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WAREHOUSING CREDIT AND SECURITY AGREEMENT
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BETWEEN
MATRIX CAPITAL MARKETS, INC.,
a Colorado corporation
AND
RESIDENTIAL FUNDING CORPORATION,
a Delaware corporation
Dated as of March 29, 2002
TABLE OF CONTENTS
1. THE CREDIT..................................................................................................1-1
1.1. The Warehousing Commitment.......................................................................1-1
1.2. Expiration of Warehousing Commitment ............................................................1-1
1.3. Warehousing Note.................................................................................1-1
2. PROCEDURES FOR OBTAINING ADVANCES...........................................................................2-1
2.1. Warehousing Advances ............................................................................2-1
3. INTEREST, PRINCIPAL AND FEES ...............................................................................3-1
3.1. Interest.........................................................................................3-1
3.2. Interest Limitation..............................................................................3-2
3.3. Principal Payments ..............................................................................3-2
3.4. Non-Usage Fees ..................................................................................3-4
3.5. Loan Package Fees, Wire Fees, Warehousing Fees ..................................................3-4
3.6. Miscellaneous Fees and Charges...................................................................3-4
3.7. Overdraft Advances............................................................................3-4
3.8. Method of Making Payments........................................................................3-5
4. COLLATERAL..................................................................................................4-1
4.1. Grant of Security Interest.......................................................................4-1
4.2. Maintenance of Collateral Records................................................................4-2
4.3. Release of Security Interest in Pledged Loans and Pledged Securities ............................4-2
4.4. Collection and Servicing Rights..................................................................4-3
4.5. Return of Collateral at End of Warehousing Commitment............................................4-4
4.6. Delivery of Collateral Documents ................................................................4-4
5. CONDITIONS PRECEDENT........................................................................................5-1
5.1. Initial Advance..................................................................................5-1
5.2. Each Advance.....................................................................................5-3
5.3. Force Majeure....................................................................................5-3
6. GENERAL REPRESENTATIONS AND WARRANTIES .....................................................................6-1
6.1. Place of Business................................................................................6-1
6.2. Organization; Good Standing; Subsidiaries .......................................................6-1
6.3. Authorization and Enforceability.................................................................6-1
6.4. Authorization and Enforceability of Guaranty.....................................................6-1
6.5. Approvals........................................................................................6-2
6.6. Financial Condition..............................................................................6-2
6.7. Litigation.......................................................................................6-2
6.8. Compliance with Laws ............................................................................6-2
6.9. Regulation U.....................................................................................6-2
6.10. Investment Company Act..........................................................................6-3
6.11. Payment of Taxes................................................................................6-3
6.12. Agreements......................................................................................6-3
6.13. Title to Properties.............................................................................6-3
6.14. ERISA...........................................................................................6-3
6.15. No Retiree Benefits.............................................................................6-4
6.16. Assumed Names...................................................................................6-4
6.17. Servicing.......................................................................................6-4
7. AFFIRMATIVE COVENANTS ......................................................................................7-1
7.1. Payment of Obligations...........................................................................7-1
7.2. Financial Statements...........................................................................7-1
7.3. Other Borrower Reports.......................................................................7-2
7.4. Maintenance of Existence; Conduct of Business ...................................................7-2
7.5. Compliance with Applicable Laws..................................................................7-2
7.6. Inspection of Properties and Books; Operational Reviews..........................................7-3
7.7. Notice...........................................................................................7-3
7.8. Payment of Debt, Taxes and Other Obligations.................................................... 7-3
7.9. Insurance........................................................................................7-3
7.10. Subordination of Certain Indebtedness.......................................................... 7-4
7.11. Other Loan Obligations ........................................................................ 7-4
7.12. ERISA ......................................................................................... 7-4
7.13. Use of Proceeds of Warehousing Advances........................................................ 7-4
8. NEGATIVE COVENANTS ........................................................................................ 8-1
8.1. Contingent Liabilities.......................................................................... 8-1
8.2. Pledge of Servicing Contracts................................................................... 8-1
8.3. Restrictions on Fundamental Changes .............................................................8-1
8.4. Subsidiaries.....................................................................................8-1
8.5. Deferral of Subordinated Debt................................................................... 8-1
8.6. Loss of Eligibility............................................................................. 8-2
8.7. Accounting Changes ............................................................................8-2
8.8. Leverage Ratio.................................................................................. 8-2
8.9. Minimum Tangible Net Worth...................................................................... 8-2
8.10. Liquidity Ratio............................................................................... 8-2
8.11. Loans to Loans Ratio......................................................................... 8-2
8.12. Distributions to Shareholders ..................................................................8-2
8.13. Transactions with Affiliates................................................................8-2
8.14. Recourse Servicing Contracts....................................................................8-2
8.15. Gestation Agreements........................................................................8-3
9. SPECIAL REPRESENTATIONS, WARRANTIES AND COVENANTS CONCERNING
COLLATERAL........................................................................................... 9-1
9.1. Special Representations and Warranties Concerning Warehousing
Collateral.................................................................................. 9-1
9.2. Special Affirmative Covenants Concerning Warehousing Collateral................................. 9-3
9.3. Special Negative Covenants Concerning Warehousing Collateral.................................... 9-3
10. DEFAULTS; REMEDIES .......................................................................................10-1
10.1. Events of Default.............................................................................10-1
10.2. Remedies..................................................................................... 10-2
10.3. Application of Proceeds.......................................................................10-5
10.4. Lender Appointed Attorney-in-Fact..............................................................10-5
10.5. Right of Set-Off...............................................................................10-5
11. MISCELLANEOUS.............................................................................................11-1
11.1. Notices....................................................................................... 11-1
11.2. Reimbursement Of Expenses; Indemnity.......................................................... 11-1
11.3. Financial Information .....................................................................11-2
11.4. Terms Binding Upon Successors; Survival of Representations ................................... 11-2
11.5. Assignment.................................................................................... 11-2
11.6. Amendments.................................................................................... 11-2
11.7. Governing Law................................................................................. 11-2
11.8. Participations................................................................................ 11-2
11.9. Relationship of the Parties....................................................................11-3
11.10. Severability................................................................................. 11-3
11.11. Consent to Credit References .................................................................11-3
11.12. Counterparts................................................................................. 11-3
11.13. Entire Agreement............................................................................11-3
11.14. Consent to Jurisdiction.......................................................................11-4
11.15. Waiver of Jury Trial......................................................................... 11-4
11.16. Waiver of Punitive, Consequential, Special or Indirect Damages................................11-4
12. DEFINITIONS...............................................................................................12-1
12.1. Defined Terms..................................................................................12-1
12.2. Other Definitional Provisions; Terms of Construction...........................................12-10
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EXHIBITS
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Exhibit A Request for Advance
Exhibit B Procedures and Documentation for Warehousing Mortgage
Loans
Exhibit C Schedule of Servicing Portfolio
Exhibit D Subsidiaries
Exhibit E Compliance Certificate
Exhibit F Lines of Credit
Exhibit G Assumed Names
Exhibit H Eligible Loans and Other Assets
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WAREHOUSING CREDIT AND SECURITY AGREEMENT
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WAREHOUSING CREDIT AND SECURITY AGREEMENT, dated as of March 29, 2002 between
MATRIX CAPITAL MARKETS, INC., a Colorado corporation ("Borrower"), and
RESIDENTIAL FUNDING CORPORATION, a Delaware corporation ("Lender").
A. Borrower has requested certain financing from Lender.
B. Lender has agreed to provide that financing to Borrower subject to the
terms and conditions of this Agreement.
C. The "Closing Date" for the transactions contemplated by this Agreement
is ____________.
NOW, THEREFORE, the parties to this Agreement agree as follows:
1. THE CREDIT
1.1. The Warehousing Commitment
On the terms and subject to the conditions and limitations of this Agreement,
including Exhibit H, Lender agrees to make Warehousing Advances to Borrower from
the Closing Date to the Business Day immediately preceding the Warehousing
Maturity Date, during which period Borrower may borrow, repay and reborrow in
accordance with the provisions of this Agreement. The total aggregate principal
amount of all Warehousing Advances outstanding at any one time may not exceed
the Warehousing Commitment Amount. While a Default or Event of Default exists,
Lender may refuse to make any additional Warehousing Advances to Borrower. If
the initial Warehousing Advance has not been made within 90 days after the
Closing Date, the Warehousing Commitment and Lender's obligation to make
Warehousing Advances to Borrower under this Agreement will automatically
terminate, and all Obligations (including any Obligations arising under Section
11.2) will automatically become due and payable, without presentment, demand or
other Notice or requirements of any kind, all of which Borrower expressly
waives.
1.2. Expiration of Warehousing Commitment
The Warehousing Commitment expires on the earlier of ("Warehousing Maturity
Date"): (a) the earlier of (i) July 31, 2003, as such date may be extended in
writing by Lender, in its sole discretion, or (ii) the first Business Day that
is 90 days or more after Lender gives Notice to Borrower of termination of the
Commitment, in each case on which date the Warehousing Commitment will expire of
its own term and the Warehousing Advances will become due and payable and
without the necessity of Notice or action by Lender, and (b) the date the
Warehousing Commitment is terminated and the Warehousing Advances become due and
payable under Section 10.2.
1.3. Warehousing Note
Warehousing Advances under the Warehousing Commitment are evidenced by
Borrower's promissory note, payable to Lender on the form prescribed by Lender
("Warehousing Note"). The term "Warehousing Note" as used in this Agreement
includes all amendments, restatements, renewals or replacements of the original
Warehousing Note and all substitutions for it. All terms and provisions of the
Warehousing Note are incorporated into this Agreement.
End of Article 1
2. PROCEDURES FOR OBTAINING ADVANCES
2.1. Warehousing Advances
To obtain a Warehousing Advance under this Agreement, Borrower must deliver to
Lender either a completed and signed request for a Warehousing Advance on the
then current form approved by Lender, or an Electronic Advance Request, together
with a list of the Mortgage Loans for which the request is being made and a
signed RFConnects Pledge Agreement sent by facsimile ("Warehousing Advance
Request"), not later than 1 Business Day before the Business Day on which
Borrower desires the Warehousing Advance. Subject to the delivery of a
Warehousing Advance Request and the satisfaction of the conditions set forth in
Sections 5.1 and 5.2, Borrower may obtain a Warehousing Advance under this
Agreement upon compliance with the procedures set forth in this Section and in
the applicable Exhibit B, including delivery to Lender of all required
Collateral Documents. Lender's current form of Warehousing Advance Request is
set forth in Exhibit A. Upon not less than 3 Business Days' prior Notice to
Borrower, Lender may modify its form of Warehousing Advance Request, RFConnects
Pledge Agreement and any other Exhibit or document referred to in this Section
to conform to current legal requirements or Lender practices and, as so
modified, those Exhibits and documents will become part of this Agreement.
End of Article 2
3. INTEREST, PRINCIPAL AND FEES
3.1. Interest
3.1 (a) Except as provided in Sections 3.1(d) and 3.1(e), Borrower must pay
interest on the unpaid amount of each Warehousing Advance from the date
the Warehousing Advance is made until it is paid in full at the
Interest Rate specified in Exhibit H.
3.1 (b) As long as no Default or Event of Default exists, Borrower is entitled
to receive a benefit in the form of an "Earnings Credit" on the portion
of the Eligible Balances maintained in time deposit accounts with a
Designated Bank, and Borrower is entitled to receive a benefit in the
form of an "Earnings Allowance" on the portion of the Eligible Balances
maintained in demand deposit accounts with a Designated Bank. Any
Earnings Allowance will be used first and any Earnings Credit will be
used second as a credit against Miscellaneous Fees and Charges
(including Designated Bank Charges), and against other fees payable to
Lender under this Agreement, including Warehousing Fees, Wire Fees,
Non-Usage Fees, and Loan Package Fees, and may be used, at Lender's
option, to reduce accrued interest. Any Earnings Allowance not used
during the month in which the benefit was received will be accumulated
and must be used within 6 months of the month in which the benefit was
received. As long as no Default or Event of Default exists, any
Earnings Credit not used during the month in which the benefit was
received will be used to provide a cash benefit to Borrower. Any
Earnings Credit retained by Lender as a result of a Default or Event of
Default will be applied to the payment of Borrower's Obligations in the
order Lender determines in its sole discretion. The Earnings Credit and
the Earnings Allowance for any month will be determined by Lender in
its sole discretion and Lender's determination of those amounts is
conclusive and binding absent manifest error. In no event will the
benefit received by Borrower exceed the Depository Benefit.
Either party to this Agreement may terminate the benefits provided for
in this Section effective immediately upon Notice to the other party,
if the terminating party determines (which determination is conclusive
and binding on the other party, absent manifest error) at any time that
any applicable law, rule, regulation, order or decree or any
interpretation or administration of such law, rule, regulation, order
or decree by any governmental authority charged with its interpretation
or administration, or compliance by such party with any request or
directive (whether or not having the force of law) of any such
authority, makes it unlawful or impossible for the party sending the
Notice to continue to offer or receive the benefits provided for in
this Section. No Notice is required for a termination of benefits as a
result of a Default or Event of Default.
3.1 (c) Lender computes interest on the basis of the actual number of days
elapsed in a year of 360 days. Borrower must pay interest monthly in
arrears, not later than 9 days after the date of Lender's invoice or,
if applicable, 2 days after the date of Lender's account analysis
statement, commencing with the first month following the Closing Date
and on the Warehousing Maturity Date.
3.1 (d) If, for any reason Borrower repays a Warehousing Advance on the same
day that it was made by Lender, Borrower agrees to pay to Lender an
administrative fee equal to 1 day of interest on that Advance at the
Interest Rate that would otherwise be applicable under Exhibit H.
Borrower must pay all administrative fees within 9 days the date of
Lender's invoice or, if applicable, within 2 days of the date of
Lender's account analysis statement.
3.1 (e) After an Event of Default occurs and upon Notice to Borrower by Lender,
the unpaid amount of each Warehousing Advance will bear interest at the
Default Rate until paid in full.
3.1 (f) Lender will adjust the rates of interest provided for in this Agreement
as of the effective date of each change in the applicable index.
Lender's determination of such rates of interest as of any date of
determination are conclusive and binding, absent manifest error.
3.2. Interest Limitation
Lender does not intend, by reason of this Agreement, the Warehousing Note or any
other Loan Document, to receive interest in excess of the amount permitted by
applicable law. If Lender receives any interest in excess of the amount
permitted by applicable law, whether by reason of acceleration of the maturity
of this Agreement, the Warehousing Note or otherwise, Lender will apply the
excess to the unpaid principal balance of the Warehousing Advances and not to
the payment of interest. If all Warehousing Advances have been paid in full and
the Warehousing Commitment has expired or has been terminated, Lender will remit
any excess to Borrower. This Section controls every other provision of all
agreements between Borrower and Lender and is binding upon and available to any
subsequent holder of the Warehousing Note
3.3. Principal Payments
3.3 (a) Borrower must pay Lender the outstanding principal amount of all
Warehousing Advances on the Warehousing Maturity Date.
3.3 (b) Except as provide in Section 3.1(e), Borrower may prepay any portion of
the Warehousing Advances without premium or penalty at any time.
3.3 (c) Borrower must pay to Lender, without the necessity of prior demand or
Notice from Lender, and Borrower authorizes Lender to cause the Funding
Bank to charge Borrower's Operating Account for, the amount of any
outstanding Warehousing Advance against a specific Pledged Asset upon
the earliest occurrence of any of the following events:
(1) One (1) Business Day elapses from the date a Warehousing Advance
was made if the Pledged Loan to be funded by that Warehousing
Advance is not acquired.
(2) Ten (10) Business Days elapse without the return of a Collateral
Document delivered by Lender to Borrower under a Trust Receipt for
correction or completion.
(3) On the date on which a Pledged Loan is determined to have been
originated based on untrue, incomplete or inaccurate information or
otherwise to be subject to fraud, whether or not Borrower had
knowledge of the misrepresentation, incomplete or incorrect
information or fraud, on the date on which Borrower knows, has
reason to know, or receives Notice from Lender, that (A) one or
more of the representations and warranties set forth in Article 9
were inaccurate or incomplete in any material respect on any date
when made or deemed made, or (B) Borrower has failed to perform or
comply with any covenant, term or condition set forth in Article 9.
(4) On the date the Pledged Loan or a Lien prior to the Mortgage
securing repayment of the Pledged Loan is defaulted and remains in
default for a period of 60 days or more.
(5) Upon the sale, other disposition or payment of any Pledged Asset
or, with respect to a Pledged Loan included in an Eligible Mortgage
Pool, upon the sale or other disposition of the related Agency
Security.
(6) One (1) Business Day immediately following the date foreclosure
proceedings are commenced with respect to a Pledged Loan
3.3 (d) Upon telephonic or written Notice to Borrower by Lender, Borrower must
pay to Lender, and Borrower authorizes Lender to cause the Funding Bank
to charge Borrower's Operating Account for, the amount of any
outstanding Warehousing Advance against a specific Pledged Asset upon
the earliest occurrence of any of the following events:
(1) For any Pledged Loan, the Warehouse Period elapses.
(2) Forty-five (45) days elapse from the date a Pledged Loan was
delivered to an Investor or Approved Custodian for examination
and purchase or for inclusion in a Mortgage Pool, without the
purchase being made or an Eligible Mortgage Pool being
initially certified, or upon rejection of a Pledged Loan as
unsatisfactory by an Investor or Approved Custodian.
(3) With respect to any Pledged Loan, any of the Collateral
Documents, upon examination by Lender, are found not to be in
compliance with the requirements of this Agreement or the
related Purchase Commitment.
3.3 (e) In addition to the payments required pursuant to Sections 3.3 (c) and
3.3(d), if the principal amount of any Pledged Loan is prepaid in
whole or in part while a Warehousing Advance is outstanding against
the Pledged Loan, Borrower must pay to Lender, without the necessity
of prior demand or Notice from Lender, and Borrower authorizes Lender
to cause the Funding Bank to charge Borrower's Operating Account for,
the amount of the prepayment, to be applied against the Warehousing
Advance.
3.3 (f) The proceeds of the sale or other disposition of Pledged Assets must
be paid directly to the Cash Collateral Account. Borrower must give
Notice to Lender in writing or by telephone or by RFConnects Delivery
to Lender (and if by telephone, followed promptly by written Notice)
of the Pledged Assets for which proceeds have been received. Upon
receipt of Borrower's Notice, Lender will apply any proceeds deposited
into the Cash Collateral Account to the payment of the Warehousing
Advance related to the Pledged Assets identified by Borrower in its
Notice, and those Pledged Assets will be considered to have been
redeemed from pledge. Lender is entitled to rely upon Borrower's
affirmation that deposits in the Cash Collateral Account represent
payments from Investors for the purchase of the Pledged Assets
specified by Borrower in its Notice. If the payment from an Investor
for the purchase of Pledged Assets is less than the outstanding
Warehousing Advance against the Pledged Assets identified by Borrower
in its Notice, Borrower must pay to Lender, and Borrower authorizes
Lender to cause the Funding Bank to charge Borrower's Operating
Account in an amount equal to that deficiency. As long as no Default
or Event of Default exists, Lender will return to Borrower any excess
payment from an Investor for Pledged Assets.
3.3 (g) Lender reserves the right to revalue any Pledged Loan. Borrower must
pay to Lender, without the necessity of prior demand or Notice from
Lender, and Borrower authorizes Lender to cause the Funding Bank to
charge Borrower's Operating Account for, any amount required after any
such revaluation to reduce the principal amount of the Warehousing
Advance outstanding against the revalued Pledged Loan to an amount
equal to the Advance Rate for the applicable type of Eligible Loan
multiplied by the Fair Market Value of the Mortgage Loan.
3.4. Non-Usage Fees
At the end of each Calendar Quarter during the term of this Agreement,
commencing with the Calendar Quarter beginning on July 1, 2002, Lender will
determine the average usage of the Warehousing Commitment by calculating the
arithmetic daily average of the Warehousing Advances outstanding during such
Calendar Quarter ("Used Portion"). Lender will then subtract the Used Portion
from the arithmetic daily average of the Warehousing Commitment Amount
outstanding during such Calendar Quarter, and the result, if positive, will be
known as the "Unused Portion." Borrower must pay to Lender a fee ("Non-Usage
Fee") in the amount of 0.125% per annum of the Unused Portion during such
Calendar Quarter. The Non-Usage Fee is payable quarterly, in arrears. Lender
computes the Non-Usage Fee on the basis of the actual number of days in each
Calendar Quarter and a year of 360 days. Borrower must pay the Non-Usage Fee
within 9 days after the date of Lender's invoice or, if applicable, within 2
days after the date of Lender's account analysis statement. If the date set
forth in clause (a) of the definition of Warehousing Maturity Date occurs on a
day other than the last day of a Calendar Quarter, Borrower must pay the
prorated portion of the Non-Usage Fee due from the beginning of the then current
Calendar Quarter to and including that date. Borrower is not entitled to a
reduction in the amount of the Non-Usage Fee if (a) the Warehousing Commitment
Amount is reduced or (b) the Warehousing Commitment is terminated at the request
of Borrower or as a result of an Event of Default. If the Warehousing Commitment
terminates at the request of Borrower or as a result of an Event of Default,
Borrower must pay, on the date of termination, a Non-Usage Fee in the amount of
0.125% per annum of the Warehousing Commitment Amount in effect immediately
prior to the date of termination, for the period from the date of termination to
and including the date set forth in clause (a) of the definition of Warehousing
Maturity Date. Lender's determination of the Non-Usage Fee for any period is
conclusive and binding, absent manifest error.
3.5. Loan Package Fees, Wire Fees, Warehousing Fees
At the time of each Warehousing Advance against an Eligible Loan, Borrower will
incur a loan package fee ("Loan Package Fee") and a wire fee ("Wire Fee"). Loan
Package Fees and Wire Fees may, at Lender's discretion, be billed separately or
combined into a single warehousing fee ("Warehousing Fee"). Borrower must pay
all Loan Package Fees, Wire Fees or Warehousing Fees in the amount set forth in
Exhibit H within 9 days after the date of Lender's invoice or, if applicable,
within 2 days after the date of Lender's account analysis statement.
3.6. Miscellaneous Fees and Charges
Borrower must reimburse Lender for all Miscellaneous Fees and Charges. Borrower
must pay all Miscellaneous Fees and Charges within 9 days after the date of
Lender's invoice or, if applicable, within 2 days after the date of Lender's
account analysis statement.
3.7. Overdraft Advances
If, under the authorization given by Borrower in the Funding Bank Agreement or
pursuant to this Agreement, Lender debits Borrower's Operating Account or
directs the Funding Bank to honor an item presented against the Operating
Account, and that debit or direction results in an overdraft, Lender may make an
additional Warehousing Advance to fund that overdraft ("Overdraft Advance").
Borrower must pay (a) the outstanding amount of any Overdraft Advance within 1
Business Day after the date of the Overdraft Advance and (b) interest on the
amount of the Overdraft Advance at a rate per annum equal to the Bank One Prime
Rate plus 2% within 9 days after the date of Lender's invoice or, if applicable,
within 2 days after the date of Lender's account analysis statement.
3.8. Method of Making Payments
3.8 (a) Unless otherwise specified in this Agreement, Borrower must make all
payments under this Agreement to Lender by the close of business on
the date when due unless the date is not a Business Day. If the due
date is not a Business Day, payment is due on, and interest will
accrue to, the next Business Day. Borrower must make all payments in
United States dollars in immediately available funds transferred by
wire to accounts designated by Lender.
3.8 (b) Borrower authorizes Lender to cause the Funding Bank to charge
Borrower's Operating Account for any interest or fees due and payable
to Lender on the 9th day after the date of Lender's invoice or, if
applicable, on the 2nd day after the date of Lender's account analysis
statement, without the necessity of prior demand or Notice from
Lender.
3.8 (c) While a Default or Event of Default exists, Borrower authorizes Lender
to cause the Funding Bank to charge Borrower's Operating Account for
any Obligations due and payable to Lender, without the necessity of
prior demand or Notice from Lender.
End of Article 3
4. COLLATERAL
4.1. Grant of Security Interest
As security for the payment of the Warehousing Note and for the performance of
all of Borrower's Obligations, Borrower grants a security interest to Lender in
all of Borrower's right, title and interest in and to the following described
property ("Collateral"):
4.1 (a) All amounts advanced by Lender to or for the account of Borrower under
this Agreement to fund a Mortgage Loan until that Mortgage Loan is
closed and those funds disbursed.
4.1 (b) All Mortgage Loans, including all Mortgage Notes, Mortgages and
Security Agreements evidencing or securing those Mortgage Loans, that
are delivered or caused to be delivered to Lender (including delivery
to a third party on behalf of Lender), or that otherwise come into the
possession, custody or control of Lender (including the possession,
custody or control of a third party on behalf of Lender) for the
purpose of pledge or in respect of which Lender has made a Warehousing
Advance under this Agreement (collectively, "Pledged Loans").
4.1 (c) All Mortgage-backed Securities that are created in whole or in part on
the basis of Pledged Loans or that are delivered or caused to be
delivered to Lender (including delivery to a third party on behalf of
Lender), or that otherwise come into the possession, custody or
control of Lender (including the possession, custody or control of a
third party on behalf of Lender) or that are registered by book-entry
in the name of Lender (including registration in the name of a third
party on behalf of Lender), in each case for the purpose of pledge, or
in respect of which an Advance has been made by Lender under this
Agreement (collectively, "Pledged Securities").
4.1 (d) All private mortgage insurance and all commitments issued by the VA or
FHA to insure or guarantee any Mortgage Loans included in the Pledged
Loans; all Purchase Commitments held by Borrower covering Pledged
Loans or Pledged Securities, and all proceeds from the sale of Pledged
Loans or Pledged Securities, all agreements under which any Pledged
Loans were acquired or are sold by Borrower; and all personal
property, contract rights, servicing rights or contracts and servicing
fees and income or other proceeds, amounts and payments payable to
Borrower as compensation or reimbursement, accounts, payments,
intangibles and general intangibles of every kind relating to Pledged
Loans, Pledged Securities, Purchase Commitments, VA commitments or
guaranties, FHA commitments, private mortgage insurance and
commitments, and all other documents or instruments relating to
Pledged Loans and Pledged Securities, including any interest of
Borrower in any fire, casualty or hazard insurance policies and any
awards made by any public body or decreed by any court of competent
jurisdiction for a taking or for degradation of value in any eminent
domain proceeding as the same relate to Pledged Loans.
4.1 (e) All escrow accounts, documents, instruments, files, surveys,
certificates, correspondence, appraisals, computer programs, tapes,
discs, cards, accounting records (including all information, records,
tapes, data, programs, discs and cards necessary or helpful in the
administration or servicing of the Collateral) and other information
and data of Borrower relating to the Collateral.
4.1 (f) All cash, whether now existing or acquired after the date of this
Agreement, delivered to or otherwise in the possession of Lender, the
Funding Bank or Lender's agent, bailee or custodian or designated on
the books and records of Borrower as assigned and pledged to Lender,
including all cash deposited in the Cash Collateral Account and the
Wire Disbursement Account.
4.1 (g) All Hedging Arrangements related to the Collateral ("Pledged Hedging
Arrangements") and Borrower's accounts in which those Hedging
Arrangements are held ("Pledged Hedging Accounts"), including all
rights to payment arising under the Pledged Hedging Arrangements and
the Pledged Hedging Accounts, except that Lender's security interest
in the Pledged Hedging Arrangements and Pledged Hedging Accounts
applies only to benefits, including rights to payment, related to the
Collateral.
4.1 (h) All cash and non-cash proceeds of the Collateral, including all
dividends, distributions and other rights in connection with, and all
additions to, modifications of and replacements for, the Collateral,
and all products and proceeds of the Collateral, together with
whatever is receivable or received when the Collateral or proceeds of
Collateral are sold, collected, exchanged or otherwise disposed of,
whether such disposition is voluntary or involuntary, including all
rights to payment with respect to any cause of action affecting or
relating to the Collateral or proceeds of Collateral.
4.2. Maintenance of Collateral Records
As long as the Warehousing Commitment is outstanding or there remain any
Obligations to be paid or performed under this Agreement or under any other Loan
Document, Borrower must preserve and maintain, at its chief executive office and
principal place of business or in a regional office approved by Lender, or in
the office of a computer service bureau engaged by Borrower and approved by
Lender and, upon request, make available to Lender the originals, or copies in
any case where the originals have been delivered to Lender or to an Investor, of
the Mortgage Notes, Mortgages and Security Agreements included in Pledged Loans,
Mortgage-backed Securities delivered to Lender as Pledged Securities, Purchase
Commitments, and all related Mortgage Loan documents and instruments, and all
files, surveys, certificates, correspondence, appraisals, computer programs,
tapes, discs, cards, accounting records and other information and data relating
to the Collateral.
4.3. Release of Security Interest in Pledged Loans and Pledged Securities
4.3 (a) Except as provided in Section 4.3 (b), Lender will release its
security interest in the Pledged Loans only against payment to Lender
of the Release Amount in connection with those Pledged Loans. If
Pledged Loans are transferred to a pool custodian or an Investor for
inclusion in a Mortgage Pool and Lender's security interest in the
Pledged Loans included in the Mortgage Pool is not released before the
issuance of the related Mortgage-backed Security, then that
Mortgage-backed Security, when issued, is a Pledged Security, Lender's
security interest continues in the Pledged Loans backing that Pledged
Security and Lender is entitled to possession of the Pledged Security
in the manner provided in this Agreement.
4.3 (b) If Pledged Loans are transferred to an Approved Custodian and included
in an Eligible Mortgage Pool, Lender's security interest in the
Pledged Loans included in the Eligible Mortgage Pool will be released
upon the delivery of the Agency Security to Lender (including delivery
to or registration in the name of a third party on behalf of Lender)
and that Agency Security is a Pledged Security. Lender's security
interest in that Pledged Security will be released only against
payment to Lender of the Release Amount in connection with the
Mortgage Loans backing that Pledged Security.
4.3 (c) Lender has the exclusive right to possession of all Pledged Securities
or, if Pledged Securities are issued in book-entry form or issued in
certificated form and delivered to a clearing corporation (as that
term is defined in the Uniform Commercial Code of Minnesota) or its
nominee, Lender has the right to have the Pledged Securities
registered in the name of a securities intermediary (as that term is
defined in the Uniform Commercial Code of Minnesota) in an account
containing only customer securities and credited to an account of
Lender. Lender has no duty or obligation to deliver Pledged Securities
to an Investor or to credit Pledged Securities to the account of an
Investor or an Investor's designee except against payment for those
Pledged Securities. Borrower acknowledges that Lender may enter into
one or more standing arrangements with securities intermediaries with
respect to Pledged Securities issued in book entry form or issued in
certificated form and delivered to a clearing corporation or its
designee, under which the Pledged Securities are registered in the
name of the securities intermediary, and Borrower agrees, upon request
of Lender, to execute and deliver to those securities intermediaries
Borrower's written concurrence in any such standing arrangements.
4.3 (d) If no Default or Event of Default occurs, Borrower may redeem a
Pledged Loan or Pledged Security from Lender's security interest by
notifying Lender of its intention to redeem the Pledged Loan or
Pledged Security from pledge and either (1) paying, or causing an
Investor to pay, to Lender, for application as a prepayment on the
principal balance of the Warehousing Note, the Release Amount in
connection with the Pledged Loan or the Pledged Loans backing that
Pledged Security, or (2) delivering substitute Collateral that, in
addition to being acceptable to Lender in its sole discretion, will,
when included with the remaining Collateral, result in a Warehousing
Collateral Value of all Collateral held by Lender that is at least
equal to the aggregate outstanding Warehousing Advances.
4.3 (e) After a Default or Event of Default occurs, Lender may, with no
liability to Borrower or any Person, continue to release its security
interest in any Pledged Loan or Pledged Security against payment of
the Release Amount for that Pledged Loan or for the Pledged Loans
backing that Pledged Security.
4.3 (f) The amount to be paid by Borrower to obtain the release of Lender's
security interest in a Pledged Loan ("Release Amount") will be (1) in
connection with the sale of a Pledged Loan by Borrower, the payment
required in any bailee letter pursuant to which Lender ships that
Pledged Loan to an Investor, Approved Custodian, pool custodian or
other party, (2) in connection with the sale of a Pledged Loan by
Lender while an Event of Default exists, the amount paid to Lender in
a commercially reasonable disposition of that Pledged Loan and (3)
otherwise, until an Event of Default occurs, the principal amount of
the Advance outstanding against the Pledged Loan.
4.4. Collection and Servicing Rights
4.4 (a) If no Event of Default exists, Borrower may service and receive and
collect directly all sums payable to Borrower in respect of the
Collateral other than proceeds of any sale of Collateral. All proceeds
of any sale of Collateral must be paid directly to the Cash Collateral
Account for application as provided in this Agreement.
4.4 (b) After an Event of Default, Lender or its designee is entitled to
service and receive and collect all sums payable to Borrower in
respect of the Collateral, and in such case (1) Lender or its designee
in its discretion may, in its own name, in the name of Borrower or
otherwise, demand, xxx for, collect or receive any money or property
at any time payable or receivable on account of or in exchange for any
of the Collateral, but Lender has no obligation to do so, (2) Borrower
must, if Lender requests it to do so, hold in trust for the benefit of
Lender and immediately pay to Lender at its office designated by
Notice, all amounts received by Borrower upon or in respect of any of
the Collateral, advising Lender as to the source of those funds and
(3) all amounts so received and collected by Lender will be held by it
as part of the Collateral.
4.5. Return of Collateral at End of Warehousing Commitment
If (a) the Warehousing Commitment has expired or been terminated, and (b) no
Warehousing Advances, interest or other Obligations are outstanding and unpaid,
Lender will release its security interest and will deliver all Collateral in its
possession to Borrower at Borrower's expense. Borrower's acknowledgement or
receipt for any Collateral released or delivered to Borrower under any provision
of this Agreement is a complete and full acquittance for the Collateral so
returned, and Lender is discharged from any liability or responsibility for that
Collateral.
4.6. Delivery of Collateral Documents
4.6 (a) Lender may deliver documents relating to the Collateral to Borrower
for correction or completion under a Trust Receipt.
4.6 (b) If no Default or Event of Default exists, upon delivery by Borrower to
Lender of shipping instructions pursuant to the applicable Exhibit B,
Lender will deliver the Mortgage Notes evidencing Pledged Loans or
Pledged Securities, together with all related loan documents and pool
documents previously received by Lender under the requirements of the
applicable Exhibit Q to the designated Investor or Approved Custodian
or to another party designated by Borrower and acceptable to Lender in
its sole discretion.
4.6 (c) If a Default or Event of Default exists, Lender may, without liability
to Borrower or any other Person, continue to deliver Pledged Loans or
Pledged Securities, together with all related loan documents and pool
documents in Lender's possession, to the applicable Investor, or
Approved Custodian or to another party acceptable to Lender in its
sole discretion.
End of Article 4
5. CONDITIONS PRECEDENT
5.1. Initial Advance
The effectiveness of this Agreement is subject to the satisfaction, in the sole
discretion of Lender, of the following conditions precedent:
5.1 (a) Lender must receive the following, all of which must be satisfactory
in form and content to Lender, in its sole discretion:
(1) The Warehousing Note and this Agreement duly executed by
Borrower.
(2) Borrower's articles or certificate of incorporation, together
with all amendments, as certified by the Secretary of State of
Colorado, Borrower's bylaws, together with all amendments,
certified by the corporate secretary or assistant secretary of
Borrower, and certificates of good standing dated within 30 days
of the date of this Agreement.
(3) A resolution of the board of directors of Borrower authorizing
the execution, delivery and performance of this Agreement and the
other Loan Documents, each Warehousing Advance Request and all
other agreements, instruments or documents to be delivered by
Borrower under this Agreement.
(4) A certificate as to the incumbency and authenticity of the
signatures of the officers of Borrower executing this Agreement
and the other Loan Documents, and of the officers and employees
of Borrower delivering each Warehousing Advance Request and all
other agreements, instruments or documents to be delivered under
this Agreement (Lender being entitled to rely on that certificate
until a new incumbency certificate has been furnished to Lender).
(5) Assumed Name Certificates dated within 30 days of the date of
this Agreement for any assumed name used by Borrower in the
conduct of its business.
(6) Fiscal year-end financial statements of Borrower (and, if
applicable, Borrower's Subsidiaries, on a consolidated basis)
containing a balance sheet as of December 31, 2001 and related
statements of income for the period ended on that date, all in
reasonable detail and prepared in accordance with GAAP applied on
a basis consistent with prior periods.
(7) Interim financial statements of Borrower (and, if applicable,
Borrower's Subsidiaries, on a consolidated basis) containing a
balance sheet as of January 31, 2002, and a related statement of
income, for the period ended on that date prepared in accordance
with GAAP applied on a basis consistent with Borrower's most
recent financial statements.
(8) The Guaranty, on the form prescribed by Lender, duly executed by
the Guarantor.
(9) The Guarantor's articles or certificate of incorporation,
together with all amendments, as certified by the Secretary of
State of Colorado, bylaws certified by the corporate secretary of
the Guarantor and certificates of good standing dated within 30
days of the date of this Agreement.
(10) A resolution of the board of directors of the Guarantor,
certified as of the date of the Agreement by its corporate
secretary, authorizing the execution, delivery and performance of
the Guaranty, and all other agreements, instruments or documents
to be delivered by the Guarantor under this Agreement.
(11) A certificate as to the incumbency and authenticity of the
signatures of the officers of the Guarantor executing the
Guaranty and all other agreements, instruments or documents to be
delivered under this Agreement (Lender being entitled to rely on
that certificate until a new incumbency certificate has been
furnished to Lender).
(12) Fiscal year-end financial statements of Parent (and, if
applicable, Parent's Subsidiaries, on a consolidated basis)
containing a balance sheet as of December 31, 2001 and related
statements of income, changes in stockholders' equity and cash
flows for the period ended on that date, all in reasonable detail
and prepared in accordance with GAAP applied on a basis
consistent with prior periods and accompanied by (A) an opinion
as to those financial statements in form and substance
satisfactory to Lender and prepared by independent certified
public accountants of recognized standing acceptable to Lender
and (B) any management letters, management reports or other
supplementary comments or reports delivered by those accountants
to Parent or its Board of directors.
(13) A favorable written opinion of counsel to Borrower and the
Guarantor (or of separate counsel at the option of Borrower and
the Guarantor), addressed to Lender and dated as of the date of
this Agreement, covering such matters as Lender may reasonably
request.
(14) Uniform Commercial Code, tax lien and judgment searches of the
appropriate public records for Borrower that do not disclose the
existence of any prior Lien on the Collateral other than in favor
of Lender or as permitted under this Agreement.
(15) Copies of Borrower's errors and omissions insurance policy or
mortgage impairment insurance policy, and blanket bond coverage
policy, or certificates in lieu of policies, showing compliance
by Borrower as of the date of this Agreement with the provisions
of Section 7.9.
(16) A fully-executed Funding Bank Agreement and evidence that all
accounts into which Warehousing Advances will be funded have been
established at the Funding Bank.
(17) Receipt by Lender of any fees due on the date of this Agreement.
(18) Receipt by Lender of the December 31, 2001 consolidating
statement of Guarantor.
5.1 (b) If Borrower is indebted to any of its directors, officers,
shareholders or Affiliates, or to the Guarantor, as of the date of
this Agreement, which indebtedness has a term of more than 1 year or
is in excess of $250,000, the Person to whom Borrower is indebted must
have executed a Subordination of Debt Agreement, on the form
prescribed by Lender; and Lender must have received an executed copy
of that Subordination of Debt Agreement, certified by the corporate
secretary or assistant secretary of Borrower to be true and complete
and in full force and effect as of the date of the Warehousing
Advance.
5.1 (c) Borrower must not have incurred any material liabilities, direct or
contingent, other than in the ordinary course of its business, since
the Audited Statement Date.
5.2. Each Advance
The obligation of Lender to make the initial and each subsequent Warehousing
Advance is subject to the satisfaction, in the sole discretion of Lender, as of
the date of each Warehousing Advance, of the following additional conditions
precedent:
5.2 (a) Borrower must have delivered to Lender the Warehousing Advance Request
and Collateral Documents required by, called for under, and must have
satisfied the procedures set forth in, Article 2 and the Exhibits
described in that Article. All items delivered to Lender must be
satisfactory to Lender in form and content, and Lender may reject any
item that does not satisfy the requirements of this Agreement or of
the related Purchase Commitment.
5.2 (b) Lender must have received evidence satisfactory to it as to the making
or continuation of any book entry or the due filing and recording in
all appropriate offices of all financing statements and other
instruments necessary to perfect the security interest of Lender in
the Collateral under the Uniform Commercial Code or other applicable
law.
5.2 (c) The representations and warranties of Borrower contained in Article 6
and Article 9 must be accurate and complete in all material respects
as if made on and as of the date of each Warehousing Advance.
5.2 (d) Borrower must have performed all agreements to be performed by it
under this Agreement, and after giving effect to the requested
Warehousing Advance, no Default or Event of Default may exist under
this Agreement.
5.2 (e) The Guarantor must have performed all agreements to be performed by
the Guarantor under the Guaranty.
Delivery of a Warehousing Advance Request by Borrower will be deemed a
representation by Borrower that all conditions set forth in this Section have
been satisfied as of the date of the Warehousing Advance.
5.3. Force Majeure
Notwithstanding Borrower's satisfaction of the conditions set forth in this
Agreement, Lender has no obligation to make a Warehousing Advance if Lender is
prevented from obtaining the funds necessary to make a Warehousing Advance, or
is otherwise prevented from making a Warehousing Advance as a result of any fire
or other casualty, failure of power, strike, lockout or other labor trouble,
banking moratorium, embargo, sabotage, confiscation, condemnation, riot, civil
disturbance, insurrection, act of terrorism, war or other activity of armed
forces, act of God or other similar reason beyond the control of Lender. Lender
will make the requested Warehousing Advance as soon as reasonably possible
following the occurrence of such an event.
End of Article 5
6. GENERAL REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants to Lender, as of the date of this Agreement and
as of the date of each Warehousing Advance Request and the making of each
Warehousing Advance, that:
6.1. Place of Business
Borrower's chief executive office and principal place of business is 0000
Xxxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxx, XX, 00000.
6.2. Organization; Good Standing; Subsidiaries
Borrower is a corporation duly organized, validly existing and in good standing
under the laws of the State of Colorado, and has the full legal power and
authority to own its property and to carry on its business as currently
conducted. Borrower is duly qualified as a foreign corporation to do business
and is in good standing in each jurisdiction in which the transaction of its
business makes qualification necessary, except in jurisdictions, if any, where a
failure to be in good standing has no material adverse effect on Borrower's
business, operations, assets or financial condition as a whole. For the purposes
of this Agreement, good standing includes qualification for all licenses and
payment of all taxes required in the jurisdiction of its incorporation and in
each jurisdiction in which Borrower transacts business. Borrower has no
Subsidiaries except as set forth on Exhibit D, which sets forth with respect to
each Subsidiary, its name, address, jurisdiction of organization, each state in
which it is qualified to do business, and the percentage ownership of its
capital stock by Borrower. Each of Borrower's Subsidiaries is duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization, and has the full legal power and authority to own its property and
to carry on its business as currently conducted.
6.3. Authorization and Enforceability
Borrower has the power and authority to execute, deliver and perform this
Agreement, the Warehousing Note and other Loan Documents to which Borrower is
party and to make the borrowings under this Agreement. The execution, delivery
and performance by Borrower of this Agreement, the Warehousing Note and the
other Loan Documents to which Borrower is party and the making of the borrowings
under this Agreement, and the Warehousing Note, have been duly and validly
authorized by all necessary corporate action on the part of Borrower (none of
which actions has been modified or rescinded, and all of which actions are in
full force and effect) and do not and will not (a) conflict with or violate any
provision of law, of any judgments binding upon Borrower, or of the articles of
incorporation or by-laws of Borrower, or (b) conflict with or result in a breach
of, constitute a default or require any consent under, or result in or require
the acceleration of any indebtedness of Borrower under any agreement, instrument
or indenture to which Borrower is a party or by which Borrower or its property
may be bound or affected, or result in the creation of any Lien upon any
property or assets of Borrower (other than the Lien on the Collateral granted
under this Agreement). This Agreement, the Warehousing Note and the other Loan
Documents constitute the legal, valid and binding obligations of Borrower,
enforceable in accordance with their respective terms, except as limited by
bankruptcy, insolvency or other such laws affecting the enforcement of
creditors' rights.
6.4. Authorization and Enforceability of Guaranty
Each non-individual Guarantor has the power and authority, and each individual
Guarantor has the legal capacity to execute, deliver and perform the Guaranty.
The Guaranty constitutes the legal, valid, and binding obligation of each
Guarantor, enforceable in accordance with its terms, except as limited by
bankruptcy, insolvency or other such laws affecting the enforcement of
creditors' rights.
6.5. Approvals
The execution and delivery of this Agreement, the Warehousing Note and the other
Loan Documents and the performance of Borrower's obligations under this
Agreement, the Warehousing Note and the other Loan Documents and the validity
and enforceability of this Agreement, the Warehousing Note and the other Loan
Documents do not require any license, consent, approval or other action of any
state or federal agency or governmental or regulatory authority other than those
that have been obtained and remain in full force and effect.
6.6. Financial Condition
The balance sheet of Borrower (and, if applicable, Borrower's Subsidiaries, on a
consolidated basis) as of each Statement Date, and the related statements of
income, cash flows and changes in stockholders' equity for the fiscal period
ended on each Statement Date, furnished to Lender, fairly present the financial
condition of Borrower (and, if applicable, Borrower's Subsidiaries) as at that
Statement Date and the results of its operations for the fiscal period ended on
that Statement Date. Borrower had, on each Statement Date, no known material
liabilities, direct or indirect, fixed or contingent, matured or unmatured, or
liabilities for taxes, long-term leases or unusual forward or long-term
commitments not disclosed by, or reserved against in, those financial
statements, and at the present time there are no material unrealized or
anticipated losses from any loans, advances or other commitments of Borrower
except as previously disclosed to Lender in writing. Those financial statements
were prepared in accordance with GAAP applied on a consistent basis throughout
the periods involved. Since the date of the financial statements described in
Section 5.1(6) or, from and after the delivery of the first financial statement
required under Section 7.2(b), there has been no material adverse change in the
business, operations, assets or financial condition of Borrower (and, if
applicable, Borrower's Subsidiaries), nor is Borrower aware of any state of
facts that (with or without notice or lapse of time or both) would or could
result in any such material adverse change.
6.7. Litigation
There are no actions, claims, suits or proceedings pending or, to Borrower's
knowledge, threatened or reasonably anticipated against or affecting Borrower or
any Subsidiary of Borrower in any court or before any arbitrator or before any
government commission, board, bureau or other administrative agency that, if
adversely determined, may reasonably be expected to result in a material adverse
change in Borrower's business, operations, assets or financial condition as a
whole, or that would affect the validity or enforceability of this Agreement,
the Warehousing Note or any other Loan Document.
6.8. Compliance with Laws
Neither Borrower nor any Subsidiary of Borrower is in violation of any provision
of any law, or of any judgment, award, rule, regulation, order, decree, writ or
injunction of any court or public regulatory body or authority that could result
in a material adverse change in Borrower's business, operations, assets or
financial condition as a whole or that would affect the validity or
enforceability of this Agreement, the Warehousing Note or any other Loan
Document.
6.9. Regulation U
Borrower is not engaged principally, or as one of its important activities, in
the business of extending credit for the purpose of purchasing or carrying
Margin Stock, and no part of the proceeds of any Warehousing Advance made under
this Agreement will be used to purchase or carry any Margin Stock or to extend
credit to others for the purpose of purchasing or carrying any Margin Stock.
6.10. Investment Company Act
Borrower is not an "investment company" or controlled by an "investment company"
within the meaning of the Investment Company Act.
6.11. Payment of Taxes
Borrower and each of its Subsidiaries has filed or caused to be filed all
federal, state and local income, excise, property and other tax returns that are
required to be filed with respect to the operations of Borrower and its
Subsidiaries, all such returns are true and correct and Borrower and each of its
Subsidiaries has paid or caused to be paid all taxes shown on those returns or
on any assessment, to the extent that those taxes have become due, including all
FICA payments and withholding taxes, if appropriate. The amounts reserved as a
liability for income and other taxes payable in the financial statements
described in Section 6.6 are sufficient for payment of all unpaid federal, state
and local income, excise, property and other taxes, whether or not disputed, of
Borrower and its Subsidiaries accrued for or applicable to the period and on the
dates of those financial statements and all years and periods prior to those
financial statements and for which Borrower and its Subsidiaries may be liable
in their own right or as transferee of the assets of, or as successor to, any
other Person. No tax Liens have been filed and no material claims are being
asserted against Borrower, any Subsidiary of Borrower or any property of
Borrower or any Subsidiary of Borrower with respect to any taxes, fees or
charges.
6.12. Agreements
Neither Borrower nor any Subsidiary of Borrower is a party to any agreement,
instrument or indenture or subject to any restriction materially and adversely
affecting its business, operations, assets or financial condition, except as
disclosed in the financial statements described in Section 6.6. Neither Borrower
nor any Subsidiary of Borrower is in default in the performance, observance or
fulfillment of any of the obligations, covenants or conditions contained in any
agreement, instrument, or indenture which default could result in a material
adverse change in Borrower's business, operations, properties or financial
condition as a whole. No holder of any indebtedness of Borrower or of any of its
Subsidiaries has given notice of any asserted default under that indebtedness,
and no liquidation or dissolution of Borrower or of any of its Subsidiaries and
no receivership, insolvency, bankruptcy, reorganization or other similar
proceedings relative to Borrower or of any of its Subsidiaries or any of its or
their properties is pending, or to the knowledge of Borrower, threatened.
6.13. Title to Properties
Borrower and each Subsidiary of Borrower has good, valid, insurable and (in the
case of real property) marketable title to all of its properties and assets
(whether real or personal, tangible or intangible) reflected on the financial
statements described in Section 6.6, except for those properties and assets that
Borrower has disposed of since the date of those financial statements either in
the ordinary course of business or because they were no longer used or useful in
the conduct of Borrower's or the Subsidiary's business. All of Borrower's
properties and assets are free and clear of all Liens except as disclosed in
Borrower's financial statements.
6.14. ERISA
Each Plan is in compliance with all applicable requirements of ERISA and the
Internal Revenue Code and with all material applicable rulings and regulations
issued under the provisions of ERISA and the Internal Revenue Code setting forth
those requirements, except where any failure to comply would not result in a
material loss to Borrower or any ERISA Affiliate. All of the minimum funding
standards or other contribution obligations applicable to each Plan have been
satisfied. No Plan is a defined-benefit pension plan subject to Title IV of
ERISA, and there is no Multiemployer Plan.
6.15. No Retiree Benefits
Except as required under Section 4980B of the Internal Revenue Code, Section 601
of ERISA or applicable state law, neither Borrower nor, if applicable, any
Subsidiary is obligated to provide post-retirement medical or insurance benefits
with respect to employees or former employees.
6.16. Assumed Names
Borrower does not originate Mortgage Loans or otherwise conduct business under
any names other than its legal name and the assumed names set forth on Exhibit
G. Borrower has made all filings and taken all other action as may be required
under the laws of any jurisdiction in which it originates Mortgage Loans or
otherwise conducts business under any assumed name. Borrower's use of the
assumed names set forth on Exhibit G does not conflict with any other Person's
legal rights to any such name, nor otherwise give rise to any liability by
Borrower to any other Person. Borrower may amend Exhibit G to add or delete any
assumed names used by Borrower to conduct business. An amendment to Exhibit G to
add an assumed name is not effective until Borrower has delivered to Lender an
assumed name certificate in the jurisdictions in which the assumed name is to be
used, which must be satisfactory in form and content to Lender, in its sole
discretion. In connection with any amendment to delete a name from Exhibit G,
Borrower represents and warrants that it has ceased using that assumed name in
all jurisdictions.
6.17. Servicing
Exhibit C is a true and complete list of Borrower's Servicing Portfolio. All of
Borrower's Servicing Contracts are in full force and effect, and are
unencumbered by Liens other than Liens disclosed in Exhibit C. No default or
event that, with notice or lapse of time or both, would become a default, exists
under any of Borrower's Servicing Contracts.
End of Article 6
7. AFFIRMATIVE COVENANTS
As long as the Warehousing Commitment is outstanding or there remain any
Obligations to be paid or performed under this Agreement or under any other Loan
Document, Borrower must:
7.1. Payment of Obligations
Punctually pay or cause to be paid all Obligations, including the Obligations
payable under this Agreement and under the Warehousing Note, in accordance with
their terms.
7.2. Financial Statements
Deliver to Lender:
7.2 (a) As soon as available and in any event within 30 days after the end of
each month, including the last month of Borrower's fiscal year, an
interim statement of income of Borrower (and, if applicable,
Borrower's Subsidiaries, on a consolidated basis) for the immediately
preceding month and for the period from the beginning of the fiscal
year to the end of that month, and the related balance sheet as at the
end of the immediately preceding month, all in reasonable detail,
subject, however, to year-end audit adjustments.
7.2 (b) As soon as available and in any event within 90 days after the end of
each fiscal year of Borrower, fiscal year-end statements of income,
changes in stockholders' equity and cash flow of Borrower (and, if
applicable, Borrower's Subsidiaries, on a consolidated basis) for that
year, and the related balance sheet as of the end of that year
(setting forth in comparative form the corresponding figures for the
preceding fiscal year), all in reasonable detail and accompanied by
(1) an opinion as to those financial statements in form and prepared
by independent certified public accountants of recognized standing
acceptable to Lender and (2) any management letters, management
reports or other supplementary comments or reports delivered by those
accountants to Borrower or its board of directors.
7.2 (c) Together with each delivery of financial statements required by this
Section, a Compliance Certificate substantially in the form of Exhibit
E.
7.2 (d) As soon as available and in any event within 90 days after the end of
each fiscal year of the Guarantor, fiscal year-end statements of
income, changes in stockholders' equity and cash flows of the
Guarantor (and, if applicable, the Guarantor's Subsidiaries, on a
consolidated basis) for the most recent fiscal year, the related
balance sheet as at the end of that year (setting forth in comparative
form the corresponding figures for the preceding fiscal year), all in
reasonable detail and accompanied by (1) an opinion as to those
financial statements in form and substance satisfactory to Lender and
prepared by independent certified public accountants of recognized
standing acceptable to Lender and (2) any management letters,
management reports or other supplementary comments or reports
delivered by those accountants to the Guarantor.
7.2 (e) As soon as available and in any event within 45 days after the end of
each fiscal quarter of Guarantor, including the last fiscal quarter of
Guarantor's fiscal year, an interim statement of income of Guarantor
(and, if applicable, Guarantor's Subsidiaries, on a consolidated
basis) for that fiscal quarter and the period from the beginning of
the fiscal year to the end of that fiscal quarter, and the related
balance sheet as at the end of that fiscal quarter, all in reasonable
detail, subject, however, to year-end audit adjustments.
7.2 (f) Copies of all regular or periodic financial and other reports that
Borrower or Guarantor files with the Securities and Exchange
Commission or any successor governmental agency or other entity.
7.3. Other Borrower Reports
Deliver to Lender:
7.3 (a) If Borrower has a Servicing Portfolio, then as soon as available and
in any event within 30 days after the end of each month, a
consolidated report ("Servicing Portfolio Report") as of the end of
the month, as to all Mortgage Loans the servicing rights to which are
owned by Borrower (specified by investor type, recourse and
non-recourse) regardless of whether the Mortgage Loans are Pledged
Loans. The Servicing Portfolio Report must indicate which Mortgage
Loans (1) are current and in good standing, (2) are more than 30, 60
or 90 days past due, (3) are the subject of pending bankruptcy or
foreclosure proceedings, or (4) have been converted (through
foreclosure or other proceedings in lieu of foreclosure) into real
estate owned by Borrower.
7.3 (b) Other reports in respect of Pledged Assets, including copies of
purchase confirmations issued by Investors purchasing Pledged Loans
from Borrower, in such detail and at such times as Lender in its
discretion may reasonably request.
7.3 (c) With reasonable promptness, all further information regarding the
business, operations, properties or financial condition of Borrower as
Lender may reasonably request, including copies of any audits
completed by HUD, Xxxxxx Xxx, Xxxxxx Xxx or Xxxxxxx Mac.
7.3 (d) As soon as available and in any event within 30 days after the end of
each month, a report, in such detail as Lender in its discretion may
reasonably request, with respect to all Mortgage Loans (including the
Pledged Loans) purchased, held or sold by Borrower during such month,
separately identifying Non-performing Mortgage Loans, Sub-performing
Mortgage Loans, and Mortgage Loans purchased under the Xxxxxx Mae
Early Buyout Loan, and a summary of Mortgage Loan documentation or
Investor problems for each Pledged Loan that is a Sub-performing
Mortgage Loan or a Non-performing Mortgage Loan.
7.4. Maintenance of Existence; Conduct of Business
Preserve and maintain its corporate existence in good standing and all of its
rights, privileges, licenses and franchises necessary or desirable in the normal
conduct of its business, conduct its business in an orderly and efficient
manner; maintain a net worth of acceptable assets as required for maintaining
Borrower's eligibility as lender, seller/servicer and issuer; and make no
material change in the nature or character of its business or engage in any
business in which it was not engaged on the date of this Agreement.
7.5. Compliance with Applicable Laws
Comply with the requirements of all applicable laws, rules, regulations and
orders of any governmental authority, a breach of which could result in a
material adverse change in Borrower's business, operations, assets, or financial
condition as a whole or on the enforceability of this Agreement, the Warehousing
Note, any other Loan Document or any Collateral, except where contested in good
faith and by appropriate proceedings.
7.6. Inspection of Properties and Books; Operational Reviews
Permit Lender or any Participant (and their authorized representatives) to
discuss the business, operations, assets and financial condition of Borrower and
its Subsidiaries with Borrower's officers, agents and employees, and to examine
and make copies or extracts of Borrower's and its Subsidiaries' books of
account, all at such reasonable times as Lender or any Participant may request.
Provide its accountants with a copy of this Agreement promptly after its
execution and authorize and instruct them to answer candidly all questions that
the officers of Lender or any Participant or any authorized representatives of
Lender or any Participant may address to them in reference to the financial
condition or affairs of Borrower and its Subsidiaries. Borrower may have its
representatives in attendance at any meetings held between the officers or other
representatives of Lender or any Participant and Borrower's accountants under
this authorization. Permit Lender or any Participant (and their authorized
representatives) access to Borrower's premises and records for the purpose of
conducting a review of Borrower's general mortgage business methods, policies
and procedures, auditing its loan files and reviewing the financial and
operational aspects of Borrower's business.
7.7. Notice
Give prompt Notice to Lender of (a) any action, suit or proceeding instituted
against Borrower 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), which action, suit or proceeding has at issue in excess of
$100,000, or any such proceedings threatened against Borrower or any of its
Subsidiaries in a writing containing the details of that action, suit or
proceeding; (b) the filing, recording or assessment of any federal, state or
local tax Lien against Borrower, or any of its assets or any of its
Subsidiaries; (c) an Event of Default; (d) a Default that continues for more
than 4 days; (e) the suspension, revocation or termination of Borrower's
eligibility, in any respect, as lender, seller/servicer or issuer, (f) the
transfer, loss, nonrenewal or termination of any Servicing Contracts to which
Borrower is a party, or which is held for the benefit of Borrower, and the
reason for that transfer, loss, nonrenewal or termination; (g) any Prohibited
Transaction with respect to any Plan, specifying the nature of the Prohibited
Transaction and what action Borrower proposes to take with respect to it; and
(h) any other action, event or condition of any nature that could lead to or
result in a material adverse change in the business, operations, assets or
financial condition of Borrower or any of its Subsidiaries.
7.8. Payment of Debt, Taxes and Other Obligations
Pay, perform and discharge, or cause to be paid, performed and discharged, all
of the obligations and indebtedness of Borrower and its Subsidiaries, all taxes,
assessments and governmental charges or levies imposed upon Borrower or its
Subsidiaries or upon their respective income, receipts or properties before
those taxes, assessments and governmental charges or levies become past due, and
all lawful claims for labor, materials and supplies or otherwise that, if
unpaid, could become a Lien or charge upon any of their respective properties or
assets. Borrower and its Subsidiaries are not required to pay, however, any
taxes, assessments and governmental charges or levies or claims for labor,
materials or supplies for which Borrower or its Subsidiaries have obtained an
adequate bond or insurance or that are being contested in good faith and by
proper proceedings that are being reasonably and diligently pursued and for
which proper reserves have been created.
7.9. Insurance
Maintain blanket bond coverage and errors and omissions insurance or mortgage
impairment insurance, with such companies and in such amounts as satisfy
prevailing requirements applicable to a lender, seller/servicer and issuer, and
liability insurance and fire and other hazard insurance on its properties, in
each case with responsible insurance companies acceptable to Lender, in such
amounts and against such risks as is customarily carried by similar businesses
operating in the same location. Within 30 days after Notice from Lender, obtain
such additional insurance as Lender may reasonably require, all at the sole
expense of Borrower. Copies of such policies must be furnished to Lender without
charge upon request of Lender.
7.10. Subordination of Certain Indebtedness
Cause any indebtedness of Borrower to any shareholder, director, officer or
Affiliate of Borrower, or to any Guarantor, which indebtedness has a term of
more than 1 year or is in excess of $250,000, to be subordinated to the
Obligations by the execution and delivery to Lender of a Subordination of Debt
Agreement, on the form prescribed by Lender, certified by the corporate
secretary of Borrower to be true and complete and in full force and effect.
7.11. Other Loan Obligations
Perform all material obligations under the terms of each loan agreement, note,
mortgage, security agreement or debt instrument by which Borrower is bound or to
which any of its property is subject, and promptly notify Lender in writing of a
declared default under or the termination, cancellation, reduction or nonrenewal
of any of its other lines of credit or agreements with any other lender. Exhibit
F is a true and complete list of all such lines of credit or agreements as of
the date of this Agreement. Borrower must give Lender at least 30 days Notice
before entering into any additional lines of credit or agreements.
7.12. ERISA
Maintain (and, if applicable, cause each ERISA Affiliate to maintain) each Plan
in compliance with all material applicable requirements of ERISA and of the
Internal Revenue Code and with all applicable rulings and regulations issued
under the provisions of ERISA and of the Internal Revenue Code, and not (and, if
applicable, not permit any ERISA Affiliate to), (a) engage in any transaction in
connection with which Borrower or any ERISA Affiliate would be subject to either
a civil penalty assessed pursuant to Section 502(i) of ERISA or a tax imposed by
Section 4975 of the Internal Revenue Code, in either case in an amount exceeding
$25,000 or (b) fail to make full payment when due of all amounts that, under the
provisions of any Plan, Borrower or any ERISA Affiliate is required to pay as
contributions to that Plan, or permit to exist any accumulated funding
deficiency (as such term is defined in Section 302 of ERISA and Section 412 of
the Internal Revenue Code), whether or not waived, with respect to any Plan in
an aggregate amount exceeding $25,000.
7.13. Use of Proceeds of Warehousing Advances
Use the proceeds of each Warehousing Advance solely for the purpose of
purchasing Eligible Loans and against the pledge of those Eligible Loans as
Collateral.
End of Article 7
8. NEGATIVE COVENANTS
As long as the Warehousing Commitment is outstanding or there remain any
Obligations to be paid or performed, Borrower must not, either directly or
indirectly, without the prior written consent of Lender:
8.1. Contingent Liabilities
Assume, guarantee, endorse or otherwise become contingently liable for the
obligation of any Person except by endorsement of negotiable instruments for
deposit or collection in the ordinary course of business, and except for
obligations arising in connection with the sale of Mortgage Loans with recourse
in the ordinary course of Borrower's business.
8.2. Pledge of Servicing Contracts
Pledge or grant a security interest in any existing or future Servicing
Contracts of Borrower other than to Lender, or omit to take any action required
to keep all of Borrower's Servicing Contracts in full force and effect.
8.3. Restrictions on Fundamental Changes
8.3 (a) Consolidate, merge or enter into any analogous reorganization or
transaction with any Person.
8.3 (b) Amend or otherwise modify Borrower's articles of incorporation or
by-laws.
8.3 (c) Liquidate, wind up or dissolve (or suffer any liquidation or
dissolution).
8.3 (d) Cease actively to engage in the business of originating or acquiring
Mortgage Loans or make any other material change in the nature or
scope of the business in which Borrower engages as of the date of this
Agreement.
8.3 (e) Sell, assign, lease, convey, transfer or otherwise dispose of (whether
in one transaction or a series of transactions) all or any substantial
part of Borrower's business or assets, whether now owned or acquired
after the Closing Date, other than, in the ordinary course of business
and to the extent not otherwise prohibited by this Agreement, sales of
(1) Mortgage Loans, (2) Mortgage-backed Securities and (3) Servicing
Contracts.
8.3 (f) Acquire by purchase or in any other transaction all or substantially
all of the business or property of, or stock or other ownership
interests of, any Person.
8.3 (g) Permit any Subsidiary of Borrower to do or take any of the foregoing
actions.
8.4. Subsidiaries
Form or acquire, or permit any Subsidiary of Borrower to form or acquire, any
Person that would thereby become a Subsidiary.
8.5. Deferral of Subordinated Debt
Pay any Subordinated Debt of Borrower in advance of its stated maturity or,
after a Default or Event of Default under this Agreement has occurred, make any
payment of any kind on any Subordinated Debt of Borrower until all of the
Obligations have been paid and performed in full and any applicable preference
period has expired.
8.6. Loss of Eligibility
Take any action that would cause Borrower to lose all or any part of its status
as an eligible lender, seller/servicer or issuer.
8.7. Accounting Changes
Make, or permit any Subsidiary of Borrower to make, any significant change in
accounting treatment or reporting practices, except as required by GAAP, or
change its fiscal year or the fiscal year of any Subsidiary of Borrower.
8.8. Leverage Ratio
Permit Borrower's Leverage Ratio at any time to exceed 10 to 1.
8.9. Minimum Tangible Net Worth
Permit Borrower's Tangible Net Worth at any time to be less than $2,500,000.
8.10. Liquidity Ratio
Permit Borrower's Liquidity Ratio at any time to be less than 35%.
8.11. Loans to Loans Ratio
Permit the ratio (expressed as a percentage) of the aggregate amount of Advances
outstanding against Non-performing Mortgage Loans and Sub-performing Mortgage
Loans to the aggregate amount of Advances outstanding at any time to be greater
than 10%. For the purpose of this calculation, any Pledged Loans that are Xxxxxx
Xxx Early Buyout Loans shall be excluded.
8.12. Distributions to Shareholders
For any fiscal year, declare or pay any dividends or otherwise declare or make
any distribution to Borrower's shareholders (including any purchase or
redemption of stock) if a Default or Event of Default exists or would occur as a
result of the dividend or distribution.
8.13. Transactions with Affiliates
Directly or indirectly (a) make any loan, advance, extension of credit or
capital contribution to any of Borrower's Affiliates, except for (i) loans,
advances, extensions of credit or capital contributions in an aggregate amount
not to exceed $500,000 to First Matrix Investment Services, and (ii) loans made
to Matrix Bancorp as part of its consolidated cash management system; (b) sell,
transfer, pledge or assign any of its assets to or on behalf of those
Affiliates, other than sales of Mortgage Loans to Affiliates in the ordinary
course of business; (c) merge or consolidate with or purchase or acquire assets
from those Affiliates, or (d) pay management fees in excess of $250,000 to or on
behalf of those Affiliates.
8.14. Recourse Servicing Contracts
Acquire or enter into Servicing Contracts under which Borrower must repurchase
or indemnify the holder of the Mortgage Loans as a result of defaults on the
Mortgage Loans at any time during the term of those Mortgage Loans.
End of Article 8
9. SPECIAL REPRESENTATIONS, WARRANTIES AND COVENANTS CONCERNING COLLATERAL
9.1. Special Representations and Warranties Concerning Warehousing
Collateral
Borrower represents and warrants to Lender, as of the date of this Agreement and
as of the date of each Warehousing Advance Request and the making of each
Warehousing Advance, that:
9.1 (a) Borrower has not selected the Collateral in a manner so as to affect
adversely Lender's interests.
9.1 (b) Borrower is the legal and equitable owner and holder, free and clear
of all Liens (other than Liens granted under this Agreement), of the
Pledged Loans and the Pledged Securities. All Pledged Loans, Pledged
Securities and related Purchase Commitments have been duly authorized
and validly issued to Borrower, and all of the foregoing items of
Collateral comply with all of the requirements of this Agreement, and
have been and will continue to be validly pledged or assigned to
Lender, subject to no other Liens.
9.1 (c) Borrower has, and will continue to have, the full right, power and
authority to pledge the Collateral pledged and to be pledged by it
under this Agreement.
9.1 (d) Each Mortgage Loan and each related document included in the Pledged
Loans (1) has been duly executed and delivered by the parties to that
Mortgage Loan and that related document, (2) has been made in
compliance with all applicable laws, rules and regulations (including
all laws, rules and regulations relating to usury), (3) is and will
continue to be a legal, valid and binding obligation, enforceable in
accordance with its terms, without setoff, counterclaim or defense in
favor of the mortgagor under the Mortgage Loan or any other obligor on
the Mortgage Note and (4) has not been modified, amended or any
requirements of which waived, except in a writing that is part of the
Collateral Documents. No party to any Mortgage Loan or related
document is in violation of any applicable law, rule or regulation if
the violation would impair the collectibility of the Mortgage Loan or
the performance by the mortgagor or any other obligor of its
obligations under the Mortgage Note or any related document.
9.1 (e) Each Pledged Loan is denominated in dollars and secured by a Mortgage
on real property located in one of the states of the United States or
the District of Columbia.
9.1 (f) Except for open-ended Second Mortgage Loans, each Mortgage Loan has
been fully advanced in the face amount of its Mortgage Note.
9.1 (g) Each First Mortgage is a first Lien on the premises described in that
Mortgage.
9.1 (h) Each Second Mortgage Loan is secured by a second Lien on the premises
described in that Mortgage.
9.1 (i) To the extent required by the related Purchase Commitment or by
Investors generally for similar Mortgage Loans, each Second Mortgage
Loan has or will have a title insurance policy, in ALTA form or
equivalent, from a recognized title insurance company, insuring the
priority of the Lien of the Mortgage and meeting the usual
requirements of Investors purchasing those Mortgage Loans. 9.1(j) Each
First Mortgage Loan has or will have a title insurance policy, in ALTA
form or equivalent, from a recognized title insurance company,
insuring the priority of the Lien of the Mortgage and meeting the
usual requirements of Investors purchasing those Mortgage Loans.
9.1 (k) Each Mortgage Loan has been evaluated or appraised in accordance with
Title XI of FIRREA.
9.1 (l) The Mortgage Note for each Pledged Loan is (1) payable or endorsed to
the order of Borrower, (2) an "instrument" within the meaning of
Article 9 of the Uniform Commercial Code of all applicable
jurisdictions and (3) is denominated and payable in United States
dollars.
9.1 (m) Except in the case of Non-performing Mortgage Loans, no default has
existed for 60 days or more under any Mortgage Loan included in the
Pledged Loans, except Non-performing Mortgage Loans and Sub-performing
Mortgage Loans.
9.1 (n) No party to a Mortgage Loan or any related document is in violation of
any applicable law, rule or regulation that would impair the
collectibility of the Mortgage Loan or the performance by the
mortgagor or any other obligor of its obligations under the Mortgage
Note or any related document.
9.1 (o) All fire and casualty policies covering the premises encumbered by
each Mortgage included in the Pledged Loans (1) name and will continue
to name Borrower and its successors and assigns as the insured under a
standard mortgagee clause, (2) are and will continue to be in full
force and effect and (3) afford and will continue to afford insurance
against fire and such other risks as are usually insured against in
the broad form of extended coverage insurance generally available.
9.1 (p) Pledged Loans secured by premises located in a special flood hazard
area designated as such by the Director of the Federal Emergency
Management Agency are and will continue to be covered by special flood
insurance under the National Flood Insurance Program.
9.1 (q) Each Pledged Loan against which a Warehousing Advance is made on the
basis of a Purchase Commitment meets all of the requirements of that
Purchase Commitment, and each Pledged Security against which a
Warehousing Advance is outstanding meets all of the requirements of
the related Purchase Commitment.
9.1 (r) Pledged Loans that are intended to be used in the formation of
Mortgage-backed Securities comply with the requirements of the issuer
of the Mortgage-backed Securities (or its sponsor) and of the Rating
Agencies.
9.1 (s) None of the Pledged Loans is a graduated payment Mortgage Loan or has
a shared appreciation or other contingent interest feature, and each
Pledged Loan provides for periodic payments of all accrued interest on
the Mortgage Loan on at least a monthly basis.
9.1 (t) The original assignments of Mortgage delivered to Lender for each
Pledged Loan are in recordable form and comply with all applicable
laws and regulations governing the filing and recording of such
documents.
9.1 (u) Each Pledged Loan secured by real property to which a Manufactured
Home is affixed will create a valid Lien on that Manufactured Home
that will have priority over any other Lien on the Manufactured Home,
whether or not arising under applicable real property law.
9.2. Special Affirmative Covenants Concerning Warehousing Collateral
As long as the Warehousing Commitment is outstanding or there remain any
Obligations to be paid or performed under this Agreement or under any other Loan
Document, Borrower must:
9.2 (a) Warrant and defend the right, title and interest of Lender in and to
the Collateral against the claims and demands of all Persons.
9.2 (b) Service or cause to be serviced all Pledged Loans in accordance with
the standard requirements of the issuers of Purchase Commitments
covering them and all applicable HUD, Xxxxxx Xxx and Xxxxxxx Mac
requirements, including taking all actions necessary to enforce the
obligations of the obligors under such Mortgage Loans. Service or
cause to be serviced all Mortgage Loans backing Pledged Securities in
accordance with applicable governmental requirements and requirements
of issuers of Purchase Commitments covering them. Hold all escrow
funds collected in respect of Pledged Loans and Mortgage Loans backing
Pledged Securities in trust, without commingling the same with
non-custodial funds, and apply them for the purposes for which those
funds were collected.
9.2 (c) Execute and deliver to Lender with respect to the Collateral those
further instruments of sale, pledge, assignment or transfer, and those
powers of attorney, as required by Lender, and do and perform all
matters and things necessary or desirable to be done or observed, for
the purpose of effectively creating, maintaining and preserving the
security and benefits intended to be afforded Lender under this
Agreement.
9.2 (d) Prior to the origination by Borrower of any Mortgage Loan to be
registered on the MERS system, obtain the approval of Lender and enter
into an Electronic Tracking Agreement.
9.2 (e) No Pledged Loan is a Discontinued Loan.
9.3. Special Negative Covenants Concerning Warehousing Collateral
As long as the Warehousing Commitment is outstanding or there remain any
Obligations to be paid or performed, Borrower must not, either directly or
indirectly, without the prior written consent of Lender:
9.3 (a) Amend or modify, or waive any of the terms and conditions of, or
settle or compromise any claim in respect of, any Pledged Loans or
Pledged Securities.
9.3 (b) Sell, transfer or assign, or grant any option with respect to, or
pledge (except under this Agreement and, with respect to each Pledged
Loan or Pledged Security, the related Purchase Commitment) any of the
Collateral or any interest in any of the Collateral.
9.3 (c) Make any compromise, adjustment or settlement in respect of any of the
Collateral or accept other than cash in payment or liquidation of the
Collateral.
End of Article 9
10. DEFAULTS; REMEDIES
10.1. Events of Default
The occurrence of any of the following is an event of default ("Event of
Default"):
10.1 (a) Borrower fails to pay the principal of any Warehousing Advance when
due, whether at stated maturity, by acceleration, or otherwise; or
fails to pay any installment of interest on any Warehousing Advance
within 9 days after the date of Lender's invoice or, if applicable,
within 2 days after the date of Lender's account analysis statement;
or fails to pay, within any applicable grace period, any other amount
due under this Agreement or any other Obligation of Borrower to
Lender.
10.1 (b) Borrower, any of its Subsidiaries or Guarantor fails to pay, or
defaults in the payment of any principal or interest on, any other
indebtedness or any contingent obligation within any applicable grace
period; breaches or defaults with respect to any other material term
of any other indebtedness or of any loan agreement, mortgage,
indenture or other agreement relating to that indebtedness, if the
effect of that breach or default is to cause, or to permit the holder
or holders of that indebtedness (or a trustee on behalf of such holder
or holders) to cause, indebtedness of Borrower, any of its
Subsidiaries or Guarantor in the aggregate amount of $50,000 or more
to become or be declared due before its stated maturity (upon the
giving or receiving of notice, lapse of time, both, or otherwise).
10.1 (c) Borrower fails to perform or comply with any term or condition
applicable to it contained in Sections 7.4 or 7.13 or in any Section
of Article 8.
10.1 (d) Any representation or warranty made or deemed made by Borrower under
this Agreement, in any other Loan Document or in any written statement
or certificate at any time given by Borrower is inaccurate or
incomplete in any material respect on the date as of which it is made
or deemed made.
10.1 (e) Borrower defaults in the performance of or compliance with any term
contained in this Agreement or any other Loan Document other than
those referred to in Sections 10.1 (a), 10.1 (c) or 10.1 (d) and such
default has not been remedied or waived within 30 days after the
earliest of (1) receipt by Borrower of Notice from Lender of that
default, (2) receipt by Lender of Notice from Borrower of that default
or (3) the date Borrower should have notified Lender of that default
under Section 7.7(c) or 7.7(d).
10.1 (f) An "event of default" (however defined) occurs under any agreement
between Borrower and Lender other than this Agreement and the other
Loan Documents.
10.1 (g) A case (whether voluntary or involuntary) is filed by or against
Borrower or any Subsidiary of Borrower or any Guarantor under any
applicable bankruptcy, insolvency or other similar federal or state
law; or a court of competent jurisdiction appoints a receiver (interim
or permanent), liquidator, sequestrator, trustee, custodian or other
officer having similar powers over Borrower or any Subsidiary of
Borrower or any Guarantor, or over all or a substantial part of their
respective properties or assets; or Borrower or any Subsidiary of
Borrower or any Guarantor (1) consents to the appointment of or
possession by a receiver (interim or permanent), liquidator,
sequestrator, trustee, custodian or other officer having similar
powers over Borrower or any Subsidiary of Borrower or any Guarantor,
or over all or a substantial part of their respective properties or
assets, (2) makes an assignment for the benefit of creditors, or (3)
fails, or admits in writing its inability, to pay its debts as those
debts become due.
10.1 (h) Borrower fails to perform any contractual obligation to repurchase
Mortgage Loans, if such obligations in the aggregate exceed $500,000.
10.1 (i) Any money judgment, writ or warrant of attachment or similar process
involving in an amount in excess of $100,000 is entered or filed
against Borrower or any of its Subsidiaries or any of their respective
assets and remains undischarged, unvacated, unbonded or unstayed for a
period of 30 days or 5 days before the date of any proposed sale under
that money judgment, writ or warrant of attachment or similar process.
10.1 (j) Any order, judgment or decree decreeing the dissolution of Borrower or
any nonindividual Guarantor is entered and remains undischarged or
unstayed for a period of 20 days.
10.1 (k) Borrower purports to disavow the Obligations or contests the validity
or enforceability of any Loan Document.
10.1 (l) Any Guarantor purports to disavow its obligations under its Guaranty
or contests the validity or enforceability of the Guaranty.
10.1 (m) Lender's security interest on any portion of the Collateral becomes
unenforceable or otherwise impaired.
10.1 (n) A material adverse change occurs in Borrower's financial condition,
business, properties, operations or prospects, or in Borrower's
ability to repay the Obligations.
10.1 (o) Any Lien for any taxes, assessments or other governmental charges (1)
is filed against Borrower or any of its property, or is otherwise
enforced against Borrower or any of its property, or (2) obtains
priority that is equal to greater than the priority of Lender's
security interest in any of the Collateral.
10.1 (p) Guarantor ceases to own, directly or indirectly, all of the capital
stock of Borrower.
10.2. Remedies
10.2 (a) If an Event of Default described in Section 10.1 (g) occurs with
respect to Borrower, the Warehousing Commitment will automatically
terminate and the unpaid principal amount of and accrued interest on
the Warehousing Note and all other Obligations will automatically
become due and payable, without presentment, demand or other Notice or
requirements of any kind, all of which Borrower expressly waives.
10.2 (b) If any other Event of Default occurs, Lender may, by Notice to
Borrower, terminate the Warehousing Commitment and declare the
Obligations to be immediately due and payable.
10.2 (c) If any Event of Default occurs, Lender may also take any of the
following actions:
(1) Foreclose upon or otherwise enforce its security interest in any
Lien on the Collateral to secure all payments and performance of
the Obligations in any manner permitted by law or provided for in
the Loan Documents.
(2) Notify all obligors under any of the Collateral that the
Collateral has been assigned to Lender (or to another Person
designated by Lender) and that allpayments on that Collateral are
to be made directly to Lender (or such other Person); settle,
compromise or release, in whole or in part, any amounts any
obligor or Investor owes on any of the Collateral on terms
acceptable to Lender; enforce payment and prosecute any action or
proceeding involving any of the Collateral; and where any
Collateral is in default, foreclose on and enforce any Liens
securing that Collateral in any manner permitted by law and sell
any property acquired as a result of those enforcement actions.
(3) Prepare and submit for filing UCC amendment statements evidencing
the assignment to Lender or its designee of any financing
statement filed in connection with any item of Collateral.
(4) Act, or contract with a third party to act, at Borrower's
expense, as servicer or subservicer of Collateral requiring
servicing, and perform all obligations required under any
Collateral, including Servicing Contracts and Purchase
Commitments.
(5) Require Borrower to assemble and make available to Lender the
Collateral and all related books and records at a place
designated by Lender.
(6) Enter onto property where any Collateral or related books and
records are located and take possession of those items with or
without judicial process; and obtain access to Borrower's data
processing equipment, computer hardware and software relating to
the Collateral and use all of the foregoing and the information
contained in the foregoing in any manner Lender deems necessary
for the purpose of effectuating its rights under this Agreement
and any other Loan Document.
(7) Before the disposition of the Collateral, prepare it for
disposition in any manner and to the extent Lender deems
appropriate.
(8) Exercise all rights and remedies of a secured creditor under the
Uniform Commercial Code of Minnesota or other applicable law,
including selling or otherwise disposing of all or any portion of
the Collateral at one or more public or private sales, whether or
not the Collateral is present at the place of sale, for cash or
credit or future delivery, on terms and conditions and in the
manner as Lender may determine, including sale under any
applicable Purchase Commitment. Borrower waives any right it may
have to prior notice of the sale of all or any portion of the
Collateral to the extent allowed by applicable law. If notice is
required under applicable law, Lender will give Borrower not less
than 10 days' notice of any public sale or of the date after
which any private sale may be held. Borrower agrees that 10 days'
notice is reasonable notice. Lender may, without notice or
publication, adjourn any public or private sale one or more times
by announcement at the time and place fixed for the sale, and the
sale may be held at any time or place announced at the
adjournment. In the case of a sale of all or any portion of the
Collateral on credit or for future delivery, the Collateral sold
on those terms may be retained by Lender until the purchaser pays
the selling price or takes possession of the Collateral. Lender
has no liability to Borrower if a purchaser fails to pay for or
take possession of the Collateral sold on those terms, and in the
case of any such failure, Lender may sell the Collateral again
upon notice complying with this Section.
(9) Instead of or in conjunction with exercising the power of sale
authorized by Section (8), Lender may proceed by suit at law or
in equity to collect all amounts due on the Collateral, or to
foreclose Lender's Lien on and sell all or any portion of the
Collateral pursuant to a judgment or decree of a court of
competent jurisdiction.
(10) Proceed against Borrower on the Warehousing Note or against any
Guarantor under the Guaranty.
(11) Retain all excess proceeds from the sale or other disposition of
the Collateral, and apply them to the payment of the Obligations
under Section 10.3.
10.2 (d) Lender will incur no liability as a result of the commercially
reasonable sale or other disposition of all or any portion of the
Collateral at any public or private sale or other disposition.
Borrower waives (to the extent permitted by law) any claims it may
have against Lender arising by reason of the fact that the price at
which the Collateral may have been sold at a private sale was less
than the price that Lender might have obtained at a public sale, or
was less than the aggregate amount of the outstanding Warehousing
Advances, accrued and unpaid interest on those Warehousing Advances,
and unpaid fees, even if Lender accepts the first offer received and
does not offer the Collateral to more than one offeree. Borrower
agrees that any sale of Collateral under the terms of a Purchase
Commitment, or any other disposition of Collateral arranged by
Borrower, whether before or after the occurrence of an Event of
Default, will be deemed to have been made in a commercially reasonable
manner.
10.2 (e) Borrower acknowledges that Mortgage Loans are collateral of a type
that is the subject of widely distributed standard price quotations
and that Mortgage-backed Securities are collateral of a type that is
customarily sold on a recognized market. Borrower waives any right it
may have to prior notice of the sale of Pledged Securities, and agrees
that Lender may purchase Pledged Loans and Pledged Securities at a
private sale of such Collateral.
10.2 (f) Borrower specifically waives and releases (to the extent permitted by
law) any equity or right of redemption, stay or appraisal that
Borrower has or may have under any rule of law or statute now existing
or adopted after the date of this Agreement, and any right to require
Lender to (1) proceed against any Person, (2) proceed against or
exhaust any of the Collateral or pursue its rights and remedies
against the Collateral in any particular order, or (3) pursue any
other remedy within its power. Lender is not required to take any
action to preserve any rights of Borrower against holders of mortgages
having priority to the Lien of any Mortgage or Security Agreement
included in the Collateral or to preserve Borrower's rights against
other prior parties.
10.2 (g) Lender may, but is not obligated to, advance any sums or do any act or
thing necessary to uphold or enforce the Lien and priority of, or the
security intended to be afforded by, any Mortgage or Security
Agreement included in the Collateral, including payment of delinquent
taxes or assessments and insurance premiums. All advances, charges,
costs and expenses, including reasonable attorneys' fees and
disbursements, incurred or paid by Lender in exercising any right,
power or remedy conferred by this Agreement, or in the enforcement of
this Agreement, together with interest on those amounts at the Default
Rate, from the time paid by Lender until repaid by Borrower, are
deemed to be principal outstanding under this Agreement and the
Warehousing Note.
10.2 (h) No failure or delay on the part of Lender to exercise any right, power
or remedy provided in this Agreement or under any other Loan Document,
at law or in equity, will operate as a waiver of that right, power or
remedy. No single or partial exercise by Lender of any right, power or
remedy provided under this Agreement or any other Loan Document, at
law or in equity, precludes any other or further exercise of that
right, power, or remedy by Lender, or Lender's exercise of any other
right, power or remedy. Without limiting the foregoing, Borrower
waives all defenses based on the statute of limitations to the extent
permitted by law. The remedies provided in this Agreement and the
other Loan Documents are cumulative and are not exclusive of any
remedies provided at law or in equity.
10.2 (i) Borrower grants Lender a license or other right to use, without
charge, Borrower's computer programs, other programs, labels, patents,
copyrights, rights of use of any name, trade secrets, trade names,
trademarks, service marks and advertising matter, or any property of a
similar nature, as it pertains to the Collateral, in advertising for
sale and selling any of the Collateral and Borrower's rights under all
licenses and all other agreements related to the foregoing inure to
Lender's benefit until the Obligations are paid in full.
10.3. Application of Proceeds
Lender may apply the proceeds of any sale, disposition or other enforcement of
Lender's Lien on all or any portion of the Collateral to the payment of the
Obligations in the order Lender determines in its sole discretion. From and
after the indefeasible payment to Lender of all of the Obligations, any
remaining proceeds of the Collateral will be paid to Borrower, or to its
successors or assigns, or as a court of competent jurisdiction may direct. If
the proceeds of any sale, disposition or other enforcement of the Collateral are
insufficient to cover the costs and expenses of that sale, disposition or other
enforcement and payment in full of all Obligations, Borrower is liable for the
deficiency.
10.4. Lender Appointed Attorney-in-Fact
Borrower appoints Lender its attorney-in-fact, with full power of substitution,
for the purpose of carrying out the provisions of this Agreement, the
Warehousing Note and the other Loan Documents and taking any action and
executing any instruments that Lender deems necessary or advisable to accomplish
that purpose. Borrower's appointment of Lender as attorney-in-fact is
irrevocable and coupled with an interest. Without limiting the generality of the
foregoing, Lender may give notice of its Lien on the Collateral to any Person,
either in Borrower's name or in its own name, endorse all Pledged Loans or
Pledged Securities payable to the order of Borrower, change or cause to be
changed the book-entry registration or name of subscriber or Investor on any
Pledged Security, prepare and submit for filing Uniform Commercial Code
amendment statements with respect to any Uniform Commercial Code financing
statements filed in connection with any item of Collateral or receive, endorse
and collect all checks made payable to the order of Borrower representing
payment on account of the principal of or interest on, or the proceeds of sale
of, any of the Pledged Loans or Pledged Securities and give full discharge for
those transactions.
10.5. Right of Set-Off
If Borrower defaults in the payment of any Obligation or in the performance of
any of its duties under the Loan Documents, Lender may, without Notice to or
demand on Borrower (which Notice or demand Borrower expressly waives), set-off,
appropriate or apply any property of Borrower held at any time by Lender, or any
indebtedness at any time owed by Lender to or for the account of Borrower,
against the Obligations, whether or not those Obligations have matured.
End of Article 10
11. MISCELLANEOUS
11.1. Notices
Except where telephonic or facsimile notice is expressly authorized by this
Agreement, all communications required or permitted to be given or made under
this Agreement ("Notices") must be in writing and must be sent by manual
delivery, overnight courier or United States mail (postage prepaid), addressed
as follows (or at such other address as may be designated by it in a Notice to
the other):
If to Borrower: Matrix Capital Markets, Inc.
0000 Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Attention: Xxxx X. xx Xxxxxxx,
President/CEO
Facsimile: (000) 000-0000
If to Lender: Residential Funding Corporation
0000 Xxxxx Xxxxxxxxxx Xxxxxxxxx,
Xxxxx 000
Xxxxxx Xxxxx, XX 00000
Attention: Xxxxxxxx Xxxxxx, Director
Facsimile: (000) 000-0000
All periods of Notice will be measured from the date of delivery if manually
delivered, from the first Business Day after the date of sending if sent by
overnight courier or from 4 days after the date of mailing if sent by United
States mail, except that Notices to Lender under Article 2 and Section 3.3 (f)
shall be deemed to have been given only when actually received by Lender.
Borrower authorizes Lender to accept Borrower's bailee pledge agreements,
Warehousing Advance Requests, shipping requests, wire transfer instructions and
security delivery instructions transmitted to Lender by facsimile or RFConnects
Delivery, and those documents, when transmitted to Lender by facsimile or by
RFConnects Delivery, have the same force and effect as the originals.
11.2. Reimbursement Of Expenses; Indemnity
Borrower must: (a) pay Lender a document production fee in connection with the
preparation and negotiation of this Agreement; (b) pay such additional
documentation production fees as Lender may require and all out-of-pocket costs
and expenses of Lender, including reasonable fees, service charges and
disbursements of counsel to Lender (including allocated costs of internal
counsel), in connection with the amendment, enforcement and administration of
this Agreement, the Warehousing Note, and other Loan Documents and the making,
repayment and payment of interest on the Warehousing Advances; (c) indemnify,
pay, and hold harmless Lender and any other holder of the Warehousing Note from
and against, all present and future stamp, documentary and other similar taxes
with respect to the foregoing matters and save Lender and any other holder of
the Warehousing Note harmless from and against any and all liabilities with
respect to or resulting from any delay or omission to pay such taxes; and (d)
indemnify, pay and hold harmless Lender and all of its Affiliates, officers,
directors, employees or agents and any subsequent holder of the Warehousing Note
(collectively called the "Indemnitees") from and against all liabilities,
obligations, losses, damages, penalties, judgments, suits, costs, expenses and
disbursements of every kind or nature whatsoever (including the reasonable fees
and disbursements of counsel to the Indemnitees (including allocated costs of
internal counsel) in connection with any investigative, administrative or
judicial proceeding, whether or not the Indemnitees have been designated as
parties to such proceeding) that may be imposed upon, incurred by or asserted
against such Indemnitees in any manner relating to or arising out of this
Agreement, the Warehousing Note, or any other Loan Document or any of the
transactions contemplated by this Agreement, the Warehousing Note and the other
Loan Documents ("Indemnified Liabilities"), except that Borrower has no
obligation under this Agreement with respect to Indemnified Liabilities arising
from the gross negligence or willful misconduct of any such Indemnitees. To the
extent that the undertaking to indemnify, pay and hold harmless as set forth in
the preceding sentence may be unenforceable because it is violative of any law
or public policy, Borrower must contribute the maximum portion that it is
permitted to pay and satisfy under applicable law to the payment and
satisfaction of all Indemnified Liabilities incurred by the Indemnitees or any
of them. The agreement of Borrower contained in this Article survives the
expiration or termination of this Agreement and the payment in full of the
Warehousing Note. Attorneys' fees and disbursements incurred in enforcing, or on
appeal from, a judgment under this Agreement are recoverable separately from and
in addition to any other amount included in such judgment, and this clause is
intended to be severable from the other provisions of this Agreement and to
survive and not be merged into such judgment.
11.3. Financial Information
All financial statements and reports furnished to Lender under this Agreement
must be prepared in accordance with GAAP, applied on a basis consistent with
that applied in preparing the financial statements as at the end of and for
Borrower's most recent fiscal year (except to the extent otherwise required to
conform to good accounting practice).
11.4. Terms Binding Upon Successors; Survival of Representations
The terms and provisions of this Agreement are binding upon and inure to the
benefit of Borrower, Lender and their respective successors and assigns. All of
Borrower's representations, warranties, covenants and agreements survive the
making of any Warehousing Advance, and except where a longer period is set forth
in this Agreement, remain effective for as long as the Warehousing Commitment is
outstanding or there remain any Obligations to be paid or performed.
11.5. Assignment
Borrower cannot assign this Agreement. Lender may at any time, without Notice to
or the consent of Borrower, transfer or assign, in whole or in part, its
interest in this Agreement and the Warehousing Note along with Lender's security
interest in any of the Collateral, and any assignee of Lender may enforce this
Agreement, the Warehousing Note and its security interest in the Collateral
assigned.
11.6. Amendments
Except as otherwise provided in this Agreement, this Agreement may not be
amended, modified or supplemented unless the amendment, modification or
supplement is set forth in a writing signed by both Borrower and Lender.
11.7. Governing Law
This Agreement and the other Loan Documents are governed by the laws of the
State of Minnesota, without reference to its principles of conflicts of laws.
11.8. Participations
Lender may at any time sell, assign or grant participations in, or otherwise
transfer to any other Person ('Participant"), all or part of the Obligations.
Without limiting Lender's exclusive right to collect and enforce the
Obligations, Borrower agrees that each participation will give rise to a
debtor-creditor relationship between Borrower and the Participant, and Borrower
authorizes each Participant, upon the occurrence of an Event of Default, to
proceed directly by right of setoff, banker's lien, or otherwise, against any
assets of Borrower that may be held by that Participant. Borrower authorizes
Lender to disclose to prospective and actual Participants all information in
Lender's possession concerning Borrower, this Agreement and the Collateral.
11.9. Relationship of the Parties
This Agreement provides for the making and repayment of Warehousing Advances by
Lender (in its capacity as a lender) and Borrower (in its capacity as a
borrower), for the payment of interest on those Warehousing Advances and for the
payment of certain fees by Borrower to Lender. The relationship between Lender
and Borrower is limited to that of creditor and secured party on the part of
Lender and of debtor on the part of Borrower. The provisions of this Agreement
and the other Loan Documents for compliance with financial covenants and the
delivery of financial statements and other operating reports are intended solely
for the benefit of Lender to protect its interest as a creditor and secured
party. Nothing in this Agreement creates or may be construed as permitting or
obligating Lender to act as a financial or business advisor or consultant to
Borrower, as permitting or obligating Lender to control Borrower or to conduct
Borrower's operations, as creating any fiduciary obligation on the part of
Lender to Borrower, or as creating any joint venture, agency, partnership or
other relationship between Lender and Borrower other than as explicitly and
specifically stated in the Loan Documents. Borrower acknowledges that it has had
the opportunity to obtain the advice of experienced counsel of its own choice in
connection with the negotiation and execution of the Loan Documents and to
obtain the advice of that counsel with respect to all matters contained in the
Loan Documents, including the waivers of jury trial and of punitive,
consequential, special or indirect damages contained in Sections 11.15 and 11.6,
respectively. Borrower further acknowledges that it is experienced with respect
to financial and credit matters and has made its own independent decisions to
apply to Lender for credit and to execute and deliver this Agreement.
11.10. SeverabiIity
If any provision of this Agreement is declared to be illegal or unenforceable in
any respect, that provision is null and void and of no force and effect to the
extent of the illegality or unenforceability, and does not affect the validity
or enforceability of any other provision of the Agreement.
11.11. Consent to Credit References
Borrower consents to the disclosure of information regarding Borrower and its
Subsidiaries and their relationships with Lender to Persons making credit
inquiries to Lender. This consent is revocable by Borrower at any time upon
Notice to Lender as provided in Section 11.1.
11.12. Counterparts
This Agreement may be executed in any number of counterparts, each of which will
be deemed an original, but all of which together constitute but one and the same
instrument.
11.13. Entire Agreement
This Agreement, the Warehousing Note and the other Loan Documents represent the
final agreement among the parties with respect to their subject matter, and may
not be contradicted by evidence of prior or contemporaneous oral agreements
among the parties. There are no oral agreements among the parties with respect
to the subject matter of this Agreement, the Warehousing Note and the other Loan
Documents.
11.14. Consent to Jurisdiction
AT THE OPTION OF LENDER, THIS AGREEMENT, THE WAREHOUSING NOTE AND THE OTHER LOAN
DOCUMENTS MAY BE ENFORCED IN ANY STATE OR FEDERAL COURT WITHIN THE STATE OF
MINNESOTA. BORROWER CONSENTS TO THE JURISDICTION AND VENUE OF THOSE COURTS, AND
WAIVES ANY OBJECTION TO THE JURISDICTION OR VENUE OF THOSE COURTS, INCLUDING THE
OBJECTION THAT VENUE IN THOSE COURTS IS NOT CONVENIENT. ANY SUCH SUIT, ACTION OR
PROCEEDING MAY BE COMMENCED AND INSTITUTED BY SERVICE OF PROCESS UPON BORROWER
BY FIRST CLASS REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, ADDRESSED
TO BORROWER AT ITS ADDRESS LAST KNOWN TO LENDER. BORROWER'S CONSENT AND
AGREEMENT UNDER THIS SECTION DOES NOT AFFECT LENDER'S RIGHT TO ACCOMPLISH
SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL
PROCEEDINGS OR OTHERWISE PROCEED AGAINST BORROWER IN ANY OTHER JURISDICTION OR
COURT. IN THE EVENT BORROWER COMMENCES ANY ACTION IN ANOTHER JURISDICTION OR
VENUE UNDER ANY TORT OR CONTRACT THEORY ARISING DIRECTLY OR INDIRECTLY FROM THE
RELATIONSHIP CREATED BY THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, LENDER AT
ITS OPTION MAY HAVE THE CASE TRANSFERRED TO A STATE OR FEDERAL COURT WITHIN THE
STATE OF MINNESOTA OR, IF A TRANSFER CANNOT BE ACCOMPLISHED UNDER APPLICABLE
LAW, MAY HAVE BORROWER'S ACTION DISMISSED WITHOUT PREJUDICE.
11.15. Waiver of Jury Trial
BORROWER AND LENDER EACH PROMISES AND AGREES NOT TO ELECT A TRIAL BY JURY OF ANY
ISSUE TRIABLE OF RIGHT BY A JURY, AND FULLY WAIVES ANY RIGHT TO TRIAL BY JURY TO
THE EXTENT THAT ANY SUCH RIGHT NOW EXISTS OR ARISES AFTER THE DATE OF THIS
AGREEMENT. THIS WAIVER OF THE RIGHT TO TRIAL BY JURY IS SEPARATELY GIVEN,
KNOWINGLY AND VOLUNTARILY, BY BORROWER AND LENDER, AND IS INTENDED TO ENCOMPASS
EACH INSTANCE AND EACH ISSUE FOR WHICH THE RIGHT TO TRIAL BY JURY WOULD
OTHERWISE APPLY. LENDER AND BORROWER ARE EACH AUTHORIZED AND DIRECTED TO SUBMIT
THIS AGREEMENT TO ANY COURT HAVING JURISDICTION OVER THE SUBJECT MATTER AND THE
PARTIES TO THIS AGREEMENT AS CONCLUSIVE EVIDENCE OF THIS WAIVER OF THE RIGHT TO
TRIAL BY JURY. FURTHER, BORROWER AND LENDER EACH CERTIFIES THAT NO
REPRESENTATIVE OR AGENT OF THE OTHER PARTY, INCLUDING THE OTHER PARTY'S COUNSEL,
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, TO ANY OF ITS REPRESENTATIVES OR AGENTS
THAT THE OTHER PARTY WILL NOT SEEK TO ENFORCE THIS WAIVER OF RIGHT TO TRIAL BY
JURY.
11.16. Waiver of Punitive, Consequential, Special or Indirect Damages
BORROWER WAIVES ANY RIGHT IT MAY HAVE TO SEEK PUNITIVE, CONSEQUENTIAL, SPECIAL
OR INDIRECT DAMAGES FROM LENDER OR ANY OF LENDER'S AFFILIATES, OFFICERS,
DIRECTORS, EMPLOYEES OR AGENTS WITH RESPECT TO ANY AND ALL ISSUES PRESENTED IN
ANY ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM BROUGHT BY BORROWER AGAINST LENDER
OR ANY OF LENDER'S AFFILIATES, OFFICERS, DIRECTORS, EMPLOYEES OR AGENTS WITH
RESPECT TO ANY MATTER ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT. THIS WAIVER OF THE RIGHT TO SEEK PUNITIVE, CONSEQUENTIAL,
SPECIAL OR INDIRECT DAMAGES IS KNOWINGLY AND VOLUNTARILY GIVEN BY BORROWER, AND
IS INTENDED TO ENCOMPASS EACH INSTANCE AND EACH ISSUE FOR WHICH THE RIGHT TO
SEEK PUNITIVE, CONSEQUENTIAL, SPECIAL OR INDIRECT DAMAGES WOULD OTHERWISE APPLY.
LENDER IS AUTHORIZED AND DIRECTED TO SUBMIT THIS AGREEMENT TO ANY COURT HAVING
JURISDICTION OVER THE SUBJECT MATTER AND THE PARTIES TO THIS AGREEMENT AS
CONCLUSIVE EVIDENCE OF THIS WAIVER OF THE RIGHT TO SEEK PUNITIVE, CONSEQUENTIAL,
SPECIAL OR INDIRECT DAMAGES.
End of Article 11
12. DEFINITIONS
12.1. Defined Terms
Capitalized terms defined below or elsewhere in this Agreement have the
following meanings or, as applicable, the meanings given to those terms in
Exhibits to this Agreement:
"Acquisition Cost" means with respect to any Eligible Loan, the cash purchase
price paid by the Borrowers to acquire such Eligible Loan minus any portion
thereof attributable to amounts other than principal payable with respect to
such Eligible Loan.
"Advance Rate" means, with respect to any Eligible Loan, the Advance Rate set
forth in Exhibit H for that type of Eligible Loan.
"Affiliate" means, when used with reference to any Person, (a) each Person that,
directly or indirectly, controls, is controlled by or is under common control
with, the Person referred to, (b) each Person that beneficially owns or holds,
directly or indirectly, 5% or more of any class of voting Equity Interests of
the Person referred to, (c) each Person, 5% or more of the voting Equity
Interests of which is beneficially owned or held, directly or indirectly, by the
Person referred to, and (d) each of such Person's officers, directors, joint
venturers and partners, the meaning set forth in Rule 12b-2 of the General Rules
and Regulations under the Exchange Act.
"Aged Mortgage Loans" means Mortgage Loans against which a Warehousing Advance
has been outstanding for longer than the Standard Warehouse Period, provided
that Aged Mortgage Loans are permitted for such type of Mortgage Loan.
"Aged Warehouse Period" means the maximum number of days a Warehouse Advance
against Aged Mortgage Loans of a particular type may remaining outstanding.
"Agency Security" means a Mortgage-backed Security issued or guaranteed by
Xxxxxx Xxx, Xxxxxxx Mac or Xxxxxx Mae.
"Agreement" means this Warehousing Credit and Security Agreement, either as
originally executed or as it may be amended, restated, renewed or replaced.
"Appraised Property Value" means with respect to an interest in real property,
the then current fair market value of the real property and any improvements on
it as of recent date determined in accordance with Title XI of FIRREA by a
qualified appraiser who is a member of the American Institute of Real Estate
Appraisers or other group of professional appraisers.
"Approved Custodian" means a pool custodian or other Person that Lender deems
acceptable, in its sole discretion, to hold Mortgage Loans for inclusion in a
Mortgage Pool or to hold Mortgage Loans as agent for an Investor that has issued
a Purchase Commitment for those Mortgage Loans.
"Audited Statement Date" means the date of Borrower's most recent audited
financial statements (and, if applicable, Borrower's Subsidiaries, on a
consolidated basis) delivered to Lender under this Agreement.
"Bank One" means Bank One, National Association, or any successor bank.
"Bank One Prime Rate" means, as of any date of determination, the highest prime
rate quoted by Bank One and most recently published by Bloomberg L.P. If the
prime rate for Bank One is not quoted or published for any period, then during
that period the term 'Bank One Prime Rate" means the highest prime rate
published in the most recent edition of The Wall Street Journal in its regular
column entitled "Money Rates."
"Borrower" has the meaning set forth in the first paragraph of this Agreement.
"Business Day" means any day other than Saturday, Sunday or any other day on
which national banking associations are closed for business.
"Calendar Quarter" means the 3 month period beginning on each January 1, April
1, July 1 or October 1.
"Cash Collateral Account" means a demand deposit account maintained at the
Funding Bank in Lender's name and designated for receipt of the proceeds of the
sale or other disposition of Collateral.
"Closing Date" has the meaning set forth in the Recitals to this Agreement.
"Collateral" has the meaning set forth in Section 4.1.
"Collateral Documents" means, with respect to each Mortgage Loan, (a) the
Mortgage Note, the Mortgage and all other documents including, if applicable,
any Security Agreement, executed in connection with or relating to the Mortgage
Loan; (b) as applicable, the original lender's ALTA Policy of Title Insurance or
its equivalent, documents evidencing the FHA Commitment to Insure, the VA
Guaranty or private mortgage insurance, the appraisal, the Regulation Z
statement, the environmental assessment, the engineering report, certificates of
casualty or hazard insurance, credit information on the maker of the Mortgage
Note, the HUD-1 or corresponding purchase advice, (c) any other document listed
in Exhibit B; and (d) any other document that is customarily desired for
inspection or transfer incidental to the purchase of any Mortgage Note by an
Investor or that is customarily executed by the seller of a Mortgage Note to an
Investor.
"Committed Purchase Price" means for an Eligible Loan (a) the dollar price as
set forth in the Purchase Commitment or, if the price is not expressed in
dollars, the product of the Mortgage Note Amount multiplied by the price
(expressed as a percentage) as set forth in the Purchase Commitment for the
Eligible Loan, or (b) if the Eligible Loan is to be used to back an Agency
Security, the dollar price as set forth in a Purchase Commitment or, if the
price is not expressed in dollars the product of the Mortgage Note Amount
multiplied by the price (expressed as a percentage) as set forth in the Purchase
Commitment for the Agency Security.
"Compliance Certificate" means a certificate executed on behalf of Borrower by
its chief financial officer or its treasurer or by another officer approved by
Lender, substantially in the form of Exhibit E.
"Credit Score" means a mortgagor's overall consumer credit rating, represented
by a single numeric credit score using the Fair, Xxxxx consumer credit scoring
system, provided by a credit repository acceptable to Lender and the Investor
that issued the Purchase Commitment covering the related Mortgage Loan (if a
Purchase Commitment is required by Exhibit H).
"Debt" means (a) all indebtedness or other obligations of a Person that, in
accordance with GAAP, would be included in determining total liabilities as
shown on the liabilities side of a balance sheet of the Person on the date of
determination, plus (b) all indebtedness or other obligations of the Person for
borrowed money or for the deferred purchase price of property or services. For
purposes of calculating a Person's Debt, Subordinated Debt not due within 1 year
of that date and deferred taxes arising from capitalized excess servicing fees
and capitalized servicing rights may be excluded from a Person's indebtedness.
"Default" means the occurrence of any event or existence of any condition that,
but for the giving of Notice or the lapse of time, would constitute an Event of
Default.
"Default Rate" means, for any Warehousing Advance, the Interest Rate applicable
to that Warehousing Advance plus 4% per annum. If no Interest Rate is applicable
to a Warehousing Advance, "Default Rate" means, for that Warehousing Advance,
the highest Interest Rate then applicable to any outstanding Warehousing Advance
plus 4% per annum.
"Depository Benefit" means the compensation received by Lender, directly or
indirectly, as a result of Borrower's maintenance of Eligible Balances with a
Designated Bank.
"Designated Bank" means any bank designated by Lender as a Designated Bank, but
only for as long as Lender has an agreement under which Lender receives
Depository Benefits from that bank.
"Designated Bank Charges" means any fees, interest or other charges that would
otherwise be payable to a Designated Bank in connection with Eligible Balances
maintained at the Designated Bank, including deposit insurance premiums, service
charges and any other charges that may be imposed by governmental authorities
from time to time.
"Discontinued Loan" has the meaning set forth in the GMAC-RFC Client Guide.
"Earnings Allowance " has the meaning set forth in Section 3.1(b).
"Earnings Credit " has the meaning set forth in Section 3.1(b).
"Electronic Advance Request" means an electronic transmission through RFConnects
Delivery containing the same information as Exhibit A to this Agreement.
"Electronic Tracking Agreement" means an Electronic Tracking Agreement, on the
form prescribed by Lender, among Borrower, Lender, MERS and MERCORP, Inc.,
pursuant to which Lender will have the authority to, among other things,
withdraw a Mortgage from the MERS system, if either the Mortgage Loan has been
registered on the MERS system naming Borrower as servicer or subservicer, or the
Mortgage Loan has not yet been registered on the MERS system.
"Eligible Balances" means all funds of or maintained by Borrower (and, if
applicable, Borrower's Subsidiaries) in demand deposit or time deposit accounts
at a Designated Bank, minus balances to support float, reserve requirements and
any other reductions that may be imposed by governmental authorities from time
to time.
"Eligible Loan" means a Mortgage Loan that satisfies the conditions and
requirements set forth in Exhibit H.
"Eligible Mortgage Pool" means a Mortgage Pool for which (a) an Approved
Custodian has issued its initial certification, (b) there exists a Purchase
Commitment covering the Agency Security to be issued on the basis of that
certification and (c) the Agency Security will be delivered to Lender.
"Equity Interests" means all shares, interests, participations or other
equivalents, however, designated, of or in a Person (other than a natural
person), whether or not voting, including common stock, membership interests,
warrants, preferred stock, convertible debentures and all agreements,
instruments and documents convertible, in whole or in part, into any one or more
of the foregoing.
"ERISA" means the Employee Retirement Income Security Act of 1974 and all rules
and regulations promulgated under that statute, as amended, and any successor
statute, rules, and regulations.
"ERISA Affiliate" means any trade or business (whether or not incorporated) that
is a member of a group of which Borrower is a member and that is treated as a
single employer under Section 414 of the Internal Revenue Code.
"Event of Default" means any of the conditions or events set forth in Section
10.1.
"Exchange Act" means the Securities Exchange Act of 1934 and all rules and
regulations promulgated under that statute, as amended, and any successor
statute, rules, and regulations.
"Exhibit B" means Exhibit B-SF or B-NP/SP/SML, as applicable to the type of
Eligible Loan against which a Warehousing Advance is to be made.
"Fair Market Value" means, at any time for an Eligible Loan or a related Agency
Security (if the Eligible Loan is to be used to back an Agency Security) as of
any date of determination, (a) the Committed Purchase Price if the Eligible Loan
is covered by a Purchase Commitment from Xxxxxx Mae or Xxxxxxx Mac or the
Eligible Loan is to be exchanged for an Agency Security and that Agency Security
is covered by a Purchase Commitment from an Investor, or (b) otherwise, the
market price for such Eligible Loan or Agency Security, determined by Lender
based on market data for similar Mortgage Loans or Agency Securities and such
other criteria as Lender deems appropriate in its sole discretion.
"Xxxxxx Mae" means Xxxxxx Xxx, a corporation created under the laws of the
United States, and any successor corporation or other entity.
"FHA" means the Federal Housing Administration and any successor agency or other
entity.
"FICA" means the Federal Insurance Contributions Act and all rules and
regulations promulgated under that statute, as amended, and any successor
statute, rules and regulations.
"FIRREA" means the Financial Institutions Reform, Recovery and Enforcement Act
of 1989 and all rules and regulations promulgated under that statute, as
amended, and any successor statute, rules, and regulations.
"First Mortgage" means a Mortgage that constitutes a first Lien on the real
property covered by the Mortgage.
"First Mortgage Loan" means a Mortgage Loan secured by a First Mortgage.
"Xxxxxxx Mac" means Xxxxxxx Mac, a corporation created under the laws of the
United States, and any successor corporation or other entity.
"Funding Bank" means Bank One or any other bank designated by Lender as a
Funding Bank.
"Funding Bank Agreement" means a letter agreement on the form prescribed by
Lender between the Funding Bank and Borrower authorizing Lender's access to the
Operating Account .
"GAAP" means generally accepted accounting principles set forth in opinions and
pronouncements of the Accounting Principles Board and the American Institute of
Certified Public Accountants and in statements and pronouncements of the
Financial Accounting Standards Board, or in opinions, statements or
pronouncements of any other entity approved by a significant segment of the
accounting profession, which are applicable to the circumstances as of the date
of determination.
"Gestation Agreement" means an agreement under which Borrower agrees to sell or
finance (a) a Mortgage Loan prior to the date of purchase by an Investor or (b)
a Mortgage Pool prior to the date a Mortgage-backed Security backed by the
Mortgage Pool is issued.
"Xxxxxx Mae" means the Government National Mortgage Association, an agency of
the United States government, and any successor agency or other entity.
"Xxxxxx Xxx Early Buyout Loan" means a delinquent Mortgage Loan purchased by
Borrower out of a Xxxxxx Mae mortgage pool.
"GMAC-RFC Client Guide" means the applicable loan purchase guide issued by
Lender, as the same may be amended or replaced.
"Guarantor" means, individually and collectively, Matrix Bancorp, Inc., a
Colorado corporation, and any other Person that after the date of this Agreement
guarantees all or any portion of Borrower's Obligations.
"Guaranty" means a guaranty of all or any portion of Borrower's Obligations. If
more than one Guaranty is executed and delivered to Lender, the term "Guaranty"
means each of the Guaranties and all of them.
"Hedging Arrangements" means, with respect to any Person, any agreements or
other arrangements (including interest rate swap agreements, interest rate cap
agreements and forward sale agreements) entered into to protect that Person
against changes in interest rates or the market value of assets.
"HUD" means the Department of Housing and Urban Development, and any successor
agency or other entity.
"Indemnified Liabilities" has the meaning set forth in Section 11.2.
"Indemnitees" has the meaning set forth in Section 11.2.
"Interest Rate" means, for any Warehousing Advance, the floating rate of
interest specified for that Warehousing Advance in Exhibit H.
"Interim Statement Date" means the date of the most recent unaudited financial
statements of Borrower (and, if applicable, Borrower's Subsidiaries, on a
consolidated basis) delivered to Lender under this Agreement.
"Internal Revenue Code" means the Internal Revenue Code of 1986, Title 26 of the
United States Code, and all rules, regulations and interpretations issued under
those statutory provisions, as amended, and any subsequent or successor federal
income tax law or laws, rules, regulations and interpretations.
"Investment Company Act" means the Investment Company Act of 1940 and all rules
and regulations promulgated under that statute, as amended, and any successor
statute, rules, and regulations.
"Investor" means Xxxxxx Xxx, Xxxxxxx Mac or a financially responsible private
institution that Lender deems acceptable, in its sole discretion, to issue
Purchase Commitments with respect to a particular category of Eligible Loans.
"Lender" has the meaning set forth in the first paragraph of this Agreement.
"Leverage Ratio" means the ratio of a Person's (and, if applicable, the Person's
Subsidiaries, on a consolidated basis) Debt to Tangible Net Worth. For purposes
of calculating a Person's Leverage Ratio, Debt arising under Hedging
Arrangements, to the extent of assets arising under those Hedging Arrangements,
may be excluded from a Person's Debt.
"LIBOR" means, for each week, the rate of interest per annum that is equal to
the arithmetic mean of the U.S. Dollar London Interbank Offered Rates for 1
month periods of certain U.S. banks as of 11:00 a.m. (London time) on the first
Business Day of each week on which the London Interbank market is open, as
published by Bloomberg L.P. If those interest rates are not offered or published
for any period, then during that period LIBOR means the London Interbank Offered
Rate for 1 month periods as published in The Wall Street Journal in its regular
column entitled "Money Rates" on the first Business Day of each week on which
the London Interbank market is open.
"Lien" means any lien, mortgage, deed of trust, pledge, security interest,
charge or encumbrance of any kind (including any conditional sale or other title
retention agreement, any lease in the nature of such an agreement and any
agreement to give any security interest).
"Liquid Assets" means the following assets owned by a Person as of any date of
determination: (a) unrestricted and unencumbered cash, funds on deposit in any
bank located in the United States, investment grade commercial paper, money
market funds, or marketable securities; and (b) the excess, if any, of Mortgage
Loans and Mortgage-backed Securities held for sale (valued in accordance with
GAAP) over the outstanding aggregate principal amount of any Debt against which
those Mortgage Loans or Mortgage-backed Securities are pledged as collateral.
"Liquidity Ratio" means the ratio of a Person's (and, if applicable, the
Person's Subsidiaries, on a consolidated basis) Liquid Assets to Tangible Net
Worth.
"Loan Documents" means this Agreement, the Warehousing Note, the Guaranty, any
agreement of Borrower relating to Subordinated Debt, any Security Agreement, if
applicable, and each other document, instrument or agreement executed by
Borrower in connection with any of those documents, instruments and agreements,
as originally executed or as any of the same may be amended, restated, renewed
or replaced.
"Loan Package Fee " has the meaning set forth in Section 3.5.
"Loan-to-Value Ratio" means, for any Mortgage Loan, the ratio of (a) the maximum
amount that may be borrowed under the Mortgage Loan (whether or not borrowed) at
the time of origination, II? us the Mortgage Note Amounts of all other Mortgage
Loans secured by the related Property, to (b) the Appraised Property Value of
the related Property.
"Manufactured Home" means a structure that is built on a permanent chassis
(steel frame) with the wheel assembly necessary for transportation in one or
more sections to a permanent site or semi-permanent site.
"Margin Stock" has the meaning assigned to that term in Regulation U of the
Board of Governors of the Federal Reserve System, as amended.
"MERS" means Mortgage Electronic Registrations Systems, Inc. and any successor
entity.
"Miscellaneous Fees and Charges" means the miscellaneous fees set forth on
Lender's collateral operations fees schedule (either as originally delivered to
Borrower or as it may be amended, restated, renewed or replaced after the date
of this Agreement) and all miscellaneous disbursements, charges and expenses
incurred by or on behalf of Lender for the handling and administration of
Warehousing Advances and Collateral, including costs for Uniform Commercial
Code, tax lien and judgment searches conducted by Lender, filing fees, charges
for wire transfers and check processing charges, charges for security delivery
fees, charges for overnight delivery of Collateral to Investors, Funding Bank
service fees and overdraft charges and Designated Bank Charges.
"Mortgage" means a mortgage or deed of trust on real property that is improved
and substantially completed (including real property to which a Manufactured
Home has been affixed in a manner such that the Lien of a mortgage or deed of
trust would attach to the Manufactured Home under applicable real property law).
"Mortgage-backed Securities" means securities that are secured or otherwise
backed by Mortgage Loans.
"Mortgage Loan" means any loan evidenced by a Mortgage Note and secured by a
Mortgage and, if applicable, a Security Agreement.
"Mortgage Note" means a promissory note secured by one or more Mortgages and, if
applicable, one or more Security Agreements.
"Mortgage Note Amount" means, as of any date of determination, the then
outstanding and unpaid principal amount of a Mortgage Note (whether or not an
additional amount is available to be drawn under that Mortgage Note).
"Mortgage Pool" means a pool of one or more Pledged Loans on the basis of which
a Mortgage-backed Security is to be issued.
"Multiemployer Plan" means a "multiemployer plan" as defined in Section
4001(a)(3) of ERISA, to which either Borrower or any ERISA Affiliate of Borrower
has any obligation with respect to its employees.
"Non-performing Mortgage Loan" means a Mortgage Loan with respect to which any
payment of principal or interest is more than 60 days delinquent, but which is
not in the process of foreclosure.
"Non-Usage Fee" has the meaning set forth in Section 3.4.
"Notices" has the meaning set forth in Section 11.1.
"Obligations" means all indebtedness, obligations and liabilities of Borrower to
Lender and Lender's Subsidiaries (whether now existing or arising after the date
of this Agreement, voluntary or involuntary, joint or several, direct or
indirect, absolute or contingent, liquidated or unliquidated, or decreased or
extinguished and later increased and however created or incurred), including
Borrower's obligations and liabilities to Lender under the Loan Documents and
disbursements made by Lender for Borrower's account.
"Operating Account" means a demand deposit account maintained at the Funding
Bank in Borrower's name and designated for funding that portion of each Eligible
Loan not funded by a Warehousing Advance made against that Eligible Loan and for
returning any excess payment from an Investor for a Pledged Loan or Pledged
Security.
"Overdraft Advance" has the meaning set forth in Section 3.9.
"Participant" has the meaning set forth in Section 11.8.
"Performing Mortgage Loan" means a Mortgage Loan that is current as to all
payments of principal and interest and which is not a Sub-performing Mortgage
Loan.
"Person" means and includes natural persons, corporations, limited liability
companies, limited liability partnerships, limited partnerships, general
partnerships, joint stock companies, joint ventures, associations, companies,
trusts, banks, trust companies, land trusts, business trusts or other
organizations, whether or not legal entities, and governments and agencies and
political subdivisions of those governments.
"Plan" means each employee benefit plan (whether in existence on the date of
this Agreement or established after that date), as that term is defined in
Section 3 of ERISA, maintained for the benefit of directors, officers or
employees of Borrower or any ERISA Affiliate.
"Pledged Assets" means, collectively, Pledged Loans, and Pledged Securities.
"Pledged Hedging Accounts" has the meaning set forth in Section 4.1 (g).
"Pledged Hedging Arrangements" has the meaning set forth in Section 4.1 (g).
"Pledged Loans" has the meaning set forth in Section 4.1 (b).
"Pledged Securities" has the meaning set forth in Section 4.1 (c).
"Prime Mortgage Loan" has the meaning set forth in Exhibit H.
"Prohibited Transaction" has the meanings set forth for such term in Section
4975 of the Internal Revenue Code and Section 406 of ERISA. "Purchase
Commitment" means a written commitment, in form and substance satisfactory to
Lender, issued in favor of Borrower by an Investor under which that Investor
commits to purchase Mortgage Loans or Mortgage-backed Securities.
"Release Amount" has the meaning set forth in Section 4.3 (f).
"RFC Base Rate" means the greater of LIBOR or 2.25% per annum.
"RFConnects Delivery" means Lender's proprietary service to support the
electronic exchange of information between Lender and Borrower, including
Advance Requests, shipping requests, payoff requests, activity reports and
exception reports. \
"RFConnects Pledge Agreement" means an agreement (on the then current form
prescribed by Lender) granting Lender a security interest in Mortgage Loans for
which Borrower has requested Warehousing Advances using RFConnects Delivery.
"Second Mortgage" means a Mortgage that constitutes a second Lien on the
property covered by the Mortgage.
"Second Mortgage Loan" means a Mortgage Loan secured by a Second Mortgage.
"Security Agreement" means a security agreement or other agreement that creates
a Lien on personal property, including furniture, fixtures and equipment, to
secure repayment of a Mortgage Loan.
"Servicing Contract" means, with respect to any Person, the arrangement, whether
or not in writing, under which that Person has the right to service Mortgage
Loans.
"Servicing Portfolio" means, as to any Person, the unpaid principal balance of
Mortgage Loans serviced by that Person under Servicing Contracts, minus the
principal balance of all Mortgage Loans that are serviced by that Person for
others under subservicing arrangements.
"Standard Warehouse Period" means, for any Mortgage Loan, the maximum number of
days a Warehousing Advance against that type of Mortgage Loan, other than
against an Aged Mortgage Loan, may remain outstanding, as set forth in Exhibit
H.
"Statement Date" means the Audited Statement Date or the Interim Statement Date,
as applicable.
"Sublimit" means the aggregate amount of Warehousing Advances (expressed as a
dollar amount or as a percentage of the Warehousing Commitment Amount) that is
permitted to be outstanding at any one time against a specific type of Eligible
Loan.
"Subordinated Debt" means (a) all indebtedness of Borrower for borrowed money
that is effectively subordinated in right of payment to all present and future
Obligations either (1) under a Subordination of Debt Agreement on the form
prescribed by Lender or (2) otherwise on terms acceptable to Lender, and (b)
solely for purposes of Section 8.5, all indebtedness of Borrower that is
required to be subordinated by Sections 5.1 (b) and 7.10.
"Sub-performing Mortgage Loan" means a Mortgage Loan that is current as to
principal and interest for the most recently required payment under the Mortgage
Note, past due with respect to previous payments of principal and/or interest,
which may be subject to a forbearance agreement for missed payments, or the
documentation for the Mortgage Loan has been modified. "Subsidiary" means any
corporation, partnership, association or other business entity in which more
than 50% of the shares of stock or other ownership interests having voting power
for the election of directors, managers, trustees or other Persons performing
similar functions is at the time owned or controlled by any Person either
directly or indirectly through one or more Subsidiaries of that Person.
"Tangible Net Worth" means the excess of a Person's (and, if applicable, the
Person's Subsidiaries, on a consolidated basis) total assets over total
liabilities as of the date of determination, each determined in accordance with
GAAP applied in a manner consistent with the financial statements referred to in
Section 5.1 (a)(6), plus that portion of Subordinated Debt not due within 1 year
of that date. For purposes of calculating a Person's Tangible Net Worth,
advances or loans to shareholders, directors, officers, employees or Affiliates
investments in Affiliates, assets pledged to secure any liabilities not included
in the Debt of the Person, intangible assets, those other assets that would be
deemed by HUD to be non-acceptable in calculating adjusted net worth in
accordance with its requirements in effect as of that date, as those
requirements appear "Consolidated Audit Guide for Audits of HUD Programs," and
other assets Lender deems unacceptable, in its sole discretion, must be excluded
from a Person's total assets.
"Third Party Originated Loan" means a Mortgage Loan originated and funded by a
third party (other than with funds provided by Borrower at closing to purchase
the Mortgage Loan) and subsequently purchased by Borrower.
"Trust Receipt" means a trust receipt in a form approved by and under which
Lender may deliver any document relating to the Collateral to Borrower for
correction or completion.
"Unused Portion" has the meaning set forth in Section 3.4.
"Used Portion" has the meaning set forth in Section 3.4.
"Warehousing Advance" means a disbursement by Lender under the Warehousing
Commitment.
"Warehousing Advance Request" has the meaning set forth in Section 2.1.
"Warehousing Collateral Value" means, as of any date of determination, (a) with
respect to any Eligible Loan, the lesser of (1) the amount of any Warehousing
Advance made, or that could be made, against such Eligible Loan under Exhibit H
or (2) an amount equal to the Advance Rate for the applicable type of Eligible
Loan multiplied by the Fair Market Value of such Eligible Loan; (b) if Eligible
Loans have been exchanged for Agency Securities, the lesser of (1) the amount of
any Warehousing Advances outstanding against the Eligible Loans backing the
Agency Securities or (2) the Fair Market Value of the Agency Securities; and (c)
with respect to cash, the amount of the cash.
"Warehousing Commitment" means the obligation of Lender to make Warehousing
Advances to Borrower under Section 1.1.
"Warehousing Commitment Amount" means $40,000,000.
"Warehousing Fee" has the meaning set forth in Section 3.7.
"Warehousing Maturity Date" has the meaning set forth in Section 1.2.
"Warehousing Note" has the meaning set forth in Section 1.3.
"Wire Disbursement Account" means a demand deposit account maintained at the
Funding Bank in Lender's name for clearing wire transfers requested by Borrower
to fund Warehousing Advances.
"Wire Fee" has the meaning set forth in Section 3.7.
12.2. Other Definitional Provisions; Terms of Construction
12.2 (a) Accounting terms not otherwise defined in this Agreement have the
meanings given to those terms under GAAP.
12.2 (b) Defined terms may be used in the singular or the plural, as the
context requires.
12.2 (c) All references to time of day mean the then applicable time in
Chicago, Illinois, unless otherwise expressly provided.
12.2 (d) References to Sections, Exhibits, Schedules and like references are to
Sections, Exhibits, Schedules and the like of this Agreement unless
otherwise expressly provided.
12.2 (e) The words "include," "includes" and "including" are deemed to be
followed by the phrase "without limitation."
12.2 (f) Unless the context in which it is used otherwise clearly requires,
the word "or" has the inclusive meaning represented by the phrase
"and/or."
12.2 (g) All incorporations by reference of provisions from other agreements
are incorporated as if such provisions were fully set forth into this
Agreement, and include all necessary definitions and related
provisions from those other agreements. All provisions from other
agreements incorporated into this Agreement by reference survive any
termination of those other agreements until the Obligations of
Borrower under this Agreement and the Warehousing Note are irrevocably
paid in full and the Warehousing Commitment is terminated.
12.2 (h) All references to the Uniform Commercial Code shall be deemed to be
references to the Uniform Commercial Code in effect on the date of
this Agreement in the applicable jurisdiction.
12.2 (i) Unless the context in which it is used otherwise clearly requires, all
references to days, weeks and months mean calendar days, weeks and
months.
End of Article 12
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed
as of the date first above written.
MATRIX CAPITAL MARKETS, INC.,
a Colorado corporation
By:
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Its:
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RESIDENTIAL FUNDING CORPORATION,
a Delaware Corporation
By:
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Its: Director
