and proper repairs, renewals and replacements so that its business
carried on in connection therewith may be properly conducted at all times.
7.15 Payment of Taxes.
On demand pay, or reimburse the Agent and Lenders for, all
stamp, documentation, intangible, or similar taxes, and all penalties or
interest that may be due with respect thereto, that
-91-
98
may be imposed or asserted by the State of Florida or any other jurisdiction in
connection with the execution and delivery of the Credit Documents or the
making of the Loans contemplated by this Agreement.
ARTICLE VIII
NEGATIVE COVENANTS
The Company covenants and agrees (and each Borrowing
Subsidiary covenants and agrees with respect to Sections 8.1, 8.2, 8.3, 8.4,
8.6, 8.7, 8.8, 8.11, 8.13, 8.14, 8.15, 8.17 and 8.18) with the Lenders that so
long as this Agreement shall remain in effect or any amounts are outstanding
under the Notes or this Agreement, unless the Required Lenders (or all Lenders,
if expressly required) shall otherwise consent in writing, the Company (or the
Borrowing Subsidiaries where applicable) (on a consolidated basis with its
Subsidiaries) shall not, directly or indirectly:
8.1 Use of Proceeds.
Use the amounts obtained under this Agreement for any purposes
other than (i) the purposes described in the recitals hereto, (ii) the funding
or purchasing of Mortgage Loans, (iii) the payment of principal, interest,
fees, expenses and other obligations described in or contemplated by this
Agreement, (iv) payment of Debt of the Company existing on the date hereof, and
(v) such other purposes permitted under this Agreement. Neither the Company
nor any Borrowing Subsidiary is engaged, nor will they engage, principally or
materially in the business of extending credit for the purpose of "purchasing"
or "carrying" any "margin stock" (within the meanings of each of the quoted
terms under Regulation U). If requested by a Lender, the Company and each
Borrowing Subsidiary shall each furnish to the Agent for the benefit of the
Lenders a statement in conformity with the requirements of Federal Reserve Form
U-1 referred to in Regulation U. No part of the proceeds of any Loan will be
used for any purpose which violates, or which would be inconsistent with, the
provisions of the Regulations of the Board of Governors of the Federal Reserve
System as now and from time to time hereafter in effect.
8.2 Compliance with Security Agreement.
Enter into any collateral custodial agreement similar to the
Security Agreement for Mortgage Loans not included in Collateral with any
entity other than the Collateral Agent or fail to duly perform any of its
obligations under the Security Agreement; provided, however, that this Section
shall not prohibit the Company or any Borrowing Subsidiary from entering into
other custodial agreements relating to the possession of
-92-
99
Mortgage Loans not included in Collateral so long as such agreements are not
made for the purpose of or in connection with the granting of a security
interest in such Mortgage Loans. Security interests in Mortgage Loans given
for confirmatory purposes in connection with the sale of such Mortgage Loans by
the Company or a Borrowing Subsidiary to investors shall not be considered
agreements "made for the purpose of or in connection with the granting of a
security interest in such Mortgage Loans" within the meaning of the preceding
sentence.
8.3 Mergers; Subsidiaries.
Merge or consolidate with any Person, or sell or otherwise
dispose of (whether in one transaction or in a series of transactions) the
shares of any of its Subsidiaries to any Person, provided that the Company may,
after prior written notice to the Agent and Lenders, (i) undertake such a
merger or consolidation so long as the Company shall be the surviving or
resulting company and (ii) take such action with respect to any Subsidiary
which is not a material part of the Company's overall business operations.
8.4 Sales.
Sell, assign, lease or otherwise dispose of (collectively,
"Transfer"), whether in one transaction or a series of transactions, all or
substantially all of its assets (whether now owned or hereafter acquired) to
any Person, or allow any Subsidiary to Transfer substantially all of its assets
to any Person (other than another Subsidiary or a Parent), provided that the
Company may after prior written notice to the Agent and Lenders allow such
action with respect to any Subsidiary which is not a material part of the
Company's overall business operations. Transfers described in this Section 8.4
and the mergers, consolidations and dispositions described in Section 8.3
(whether or not permitted by the provisions of such Sections) are referred to
herein as "Fundamental Changes."
8.5 Debt. Allow the total Debt (excluding Subordinated Debt) of
the Company and its Subsidiaries (on a consolidated basis) to exceed the sum of
the following (the "Debt Threshold"):
(a) one hundred percent (100%) of the value of the
Company's cash and "short-term investments";
(b) ninety-eight percent (98%) of the value of the
Company's "mortgage loans receivable";
(c) ninety percent (90%) of the value of the Company's
"pool loan purchases" and "mortgage claims receivable", to the extent
such assets represent VA Mortgage Loans and FHA Mortgage Loans
repurchased by the Company from GNMA Security
-93-
100
holders including the amount of past-due interest advanced by the
Company on account of such Mortgage Loans which is guaranteed by VA or
insured by FHA, provided however, the Required Lenders can elect upon
90 days prior notice to the Company not to include such interest
amount in the calculation of this component of the Debt Threshold;
(d) seventy-five percent (75%) of the amount of Servicing
Sale Receivables which would qualify as Eligible Pledged Servicing
Sale Receivables if such Servicing Sale Receivables were pledged as
Collateral;
(e) seventy-five percent (75%) of "loans held for
investment";
(f) sixty percent (60%) of the amount of the Company's
servicing rights as determined in accordance with GAAP on a monthly
basis (or more frequently if requested by the Agent);
(g) fifty percent of the value of Approved Equity
Securities, as shown on the most recent quarterly financial statements
(or as reported on a more frequent basis if required by Agent)
provided that the maximum amount that can be included in this
component of the Debt Threshold shall be $100,000,000, as such amount
may be reduced in accordance with Section 8.16; and
(h) fifty percent (50%) of the amount of Servicing Sale
Receivables which would not qualify as Eligible Servicing Sale
Receivables net of any contingent expense holdback relating to such
Servicing Sale Receivables recorded as a liability under GAAP.
Terms set forth in quotes in this Section shall have the meanings given such
terms in the Company's consolidated financial statements.
8.6 Ratably Secured Debt. Incur any Debt which may be entitled to
a security interest in any of the Collateral which would be equal or superior
to the security interest of Collateral Agent as agent for the Secured Parties.
8.7 Guarantees.
Create, incur, assume or suffer to exist any Guarantee of the
Company or a Borrowing Subsidiary except Guarantees in an aggregate combined
amount for the Company and the Borrowing Subsidiaries not to exceed $25,000,000
at any one time outstanding.
8.8 Investments.
-94-
101
Make or own any Investment in any Person, except:
(a) Investments in the ordinary course of its mortgage
banking business in connection with mortgage loans, collateralized
mortgage obligations and other mortgage-related securities;
(b) Investments in the ordinary course of its mortgage
banking business in connection with puts, calls, swaps and other
interest rate hedging products, options and futures contracts to
provide protection from interest rate fluctuation;
(c) Investments in the ordinary course of its mortgage
banking business in connection with real estate acquired by
foreclosure;
(d) Investments in the ordinary course of the Company's
mortgage banking business in connection with servicing rights;
(e) Investments in the ordinary course of its mortgage
banking business in connection with commitments from investors to
purchase Mortgage Loans or mortgage-related securities;
(f) the acquisition of the Mortgage Loans, Securities and
mortgage servicing contracts of another Person engaged in
mortgage-related businesses;
(h) Investments in Cash Equivalents;
(i) those Investments in existence on the date hereof and
disclosed in the financial statements referred to in Section 6.6;
(j) loans to officers of the Company in an aggregate
principal amount at any time outstanding not to exceed $5,000,000;
(k) loans and advances to employees of the Company, or
its Subsidiaries for (i) travel and entertainment in the ordinary
course of business in an aggregate amount for the Company and its
Subsidiaries not to exceed $100,000 at any one time outstanding and
(ii) relocation expenses in the ordinary course of business in an
aggregate amount for the Company and its Subsidiaries not to exceed
$1,000,000 at any one time outstanding;
(l) Investments of up to 10% of the Company's net worth
(as determined in accordance with GAAP) by the Company in its
-95-
102
Subsidiaries and investments by such Subsidiaries in the Company and
in other Subsidiaries;
(m) Investments made by any Subsidiary in the ordinary
course of its business;
(n) Investments in equity securities which (1) are traded
on the New York Stock Exchange, the American Stock Exchange or NASDAQ,
(2) are subject to no transfer restrictions, and (3) have a readily
determinable market value, in an aggregate market value amount not to
exceed $25,000,000 (which market value shall be determined by the
Company and reported to the Agent on a monthly basis, or more
frequently at the request of the Agent);
(o) repurchase and reverse repurchase contracts
incidental to the mortgage-related businesses of the Company and its
Subsidiaries in an aggregate dollar amount not to exceed $250,000,000
and 25,000,000 respectively; and
(p) other Investments which are the result of a merger or
consolidation permitted under Section 8.3 if, after giving effect to
any such Investment, the consolidated net revenues (determined in
accordance with GAAP) of all business segments that constitute
mortgage-related businesses of the Resulting Entity for the
Fundamental Change/Investment Calculation Period are at least 75
percent of the total net revenues (determined in accordance with GAAP)
of the Resulting Entity for the Fundamental Change/Investment
Calculation Period.
8.9 Leverage Ratios.
Permit the ratio of (1) Funded Debt less Subordinated Debt to
(2) Adjusted Consolidated Tangible Net Worth plus Subordinated Debt to exceed
the following:
(a) while the Facility is secured:
Level of Aggregate Commitment Maximum Leverage Ratio
----------------------------- ----------------------
0 - $500,000,000 4.00 to 1
$500,000,001 - $550,000,000 4.25 to 1
$550,000,001 - $600,000,000 4.50 to 1
$600,000,001 - $650,000,000 4.75 to 1
$650,000,001 - $700,000,000 5.00 to 1
$700,000,001 - $750,000,000 5.25 to 1
(b) while the Facility is unsecured pursuant to Section
4.13(a):
-96-
103
Level of Aggregate Commitment Maximum Leverage Ratio
----------------------------- ----------------------
0 - $500,000,000 3.00 to 1
$500,000,001 - $550,000,000 3.25 to 1
$550,000,001 - $600,000,000 3.50 to 1
$600,000,001 - $650,000,000 3.75 to 1
$650,000,001 - $700,000,000 4.00 to 1
$700,000,001 - $750,000,000 4.25 to 1
8.10 Recourse Servicing.
Permit the principal balance of Mortgage Loans covered by Recourse Servicing to
exceed the sum of (A) the aggregate principal balance of all Mortgage Loans
covered by Recourse Servicing owned by the Company as of March 31, 1997 plus
(B) the aggregate principal balance of all Mortgage Loans covered by Recourse
Servicing acquired by the Company from and after April 1, 1997 as a part of one
or more larger acquisitions of Servicing Agreements, provided that the
aggregate principal balance of Mortgage Loans covered by Recourse Servicing
acquired in all acquisitions after April 1, 1997 shall not exceed the lesser of
(i) $100,000,000 or (ii) 10% of the principal balance of all Mortgage Loans
covered by the Servicing Agreements acquired in all such acquisitions less (C)
all reductions in such aggregate principal balances, whether by reason of
prepayment or amortization from and after April 1, 1997 (or the date of later
acquisition, as the case may be) and less (D) the aggregate principal balance
of any Mortgage Loans covered by any such Recourse Servicing sold by the
Company after March 31, 1997.
8.11 Liens.
Permit, or permit any Subsidiary to permit, any Lien to exist
on any of its property or assets (including, without limitation, the Company's
rights under any contracts relating to mortgage sales and under any Servicing
Agreements) other than:
(a) Liens for taxes, assessments and other governmental
impositions not yet due or which are being contested in good faith by
appropriate proceedings, provided, that adequate reserves with respect
thereto are maintained on the books of the Company or its
Subsidiaries, as the case may be, in conformity with GAAP;
(b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's or other like Liens arising in the ordinary course of
business and securing obligations which are not overdue for a period
of more than 60 days or which are being contested in good faith by
appropriate proceedings, provided, that adequate reserves with respect
thereto are maintained on the books of the Company or its
Subsidiaries, as the case may be, in accordance with GAAP;
-97-
104
(c) pledges or deposits in connection with workers'
compensation, unemployment insurance and other social security
legislation;
(d) deposits to secure the performance of bids, trade
contracts (other than for borrowed money), leases, statutory
obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature incurred in the ordinary course of
business;
(e) easements, rights-of-way, restrictions and other
similar encumbrances incurred in the ordinary course of business
which, in the aggregate, are not substantial in amount and which do
not in any case materially detract from the value of the property
subject thereto or interfere with the ordinary conduct of the business
of the Company or such Subsidiary;
(f) Liens of landlords, arising solely by operation of
law and which are not avoidable as a matter of law, on fixtures and
moveable property located on premises leased in the ordinary course of
business, provided, that the rental payments secured thereby are not
yet due;
(g) Liens arising out of judgments or awards against the
Company or any Subsidiary with respect to which the Company or such
Subsidiary is prosecuting an appeal or proceeding for review and the
Company or such Subsidiary is maintaining adequate reserves in
accordance with GAAP;
(h) Liens which were in existence on December 31, 1996
and which secured obligations reflected in the financial statements
referred to in Section 6.6;
(i) Liens upon real and/or tangible personal property,
which property was acquired after December 31, 1996 (by purchase,
construction or otherwise) by the Company or its Subsidiaries, each of
which Liens either (A) existed on such property before the time of its
acquisition and was not created in anticipation thereof at the request
or direction of the Company, or (B) was created solely for the purpose
of securing Debt representing, or incurred to finance, refinance or
refund, the cost (including the cost of construction) of the
respective property; provided, that no such Lien shall extend to or
cover any property of the Company or such Subsidiary other than the
respective property so acquired and improvements thereon;
(j) Liens incidental to the conduct of the Company's or a
Borrowing Subsidiary's mortgage-related businesses or the ownership of
its property or arising out of transactions entered in the ordinary
course of the Company's or a
-98-
105
Borrowing Subsidiary's mortgage-related businesses which do not secure
Debt and do not, in the aggregate, materially detract from the value
of its properties in the aggregate or materially impair the use
thereof in the ordinary course of the Company's or such Borrowing
Subsidiary's business;
(k) Liens on assets of corporations which become
Subsidiaries after the date of this Agreement; provided, that (i) such
Liens existed at the time such corporation became a Subsidiary and
were not created in anticipation thereof, (ii) any such Lien is not
spread to cover any property or assets of such corporation after the
time such corporation becomes a Subsidiary (other than any such
spreading resulting from "after-acquired property" clauses in
existence on the date such corporation became a Subsidiary) and (iii)
the amount of Debt secured thereby is not increased;
(l) any extension, renewal or replacement (or successive
extensions, renewals or replacements), in whole or in part, of any
Lien referred to in the foregoing clauses; provided, that the
principal amount of Debt secured thereby shall not exceed the
principal amount of Debt so secured immediately prior to the time of
such extension, renewal or replacement, and that such extension,
renewal, or replacement Lien shall be limited to all or a part of the
property which secured the Lien so extended, renewed or replaced (plus
improvements on such property);
(m) Liens (not otherwise permitted hereunder) which
secure obligations not exceeding (as to the Company and all
Subsidiaries) $15,000,000 in an aggregate principal amount at any one
time outstanding;
(n) Liens (not otherwise permitted hereunder) which
secure obligations (as to the Company and all Subsidiaries) (1)
incidental to forward delivery contracts or repurchase agreements in
the ordinary course of the Company's or a Borrowing Subsidiary's
mortgage-related businesses or (2) incidental to Investments by the
Company in the ordinary course of its mortgage banking business in
connection with puts, calls, swaps and other interest rate hedging
products, options and futures contracts to provide protection from
interest rate fluctuation; and
(o) the Liens arising under the Security Agreement or any
other Credit Document;
provided, however, that so long as no Event of Default has occurred and is
continuing and the security interest in favor of the Collateral Agent is in
effect and is not abated pursuant to Section 4.11(a), the Company may also
permit Liens on Securities and Mortgage Loans owned by the Company (other than
Securities or
-99-
106
Mortgage Loans constituting Collateral) to secure Debt incurred from sources
other than the Secured Parties for the purpose of originating or purchasing
such Securities or Mortgage Loans.
8.12 Credit Requirement.
Permit the Borrowing Base to be less than the Credit
Requirement.
8.13 Affiliate Transactions.
Enter, or permit any Subsidiary to enter, into any
transactions with the Company's Parent or Affiliates that is not an
arm's-length transaction or that in any material respect is less advantageous
to the Company or such Subsidiary than a similar typical transaction with an
unrelated third-party; make any loans or advances to the Parent or any
Affiliates with financial terms more advantageous to the Parent or Affiliate
than the terms of loans and advances made to the Company from any such Parent
or Affiliate; or make any net loans or advances to the Parent or any Affiliates
which would cause any violation of Sections 7.9 or 8.9.
8.14 Conduct of Business.
Except as permitted under Section 8.8:
(a) enter into any material line of new business other
than businesses related to its current businesses, materially change
the nature of its business, cease to carry on its business as now
conducted, or
(b) fail to maintain its corporate existence, licenses,
franchises and privileges.
8.15 FHA and other Approvals.
Cause any Federal Agency which insures any material portion of
the Mortgage Loans owned or serviced by the Company or any Borrowing Subsidiary
to withdraw its approval of the Company or any Borrowing Subsidiary, or become
ineligible or allow any Borrowing Subsidiary to become ineligible as a lender
under the VA loan guaranty program.
8.16 Restricted Payments.
Make any Restricted Payments; provided, however, so long as no
Default arising from the Company's failure to comply with Section 7.9 has
occurred and is continuing (or would result from any such payment) and no Event
of Default has occurred and is continuing (or would result from any such
payment), the Company
-100-
107
may make Restricted Payments as expressly permitted by subparagraphs (a) and
(b) below:
(a) The Company may make Restricted Payments in an amount
which, when added to all other Restricted Payments (including
Restricted Payments made pursuant to Section 8.16(b)(i)) made
subsequent to June 30, 1997, does not exceed fifty percent (50%) of
the increase, if any, in Adjusted Consolidated Tangible Net Worth from
June 30, 1997 through the completed calendar quarter preceding any
such Restricted Payment.
The increase in Adjusted Consolidated Tangible Net Worth
referenced in this Subsection (a) shall be computed without regard to
any increase or decrease resulting from the following activities: (1)
the contribution or distribution of Capital Securities, (2) cash
equity contributions to the Company, (3) the receipt of proceeds of
issuances of stock of the Company, (4) increases or decreases in the
amount of Subordinated Debt, or (5) the payment of permitted
Restricted Payments.
(b) The Company may, without regard to the maximum limit
on Restricted Payments established by Subsection (a) above:
(i) pay dividends required to be paid on its Series A
Preferred Stock and pay interest that is due and payable on
the Subordinated Debt, provided that all payments made
pursuant to this clause (i) shall still be included for
purposes of determining the maximum amount of dividends and
distributions payable under Subsection (a);
(ii) make additional Restricted Payments not to exceed the
Maximum Special Dividend Amount in the aggregate, which
additional Restricted Payments made pursuant to this clause
(ii) shall not be included in determining the maximum amount
of Restricted Payments made under subsection (a);
(iii) distribute Capital Securities; and
(iv) distribute the proceeds of issuances of stock to an
Affiliate (but not any proceeds received in connection with
any public or secondary offering of stock).
At the time the Company pays or makes any such Restricted Payment, it
shall notify the Agent in writing of the amount of such payment, which notice
shall (1) specify under which subparagraph and clause above the Restricted
Payment is being
-101-
108
made and (2) contain such information as is necessary to demonstrate that such
dividend is permissible under the applicable subparagraph and clause.
As used herein, "Maximum Special Dividend Amount" shall mean
$90,900,000 plus (a) the amount of servicing holdback net proceeds collected by
the Company after June 30, 1997, up to a maximum of $29,200,000, plus (b)
one-half of the liquidation proceeds of U.S. West, Inc. redeemable preferred
stock owned by the Company, up to a maximum of $25,000,000, provided that such
liquidation proceeds shall be included in the Maximum Special Dividend Amount
only if the other half of such liquidation proceeds is used to repay Credit
Indebtedness and the maximum amount that can be included in the component of
the Debt Threshold set forth in Section 8.5(g) relating to Approved Equity
Securities is permanently reduced by the amount of any Special Dividend
attributable to such liquidation proceeds.
8.17 Borrowing Subsidiary Liabilities and Secured Debt. Allow (i)
TMA's total liabilities (as defined by GAAP), other than liabilities to the
Company or its Affiliates, to exceed at any time $5,000,000, (ii) CPM's total
liabilities for borrowed money other than money borrowed by CPM under this
Agreement or borrowed from the Company or its Affiliates to exceed at any time
$15,000,000, or (iii) any Borrowing Subsidiary to create or suffer any Liens on
any of its assets to secure the repayment of borrowed money.
8.18 Funding of Borrowing Subsidiary Mortgage Loans. Discontinue
the method by which the Company directly funds Mortgage Loans pledged by the
Borrowing Subsidiaries as Collateral or amend or terminate any Funding
Agreement without the prior written consent of the Required Lenders, which
consent shall not be unreasonably withheld.
8.19 Subordinated Debt Indenture.
(a) Enter into, without the prior written consent of
the Required Lenders, any amendment or modification of the
Subordinated Debt Indenture or other documents evidencing or governing
the terms of the Subordinated Debt if such amendment or modification
would change (i) the principal amount of or rate of interest on the
Subordinated Debt, (ii) the terms of repayment of the Subordinated
Debt, (iii) the provisions relating to the deferral of interest on the
Subordinated Debt, (iv) any terms or provisions of Article 12
(Subordination) of the Subordinated Debt Indenture, (v) the definition
of "Event of Default" in the Subordinated Debt Indenture, or (vi) the
provision of the Subordinated Debt Indenture which requires the
trustee to give certain holders of senior indebtedness notices of
defaults, accelerations and certain other events; provided, however,
that the Lenders
-102-
109
hereby consent to that certain First Supplemental Indenture dated
December 1, 1995; or
(b) Enter into, without the prior written consent of
the Agent, any material amendment or modification of the Subordinated
Debt Indenture or other documents evidencing or governing the terms of
the Subordinated Debt other than the amendments or modifications
requiring the consent of the Required Lenders pursuant to clause (a)
above; or
(c) Consent, without prior written notice to the
Agent, to any change in the trustee under the Subordinated Debt
Indenture.
ARTICLE IX
THE AGENT
9.1 Appointment and Authorization.
(a) Each Lender irrevocably appoints and authorizes the
Agent to take such action as agent on its behalf and to exercise such
powers under this Agreement as are delegated to the Agent by the terms
hereof together with all such powers as are reasonably incidental
thereto.
(b) The Agent is hereby authorized to enter into the
Security Agreement on behalf of the Lenders and all obligations of the
Lenders thereunder shall be binding upon each Lender as if such Lender
had executed the Security Agreement. Each Lender hereby appoints and
authorizes the Collateral Agent to act on its behalf in the capacity
described in the Security Agreement and authorizes the Collateral
Agent to act on such Lender's behalf in all respects with regard to
performance under the Security Agreement.
(c) Unless and until the Agent shall have received the
directions of the Required Lenders as provided in Section 10.2(1) or
(2) or of all Lenders, if expressly required hereunder, the Agent may
(but shall not be obligated to) take or refrain from taking such
action, or direct the Collateral Agent to take or refrain from taking
such action with respect to an Event of Default as it shall deem
advisable in the best interests of the Lenders.
(d) The Agent shall not be required to take any action
hereunder if it shall reasonably determine that by so doing it may
incur criminal or civil liability.
-103-
110
9.2 Agent and Affiliates.
The Agent shall have the same rights and powers under this
Agreement as any other Lender and may exercise or refrain from exercising the
same as though it were not the Agent, and the Agent and its Affiliates may
accept deposits from, lend money to, and generally engage in any kind of
business with, the Company, any Subsidiary or Affiliate of the Company as if it
were not the Agent hereunder.
9.3 Action by Agent.
The obligations of the Agent hereunder are only those
expressly set forth herein. Without limiting the generality of the foregoing,
the Agent shall not be required to take any action with respect to any Default,
except as expressly provided in this Article IX or in Article X.
9.4 Consultation with Experts.
The Agent may consult with legal counsel (who may be counsel
for the Company), independent public accountants and other experts selected by
it and shall not be liable for any action taken or omitted to be taken by it in
good faith in accordance with the advice of such counsel, accountants or
experts.
9.5 Liability of Agent.
(a) Neither the Agent nor any of its directors, officers,
agents, or employees shall be liable for any action taken or not taken
by it in connection herewith (i) with the consent or at the request of
the Required Lenders or of all Lenders, if required or (ii) in the
absence of its own gross negligence or willful misconduct.
(b) Neither the Agent (except as otherwise provided in
this Agreement) nor any of its directors, officers, agents or
employees shall be responsible for or have any duty to ascertain,
inquire into or verify
(i) any statement, warranty or representation
made in connection with this Agreement or any Advance
hereunder;
(ii) the performance or observance of any of the
covenants or agreements of the Company or any Borrowing
Subsidiary;
(iii) the satisfaction of any condition specified
in Article V, except receipt of items required to be
-104-
111
delivered to the Agent and the determination of the amount of
the Credit Requirement; or
(iv) the validity, effectiveness or genuineness
of this Agreement, the Notes or any other instrument or
writing furnished in connection herewith.
(c) The Agent shall not incur any liability by acting in
reliance upon any notice, consent, certificate, statement, or other
writing (which may be a bank wire, telex or similar writing) or
telephone communication believed by it to be genuine or, in the case
of a writing, to be signed by the proper party or parties.
9.6 Indemnification.
(a) Each Lender shall, ratably in accordance with its
share of the Aggregate Commitment (or, if the Commitments have been
terminated, then in accordance with its share of aggregate Loans then
outstanding) at the time the Agent or the Collateral Agent incurred
such liability, indemnify the Agent and the Collateral Agent (to the
extent not reimbursed by the Company or a Borrowing Subsidiary)
against any cost, expense (including reasonable counsel fees and
disbursements), claim, demand, action, loss or liability (except such
as result from the indemnified party's gross negligence or willful
misconduct) that the Agent or the Collateral Agent may suffer or incur
in connection with this Agreement or the Security Agreement or any
action taken or omitted by the Agent or the Collateral Agent hereunder
or thereunder.
(b) For the purposes of this Section, the amount of any
Commitment of any Lender shall be the highest amount of such
Commitment of such Lender during the course of any event for which
indemnity is sought.
(c) The provisions of this Section shall survive the
termination of this Agreement.
9.7 Credit Decision.
Each Lender acknowledges that it has itself been and will
continue to be, independently and without reliance upon the Agent or any other
Lender, solely responsible for making its own independent appraisal of and
investigations into the financial condition, creditworthiness, condition,
affairs, status and nature of the Company and the Borrowing Subsidiaries.
Accordingly, each Lender confirms to the Agent that it has not relied, and will
not hereafter rely, on the Agent or any other Lender (i) except as otherwise
provided in this Agreement, to check or inquire on such Lender's behalf into
the adequacy,
-105-
112
accuracy or completeness of any information provided by the Company or any
Borrowing Subsidiary under or in connection with this Agreement or the
transactions herein contemplated (whether or not such information has been or
is hereafter distributed to such Lender by the Agent) or (ii) to assess or keep
under review on such Lender's behalf the financial condition, creditworthiness,
condition, affairs, status or nature of the Company, any Borrowing Subsidiary
or any Approved Investor.
9.8 Resignation or Removal and Appointment of Successor Agent.
The Agent may resign at any time by giving 90 days prior
written notice thereof to the Lenders and the Company. The Agent may be
removed at any time upon ninety (90) days prior written notice from the
Required Lenders. Upon any such resignation or removal notice the Required
Lenders shall have the right to appoint a successor Agent; provided that such
appointment, unless made after the occurrence of a Default and during the
continuance thereof, shall be subject to the consent of the Company, which
consent shall not be unreasonably withheld. If the Company and/or Required
Lenders, as applicable, are unable to agree on the appointment of a successor
agent within such 90 day period, the retiring agent shall appoint one of the
Lenders as a successor agent for the Lenders. Upon the appointment of a
successor Agent, that successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring
Agent, and the retiring Agent shall be discharged from its duties and
obligations under this Agreement; provided, however, that the resigning Agent
shall not be discharged from any liability as a result of its or its
directors', officers', agents' or employees' gross negligence or willful
misconduct in connection with the performance of its duties and obligations
under this Agreement prior to the effective date of its resignation. After any
retiring Agent's resignation hereunder as Agent, the provisions of this Article
IX shall inure to its benefit as to any actions taken or omitted to be taken by
it while it was Agent under this Agreement.
9.9 Compensation.
Compensation of the Agent for its services hereunder and
reimbursement for any expenses incurred by it in the performance of its duties
hereunder shall be paid by the Company pursuant to a separate written agreement
between the Agent and the Company.
9.10 Release of Collateral Documents.
The Collateral Agent shall not release any Pledged Items
except as provided herein or in connection with the enforcement of any remedies
hereunder.
-106-
113
9.11 Knowledge of Defaults.
The Agent shall not be deemed to have knowledge or notice of
the occurrence of any Event of Default unless the Agent has received notice
from a Lender or the Company referring to this Agreement, describing such Event
of Default and stating that such notice is a "Notice of Default." The Agent
shall notify the Lenders within a reasonable time after the Agent has notice of
the occurrence of an Event of Default, which notice shall describe the Event of
Default.
9.12 Reports.
The Agent may, at its option with the approval of the Company,
alter the format of any report required hereunder, provided such modified
report contains the same information previously furnished in the unmodified
report.
ARTICLE X
DEFAULTS
10.1 Defaults.
In case of the happening of any of the following events
(herein called "Events of Default"):
(a) Any principal amount of any Loan made under this
Agreement (other than principal payments required to be made pursuant
to Sections 2.14(a)) shall not be paid when due and payable; or
(b) Any principal payment required to be made pursuant to
Sections 2.14(a) shall not be paid when due and payable, and shall
remain unpaid for one Business Day;
(c) Any interest or Fees due under this Agreement shall
not be paid when due and payable, and shall remain unpaid for five (5)
days; or
(d) Any amount, other than principal or interest or Fees,
payable under this Agreement shall not be paid when due and payable
and shall remain unpaid for five (5) days after written notice to the
Company or a Borrowing Subsidiary (as applicable) of such nonpayment;
or
(e) Any representation or warranty made or deemed made by
the Company or any Borrowing Subsidiary (or any of their officers)
herein (other than the representations and warranties contained in
Sections 4.6 and 4.7, the inaccuracies of which shall only cause the
Collateral affected thereby to cease to qualify as Eligible
Collateral)
-107-
114
in the Security Agreement or in any certificate, agreement, instrument
or statement contemplated by or made or delivered pursuant to or in
connection herewith or therewith shall prove to have been incorrect
when made or deemed made in any material respect; provided however
that if the facts resulting in the breach of any such representation
or warranty are susceptible of correction, such breach shall not
constitute an Event of Default if such facts are corrected within 30
days after such inaccurate representation or warranty was made or
deemed made; or
(f) The Company or any Borrowing Subsidiary, as
applicable, shall fail to perform or observe any term, covenant or
agreement contained in Sections 7.10, 8.1, 8.3, 8.4, 8.6, 8.7, 8.9,
8.14(a), 8.15, 8.17, 8.18, or 8.19 (or, while the security interest in
favor of the Collateral Agent is abated, Section 8.11); or
(g) The Company shall (i) fail to comply with the
covenant contained in Section 8.12 and such failure remains unremedied
for one Business Day, or (ii) fail to perform any term, covenant or
agreement contained in Sections 7.7(a), 7.9, 8.5, 8.8 or 8.16, and
such failure shall remain unremedied for more than 30 days;
(h) The Company or any Borrowing Subsidiary shall fail to
perform or observe any other term, covenant or agreement contained
herein (including Section 8.11 while the security interest in favor of
the Collateral Agent is not abated) or in the Security Agreement on
its part to be performed or observed and any such failure remains
unremedied for thirty (30) days after written notice thereof shall
have been given to the Company or such Borrowing Subsidiary (as
applicable) by the Agent or the Collateral Agent; or
(i) An Event of Default shall exist under any other
Credit Document; or
(j) Either this Agreement, the Notes or the Security
Agreement shall, at any time after its execution and delivery, for any
reason cease to be in full force and effect (unless such occurrence is
in accordance with its terms or after payment thereof) or shall be
declared to be null and void, or the validity or enforceability
thereof shall be contested by the Company, any Borrowing Subsidiary or
the Collateral Agent, or the Company, any Borrowing Subsidiary or the
Collateral Agent shall deny that it has any further liability or
obligation thereunder; or
(k) The Company, its Parent, Fund American Enterprises
Holdings, Inc., any Borrowing Subsidiary or any of the Company's other
material Subsidiaries shall (i) be
-108-
115
adjudicated bankrupt or insolvent, (ii) admit in writing its inability
to pay its debts as they mature, (iii) make an assignment for the
benefit of creditors, (iv) fail generally to pay its debts as such
debts become due and payable, (v) apply for or consent to the
appointment of any receiver, trustee, custodian or similar officer for
it or for all or any substantial part of its property; or such
receiver, trustee, custodian or similar officer shall be appointed
without the application or consent of the Company or of such
Subsidiary, as the case may be, and such appointment shall continue
undischarged for a period of 60 days, (vi) institute (by petition,
application, answer, consent or otherwise) any bankruptcy, insolvency,
reorganization, arrangement, readjustment of debt, dissolution,
liquidation or similar proceeding relating to it under the laws of any
jurisdiction, (vii) have any bankruptcy, insolvency, reorganization,
arrangement, readjustment ofdebt, dissolution, liquidation or similar
proceeding (by petition, application or otherwise) instituted against
it and remain undismissed for a period of 60 days, or (viii) have any
judgment, writ, warrant of attachment or execution or similar process
issued or levied in respect of any of its obligations (alleged or
otherwise) against any of its property involving any amount in excess
of $5,000,000 and such judgment, writ or similar process shall not be
released, vacated, stayed or fully bonded within 30 days after its
issue or levy; or
(l) The Company, any Borrowing Subsidiary or any of the
Company's other material Subsidiaries shall (i) default in the payment
when due (after giving effect to any available cure period) of any
principal of or interest on any of its Debt other than the Credit
Indebtedness in excess of $25,000,000 in the aggregate or (ii) any
event specified in any note, agreement, indenture or other document
evidencing or relating to any such Debt in excess of $25,000,000 shall
occur if the effect of such event is to cause, or to permit the holder
or holders of such Debt (or a trustee or agent on behalf of such
holder or holders) to cause, such Debt to become due, or to be prepaid
in full, prior to its stated maturity, and in either case any notice
or cure period has expired and such default has not been waived in
writing by the holder of such Debt; or
(m) An event or condition occurs or exists with respect
to any Plan concerning which the Company is under an obligation to
furnish a report to the Lenders in accordance with Section 7.7(h) and
as a result of such event or condition, together with all other such
events or conditions, the Company or any ERISA Affiliate has incurred
a liability to a Plan or the PBGC (or any combination of the
foregoing) which is material in relation to the financial position of
the Company; or
-109-
116
(n) A Change in Control shall occur with respect to the
Company; or
(o) Except in connection with a Positive Security Event,
the lien against the Collateral created under the Security Agreement
for the benefit of the Secured Parties shall cease to be a perfected,
first priority security interest; provided, however, that if the
Secured Parties shall cease to have a perfected, first priority
interest in a portion of the Collateral, such cessation shall not
constitute an Event of Default so long as the Collateral in which the
Secured Parties have a perfected, first priority interest is
sufficient to cause the Borrowing Base to exceed the Credit
Requirement;
then, and in every such event and at any time thereafter during the continuance
of such event, the Agent and the Lenders shall have the rights described in the
following Sections of this Article X.
10.2 Remedies.
(1) Upon the occurrence of any Event of Default the Agent
may, and at the direction of the Required Lenders shall, at the same
or different times, take one or more of the following actions: (i) by
notice to the Company terminate the Commitments and they shall
thereupon terminate, (ii) by notice to the Company declare the
Obligations to be, and the Obligations shall thereupon become,
immediately due and payable without presentment, demand, protest or
other notice of any kind, all of which are hereby waived by the
Company and the Borrowing Subsidiaries, provided that in the case of
any of the Events of Default specified in subparagraph (k) of Section
10.1 , without any notice to the Company or any Borrowing Subsidiary
or any other act by the Agent or the Lenders, the Commitments shall
thereupon terminate and the Obligations shall become immediately due
and payable without presentment, demand, protest or other notice of
any kind, all of which are hereby waived by the Company and the
Borrowing Subsidiaries. Following the occurrence and during the
continuance of a Default, no Lender shall be obligated to fund any
Loan hereunder.
(2) Following the occurrence and during the continuance
of an Event of Default, the Company and the Borrowing Subsidiaries
agree that the Company, the Borrowing Subsidiaries and the Agent
shall, at the request of the Required Lenders, implement certain
procedures with respect to the Company's and the Borrowing
Subsidiaries' funding of AP Mortgages, all at the Company's sole
expense. Such procedures may include, but are not limited to: (i)
reducing the advance rate against AP Mortgages for purposes of
-110-
117
determining the Mortgage Collateral Value component of the Borrowing
Base, (ii) requiring that if (A) AP Mortgages are funded with wire
transfers, such wire transfers originate from accounts located at a
lending office of a Lender, (B) AP Mortgages are funded from accounts
which are not located at a lending office of a Lender, the financial
institution which holds such account enter into an agreement with the
Company or the applicable Borrowing Subsidiary (as applicable) and the
Agent which shall provide that the Agent shall have exclusive dominion
and control over the funds in such account, and (iii) requiring the
Company and the Borrowing Subsidiaries to provide the Agent and the
Lenders with such information regarding the funding of such AP
Mortgages as the Required Lenders may reasonably request. The Company
and the Borrowing Subsidiaries, at their expense, shall from time to
time execute and deliver to the Agent or the Collateral Agent all such
assignments, certificates, supplemental documents, and financing
statements, and shall do all other acts or things, as the Agent may
reasonably request in order to more fully implement such procedures.
(3) Upon the occurrence of any Event of Default, the
Agent and the Collateral Agent, on behalf of the Secured Parties,
shall be entitled to all rights and remedies hereunder and under the
Security Agreement and all other rights and remedies at law or in
equity existing in or conferred upon the Secured Parties by other
jurisdictions or other applicable law.
(4) The Company and the Borrowing Subsidiaries waive any
right to require the Agent, the Collateral Agent or any Lender to (i)
proceed against or exhaust any of its remedies against the Company,
any Borrowing Subsidiary or any other Person in any particular order,
(ii) proceed against or exhaust any of the Collateral or pursue its
rights and remedies as against the Collateral in any particular order
or (iii) pursue any other remedy in its power.
(5) The Agent on behalf of the Lenders may, but shall not
be obligated to, advance any sums or do any act or thing necessary to
uphold and enforce the lien and priority of, or the security intended
to be afforded by, any Pledged Mortgage, including, without
limitation, payment of delinquent taxes or assessments and insurance
premiums. The Company and the Borrowing Subsidiaries shall provide
any and all information required by the Agent or the Collateral Agent
to administer this Agreement or collect on the Collateral. All
advances, charges, costs and expenses, including reasonable attorneys
fees, incurred or paid by the Agent in exercising any right, power or
remedy conferred by this Agreement, or in the enforcement hereof (or
by any Lender acting on instruction of the Required Lenders in the
-111-
118
enforcement hereof), together with interest thereon at the rate per
annum of two percent (2%) plus the Alternate Base Rate from the time
of payment until repaid, shall become a part of the Credit
Indebtedness.
(6) No failure on the part of the Agent or any Lender to
exercise, and no delay in exercising, any right, power or remedy
hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise by the Agent or any Lender of any right, power or
remedy hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or remedy. The remedies herein
provided are cumulative and are not exclusive of any remedies provided
by law.
10.3 Notice of Default.
The Agent may, and at the direction of the Required Lenders
shall, give notice to the Company under Section 10.1(d), 10.1(h) or 10.2 and
shall thereupon notify all Lenders thereof.
10.4 Application of Proceeds.
(a) After the occurrence of an Event of Default, the
portion of the proceeds of any sale or enforcement of all or any part of the
Collateral which is delivered to the Agent by the Collateral Agent pursuant to
the provisions of the Security Agreement shall be applied by the Agent, after
taking into account any adjustments made pursuant to Section 2.3(e):
First, to the extent not already paid from the Collateral
proceeds by the Collateral Agent, to payment of all costs and expenses
of such sale or enforcement, including reasonable compensation to the
Agent's agents and counsel, and all expenses, liabilities and advances
made or incurred by the Agent or any Lender acting on instructions of
the Required Lenders in connection therewith;
Second, to the extent not already paid from the Collateral
proceeds by the Collateral Agent, to the payment of all costs and
expenses incurred by the Collateral Agent under the Security
Agreement;
Third, to the payment of accrued and unpaid interest on the
Credit Indebtedness (including the accrued and unpaid interest
portion, if any, of the Approved GNMA Letter of Credit Obligations),
fees due hereunder and all other unpaid Credit Indebtedness other than
the principal amount of Loans, the face amount (whether drawn or
undrawn) of Approved GNMA Letters of Credit, and the Approved Secured
Rate Hedging Obligations, ratably according to the respective amounts
owing or due each Lender or Non-Lender Balance Bank until such amounts
are paid in full;
-112-
119
Fourth, to the total unpaid principal amount of all Loans and
to the unpaid face amount (whether drawn or undrawn) of Approved GNMA
Letters of Credit, and to all Approved Secured Rate Hedging
Obligations then due and payable, ratably according to the amount due
each Lender (provided, however, that proceeds applicable to the
undrawn face amount of Approved GNMA Letters of Credit shall be
distributed in accordance with Section 10.5 below) until such amounts
are paid in full; and
Fifth, 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.
(b) The Agent shall have absolute discretion as to the
time of application of any such proceeds, moneys or balances in
accordance with this Agreement.
(c) 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 Credit Indebtedness, the Company and each
Borrowing Subsidiary shall remain liable for any deficiency.
10.5 Letter of Credit Cash Collateral Accounts.
(a) Upon the Agent's receipt of any Collateral proceeds
to be applied to the undrawn face amount of any Approved GNMA Letters
of Credit pursuant to Section 10.4(a), a separate cash collateral
account (each a "Letter of Credit Account") shall be established with
the Agent for each outstanding Approved GNMA Letter of Credit. Each
Letter of Credit Account shall be established in the name of the
Company but shall be under the sole dominion and control of the Agent,
for the benefit of the Lenders, and the Company shall have no interest
therein. All funds deposited into the Letter of Credit Accounts from
time to time shall be invested by the Agent at its discretion in
certificates of deposit of First Chicago having a maturity not
exceeding 30 days, and all amounts earned thereon shall also be held
in the Letter of Credit Account to be disbursed in accordance with
Section 10.5(b). In addition to the foregoing, the Company hereby
grants to the Agent, for the benefit of the Lenders, a properly
perfected security interest in and to each Letter of Credit Account
and any funds that may hereafter be on deposit in such account and the
proceeds thereof.
(b) Upon the Agent's receipt of any Collateral proceeds
to be applied to the undrawn face amount of any particular Approved
GNMA Letter of Credit pursuant to Section 10.4, such proceeds shall be
deposited by the Agent into the Letter of
-113-
120
Credit Account applicable to that particular Approved GNMA Letter of
Credit. Such funds shall be promptly disbursed from the applicable
Letter of Credit Account to reimburse the applicable Issuing Bank for
drafts drawn from time to time under the applicable Approved GNMA
Letter of Credit. If an Approved GNMA Letter of Credit is drawn upon
and the funds held in the Letter of Credit Account applicable to that
Approved GNMA Letter of Credit are insufficient to reimburse the
Issuing Bank in full for all Approved GNMA Letter of Credit
Obligations applicable thereto, such unreimbursed obligations shall,
for purposes of Section 10.4, thereafter be considered unpaid Loan
principal due and owing to the Issuing Lender. If (i) an Approved
GNMA Letter of Credit is fully drawn upon and all Approved GNMA Letter
of Credit Obligations relating thereto are paid in full or (ii) an
Approved GNMA Letter of Credit expires or is otherwise terminated (and
thus no further Approved GNMA Letter of Credit Obligations exist with
respect to such Approved GNMA Letter of Credit), then any funds then
held in the Letter of Credit Account relating to such Approved GNMA
Letter of Credit shall be considered Collateral proceeds which shall
again be distributed to the Agent to be disbursed in accordance with
Section 10.4.
ARTICLE XI
BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS
11.1 Successors and Assigns.
The terms and provisions of the Credit Documents shall be
binding upon and inure to the benefit of the Company, the Borrowing
Subsidiaries and the Lenders and their respective successors and assigns,
except that neither the Company nor any Borrowing Subsidiary shall have the
right to assign its rights or obligations under the Credit Documents without
the consent of all the Lenders and any assignment by any Lender must be made in
compliance with Section 11.3. The Agent may treat the payee of any Note as the
owner thereof for all purposes hereof unless and until such payee complies with
Section 11.3 in the case of an assignment thereof or, in the case of any other
transfer, a written notice of the transfer is filed with the Agent. Any
assignee or transferee of a Note agrees by acceptance thereof to be bound by
all the terms and provisions of the Credit Documents. Any request, authority
or consent of any person, who at the time of making such request or giving such
authority or consent is the holder of any Note, shall be conclusive and binding
on any subsequent holder, transferee or assignee of such Note or of any Note or
Notes issued in exchange therefor.
-114-
121
11.2 Participations.
(a) Permitted Participants; Effect. Any Lender may, in
the ordinary course of its business and in accordance with applicable
law, at any time sell to one or more banks or other entities ("
Participants") participating interests in any Loan owing to such
Lender, any Note held by such Lender, any Commitment of such Lender or
any other interest of such Lender under the Credit Documents. In the
event of any such sale by a Lender of participating interests to a
Participant, such Lender's obligations under the Credit Documents
shall remain unchanged, such Lender shall remain solely responsible to
the other parties hereto for the performance of such obligations, such
Lender shall remain the holder of any such Note for all purposes under
the Credit Documents, all amounts payable by the Company or any
Borrowing Subsidiary under this Agreement shall be determined as if
such Lender had not sold such participating interests, and the
Company, each Borrowing Subsidiary and the Agent shall continue to
deal solely and directly with such Lender in connection with such
Lender's rights and obligations under the Credit Documents.
(b) Voting Rights. Except as otherwise expressly
provided in the Credit Documents, each Lender shall retain the sole
right to approve, without the consent of any Participant, any
amendment, modification or waiver of any provision of the Credit
Documents other than any amendment, modification or waiver with
respect to any Loan or Commitment in which such Participant has an
interest which (i) forgives principal, interest or Fees or reduces the
interest rate or Fees payable with respect to any such Loan or
Commitment, (ii) postpones any date fixed for any regularly-scheduled
payment of principal of, or interest on, any such Loan or Fees on any
such Commitment, (iii) releases Collateral beyond the releases
expressly provided for herein, or (iv) extends the Termination Date.
(c) Benefit of Set-Off. The Company and the Borrowing
Subsidiaries agree that each Participant shall be deemed to have the
right of set-off provided pursuant to Section 12.10(a) in respect of
its participating interest in amounts owing under the Credit Documents
to the same extent as if the amount of its participating interest were
owing directly to it as a Lender under the Credit Documents, provided
that each Lender shall retain the right of set-off provided in Section
12.10(a) with respect to the amount of participating interests sold to
each Participant. The Lenders agree to share with each Participant,
and each Participant, by exercising the right of set-off provided in
Section 12.10(a), agrees to share with each Lender, any amount
received pursuant to the exercise of its right of set-off, such
amounts to be shared in accordance with Section 12.10(b) as
-115-
122
if each Participant were a Lender. Neither the Company nor any
Borrowing Subsidiary is a party to the agreement among the Lenders and
Participants set forth in the immediately preceding sentence, and such
sentence may be amended without the consent of either the Company or
any Borrowing Subsidiary.
11.3 Assignments.
(a) Permitted Assignments. Any Lender may, with the
prior written consent of Agent (which consent shall not be
unreasonably withheld or delayed), in the ordinary course of its
business and in accordance with applicable law, at any time assign to
one or more banks or other entities (" Purchasers") all or any part of
its rights and obligations under the Credit Documents, provided that,
unless an Event of Default has occurred and is then continuing, the
prior written consent of the Company to the identity of any such
Purchaser shall be required, and the Company agrees that such consent
shall not be unreasonably withheld or delayed, except that no consent
of the Agent or the Company shall ever be required for (i) any
assignment to a Person directly or indirectly controlling, controlled
by or under direct or indirect common control with the assigning
Lender or (ii) the pledge or assignment by a Lender of such Lender's
Note and other rights under the Loan Documents to any Federal Reserve
Bank in accordance with applicable law. Notwithstanding the
foregoing, no assignment of Loans or Commitments which requires the
consent of the Agent or the Company may be made if the assignment
would result in either the assigning Lender or the Purchaser (which
may be an existing Lender) holding a Commitment of less than
$10,000,000; provided, however, that if (due to reductions in the
Aggregate Commitment) a Lender's Commitment is less than $10,000,000,
such Lender may assign all (but not less than all) of its Commitment
in accordance with the terms of this Section notwithstanding the fact
that such Commitment is less than $10,000,000.
(b) Effect; Effective Date. Upon delivery to the Agent
of a New/Modified Commitment Supplement in the form of Exhibit H
hereto executed by the assigning Lender and the Purchaser and payment
to the Agent of an assignment fee of $3,500, such assignment shall
become effective on the effective date specified in such notice of
assignment. On and after the effective date of such assignment, such
Purchaser shall for all purposes be a Lender party to this Agreement
and any other Credit Document executed by the Lenders and shall have
all the rights and obligations of a Lender under the Credit Documents,
to the same extent as if it were an original party hereto, and no
further consent or action by the Company, the Lenders or the Agent
shall be required to release the transferor Lender with respect to the
percentage of the Commitments and Loans assigned to such Purchaser.
Upon the consummation of any assignment to a Purchaser pursuant to
this Section, the transferor Lender, the Agent, the Company and the
Borrowing Subsidiaries shall make appropriate arrangements so that
replacement Notes are issued to such transferor Lender and new Notes
or, as appropriate, replacement Notes, are issued to such Purchaser,
in each case in principal amounts reflecting their respective
Commitments, as adjusted pursuant to such assignment.
-116-
123
11.4 Dissemination of Information.
The Company and the Borrowing Subsidiaries authorize each Lender to
disclose to any Participant or any other Person acquiring an interest in the
Credit Documents by operation of law (each a "Transferee") and any prospective
Transferee any and all information in such Lender's possession concerning the
creditworthiness of the Company and its Subsidiaries, provided that the
transferor shall obtain from any such Transferee or prospective Transferee,
prior to disclosing any such information, a confidentiality agreement executed
by the Transferee or prospective Transferee agreeing to be bound by any
confidentiality requirements with respect to such information which are imposed
upon the Lenders under the terms of the Credit Documents.
11.5 Tax Treatment.
If any interest in any Credit Document is transferred to any Transferee
which is organized under the laws of any jurisdiction other than the United
States or any State thereof, the transferor Lender shall cause such Transferee,
concurrently with the effectiveness of such transfer, to comply with all
applicable provisions of the Code with respect to withholding and other tax
matters.
ARTICLE XII
MISCELLANEOUS
12.1 Immediately Available Funds.
All payments and other transfers of funds under this Agreement shall be
made in funds immediately available at the place of payment unless the
recipient thereof shall otherwise agree.
12.2 Notices.
Except where instructions or notices are expressly authorized elsewhere
in this Agreement to be given by telephone or by other means of transmission,
all instructions, notices and other communications to be given to any party
hereto shall be in writing and shall be personally delivered or sent by
certified mail, postage prepaid, private delivery service or by facsimile, and
shall be deemed to be given for purposes of this Agreement on the day (or at
the time of day, if applicable) when actually received by the intended party at
its address or facsimile or telephone number as set forth below (or as such
party may specify to the other parties in writing). Any requirement that
notice be given to any person under this Agreement shall be deemed to require
notice to the Agent, the Company and each Lender, unless
116.1
124
otherwise expressly provided herein. Whenever the giving of notice by
telephone is permitted by this Agreement, such notice shall be confirmed in
writing within three days.
The addresses for notices to the parties are as set forth below their
signatures on the signature pages hereto or on any assignment.
12.3 Survival and Termination of Agreement.
All covenants, agreements, representations and warranties made herein
and in the certificates and other documents delivered pursuant hereto shall
survive the funding of the Notes and shall continue in full force and effect to
the Termination Date or so long as any amount payable to the Lenders in
connection with this Agreement is unpaid, whichever is later, at which time this
Agreement shall terminate, it being expressly understood that the obligations of
the Company under Sections 3.1, 3.3 and 7.8 shall survive any termination of
this Agreement. Whenever in this Agreement any party is referred to, such
reference shall be deemed to include the successors and assigns of such party,
but no assignment or transfer (by operation of law or otherwise) of this
Agreement by the Company or any Borrowing Subsidiary or any of their rights or
duties hereunder may be made without the prior written consent of all of the
Lenders; and all covenants, promises and agreements by or on behalf of the
Company or any Borrowing Subsidiary which are contained in this Agreement shall
inure to the benefit of the successors and assigns of the Lenders.
12.4 Fees and Expenses of the Lenders.
The Company will pay (a) all reasonable out-of-pocket costs and
expenses incurred by the Agent or by the Collateral Agent (including the fees,
out-of-pocket expenses and other reasonable expenses of counsel to the Agent or
the Collateral Agent) in connection with the preparation, execution and delivery
of this Agreement, the Notes, the Security Agreement and any other agreements or
documents referred to herein or therein and any amendments thereto, and (b) all
reasonable out-of-pocket costs and expenses incurred by the Agent, the
Collateral Agent and the Lenders (including the fees, out-of-pocket expenses and
other reasonable expenses of counsel to the Lenders) in connection with the
enforcement and protection of the rights of the Lenders under this Agreement,
the Notes, the Security Agreement or any other agreement or document referred to
herein or therein.
116.2
125
12.5 Applicable Law.
This Agreement shall be construed in accordance with and governed by
the law of the State of Illinois.
12.6 Modification of Agreement.
Except for certain changes in a Lender's Commitment or admission of a
new Lender which (pursuant to Section 2.1) do not require any consents or
approvals from the other Lenders but which require a New/Modified Commitment
Supplement executed by the Agent, the Company, the Borrowing Subsidiaries and
the Lender(s) being added or modifying their Commitment, no provisions of this
Agreement may be amended or waived unless such amendment or waiver is in writing
and is signed by the Company, and the Agent if the rights or duties of the Agent
are affected thereby, and
(1) each Lender if such amendment or waiver
(i) reduces or forgives any principal of any unpaid Loan or any
interest thereon or any Fees due to such Lender hereunder; or
(ii) postpones the date fixed for any payment of principal of or
interest on any unpaid Loan or any Fees payable to such Lenders; or
(iii) changes the amount of payment of principal of or interest
on any unpaid Loan or any Fees payable to the Lenders hereunder; or
(iv) changes or waives any of the conditions precedent to the
initial Advance hereunder or any subsequent Advance; or
(v) changes the amount of any such Lender's Commitment, except as
expressly provided for herein; or
(vi) would amend or waive the method of calculating the Borrowing
Base; or
(vii) would amend or waive the provisions of Section 2.14; or
(viii) extends the Termination Date; or
(ix) releases any Collateral beyond the releases expressly
provided for herein or in the Security Agreement; or
116.3
126
(x) changes the definitions of Positive Security
Event, Negative Security Event or Positive Security Conditions
or waives compliance with any Positive Security Condition; or
(xi) changes or waives any restriction on the
Company's or any Borrowing Subsidiary's ability to assign its
rights or obligations under any of the Credit Documents; or
(xii) changes or waives any funding requirement,
including, without limitation, any Lending Sublimits; or
(xiii) changes or waives any yield protection; or
(xiv) changes or waives any provision herein regarding
the indemnification of the Agent, the Collateral Agent or such
Lender; or
(xv) changes the definition of Required Lenders or
modifies any requirement for consent by all of the Lenders; or
(xvi) changes or waives any provision herein regarding
the allocation among the Lenders of any payments or proceeds
received by the Agent hereunder; or
(2) the Required Lenders in the case of all other waivers
or amendments.
12.7 Non-Waiver of Rights by the Lenders.
Neither any failure nor any delay on the part of the Agent or
the Lenders in exercising any right, power or privilege hereunder or under the
Security Agreement shall operate as a waiver thereof, nor shall a single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege.
12.8 Dealings with the Company and its Affiliates.
The Lenders and their Affiliates may accept deposits from,
extend credit to and generally engage in any kind of banking, trust or other
business with the Company and any of its Affiliates regardless of the capacity
of the Lenders hereunder.
12.9 Changes in GAAP.
The parties agree that if there are any changes in GAAP in the
future which result in material changes to the presentation of the Company's
financial condition in accordance with GAAP in such a way as to alter the
material intent of this
116.4
127
Agreement, then the parties will negotiate in good faith to attempt to agree on
such modifications to this Agreement as may be necessary to preserve the
original intent of this Agreement in light of such revised GAAP rules, provided
that unless and until a written agreement is entered into by all parties
hereto, no changes to this Agreement shall be effective and all calculations
required to be made in accordance with GAAP hereunder shall continue to be made
as if GAAP had not changed.
12.10 Set-off.
(a) If an Event of Default shall have occurred, each Lender shall
have the right, at any time and from time to time without notice to the
Company or any Borrowing Subsidiary, any such notice being hereby expressly
waived, 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 such
Lender to or for the credit or the account of the Company or any Borrowing
Subsidiary against and on account of all outstanding Credit Indebtedness
and all Credit Indebtedness which from time to time may become due
hereunder and all other obligations and liabilities of the Company or any
Borrowing Subsidiary under this Agreement, regardless of the adequacy of
any Collateral and irrespective of whether or not such Lender shall have
made any demand hereunder and whether or not said obligations and
liabilities shall have matured.
(b) Each Lender agrees that if it shall, by exercising any right of
set-off or counterclaim or otherwise, receive payment of a proportion of
the aggregate amount of principal, interest or Fees due with respect to
this Agreement and the Notes held by it which is greater than the
proportion received by any other Lender in respect of the aggregate amount
of principal, interest or Fees due with respect to this Agreement and the
Notes held by such other Lender, the Lender receiving such proportionately
greater payment shall purchase such participations in the Notes held by the
other Lenders and such other adjustments shall be made, as may be required
so that all such payments of principal, interest or Fees shall be shared by
the Lenders hereunder pro rata according to their respective shares of the
Credit Indebtedness. Each Lender agrees to exercise any and all rights of
set-off, counterclaim or bankers' lien relating to the Credit Indebtedness
first fully against the Credit Indebtedness and only then to any other Debt
of the Company or any Borrowing Subsidiary to such Lender. Neither the
Company nor any Borrowing Subsidiary is a party to the agreement among the
Lenders set forth in this Section 12.10 (b), and such Section may be
amended without the consent of either the Company or any Borrowing
Subsidiary.
116.5
128
(c) The Company and the Borrowing Subsidiaries agree that funds
received and held by the Company or any Borrowing Subsidiary as
custodian for FNMA, GNMA or other mortgage pools which are deposited into
accounts with any Lender shall be clearly identified as custodial
accounts, and each Lender agrees that each provision of the foregoing
paragraphs of this Section 12.10 shall not apply to such custodial
accounts. Neither the Company nor any Borrowing Subsidiary shall deposit
any of its general funds in any custodial accounts or otherwise commingle
funds in any custodial accounts.
12.11 Counterparts.
This Agreement may be executed in counterparts which, taken
together, shall constitute a single document.
12.12 Severability.
In case any one or more of the provisions contained in this Agreement
should be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein shall
not in any way be affected or impaired thereby.
12.13 Headings.
Section headings in the Credit Documents are for convenience of
reference only and shall not govern the interpretation of any of the provisions
of the Credit Documents.
12.14 Entire Agreement.
The Credit Documents embody the entire agreement and understanding
among the Company, the Borrowing Subsidiaries, the Agent and the Lenders and
supersede all prior agreements and understandings among the Company, the
Borrowing Subsidiaries, the Agent and the Lenders relating to the subject
matter thereof.
12.15 Limitation on Recourse to Borrowing Subsidiaries.
Each Borrowing Subsidiary and the Company shall be jointly and severally
liable for the payment of the Obligations; provided, however, that recourse to
any particular Borrowing Subsidiary hereunder shall be limited to (i) such
Borrowing Subsidiary's interest in the Collateral pledged by such Borrowing
Subsidiary to the Agent or the Collateral Agent under the Credit Documents and
the proceeds thereof, plus (ii) an amount equal to the capital investment by
the Company in such Borrowing Subsidiary, plus (iii) an amount equal to the
total of all Debt owed by such Borrowing Subsidiary to the Company.
116.6
129
12.16 Consent of Jurisdiction.
THE COMPANY AND EACH BORROWING SUBSIDIARY EACH HEREBY IRREVOCABLY
SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR
ILLINOIS STATE COURT SITTING IN CHICAGO IN ANY ACTION OR PROCEEDING ARISING OUT
OF OR RELATING TO ANY CREDIT DOCUMENTS AND THE COMPANY AND EACH BORROWING
SUBSIDIARY HEREBY EACH IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH
ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND
IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE
OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH
COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE
AGENT OR ANY LENDER TO BRING PROCEEDINGS AGAINST THE COMPANY OR ANY BORROWING
SUBSIDIARY IN THE COURTS OF ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY
THE COMPANY OR ANY BORROWING SUBSIDIARY AGAINST THE AGENT OR ANY LENDER OR ANY
AFFILIATE OF THE AGENT OR ANY LENDER INVOLVING, DIRECTLY OR INDIRECTLY, ANY
MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY CREDIT
DOCUMENT SHALL BE BROUGHT ONLY IN A COURT IN CHICAGO, ILLINOIS.
116.7
130
12.17 Waiver of Jury Trial.
THE COMPANY, EACH BORROWING SUBSIDIARY, THE AGENT AND EACH LENDER
HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR
INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY
WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY CREDIT DOCUMENT OR THE
RELATIONSHIP ESTABLISHED THEREUNDER.
IN WITNESS WHEREOF, the Company, the Borrowing Subsidiaries and the
Lenders have caused this Agreement to be duly executed by their duly authorized
officers, all as of the day and year first above written:
SOURCE ONE MORTGAGE SERVICES CORPORATION
By: Xxxxxxx X. Xxxxxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Executive Vice President
and Chief Financial Officer
Address for Notices:
00000 Xxxxxxxxxx Xxxx
Xxxxxxxxxx Xxxxx, XX 00000-0000
Attn: Chief Financial Officer
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
and
Attn: Vice President/Treasury
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
116.8
131
THE MORTGAGE AUTHORITY, INC.
By: Xxxxx X. Xxxxx
--------------------------------
Name: Xxxxx X. Xxxxx
Title: Vice President/Treasury
Address for Notices:
00000 Xxxxxxxxxx Xxxx
Xxxxxxxxxx Xxxxx, XX 00000-0000
Attn: Controller
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
CENTRAL PACIFIC MORTGAGE COMPANY
By: Xxxx X. Xxxxxxx
--------------------------------
Name: Xxxx X. Xxxxxxx
Title: Executive Vice President
Address for Notices:
0000 Xxxxxxx Xxxxxxxxx
Xxxxxx Xxxxxxx, XX 00000
Attn: Chief Financial Officer
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
116.9
132
THE FIRST NATIONAL BANK OF CHICAGO,
as Agent
By: Xxxxxxxx X. Xxxxxxxxx
----------------------------
Name: Xxxxxxxx X. Xxxxxxxxx
Title: Vice President
Address for Notices Regarding
Fundings:
Xxx Xxxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx Xxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
Address for Other Notices:
Xxx Xxxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxx, III
First Vice President
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
THE FIRST NATIONAl BANK OF CHICAGO
By: Xxxxxxxx X. Xxxxxxxxx
----------------------------
Name: Xxxxxxxx X. Xxxxxxxxx
Title: Vice President
Address for Notices:
Xxx Xxxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxx, III
First Vice President
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
116.10
133
BANK OF AMERICA NT & SA
By: Xxxxxx X. Xxxxxxx
--------------------------------
Xxxxxx X. Xxxxxxx
Vice President
Address for Notices:
00000 Xxxxx xx xx Xxxxx, Xxxxx 000
Xxxxxx Xxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxxx,
Vice President
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
THE BANK OF NEW YORK
By: Xxxxxxxx X. Dominus
--------------------------------
Xxxxxxxx X. Dominus
Vice President
Address for Notices:
Xxx Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxxx X. Dominus,
Vice President
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
116.11
134
BANKERS TRUST COMPANY
By: Xxxx X'Xxxxxx
----------------------------------
Xxxx X'Xxxxxx
Vice President
Address for Notices:
000 Xxxxxxx Xxxxxx
25th Floor, Mail Stop 0000
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx X'Xxxxxx,
Vice President
Telephone No.: (000) 000-0000
Facsimile NO.: (000) 000-0000
BANQUE PARIBAS
By: Xxxxx X. Xxxxxxx
----------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Group Vice President
By: Xxxxxx X. Xxxxx
----------------------------------
Name: Xxxxxx X. Xxxxx
Title: Assistant Vice President
Address for Notices:
The Equitable Tower
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx Xxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
116.12
135
CIBC, INC.
By: Xxxxxx X. Xxxxxxx
----------------------------------
Xxxxxx X. Xxxxxxx
Director
CIBC Wood Gundy Securities
Corp., As Agent for CIBC, Inc.
Address for Notices:
000 Xxxxxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxxxx
Director
CIBC Wood Gundy Securities
Corp., As Agent for
CIBC, Inc.
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
COMERICA BANK
By: Xxx X. Xxxxx
----------------------------------
Xxx X. Xxxxx
Title:
---------------------------
Address for Notices:
One Detroit Center
000 Xxxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Attn: Xxx X. Xxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
116.13
136
CREDIT LYONNAIS NEW YORK BRANCH
By: Xxxxxx x'Xxxxxx
---------------------------
Xxxxxx x'Xxxxxx
Senior Vice President
Address for Notices:
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxxx Xxxxx Xxxxxx,
Asst. Vice President
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
FLEET BANK N.A.
By: Xxxxxx Xxxxxxx
---------------------------
Xxxxxx Xxxxxxx
Vice President
Address for Notices:
000 Xxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx Xxxxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
GUARANTY FEDERAL BANK, F.S.B.
By: Xxxxxxx Xxxxxxx
---------------------------
Xxxxxxx Xxxxxxx
Vice President
Address for Notices:
0000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxx 00000
Attn: Xxxx Xxxxxx,
Banking Officer
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
116.14
137
THE MITSUBISHI TRUST AND BANKING
CORPORATION, LOS ANGELES AGENCY
By: Yasushi Satomi
--------------------------------
Name: YASUSHI SATOMI
--------------------------
Title: Senior Vice President
--------------------------
Address for Notices:
000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxx 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxx X. Xxxxx,
Vice President for Credit
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
and
Attn: Xxx Xxxxxxxxxx
Operations
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
NATIONAL CITY BANK OF KENTUCKY
By: Xxxx X. Xxxxxxxxx
--------------------------------
Xxxx X. Xxxxxxxxx
Vice President
Address for Notices:
000 X. Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxx X. Xxxxxxxxx
Vice President
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
116.15
138
PNC BANK, KENTUCKY, INC.
By: Xxxxxx Xxxxxxx
------------------------------------
Xxxxxx Xxxxxxx
Title: Vice President
Address for Notices:
000 Xxxx Xxxxxxxxx, Xxxxx 0000
Xxxxxxxxxx, XX 00000
Attn: Xxxxx Xxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
XXXXX FARGO BANK, NA
By: Xxxxxxx X. XxXxxxxxx
------------------------------------
Name: Xxxxxxx X. XxXxxxxxx
Title: Senior Vice President
By: Xxxxxxx Xxxxxxxx
------------------------------------
Name: Xxxxxxx Xxxxxxxx
Title: Assistant Vice President
Address for Notices:
000 Xxxxxxxx, 00 Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxx XxXxxxxxx
Senior Vice President
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
and
Attn: XxXxxx Xxxxxx, Vice President
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
116.16
000
XXXXXXXXXXXX XXXXXXXXXX XXXXXXXXXXXX,
XXX XXXX BRANCH
By:________________________________
Name:___________________________
Title:__________________________
By:________________________________
Name:___________________________
Title:__________________________
Address for Notices:
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Attn: Xxx Xxxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
with a copy to:
000 Xxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attn: Xxxxx Xxxxxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
-117-
140
CORESTATES BANK, N.A.
By:_________________________________
Name:____________________________
Title:___________________________
Address for Notices:
0000 Xxxxxxxx Xxxxxx, XX 0-0-00-0
Xxxxxxxxxxxx, XX 00000-0000
Attn: Xxxx X. Xxxxx
Vice President
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
-118-
141
SCHEDULE 1
APPLICABLE MARGIN
Ratings: S&P and Xxxxx'x At Least A- or AT LEAST BBB+ At Least BBB At Least BBB- Below either
A3* OR BAA1* or Baa2* and Baa3 BBB- or Baa3
----------------------------------------------------------------------------------------------------------------------------
Applicable Margin 0.35% 0.40% 0.45% 0.50% 0.75%
The Applicable Margin for each Rate Option shall be the applicable percentage
per annum set forth above, which is based on the Company's long term unsecured
debt ratings, changing as and when such ratings change for Eurodollar Interest
Periods or Discount Periods commencing after the date of such change. Each
rating classification sets forth the S&P rating and the Xxxxx'x rating,
respectively. For the three columns noted with an asterisk (*), if on any day
the ratings of S&P and Xxxxx'x are not both at the required level, the higher
rating will be the applicable rating for purposes of determining the
classification unless the lower rating is more than one rating category below
the minimum rating for such rating agency under such column, in which event the
higher rating will be disregarded, the lower rating will be deemed to have been
one rating category higher than the actual reported lower rating, and the
column applicable using such deemed lower rating shall apply. If for any
reason the Company's unsecured long term debt is not rated by both S&P and
Xxxxx'x, the column headed "Below either BBB- or Baa3" shall be used.
-119-
142
SCHEDULE 2
FACILITY FEE RATE
Ratings: S&P and Xxxxx'x At Least A- or AT LEAST BBB+ At Least BBB At Least BBB- Below either
A3* OR BAA1* or Baa2* and Baa3 BBB- or Baa3
----------------------------------------------------------------------------------------------------------------------------
Facility Fee Rate .075% .10% .125% .15% .20%
The Facility Fee Rate for this Facility shall be the applicable percentage per
annum set forth above, which is based on the Company's long term unsecured debt
ratings, changing as and when such ratings change. Each rating classification
sets forth the S&P rating and the Xxxxx'x rating, respectively. For the three
columns noted with an asterisk (*), if on any day the ratings of S&P and
Xxxxx'x are not both at the required level, the higher rating will be the
applicable rating for purposes of determining the classification unless the
lower rating is more than one rating category below the minimum rating for such
rating agency under such column, in which event the higher rating will be
disregarded, the lower rating will be deemed to have been one rating category
higher than the actual reported lower rating, and another column will be
applicable using such deemed lower rating. If for any reason the Company's
unsecured long term debt is not rated by both S&P and Xxxxx'x, the column
headed "Below either BBB- or Baa3" shall be used.
-120-
143
EXHIBIT A
LIST OF APPROVED INVESTORS
-121-
144
EXHIBIT B
FORM OF BORROWING BASE CERTIFICATE
Dated as of: _______________
Reference is made to that certain Third Amended and Restated Revolving
Credit Agreement among the Company, the Borrowing Subsidiaries, The First
National Bank of Chicago, individually and as administrative agent, and the
lenders named therein, dated as of July __, 1997 (the "Credit Agreement").
Capitalized terms not otherwise defined herein are used with the same meanings
as in the Credit Agreement.
1. BORROWING BASE:
--------------
Eligible Mortgage Loans
(Mortgage Collateral Value):
Eligible Delivered Mortgages $______________
Eligible AP Mortgages $______________
Eligible Pledged Securities
(MBS Value) $______________
Total Pledged Items $______________
Percentage Factor 98%
(A) BORROWING BASE
FROM PLEDGED ITEMS $______________
Eligible Repurchased Agency
Loans and Receivables $______________
Percentage Factor 90%
(B) BORROWING BASE
FROM REPURCHASED AGENCY LOANS
AND RECEIVABLES $______________
Eligible Servicing Sale Receivables $______________
Percentage Factor 75%
(C) BORROWING BASE
-122-
145
FROM ELIGIBLE SERVICING SALE RECEIVABLES $______________
(D) BALANCE IN SETTLEMENT ACCOUNT $______________
(E) CASH AND CASH EQUIVALENTS $______________
SUM OF (A) - (E) ABOVE $______________
Reconciling Items:
Timing Difference $______________
Loan Detail Difference $______________
BORROWING BASE $______________
Credit Requirement:
Facility Advances $______________
Approved Secured Rate Hedging Obligations $______________
Outstanding CPNs $______________
Approved GNMA Letter of Credit Obligations $______________
SUM OF CREDIT REQUIREMENT $______________
EXCESS OF AGGREGATE BORROWING
BASE OVER CREDIT REQUIREMENT $______________
2. CERTIFICATION: To the best of the knowledge and belief (after
reasonable investigation) of the officer of the Company executing this
Certificate, the Company hereby certifies to The First National Bank
of Chicago for the benefit of lenders under the Credit Agreement that:
(a) the above information is, and the computations are accurate and
complete and in accordance with the requirements of the Credit
Agreement, and (b) as of the date hereof, (1) all representations and
warranties of the Company set forth in the Credit Agreement are
accurate and complete, (2) there does not exist an Event of Default
under the Credit Agreement, and (3) the Company has given written
notice to The First National Bank of Chicago of any Default which now
exists under the Credit Agreement.
-123-
146
IN WITNESS WHEREOF, the Company has caused this Borrowing Base
Certificate to be executed and delivered by its duly authorized
officer this ___ day of __________, 199_.
SOURCE ONE MORTGAGE SERVICES
CORPORATION
By:_____________________________________
Name:___________________________________
Title:__________________________________
-124-
147
EXHIBIT C
COMMITMENTS AND COMMITMENT PERCENTAGES
Commitment Commitment Adj. Commit.
Bank Name Amount Percentage Percentage
---------------------------------------------------------------------------------------------------------
First Chicago SWING $20,000,000 4.0000000000%
---------------------------------------------------------------------------------------------------------
1. First Chicago $20,000,000 4.0000000000% 4.1666666667%
---------------------------------------------------------------------------------------------------------
2. Bank of America $36,000,000 7.2000000000% 7.5000000000%
---------------------------------------------------------------------------------------------------------
3. Bank of New York $36,000,000 7.2000000000% 7.5000000000%
---------------------------------------------------------------------------------------------------------
4. Comerica $36,000,000 7.2000000000% 7.5000000000%
---------------------------------------------------------------------------------------------------------
5. Credit Lyonnais $36,000,000 7.2000000000% 7.5000000000%
---------------------------------------------------------------------------------------------------------
6. Guaranty Federal $36,000,000 7.2000000000% 7.5000000000%
---------------------------------------------------------------------------------------------------------
7. PNC $36,000,000 7.2000000000% 7.5000000000%
---------------------------------------------------------------------------------------------------------
8. Westdeutsche $36,000,000 7.2000000000% 7.5000000000%
---------------------------------------------------------------------------------------------------------
9. National City $35,000,000 7.0000000000% 7.2916666667%
---------------------------------------------------------------------------------------------------------
10. Banque Paribas $27,000,000 5.4000000000% 5.0000000000%
---------------------------------------------------------------------------------------------------------
11. CIBC $27,000,000 5.4000000000% 5.0000000000%
---------------------------------------------------------------------------------------------------------
12. Fleet Bank $27,000,000 5.4000000000% 5.0000000000%
---------------------------------------------------------------------------------------------------------
13. Bankers Trust $24,000,000 4.8000000000% 5.0000000000%
---------------------------------------------------------------------------------------------------------
14. CoreStates $24,000,000 4.8000000000% 5.0000000000%
---------------------------------------------------------------------------------------------------------
15. Mitsubishi Trust $22,000,000 4.4000000000% 4.5833333333%
---------------------------------------------------------------------------------------------------------
16. Xxxxx Fargo $22,000,000 4.4000000000% 4.5833333333%
---------------------------------------------------------------------------------------------------------
Total $500,000,000 100.000000% 100.000000%
---------------------------------------------------------------------------------------------------------
-125-
148
EXHIBIT D
SECURITY AGREEMENT
-126-
149
EXHIBIT E-1
FORM OF AMENDED AND RESTATED NOTE
(FOR LOANS OTHER THAN DISCOUNT LOANS AND BID LOANS)
Date of Note: July __, 1997
FOR VALUE RECEIVED, the undersigned (the "Makers") do hereby jointly
and severally covenant and promise to pay to the order of ____________________
(the "Lender") or its successors or assigns (collectively, the "Payee"), on the
Termination Date, the aggregate unpaid principal amount of all Loans made by
Lender pursuant to the Credit Agreement other than Discount Loans and Bid Loans
held from time to time by the Lender (the "Principal Amount") and to pay
interest on the unpaid Principal Amount at the applicable interest rate or
rates per annum determined in accordance with the terms of the Credit
Agreement. All payments of principal of and interest on this Note shall be
made in legal tender of the United States. All payments of principal of and
interest on this Note shall be made in immediately available funds at the
principal office of The First National Bank of Chicago (the "Agent"), Xxx Xxxxx
Xxxxxxxx Xxxxx, Xxxxxxx, Xxxxxxxx.
Interest on this Note shall be computed on the basis of actual number
of days elapsed in a 360 day year.
This Note is one of the Notes referred to in the Third Amended and
Restated Revolving Credit Agreement, bearing even date herewith, among the
Company, the Borrowing Subsidiaries, the Lender and the other lenders listed on
the signature pages thereof and the Agent (as the same may be amended and
supplemented from time to time, the "Credit Agreement") and is entitled to the
benefits thereof. Reference is made to the Credit Agreement for (i) provisions
for the prepayment hereof, (ii) acceleration of the maturity hereof, (iii) the
obligation of the Makers to pay certain expenses (including attorney's fees)
incurred in the enforcement thereof and hereof and (iv) a description of the
security for this Note. Capitalized terms used herein without definition have
the respective meanings ascribed to them in the Credit Agreement.
All Loans made by the Lender and all repayments of the principal
thereof shall be recorded by the Lender in its books and records; provided,
however, that the Lender's failure to so record or any error in such recording
shall not affect the Makers' liability hereunder or under the Credit Agreement.
Upon any transfer hereof, the Lender shall endorse on the schedule
-127-
150
attached hereto or on a schedule accompanying the transfer of this Note, the
unpaid principal balance of this Note.
If an Event of Default shall occur under the Credit Agreement, the
unpaid Principal Amount hereunder shall become due and payable (i)
automatically in the case of any of the Events of Default specified in
paragraph (k) of Section 10.1 of the Credit Agreement, or (ii) at the option of
the Required Lenders with respect to all other Events of Default and shall bear
interest at the rate provided for in Section 2.7 of the Credit Agreement from
and after such date. The foregoing provision shall not be construed as a
waiver by the Payee of its right to pursue any other remedies available to it
under this Note, the Credit Agreement or any other instrument evidencing or
securing the Principal Amount.
This Note may not be changed orally but only by an agreement in
writing, signed by the party against whom enforcement of any waiver, change,
modification or discharge is sought. Written notices required to be given
hereunder shall be given as provided in the Credit Agreement to the Payee and
Makers at the respective addresses specified or provided for therein.
Should the indebtedness evidenced by this Note or any part thereof be
collected at law or in equity, or in bankruptcy, receivership or any other
court proceeding (whether at the trial or appellate level), or should this Note
be placed in the hands of attorneys for collection upon default, the Makers
agree to pay, in addition to the principal, interest and other sums due and
payable hereon, all costs of collecting or attempting to collect on this Note,
including reasonable attorneys' fees and expenses.
Notwithstanding the foregoing, recourse to any particular Borrowing
Subsidiary hereunder shall be limited to (i) such Borrowing Subsidiary's
interest in the Collateral pledged by such Borrowing Subsidiary to the Agent or
the Collateral Agent under the Credit Documents and the proceeds thereof plus
(ii) an amount equal to the capital investment by the Company in such Borrowing
Subsidiary, plus (iii) an amount equal to the total of all Debt owed by such
Borrowing Subsidiary to the Company.
Anything herein to the contrary notwithstanding, the obligations of
the Makers under this Note shall be subject to the limitation that payments of
interest shall not be required to the extent that receipt of any such payment
by the Payee would be contrary to provisions of law applicable to Payee which
limit the maximum rate of interest that may be charged or collected by Payee.
The undersigned and all endorsers, guarantors and sureties of this
Note and all other persons liable or to become liable on
-128-
151
this Note severally waive presentment for payment, demand, notice of demand and
of dishonor and nonpayment of this Note, notice of intention to accelerate the
maturity of this Note, notice of acceleration of the maturity of this Note,
protest and notice of protest, diligence in collecting, and the bringing of
suit against any other party, and agree to all renewals, extensions,
modifications, partial payments, releases or substitutions of security, in
whole or in part, with or without notice, before or after maturity.
Notwithstanding the foregoing paragraphs and all other provisions of
this Note and the Credit Agreement, none of the terms and provisions of this
Note or the Credit Agreement shall ever be construed to create a contract to
pay to the Payee, for the use, forbearance or detention of money, interest in
excess of the maximum amount of interest permitted to be charged by the Payee
to the undersigned under applicable state or federal law from time to time in
effect, and the undersigned shall never be required to pay interest in excess
of such maximum amount. If, for any reason interest is paid hereon in excess
of such maximum amount, then promptly upon any determination that such excess
has been paid the Payee will, at its option, either refund such excess to the
undersigned or apply such excess to the principal owing hereunder.
This Note is to be construed and enforced in accordance with the laws
of the State of Illinois.
IN WITNESS WHEREOF, Makers have executed and delivered this Note on
the day and year first above written.
SOURCE ONE MORTGAGE SERVICES
CORPORATION
By:________________________________
Name: Xxxxxxx X. Xxxxxxxx
Title: Executive Vice President
and Chief Financial Officer
Address:
00000 Xxxxxxxxxx Xxxx
Xxxxxxxxxx Xxxxx, XX 00000-0000
Attn: Chief Financial Officer
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
and
Attn: Vice President/Treasury
Telephone No.: (000) 000-0000
-129-
152
Facsimile No.: (000) 000-0000
THE MORTGAGE AUTHORITY, INC.
By:________________________________
Name: Xxxxx X. Xxxxx
Title: Chief Financial Officer
Address:
00000 Xxxxxxxxxx Xxxx
Xxxxxxxxxx Xxxxx, XX 00000-0000
Attn: Controller
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
CENTRAL PACIFIC MORTGAGE COMPANY
By:________________________________
Name: Xxxx Xxxxxxx
Title: Chief Financial Officer
Address:
0000 Xxxxxxx Xxxxxxxxx
Xxxxxx Xxxxxxx, XX 00000
Attn: Chief Financial Officer
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
-130-
153
PAYMENTS OF PRINCIPAL
Unpaid
Principal Notation
Date Balance Made by
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
-131-
154
EXHIBIT E-2
FORM OF AMENDED AND RESTATED DISCOUNT NOTE
Date of Note: July __, 1997
FOR VALUE RECEIVED, the undersigned (the "Makers") do hereby jointly
and severally covenant and promise to pay to the order of ____________________
(the "Lender") or its successors or assigns (collectively, the "Payee") the
unpaid principal amount of each Discount Loan made and retained by the Lender
(if the holder hereof is the Balance Bank initially making such discount Loan)
or, in all other cases, made by a Balance Bank and purchased by the holder
hereof (or its predecessor in interest) under the Credit Agreement (the
"Principal Amount"), on the last day of the Discount Loan Period applicable to
each such Discount Loan with a final payment of any such amounts not previously
due on the Termination Date.
Each Discount Loan evidenced by this Note was funded to the Company at
a discount as provided in the Credit Agreement; accordingly, the unpaid
principal amount of each Discount Loan evidenced by this Note will bear no
interest hereunder until the last day of the Discount Loan Period applicable
thereto, and if such unpaid principal amount of such Discount Loan is not paid
in full on such day, such unpaid principal amount shall from and after such day
bear interest at the rate of interest set forth in Section 2.7 of the Credit
Agreement. All payments of principal of and interest, if any, on this Note
shall be made in legal tender of the United States. All payments of principal
of and interest on this Note shall be made in immediately available funds at
the principal office of The First National Bank of Chicago (the "Agent"), Xxx
Xxxxx Xxxxxxxx Xxxxx, Xxxxxxx, Xxxxxxxx.
Interest on this Note, if any, shall accrue, shall be computed on the
basis of actual number of days elapsed in a 360 day year.
This Note is one of the Discount Notes referred to in the Third
Amended and Restated Revolving Credit Agreement, bearing even date herewith,
among the Company, the Borrowing Subsidiaries, the Lender and the other lenders
listed on the signature pages thereof and the Agent (as the same may be amended
and supplemented from time to time, the "Credit Agreement") and is entitled to
the benefits thereof. Reference is made to the Credit Agreement for (i)
provisions for the prepayment hereof, (ii) acceleration of the maturity hereof,
(iii) the obligation of the Makers to pay certain expenses (including
attorney's fees) incurred in the enforcement thereof and hereof and (iv) a
-132-
155
description of the security for this Note. Capitalized terms used herein
without definition have the respective meanings ascribed to them in the Credit
Agreement.
All Discount Loans made by the Lender and all repayments of the
principal thereof shall be recorded by the Lender in its books and records;
provided, however, that the Lender's failure to so record or any error in such
recording shall not affect the Makers' liability hereunder or under the Credit
Agreement. Upon any transfer hereof, the Lender shall endorse on the schedule
attached hereto or on a schedule accompanying the transfer of this Note, the
unpaid principal balance of this Note.
If an Event of Default shall occur under the Credit Agreement, the
unpaid Principal Amount hereunder shall become due and payable (i)
automatically in the case of any of the Events of Default specified in
paragraph (k) of Section 10.1 of the Credit Agreement, or (ii) at the option of
the Required Lenders with respect to all other Events of Default and shall bear
interest at the rate provided for in Section 2.7 of the Credit Agreement from
and after such date. The foregoing provision shall not be construed as a
waiver by the Payee of its right to pursue any other remedies available to it
under this Note, the Credit Agreement or any other instrument evidencing or
securing the Principal Amount.
This Note may not be changed orally but only by an agreement in
writing, signed by the party against whom enforcement of any waiver, change,
modification or discharge is sought. Written notices required to be given
hereunder shall be given as provided in the Credit Agreement to the Payee and
Makers at the respective addresses specified or provided for therein.
Should the indebtedness evidenced by this Note or any part thereof be
collected at law or in equity, or in bankruptcy, receivership or any other
court proceeding (whether at the trial or appellate level), or should this Note
be placed in the hands of attorneys for collection upon default, the Makers
agree to pay, in addition to the principal, interest and other sums due and
payable hereon, all costs of collecting or attempting to collect on this Note,
including reasonable attorneys' fees and expenses.
Notwithstanding the foregoing, recourse to any particular Borrowing
Subsidiary hereunder shall be limited to (i) such Borrowing Subsidiary's
interest in the Collateral pledged by such Borrowing Subsidiary to the Agent or
the Collateral Agent under the Credit Documents and the proceeds thereof plus
(ii) an amount equal to the capital investment by the Company in such Borrowing
-133-
156
Subsidiary, plus (iii) an amount equal to the total of all Debt owed by such
Borrowing Subsidiary to the Company.
Anything herein to the contrary notwithstanding, the obligations of
the Makers under this Note shall be subject to the limitation that payments of
interest shall not be required to the extent that receipt of any such payment
by the Payee would be contrary to provisions of law applicable to Payee which
limit the maximum rate of interest that may be charged or collected by Payee.
The undersigned and all endorsers, guarantors and sureties of this
Note and all other persons liable or to become liable on this Note severally
waive presentment for payment, demand, notice of demand and of dishonor and
nonpayment of this Note, notice of intention to accelerate the maturity of this
Note, notice of acceleration of the maturity of this Note, protest and notice
of protest, diligence in collecting, and the bringing of suit against any other
party, and agree to all renewals, extensions, modifications, partial payments,
releases or substitutions of security, in whole or in part, with or without
notice, before or after maturity.
Notwithstanding the foregoing paragraphs and all other provisions of
this Note and the Credit Agreement, none of the terms and provisions of this
Note or the Credit Agreement shall ever be construed to create a contract to
pay to the Payee, for the use, forbearance or detention of money, interest in
excess of the maximum amount of interest permitted to be charged by the Payee
to the undersigned under applicable state or federal law from time to time in
effect, and the undersigned shall never be required to pay interest in excess
of such maximum amount. If, for any reason interest is paid hereon in excess
of such maximum amount, then promptly upon any determination that such excess
has been paid the Payee will, at its option, either refund such excess to the
undersigned or apply such excess to the principal owing hereunder.
This Note is to be construed and enforced in accordance with the laws
of the State of Illinois.
IN WITNESS WHEREOF, Makers have executed and delivered this Note on
the day and year first above written.
SOURCE ONE MORTGAGE SERVICES
CORPORATION
By:________________________________
Name: Xxxxxxx X. Xxxxxxxx
Title: Executive Vice President
and Chief Financial Officer
-134-
157
Address:
00000 Xxxxxxxxxx Xxxx
Xxxxxxxxxx Xxxxx, XX 00000-0000
Attn: Chief Financial Officer
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
and
Attn: Vice President/Treasury
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
THE MORTGAGE AUTHORITY, INC.
By:________________________________
Name: Xxxxx X. Xxxxx
Title: Chief Financial Officer
Address:
00000 Xxxxxxxxxx Xxxx
Xxxxxxxxxx Xxxxx, XX 00000-0000
Attn: Controller
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
CENTRAL PACIFIC MORTGAGE COMPANY
By:________________________________
Name: Xxxx Xxxxxxx
Title: Chief Financial Officer
Address:
0000 Xxxxxxx Xxxxxxxxx
Xxxxxx Xxxxxxx, XX 00000
Attn: Chief Financial Officer
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
-135-
158
PAYMENTS OF PRINCIPAL
Unpaid
Principal Notation
Date Balance Made by
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
-136-
159
EXHIBIT F
METHOD OF DETERMINING WEIGHTED AVERAGE PURCHASE PRICES
STEP ONE
Group Mortgage Loans or Securities into the following categories (or such other
categories as are agreed upon among the Company, the Agent and the Collateral
Agent):
GNMA 15 FNMA/FHLMC 15 Private
GNMA 30 FNMA/FHLMC 30 Investors
GNMA ARM FNMA/FHLMC ARM
FNMA/FHLMC Balloon
Non-Conforming
Jumbo
STEP TWO - WEEKLY
Allocate Approved Investor Commitments (other than those allocated to repos)
under which the applicable Mortgage Loans or Securities could be settled to
each mortgage-type category on a FIFO basis. The dollar amount of Approved
Investor Commitments allocated should cover the maximum amount of Mortgage
Loans or Securities for which the Company expects to borrow in the following
week. If the mortgage balances exceed the allocated Approved Investor
Commitments on any day, a re-allocation should be calculated.
After allocating Approved Investor Commitments, compute the weighted average
price of the Approved Investor Commitments. This is the price to be allocated
to Securities or the unpaid principal balance of Mortgage Loans, as applicable,
in each category for any borrowing in the next week. Approved Investor
Commitments may not be allocated to Mortgage Loans unless the related coupons
net of servicing and guaranty fees equal or exceed the contract coupon
requirement.
AT THE REQUEST OF THE CREDIT AGENT, THE FOLLOWING FURTHER STEPS SHALL BE TAKEN
WHEN COMPUTING THE WEIGHTED AVERAGE PURCHASE PRICES.
STEP THREE - XXXX TO MARKET FORWARD PURCHASE CONTRACTS
Calculate the value of all unallocated mandatory delivery forward purchase
contracts. Compute a net negative or positive amount to be added to or
subtracted from the aggregate market value of all collateral. Use the
following method:
-137-
160
AGENCY SECURITY CONTRACT
Find the Telerate (or other recognized electronic service) purchase (offer)
price for same coupon, type, and delivery date as stated on the Company's
forward purchase contract. Subtract the Company's contract price from the
Telerate price and multiply by the dollar amount of the contract. A positive
number is a deduction, and a negative number is an addition to aggregate market
value.
OTHER CONTRACTS
Unallocated Whole Loan Contracts:
Use the above method but use the weighted average posted prices of two
nationally recognized private mortgage conduits mutually acceptable to the
Collateral Agent and the Company for similar mortgages, coupon (net of
servicing fees) and delivery date.
Private Label Securities Forward Purchase Contracts:
Use the same method but the current contract price should be based on quotes of
two nationally recognized dealers in private label mortgage- backed securities
for the same forward delivery date as the contract.
If no Telerate price is posted for a particular agency or whole loan coupon,
the posted price associated with the nearest lower coupon should be used. If
the contract coupon is below the lowest Telerate coupon then the price should
be based on quotes of two nationally recognized dealers in mortgage-backed
securities for the same forward delivery date as the contract.
-138-
161
EXHIBIT G
FORM OF BID LOAN NOTICE
TO: The First National Bank of Chicago, as Agent
FROM: Source One Mortgage Services Corporation, and
_______________,
as a Bid Lender
Reference is made to that certain Third Amended and Restated Revolving
Credit Agreement (the "Agreement") dated July __, 1997 by and among Source One
Mortgage Services Corporation (the "Company"), the Borrowing Subsidiaries, the
Agent and certain other lenders. All capitalized terms not otherwise defined
in this notice shall have the meaning given to them in the Agreement.
The Company (on behalf of itself and the Borrowing Subsidiaries) and
the Bid Lender hereby inform you that the Company has accepted a bid from the
Bid Lender for one or more Bid Loans having the following terms:
Principal Amount of Loan: $_______________
Rate of Interest: _______________%
Advance Date: _______________, 199_
Interest Period (1 to 45 days): _______________
Proposed Due Date*: _______________, ____
[BID LENDER] SOURCE ONE MORTGAGE SERVICES
CORPORATION
By:______________________ By:____________________________
Its:_____________________ Its:___________________________
-139-
162
* If other than Termination Date.
-140-
163
EXHIBIT H
FORM OF NEW/MODIFIED COMMITMENT SUPPLEMENT
This New/Modified Commitment Supplement ("Supplement") is made as of
_________________, 199_ (the "Effective Date") by and among Source One Mortgage
Services Corporation (the "Company"), The Mortgage Authority, Inc., Central
Pacific Mortgage Company, The First National Bank of Chicago, in its capacity
as agent ("Agent"), and _______________________ ("New Lender"), [and
____________________________ ("Assignor")][BRACKETED LANGUAGE IS APPLICABLE IF
AN EXISTING LENDER IS ASSIGNING A PORTION OF ITS COMMITMENT].
The Company, the Borrowing Subsidiaries, [Assignor] and Agent are
parties to a certain Third Amended and Restated Revolving Credit Agreement
dated as of July __, 1997 (the "Credit Agreement") pursuant to which Agent and
certain other Lenders agreed to provide a revolving credit facility to the
Company and the Borrowing Subsidiaries on the terms and conditions set forth in
the Credit Agreement. Any capitalized term not expressly defined herein shall
have the meaning ascribed to such term in the Credit Agreement.
The New Lender has agreed to become a Lender under the Credit
Agreement with a Commitment in the amount of ______________________ Dollars
($______________). [The Company and Assignor have agreed to reduce Assignor's
Commitment under the Credit Agreement to ____________________ Dollars
($___________).]
The parties hereto desire to amend the Credit Agreement pursuant to
Section 2.1(b) thereof to reflect the New Lender's Commitment [and Assignor's
reduced Commitment].
NOW, THEREFORE, the parties hereto agree as follows:
1. From and after the Effective Date, the New Lender shall be
considered a "Lender" under the Credit Agreement and the Company, the Borrowing
Subsidiaries and Agent hereby consent to the addition of the New Lender.
2. From and after the Effective Date, the New Lender's Commitment
under the Credit Agreement shall be ________________________ Dollars
($______________) or such other amount as may be stated in any subsequent
modification to the Credit Agreement. The Company and the Borrowing
Subsidiaries shall execute and deliver to the New Lender simultaneously
herewith Notes in the form attached as Exhibits E-1 and E-2 to
-141-
164
the Credit Agreement. The Aggregate Commitment of the Lenders under the Credit
Agreement, after giving effect to such Commitment by the New Lender [and the
reduced Commitment of Assignor described in the following Section] shall be
$_______________.
[3. From and after the Effective Date, Assignor's Commitment under
the Credit Agreement shall be _________________________________ Dollars
($______________) or such other amount as may be stated in any subsequent
modification to the Credit Agreement.]
[4. The New Lender, promptly after receipt of its Notes, agrees to
purchase from Assignor, and Assignor hereby agrees to sell to the New Lender,
without recourse, a portion of the outstanding Loans made by Assignor equal to
_________ percent (__%) of the outstanding principal balance of each such Loan.
Such purchase shall be effected by wire transfer of immediately available funds
to Assignor on the Effective Date. The Company and each Borrowing Subsidiary
each irrevocably and unconditionally agrees that from and after the Effective
Date the portion of Loans so funded by Assignor shall be evidenced by and shall
be deemed to be Loans made by the New Lender under the New Lender's Note as of
the Effective Date and shall be treated as such for purposes of calculating
interest and fees accruing from and after the Effective Date under the Credit
Agreement. All interest and fees accruing on such portion of the Loans prior
to the Effective Date shall be paid when due to Assignor.]
5. For purposes of Section 12.2 of the Credit Agreement
(Notices), the New Lender's address and telecopy number shall be as specified
below its signature in this Supplement.
6. All references in the Credit Agreement and the other Credit
Documents shall be deemed to refer to the Credit Agreement as modified by this
Supplement. Pursuant to Section 2.1(b) of the Credit Agreement, Exhibit C to
the Credit Agreement is hereby replaced by Exhibit C to this Supplement.
7. In all other respects, the Credit Agreement is and remains
unmodified and in full force and effect and is hereby ratified and confirmed.
8. This Supplement may be executed in any number of counterparts,
all of which taken together shall constitute one agreement, and any of the
parties hereto may execute this Supplement by signing any such counterpart.
-142-
165
IN WITNESS WHEREOF, the Company, the Borrowing Subsidiaries, the New
Lender, [Assignor] and Agent have executed this Supplement as of the date first
above written.
COMPANY: SOURCE ONE MORTGAGE SERVICES
CORPORATION
By:________________________________
Name:___________________________
Title:__________________________
TMA: THE MORTGAGE AUTHORITY, INC.
By:________________________________
Name:___________________________
Title:__________________________
CPM: CENTRAL PACIFIC MORTGAGE COMPANY
By:________________________________
Name:___________________________
Title:__________________________
NEW LENDER: ___________________________________
By:________________________________
Name:___________________________
Title:__________________________
Address for Notices:
___________________________________
___________________________________
Attn: ____________________________
Telephone No.: ___________________
Facsimile No.: ___________________
-143-
166
AGENT: THE FIRST NATIONAL BANK OF CHICAGO,
as Agent
By:________________________________
Name:___________________________
Title:__________________________
[ASSIGNOR: ___________________________________
By:________________________________
Name:___________________________
Title:__________________________]
-144-
167
EXHIBIT I
FORM OF NON-LENDER BALANCE BANK SUPPLEMENT
THIS NON-LENDER BALANCE SUPPLEMENT (the "Supplement") is entered into
as of _________________, 199_, by and among SOURCE ONE MORTGAGE SERVICES
CORPORATION, a Delaware corporation (the "Company"), THE MORTGAGE AUTHORITY,
INC., a Delaware corporation, CENTRAL PACIFIC MORTGAGE COMPANY, a California
corporation, THE FIRST NATIONAL BANK OF CHICAGO, a national banking
association, as administrative agent for the Lenders ("Agent"), and
____________________________, a _____________________ (the "Bank"), an
Affiliate of one of the Lenders.
A. The Company, the Borrowing Subsidiaries, and Agent are parties
to that certain Third Amended and Restated Revolving Credit Agreement dated as
of July __, 1997 (the "Credit Agreement") pursuant to which Agent and certain
other Lenders agreed to provide a revolving credit facility to the Company and
the Borrowing Subsidiaries on the terms and conditions set forth in the Credit
Agreement. Any capitalized term not expressly defined herein shall have the
meaning ascribed to such term in the Credit Agreement.
B. The Bank has agreed to become a Non-Lender Balance Bank under
the Credit Agreement and to make Discount Advances and to sell its interest in
such Discount Advances to the Lenders in accordance with Section 2.4 of the
Credit Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
1. The Bank hereby agrees to become and is hereby designated as a
"Non-Lender Balance Bank" under the Credit Agreement, but is not and shall not
be considered a "Lender" under the Credit Agreement. The Bank hereby agrees to
(i) enter into a Balance Bank Agreement with the Company, (ii) make Discount
Advances to the Company, (ii) sell its interest in such Discount Advances to
the Lenders, and (iii) otherwise accede to all obligations of a Non-Lender
Balance Bank under Section 2.4 of the Credit Agreement. The Bank shall be
entitled to all rights of a Non-Lender Balance Bank under the Credit Agreement.
2. None of the Borrowing Subsidiaries, the Company or the Agent
shall consent to any amendment of the provisions of Section 2.4 of the Credit
Agreement affecting the Bank without the prior written consent of the Bank.
-145-
168
3. The Bank's address for any notices to be sent in connection
with the Credit Agreement shall be as specified below its signature in this
Supplement.
4. This Supplement may be executed in any number of counterparts,
all of which taken together shall constitute one agreement, and any of the
parties hereto may execute this Supplement by signing any such counterpart.
IN WITNESS WHEREOF, the Company, the Borrowing Subsidiaries, Agent and
the Bank have executed this Supplement as of the date first above written.
COMPANY: SOURCE ONE MORTGAGE SERVICES
CORPORATION
By:________________________________
Name:___________________________
Title:__________________________
TMA: THE MORTGAGE AUTHORITY, INC.
By:________________________________
Name:___________________________
Title:__________________________
CPM: CENTRAL PACIFIC MORTGAGE COMPANY
By:________________________________
Name:___________________________
Title:__________________________
AGENT: THE FIRST NATIONAL BANK OF CHICAGO,
as Agent
By:________________________________
Name:___________________________
Title:__________________________
BANK: ___________________________________
By:________________________________
Name:___________________________
-146-
169
Title:__________________________
Address for Notices:
___________________________________
___________________________________
Attn: ____________________________
Telephone No.: ___________________
Facsimile No.: ___________________
-147-
170
EXHIBIT J
FORM OF AP NOTICE
[SOURCE ONE MORTGAGE SERVICES CORPORATION (the "Company")][OR THE
APPLICABLE BORROWING SUBSIDIARY] ("Borrowing Subsidiary")] pursuant to that
certain Third Amended and Restated Revolving Credit Agreement, dated as of July
__, 1997 (as amended, extended and replaced from time to time, collectively,
the "Credit Agreement") among the Company, the Borrowing Subsidiaries, The
First National Bank of Chicago, individually and as agent (the "Credit Agent"),
and certain other lenders, and (ii) that certain Third Amended and Restated
Security and Collateral Agency Agreement dated as of July __, 1997 by and among
the Company, the Borrowing Subsidiaries, the Credit Agent and National City
Bank of Kentucky (the "Collateral Agent") as collateral agent for the Secured
Parties (as defined in the Credit Agreement), for new value this day received,
and as security for the payment of any and all indebtedness and obligations of
the Company and Borrowing Subsidiaries under the Credit Agreement, hereby
creates and grants to the Collateral Agent for the benefit of the Secured
Parties a security interest in and to the mortgage loans identified as "AP
Mortgages" on the Company's "Collateral Transmittals" (as such term is defined
in the Credit Agreement) on the date indicated below which provide the
information concerning the AP Mortgages required by the Credit Agreement.
[SOURCE ONE MORTGAGE SERVICES
CORPORATION]
[APPLICABLE BORROWING SUBSIDIARY]
By:_____________________________________
Dated:_______________, 199_.
-148-
171
EXHIBIT K
FORM OF OPINION LETTER
-149-
172
EXHIBIT L
MATERIAL LITIGATION NOT REFERENCED IN ANNUAL/QUARTERLY REPORTS
NONE.
-150-
173
EXHIBIT M
FORM OF FUNDING AGREEMENTS
-151-
174
EXHIBIT N
FORM OF TRANSITION MEMORANDUM
This TRANSITION MEMORANDUM is dated as of July __, 1997, by and
between Source One Mortgage Services Corporation, a Delaware corporation (the
"Company"), The Mortgage Authority, a Delaware corporation ("TMA"), Central
Pacific Mortgage Company, a California corporation ("CPMC") and The First
National Bank of Chicago, as agent ("Agent") for the Existing Lenders and for
the Continuing Lenders (as such terms are hereinafter defined).
The Company and the Borrowing Subsidiaries have entered into a certain
Third Amended and Restated Revolving Credit Agreement dated as of July __, 1997
(the "Credit Agreement") with the lenders named therein and the Agent. The
lenders under the Credit Agreement are hereinafter referred to collectively as
the "Continuing Lenders". Pursuant to the Credit Agreement the Continuing
Lenders will agree to extend credit to the Company and the Borrowing
Subsidiaries through a revolving credit facility (the "New Facility") on the
terms and subject to the conditions set forth therein. Capitalized terms not
otherwise defined herein are used with the same meanings as in the Credit
Agreement.
The New Facility amends and restates existing revolving credit
facility provided to the Company, TMA, or CPMC (the "Existing Facility") made
available pursuant to that certain Second Amended and Restated Revolving Credit
Agreement dated as of November 12, 1996 (as amended, the "Existing Agreement"),
by and among the Company, TMA, CPMC, the Agent and the lenders participating
therein (each an "Existing Lender").
Certain of the Existing Lenders are not Continuing Lenders under the
New Facility (the "Exiting Lenders"). In addition, pursuant to the Credit
Agreement (i) certain of the Existing Lenders will have a percentage of the
Aggregate Commitment under the New Facility that differs from their percentage
under the Existing Facility, and (ii) certain Continuing Lenders joining the
New Facility are not Existing Lenders.
The purpose of this Transition Memorandum is to set forth an
understanding of certain matters concerning the transition by the Company from
the Existing Facility to the New Facility, such matters including, without
limitation, (i) the payment of all the outstanding Loans (as defined in the
Existing Agreement and hereinafter referred to as the "Existing Loans") to the
Exiting Lenders, (ii) the changes necessary in the percentage of the Advances
under the Credit Agreement held by the Continuing Lenders, and (iii) the
initial fundings of Advances by the Continuing Lenders which are not Existing
Lenders.
-152-
175
1. Summary of Existing Loans. The initial Advance under the New
Facility shall be used to pay any Existing Loans held by the Exiting Lenders.
Prior to the date the conditions precedent set forth in Article 5 of the Credit
Agreement are satisfied (such date being the "Effective Date"), the Agent shall
identify the Existing Loans payable by the Company under the Existing
Agreements to each Exiting Lender and advise the Continuing Lenders of such
amount. The aggregate outstanding balance of the Existing Loans held by the
Exiting Lenders on the Effective Date shall be hereinafter referred to as the
"Exiting Lender Pay-Off Amount".
2. Initial Advance. Subject to the terms and conditions set
forth in the Credit Agreement, including, without limitation, satisfaction of
the conditions precedent set forth in Article 5 therein, the Continuing Lenders
will make an initial Advance to the Company on the Effective Date in an amount
equal to the Exiting Lender Pay-Off Amount. The initial Advance shall be based
upon an Advance Notice and shall consist of such types of Advances specified in
such Advance Notice. Each Continuing Lender will agree to make its share of
such Advance available to the Agent at such time and in such amount as provided
in the Credit Agreement as modified by Paragraphs 3 and 4 below.
3. Conversion of Loans. With respect to each Continuing Lender,
to the extent that such lender has an Existing Loan outstanding on the date of
the initial Advance, such Continuing Lender shall only be required to fund to
the Agent an amount (the "Net Funding Amount") equal to the excess, if any, of
that amount by which the aggregate amount of its Loans to be outstanding under
the New Facility on the Effective Date exceeds the aggregate amount of its
Existing Loans (excluding any accrued and unpaid interest, Fees and other
charges or expenses thereon). After making its Net Funding Amount available to
the Agent, such Continuing Lender shall be deemed to have made available all of
its Loans under the New Facility and shall be deemed to have converted its
Existing Loans (excluding any accrued and unpaid interest and other charges or
expenses thereon). To the extent that a Continuing Lender has Existing Loans
in an amount which exceeds the amount of its Loans to be outstanding under the
New Facility on the Effective Date, such Lender shall be deemed to have made
available all of its Loans under the New Facility required to be made on the
Effective Date and shall be repaid a portion of its Existing Loans equal to
such excess amount, if any, as provided in Paragraph 4. All Existing Loans
held by Continuing Lenders which are outstanding on the Effective Date and not
repaid shall continue as the same type of Loan under the New Facility until
repaid or converted in accordance with the terms of the Credit Agreement;
provided that from and after the Effective Date such Existing Loans shall bear
interest at the
-153-
176
interest rates applicable under the Credit Agreement rather than the rates
applicable under the Existing Agreements.
4. Percentage Reconciliation. If any Continuing Lender holds
Existing Loans (other than Bid Loans) on the Effective Date which are in excess
of such Continuing Lender's Adjusted Commitment Percentage of the Loans (other
than Bid Loans and Swingline Loans) to be outstanding under the New Facility
(an "Overfunded Lender") on the Effective Date, such Overfunded Lender shall be
repaid from the additional funding under the following sentence an amount of
Existing Loans sufficient to eliminate such excess. Each Continuing Lender
(including any Continuing Lender which is not an Existing Lender) that holds
Existing Loans in an amount less than such Continuing Lender's Adjusted
Commitment Percentage of the Loans (other than Bid Loans and Swingline Loans)
to be outstanding under the New Facility on the Effective Date (an "Underfunded
Lender") shall make an additional funding as a Federal Funds Loan in connection
with the initial Advance in an amount sufficient to eliminate such shortfall
(such additional funding being collectively referred to as "Percentage
Reconciliation Funding Amount").
5. Distribution of Initial Advance. After each Continuing Lender
has funded its Loan (or so much of such Loan as may be required pursuant to
Paragraphs 3 and 4 above), the Agent shall (i) distribute to each Exiting
Lender its Exiting Lender Pay-Off Amount in accordance with the Existing
Agreements and (ii) distribute to each Overfunded Lender its share of the
aggregate Percentage Reconciliation Funding Amount.
6. Payment of Accrued Interest and Fees; Indemnification. On the
Effective Date the Company shall pay to the Agent for distribution to each
Exiting Lender all accrued interest and Fees owing to such Lender for its
Existing Loans. To the extent of its obligations under the Existing Agreement,
the Company shall pay each Exiting Lender for all reasonable losses, costs and
expenses incurred by such Exiting Lender in connection with any prepayment of
its Existing Loans in accordance with the terms of the Existing Agreement.
7. Termination of Commitments under Existing Facility. On the
Effective Date the commitments of the Lenders (as defined in the Existing
Agreement) under the Existing Facility shall terminate and the Lenders therein
shall have no further obligation to make any further Loans (as defined in the
Existing Agreement) under the Existing Facility.
8. No Modification. It is understood and agreed to by the
parties hereto that, except as expressly set forth above, nothing in this
memorandum shall modify or amend the covenants, terms and agreements set forth
in the Existing Agreement or the documents related thereto or in the Credit
Agreement and the other Credit
-154-
177
Documents, or discharge the obligations of (a) the Company, TMA, the Existing
Lenders and the Agent under the Existing Agreement, and (b) the Company, the
Borrowing Subsidiaries, the Continuing Lenders and the Agent under the Credit
Agreement.
Borrowers: SOURCE ONE MORTGAGE SERVICES
CORPORATION
By:_____________________________________
Name:________________________________
Title:_______________________________
THE MORTGAGE AUTHORITY, INC.
By:_____________________________________
Name:________________________________
Title:_______________________________
CENTRAL PACIFIC MORTGAGE COMPANY
By:_____________________________________
Name:________________________________
Title:_______________________________
Agent on Behalf THE FIRST NATIONAL BANK OF CHICAGO,
of Continuing Lenders. as Agent for the Continuing Lenders
By:_____________________________________
Name:________________________________
Title:_______________________________
-155-
178
Exiting Lenders: ABN AMRO BANK, N.V.
By:_____________________________________
Name:________________________________
Title:_______________________________
By:_____________________________________
Name:________________________________
Title:_______________________________
THE BANK OF TOKYO-MITSUBISHI, LTD.
By:_____________________________________
Xxxxx Xxxxxx
Title:_______________________________
BARCLAYS BANK PLC
By:_____________________________________
Xxxxx Xxxxxxxx
Title:_______________________________
CAISSE NATIONALE DE CREDIT AGRICOLE
By:_____________________________________
Xxxxxx Xxxxxx
Title:_______________________________
-156-
000
XXXXXX XXXXXX XXXXX XXXXXX, XX
By:_____________________________________
Name:________________________________
Title:_______________________________
By:_____________________________________
Name:________________________________
Title:_______________________________
THE DAI-ICHI KANGYO BANK, LTD., CHICAGO
BRANCH
By:_____________________________________
Name:________________________________
Title:_______________________________
THE FUJI BANK, LIMITED
By:_____________________________________
Name:________________________________
Title:_______________________________
-157-
180
THE LONG-TERM CREDIT BANK OF JAPAN, LTD.
By:_____________________________________
Name:________________________________
Title:_______________________________
THE SANWA BANK, LIMITED, CHICAGO BRANCH
By:_____________________________________
Xxxxxxx X. Xxxx
Vice President
THE SUMITOMO BANK, LTD.
By:_____________________________________
Xxxxx Xxxxxxx
Title:_______________________________
-158-
