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EXHIBIT 10.5
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CREDIT AND SECURITY AGREEMENT
BETWEEN
WASHINGTON MORTGAGE FINANCIAL GROUP, LTD.,
a Delaware corporation
AND
WMF/XXXXXXX, XXXXX ASSOCIATES LIMITED,
a Delaware corporation
AND
RESIDENTIAL FUNDING CORPORATION,
a Delaware corporation
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Dated as of June 14, 1996
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TABLE OF CONTENTS
PAGE
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1. DEFINITIONS................................................................................... 1
1.1 Defined Terms........................................................................ 1
1.2 Other Definitional Provisions........................................................ 16
2. THE CREDIT.................................................................................... 16
2.1 The Warehousing Commitment........................................................... 16
2.2 Procedures for Obtaining Warehousing Advances........................................ 19
2.3 The Term Loan Commitment............................................................. 21
2.4 The Servicing Facility Commitment.................................................... 21
2.5 Procedures for Obtaining Servicing Facility
Advances............................................................................. 23
2.6 Notes................................................................................ 26
2.7 Interest............................................................................. 26
2.8 Principal Payments................................................................... 28
2.9 Expiration of Commitments............................................................ 32
2.10 Method of Making Payments............................................................ 32
2.11 Commitment Fees...................................................................... 33
2.12 Miscellaneous Charges................................................................ 35
2.13 Interest Limitation.................................................................. 35
3. COLLATERAL.................................................................................... 35
3.1 Grant of Security Interest........................................................... 35
3.2 Release of Security Interest in Collateral........................................... 38
3.3 Delivery of Additional Collateral or Mandatory
Prepayment........................................................................... 39
3.4 Collection and Servicing Rights...................................................... 40
3.5 Return of Collateral at End of Commitment............................................ 40
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4. CONDITIONS PRECEDENT.......................................................................... 41
4.1 Initial Advance...................................................................... 41
4.2 Each Advance......................................................................... 43
5. REPRESENTATIONS AND WARRANTIES................................................................ 45
5.1 Organization; Good Standing; Subsidiaries............................................ 45
5.2 Authorization and Enforceability. .................................................. 45
5.3 Approvals............................................................................ 46
5.4 Financial Condition.................................................................. 46
5.5 Litigation........................................................................... 46
5.6 Compliance with Laws................................................................. 47
5.7 Regulations G and U.................................................................. 47
5.8 Investment Company Act............................................................... 47
5.9 Payment of Taxes..................................................................... 47
5.10 Agreements........................................................................... 47
5.11 Title to Properties.................................................................. 48
5.12 ERISA................................................................................ 48
5.13 Eligibility.......................................................................... 48
5.14 Place of Business.................................................................... 49
5.15 Special Representations Concerning Warehousing
Collateral........................................................................... 49
5.16 Servicing............................................................................ 52
5.17 Special Representations Concerning Servicing
Collateral........................................................................... 52
6. AFFIRMATIVE COVENANTS......................................................................... 53
6.1 Payment of Notes..................................................................... 54
6.2 Financial Statements and Other Reports............................................... 54
6.3 Maintenance of Existence; Conduct of Business........................................ 56
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6.4 Compliance with Applicable Laws...................................................... 56
6.5 Inspection of Properties and Books................................................... 57
6.6 Notice............................................................................... 57
6.7 Payment of Debt, Taxes, etc.......................................................... 58
6.8 Insurance............................................................................ 58
6.9 Closing Instructions................................................................. 58
6.10 Subordination of Certain Indebtedness................................................ 59
6.11 Other Loan Obligations............................................................... 59
6.12 Use of Proceeds of Advances.......................................................... 59
6.13 Special Affirmative Covenants Concerning
Collateral........................................................................... 59
7. NEGATIVE COVENANTS................................................................................. 61
7.1 Contingent Liabilities............................................................... 61
7.2 Sale or Pledge of Servicing Contracts................................................ 61
7.3 Merger; Sale of Assets; Acquisitions................................................. 61
7.4 Deferral of Subordinated Debt........................................................ 62
7.5 Loss of Eligibility.................................................................. 62
7.6 Debt to Adjusted Tangible Net Worth Ratio............................................ 62
7.7 Minimum Adjusted Tangible Net Worth.................................................. 62
7.8 Liquidity............................................................................ 62
7.9 Maximum Pass-Throughs................................................................ 62
7.10 Minimum Adjusted Servicing Portfolio................................................. 62
7.11 Debt Service Coverage Ratio.......................................................... 62
7.12 Delinquency Ratio.................................................................... 62
7.13 Transactions with Affiliates......................................................... 62
7.14 Special Negative Covenants Concerning Collateral..................................... 63
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8. DEFAULTS; REMEDIES............................................................................ 63
8.1 Events of Default.................................................................... 63
8.2 Remedies............................................................................. 67
8.3 Application of Proceeds.............................................................. 71
8.4 Lender Appointed Attorney-in-Fact.................................................... 71
8.5 Right of Set-Off..................................................................... 72
9. NOTICES....................................................................................... 72
10. REIMBURSEMENT OF EXPENSES; INDEMNITY.......................................................... 73
11. FINANCIAL INFORMATION......................................................................... 74
12. MISCELLANEOUS................................................................................. 74
12.1 Terms Binding Upon Successors; Survival of
Representations...................................................................... 74
12.2 Assignment........................................................................... 75
12.3 Amendments........................................................................... 75
12.4 Governing Law........................................................................ 75
12.5 Participations....................................................................... 75
12.6 Relationship of the Parties.......................................................... 75
12.7 Severability......................................................................... 76
12.8 Operational Reviews.................................................................. 76
12.9 Consent to Credit References......................................................... 76
12.10 Consent to Jurisdiction.............................................................. 76
12.11 Counterparts......................................................................... 77
12.12 Entire Agreement..................................................................... 77
12.13 Waiver of Jury Trial................................................................. 77
12.14 Joint and Several Liability.......................................................... 77
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EXHIBITS
Exhibit A-1 Warehousing Promissory Note
Exhibit A-2 Term Loan Promissory Note
Exhibit A-3 Servicing Facility Promissory Note
Exhibit B (Intentionally Omitted)
Exhibit C-MF Request for Advance Against
Mortgage Loans
Exhibit C-SER Servicing Acquisition Advance Request
Exhibit C-WC Working Capital Advance Request
Exhibit D-MF/BER Procedures and Documentation for
Warehousing Berkshire Loans
Exhibit D-MF/CONV/DUS Procedures and Documentation for
Warehousing Conventional
Multifamily, Health Care, Commercial
and FNMA DUS Mortgage Loans
Exhibit D-MF/FHA Procedures and Documentation for
Warehousing FHA Project Mortgage
Loans and FHA Construction Mortgage
Loans
Exhibit D-SA Procedures and Documentation for
Servicing Acquisition Advances
Exhibit E-1 Schedule of Servicing Portfolio
Exhibit E-2 Schedule of Pledged Servicing
Contracts
Exhibit F Subordination of Debt Agreement
Exhibit G Subsidiaries
Exhibit H Legal Opinion
Exhibit I-MF Officer's Certificate
Exhibit J Schedule of Existing Warehouse Lines
Exhibit K Funding Bank Agreement
Exhibit L Terms Applicable to Guaranteed
Advances
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THIS CREDIT AND SECURITY AGREEMENT, dated as of June 14, 1996, between
WASHINGTON MORTGAGE FINANCIAL GROUP, LTD., a Delaware corporation
("Washington") and WMF/XXXXXXX, XXXXX ASSOCIATES LIMITED, a Delaware
corporation ("Xxxxxxx", Washington and Xxxxxxx are hereinafter collectively
referred to as the "Borrowers"), and for purposes of this Agreement are deemed
to have their principal office at 0000 Xxxxxx Xxxx Xxxx, Xxxxx 000, Xxxxxx, XX
00000, and RESIDENTIAL FUNDING CORPORATION, a Delaware corporation (the
"Lender"), having its principal office at 0000 Xxxxxxxxxx Xxxx Xxxx., Xxxxx
000, Xxxxxxxxxxx, Xxxxxxxxx 00000.
WHEREAS, the Borrowers and the Lender desire to set forth herein the
terms and conditions upon which the Lender shall provide warehouse financing,
term loan financing and servicing facility financing to the Borrowers;
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. DEFINITIONS.
1.1 Defined Terms. Capitalized terms defined below or
elsewhere in this Agreement (including the Exhibits hereto)
shall have the following meanings:
"Acknowledgment Agreement" has the meaning set forth in
Section 8.2(i) hereof.
"Adjusted Servicing Portfolio" means, for any Person, the
Servicing Portfolio of such Person, but excluding the principal
balance of Mortgage Loans included in the Servicing Portfolio at such
date, (a) which are past due for principal or interest for sixty (60)
days or more, (b) are Commercial Mortgage Loans, FNMA DUS Mortgage
Loans or FHA co-insured Mortgage Loans, (c) with respect to which such
Person is obligated to 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 such Mortgage Loans, (d) for which the
Servicing Contracts are not owned by such Person free and clear of all
Liens (other than in favor of the Lender), or (e) which are serviced
by the Borrowers for others under subservicing arrangements.
"Adjusted Tangible Net Worth" means with respect to any
Person at any date, the Tangible Net Worth of such Person at such
date, excluding capitalized excess servicing fees and capitalized
servicing rights, plus one-half percent (1/2%) of the Adjusted
Servicing Portfolio and plus deferred taxes arising from capitalized
excess servicing fees and capitalized servicing rights.
"Advance" means a disbursement by the Lender under the
Commitments pursuant to Article 2 of this Agreement,
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including, without limitation, Warehousing Advances, the Term Loan
Advance, Servicing Facility Advances and readvances of funds
previously advanced to the Borrowers and repaid to the Lender.
"Advance Request" means a Warehousing Advance Request or
a Servicing Facility Advance Request.
"Affiliate" has the meaning set forth in Rule 12b-2 of the
General Rules and Regulations under the Exchange Act.
"Agreement" means this Credit and Security Agreement, either
as originally executed or as it may from time to time be supplemented,
modified or amended.
"Annual Debt Payments" means, as of the last day of any
fiscal quarter of the Washington and its Subsidiary, the sum of (a)
the aggregate amount of scheduled principal payments required under
this Agreement on the Term Loan Advances and Servicing Facility
Advances in the four (4) fiscal quarters following such date
(assuming, with respect to all measurement dates prior to the
Servicing Facility Commitment Termination Date, that (i) the Servicing
Facility Commitment Termination Date is not extended, and (ii) no
Servicing Facility Advances are made after such measurement date), and
(b) the amount of interest expense incurred under this Agreement on
the Term Loan Advances and Servicing Facility Advances or under the
Existing Term Agreement and deducted in calculating net income for the
four (4) fiscal quarters ending on such date.
"Appraisal" means a certificate of independent certified
public accountants or independent financial consultants selected by
the Borrowers and reasonably satisfactory to the Lender as to the
Appraisal Value of the Pledged Servicing Contracts or the Nonrecourse
Servicing Contracts acquired in any Servicing Acquisition, which shall
evaluate such Servicing Contracts based upon reasonably determined
categories of the Mortgage Loans contained therein and give effect to
any subservicing agreement to which any such Mortgage Loan is or will
be subject, which certificate shall be in form, substance and detail
reasonably satisfactory to the Lender.
"Appraisal Value" means, at any date of determination, with
respect to the Pledged Servicing Contracts or the Nonrecourse
Servicing Contracts acquired in any Servicing Acquisition, the fair
market value of the Borrowers' right to service Mortgage Loans
pursuant to such Servicing Contracts, calculated as a percentage of
the unpaid principal amount of each Mortgage Loan serviced pursuant
thereto, as set forth in the most recent Appraisal, adjusted to
account for changes in such Servicing Contracts since the date of such
Appraisal.
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"Approved Custodian" means a pool custodian or other Person
which is deemed acceptable to the Lender from time to time in its sole
discretion to hold a Mortgage Loan for inclusion in a Mortgage Pool or
to hold a Mortgage Loan as agent for an Investor who has issued a
Purchase Commitment for such Mortgage Loan.
"Berkshire Advance" means an Advance made to Washington
against Berkshire Loans.
"Berkshire Loans" means advances made by Washington under the
Berkshire Master Agreement and evidenced by the Berkshire Master
Notes.
"Berkshire LP" means BRI OP Limited Partnership, a Delaware
limited partnership.
"Berkshire Master Agreement" means the Master Credit Facility
Agreement dated as of November 17, 1995, by and among Berkshire LP,
Berkshire Realty Company, Inc., BRI River Xxxxx Limited Partnership,
any Subsidiary of Berkshire LP that becomes a "Subsidiary Guarantor"
thereunder and Washington, as the same may be amended, supplemented,
restated or otherwise modified and in effect from time to time.
"Berkshire Master Notes" means the "Base Facility Note" and
the "Revolving Facility Note" executed and delivered to Washington
under the Berkshire Master Agreement, as the same may be amended,
supplemented, restated or otherwise modified and in effect from time
to time.
"Borrowers" has the meaning set forth in the first
paragraph of this Agreement.
"Business Day" means any day excluding Saturday or Sunday and
excluding any day on which national banking associations are closed
for business.
"Calendar Quarter" shall mean the three (3) month period
beginning on any January 1, April 1, July 1 or October 1.
"Cash Collateral Account" means a demand deposit account
maintained at the Funding Bank in the name of the Lender and
designated for receipt of the proceeds of the sale or other
disposition of the Collateral.
"Closing Date" means June ___, 1996.
"Collateral" has the meaning set forth in Section 3.1
hereof.
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"Collateral Documents" has the meaning set forth in
Section 2.2(a) hereof.
"Collateral Value" means (a) with respect to any Mortgage
Loan as of the date of determination, the lesser of (i) the amount of
any Advance made against such Mortgage Loan under Section 2.1(c)
hereof; or (ii) the Fair Market Value of such Mortgage Loan; or (b)
in the event Pledged Mortgages have been exchanged for Pledged
Securities, the aggregate Fair Market Value of the Mortgage Loans
backing such Pledged Securities; or (c) with respect to cash, the
amount of such cash.
"Commercial Advance" means an Advance made against a
Commercial Mortgage Loan.
"Commercial Mortgage Loan" means a Mortgage Loan (other than
a Multifamily Mortgage Loan or a Health Care Mortgage Loan) secured by
a Mortgage on improved commercial real property.
"Commitment" means the Warehousing Commitment, the Term
Loan Commitment or the Servicing Facility Commitment.
"Commitment Fee" means the Warehousing Commitment Fee,
the Term Loan Commitment Fee or the Servicing Facility
Commitment Fee.
"Committed Purchase Price" means for a Mortgage Loan the
product of the Mortgage Note Amount multiplied by (a) the price
(expressed as a percentage) as set forth in a Purchase Commitment for
such Mortgage Loan or (b) in the event such Mortgage Loan is to be
used to back a Mortgage-backed Security or a Participation
Certificate, the price (expressed as a percentage) as set forth in a
Purchase Commitment for such Mortgage-backed Security or a
Participation Certificate.
"Conventional Mortgage Loan" means a Multifamily Mortgage
Loan (other than a FNMA DUS Mortgage Loan, an FHA Project Mortgage
Loan, or an FHA Construction Mortgage Loan), or a Health Care Mortgage
Loan (other than an FHA Project Mortgage Loan or an FHA Construction
Mortgage Loan).
"Debt" means, with respect to any Person, at any date (a) all
indebtedness or other obligations of such Person which, in accordance
with GAAP, would be included in determining total liabilities as shown
on the liabilities side of a balance sheet of such Person at such
date; and (b) all indebtedness or other obligations of such Person for
borrowed money or for the deferred purchase price of property or
services; provided that for purposes of this Agreement, there shall be
excluded from Debt at any date loan loss reserves, Subordinated Debt
not due within one year of such date, and deferred taxes arising from
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capitalized excess servicing fees and capitalized servicing
rights.
"Debt Service Coverage Ratio" means, as of the last day of
any fiscal quarter of Washington and its Subsidiaries, the ratio of
Funds From Operations to Annual Debt Payments.
"Default" means the occurrence of any event or existence of
any condition which, but for the giving of Notice, the lapse of time,
or both, would constitute an Event of Default.
"Default Rate" has the meaning set forth in Section 2.1(g)
hereof.
"Delinquency Ratio" means the ratio of (a) the unpaid
principal balance of Mortgage Loans serviced by the Borrowers (i) on
which one or more payments are more than thirty (30) days past due,
(ii) which are subject to foreclosure proceedings or (iii) any obligor
on which is the subject of bankruptcy or other similar proceedings, to
(b) the Servicing Portfolio of the Borrowers.
"Depository Benefit" shall mean the compensation received by
the Lender, directly or indirectly, as a result of the Borrowers'
maintenance of Eligible Balances with a Designated Bank.
"Designated Bank" means any bank(s) designated from time to
time by the Lender to be a Designated Bank with whom the Lender has an
agreement under which the Lender can receive a Depository Benefit. As
of the date of this Agreement, the Designated Banks are Bank United
Texas, fsb and National City Bank, Kentucky. The Lender has the right,
at any time and from time to time in its sole discretion, to designate
one or more additional banks, or to terminate the designation of any
bank, as a designated bank hereunder.
"DUS Program" means FNMA's Delegated Underwriting and
Servicing Program.
"Eligible Balances" means all funds of or maintained by the
Borrowers and their Subsidiaries in non-interest bearing accounts at a
Designated Bank, less balances to support fees, interest or other
amounts that would otherwise be payable to the Designated Bank, float,
reserve requirements, Federal Deposit Insurance Corporation insurance
premiums and such other reductions as may be imposed by governmental
authorities from time to time.
"Eligible Mortgage Pool" means a Mortgage Pool for which (a)
an Approved Custodian has issued its initial certification (on the
basis of which a Pledged Security is to be issued),
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(b) there exists a Purchase Commitment covering such Pledged Security,
and (c) such Pledged Security will be delivered to the Lender.
"ERISA" means the Employee Retirement Income Security Act of
1974 and all rules and regulations promulgated thereunder, as amended
from time to time and any successor statute.
"Event of Default" means any of the conditions or events
set forth in Section 8.1 hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, and any successor statute.
"Existing Term Agreement" means the Term Loan and Security
Agreement dated December 19, 1994, between the Borrowers and the
Lender, as the same has been amended and is
in effect on the Closing Date.
"Existing Warehousing Agreement" means the Warehousing Credit
and Security Agreement (Single-Family and Multi-Family Mortgage Loans)
dated as of November 23, 1993, between the Borrowers and the Lender,
as the same has been amended and is in effect on the Closing Date.
"Fair Market Value" means at any time for a Mortgage Loan or
the related Mortgage-backed Security (if such Mortgage Loan is to be
used to back a Mortgage-backed Security) (a) if such Mortgage Loan or
the related Mortgage-backed Security is covered by a Purchase
Commitment, the Committed Purchase Price, or (b) otherwise, the market
price for such Mortgage Loan or Mortgage-backed Security, determined
by the Lender based on market data for similar Mortgage Loans or
Mortgage-backed Securities and such other criteria as the Lender deems
appropriate.
"FHA" means the Federal Housing Administration and any
successor thereto.
"FHA Construction Mortgage Loan" means an FHA fully insured
Mortgage Loan for the construction or substantial rehabilitation of a
Multifamily Property or a Health Care Facility.
"FHA Project Mortgage Loan" means an FHA fully insured
Multifamily Mortgage Loan or an FHA fully insured Health Care Mortgage
Loan.
"FHLMC" means the Federal Home Loan Mortgage Corporation
and any successor thereto.
"FICA" means the Federal Insurance Contributions Act.
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"FIRREA" means the Financial Institutions Reform, Recovery
and Enforcement Act of 1989, as amended from time to time, and the
regulations promulgated and rulings issued thereunder.
"First Mortgage" means a Mortgage which constitutes a first
Lien on the property covered thereby.
"First Mortgage Loan" means a Mortgage Loan secured by a
First Mortgage.
"FNMA" means the Federal National Mortgage Association
and any successor thereto.
"FNMA DUS Mortgage Loan" means a Multifamily Mortgage Loan
under FNMA's DUS Program.
"Funding Bank" means The First National Bank of Chicago or
any other bank designated from time to time by the Lender.
"Funding Bank Agreement" means the letter agreement
substantially in the form of Exhibit K hereto.
"Funds From Operations" means, as of the last day of any
fiscal quarter of Washington and its Subsidiaries, the sum of (a) the
net income of Washington and its Subsidiaries on a consolidated basis,
for the four (4) fiscal quarters ending on such date, plus (b) the
amount of income tax expense deducted in calculating such net income,
minus (c) the amount of income taxes actually paid by Washington and
its Subsidiaries during such four (4) fiscal quarters, plus (d)
depreciation, amortization and other non-cash items deducted in
calculating such net income, minus (e) non-cash revenue included in
calculating such net income, minus (f) the amount of dividends paid
and other distributions made on the capital stock of Washington during
such four (4) fiscal quarters, plus (g) the amount of interest expense
incurred under this Agreement on the Term Loan Advances and Servicing
Facility Advances or under the Existing Term Loan Agreement and
deducted in calculating such net income.
"GAAP" means generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles
Board and the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards
Board or in such other statements by such other entity as may be
approved by a significant segment of the accounting profession, which
are applicable to the circumstances as of the date of determination.
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"Gestation Agreement" means an agreement under which the
Borrowers agree to sell or finance (a) a Pledged Mortgage prior to the
date of purchase by an Investor, or (b) a Mortgage Pool prior to the
date the Mortgage-backed Security is issued.
"GNMA" means the Government National Mortgage Association
and any successor thereto.
"Health Care Facility" means a retirement service center, a
board and care facility, an intermediate care facility, a nursing home
or a hospital.
"Health Care Mortgage Loan" means a Mortgage Loan secured
by a Mortgage on a Health Care Facility.
"HUD" means the Department of Housing and Urban
Development and any successor thereto.
"HUD 241 Program" means federal loan insurance to finance
improvements, additions and equipment to multi-family rental housing
and healthcare facilities pursuant to Section 241 of the National
Housing Act, 12 U.S.C. Sections 1715z-6.
"HUD 241 Advances" means Advances made against HUD 241
Mortgage Loans.
"HUD 241 Mortgage Loans" means Mortgage Loans that are
insured by HUD under the HUD 241 Program and committed for purchase by
an Investor pursuant to a Purchase Commitment.
"Indemnified Liabilities" has the meaning set forth in
Article 10 hereof.
"Internal Revenue Code" means the Internal Revenue Code of
1986, or any subsequent federal income tax law or laws, as any of the
foregoing have been or may from time to time be amended.
"Investor" means FNMA, FHLMC or a financially responsible
private institution which is deemed acceptable by the Lender from time
to time in its sole discretion.
"Lender" has the meaning set forth in the first paragraph
of this Agreement.
"LIBOR" means, for each calendar week, the rate of interest
per annum which is equal to the arithmetic mean of the U.S. Dollar
London Interbank Offered Rates for one (1) month periods 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 Xxxxxx-Xxxxxx, Inc.
on its
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MoneyCenter system. LIBOR shall be rounded, if necessary, to the next
higher one sixteenth of one percent (1/16%). If such U.S. dollar LIBOR
rates are not so offered or published for any period, then during such
period LIBOR shall mean the London Interbank Offered Rate for one (1)
month periods published on the first Business Day of each week on
which the London Interbank market is open, in the Wall Street Journal
in its regular column entitled "Money Rates."
"Lien" means any lien, mortgage, deed of trust, pledge,
security interest, charge or encumbrance of any kind (including any
conditional sale or other title retention agreement, any lease in the
nature thereof, and any agreement to give any security interest).
"Liquid Assets" means, with respect to any Person at any
date, the following unrestricted and unencumbered assets owned by such
Person on such date: cash, funds on deposit in any bank located in the
United States, investment grade commercial paper, money market funds,
marketable securities and 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 notes or
other debt instruments against which such Mortgage Loans or
Mortgage-backed Securities are pledged as Collateral.
"Loan Documents" means this Agreement, the Notes, any
agreement of the Borrowers relating to Subordinated Debt, and each
other document, instrument or agreement executed by the Borrowers in
connection herewith or therewith, as any of the same may be amended,
restated, renewed or replaced from time to time.
"Margin Stock" has the meaning assigned to that term in
Regulations G and U of the Board of Governors of the Federal Reserve
System as in effect from time to time.
"Maturity Date" means, for any Advance, the Warehousing
Maturity Date, the Servicing Facility Maturity Date or the Term Loan
Maturity Date, as applicable.
"Miscellaneous Charges" has the meaning set forth in
Section 2.12 hereof.
"Mortgage" means a mortgage or deed of trust on improved real
property. A Mortgage may be a First Mortgage or a Second Mortgage.
"Mortgage-backed Securities" means GNMA, FNMA or FHLMC
securities that are backed by Mortgage Loans.
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"Mortgage Loan" means any loan evidenced by a Mortgage
Note and any Berkshire Loan.
"Mortgage Note" means a promissory note secured by a
Mortgage.
"Mortgage Note Amount" means, as of the date of
determination, with respect to any Mortgage Loan, the then outstanding
unpaid principal amount of the related Mortgage Note or the then
outstanding unpaid principal amount of the Berkshire Loan.
"Mortgage Pool" means a pool of one or more Pledged Mortgages
on the basis of which there is to be issued a Mortgage-backed
Security.
"Multiemployer Plan" means a "multiemployer plan" as defined
in Section 4001(a)(3) of ERISA which is maintained for employees of
the Borrowers or a Subsidiary of the Borrowers.
"Multifamily Mortgage Loan" means a Mortgage Loan secured
by a Mortgage on improved Multifamily Property.
"Multifamily Property" means real property containing or
which will contain more than four (4) dwelling units.
"Nonrecourse Servicing Contract" means a Servicing Contract
under which the Borrowers are not obligated to repurchase or indemnify
the holder of Mortgage Loans as a result of a default on the Mortgage
Loans occurring more than six months after the date of such Mortgage
Loan; provided, that the Borrowers may be obligated to repurchase or
indemnify the holder as a result of a breach of any customary
representation or warranty made by the Borrowers, as seller or
servicer, in respect of such Mortgage Loans.
"Notes" has the meaning set forth in Section 2.6 hereof.
"Notices" has the meaning set forth in Article 9 hereof.
"Obligations" means any and all indebtedness, obligations and
liabilities of the Borrowers to the Lender (whether now existing or
hereafter arising, voluntary or involuntary, whether or not jointly
owed with others, direct or indirect, absolute or contingent,
liquidated or unliquidated, and whether or not from time to time
decreased or extinguished and later increased, created or incurred),
arising out of or related to the Loan Documents.
"Officer's Certificate" means a certificate executed on
behalf of the Borrowers by their chief financial officer or its
treasurer or by such other officer as may be designated
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herein and substantially in the form of Exhibit I-MF attached
hereto.
"Operating Account" means a demand deposit account maintained
at the Funding Bank in the name of Borrowers and designated for
funding the discount portion of each Advance and for returning any
excess payment from an Investor for a Pledged Mortgage or Pledged
Security.
"Parent" shall mean NHP Financial Services, Ltd., a
Delaware corporation.
"Participant" has the meaning set forth in Section 12.5
hereof.
"Participation Certificate" means a participation certificate
issued by an Investor, a pool custodian satisfactory to the Lender or
the Borrowers evidencing an undivided interest in a Pledged Mortgage
or a Mortgage Pool consisting of Pledged Mortgages.
"Person" means and includes natural persons, corporations,
limited partnerships, general partnerships, joint stock companies,
joint ventures, associations, companies, trusts, banks, trust
companies, land trusts, business trusts or other organizations,
whether or not legal entities, and governments and agencies and
political subdivisions thereof.
"Plans" has the meaning set forth in Section 5.12 hereof.
"Pledged Mortgages" has the meaning set forth in Section
3.1(a) hereof.
"Pledged Securities" has the meaning set forth in Section
3.1(b) hereof.
"Pledged Servicing Contracts" has the meaning set forth
in Section 3.1(d) hereof.
"Purchase Commitment" means a written commitment, in form and
substance satisfactory to the Lender, issued in favor of the Borrowers
by an Investor pursuant to which that Investor commits to purchase
Mortgage Loans, Mortgage-backed Securities or Participation
Certificates.
"Release Amount" has the meaning set forth in Section
3.2(g) hereof.
"Refunder" means an Advance made against a Mortgage Loan the
proceeds of which are used to repay an existing Mortgage Loan in the
Borrowers' Servicing Portfolio or retire a
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Mortgage-backed Security for which one of the Borrowers is the
servicer.
"Second Mortgage" means a Mortgage which constitutes a second
Lien on the property covered thereby.
"Second Mortgage Loan" means a Mortgage Loan secured by
a Second Mortgage.
"Servicing Acquisition" means a transaction in which the
Borrowers acquire Nonrecourse Servicing Contracts with respect to
Multi-family Mortgage Loans in a bulk purchase, to the extent that the
Lender makes a Servicing Acquisition Advance to finance a part of the
cost of the Borrowers' acquisition of such Servicing Contracts.
"Servicing Acquisition Advance" shall mean a Servicing
Facility Advance used to finance part of the Borrowers' cost of a
Servicing Acquisition.
"Servicing Acquisition Cost" means, with respect to any
Nonrecourse Servicing Contracts acquired by the Borrowers as part of
any Servicing Acquisition, the unamortized net cost to the Borrowers,
as reflected on its books and records, of acquiring such Nonrecourse
Servicing Contracts.
"Servicing Acquisition Documents" means, with respect to any
Servicing Acquisition, the Servicing Purchase Agreement and all
agreements, documents, and instruments executed and
delivered in connection therewith.
"Servicing Collateral" means the Pledged Servicing Contracts,
all Collateral described in Sections 3.1(e) and 3.1(f) and all
Collateral described in Sections 3.1(g), 3.1(h) and 3.1(i) hereof that
constitutes proceeds of, or is related to, such Collateral.
"Servicing Collateral Value" means, as of the date of any
determination, sixty-five (65%) of the Appraisal Value of the Pledged
Servicing Contracts (adjusted to account for Pledged Servicing
Contracts sold, created or acquired since the date of the most recent
Appraisal in accordance with the methodology of such Appraisal);
provided, that for purposes of calculating the Servicing Collateral
Value, the following Mortgage Loans shall be excluded: (i) Mortgage
Loans on which any payment is more than forty-five (45) days past due,
(ii) Mortgage Loans in respect of which the Borrowers have commenced
foreclosure proceedings, (iii) Mortgage Loans in respect of which any
obligor is the subject of a bankruptcy proceeding, and (iv) Servicing
Contracts excluded in calculating the Adjusted Servicing Portfolio.
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"Servicing Contract" means, with respect to any Person, the
arrangement, whether or not in writing, pursuant to which such Person
has the right to service Mortgage Loans.
"Servicing Facility Advance" means a disbursement by the
Lender under the Servicing Facility Commitment pursuant to Section 2.4
of this Agreement.
"Servicing Facility Advance Request" has the meaning set
forth in Section 2.5(a) hereof.
"Servicing Facility Commitment" has the meaning set forth
in Section 2.4 hereof.
"Servicing Facility Commitment Amount" means Ten Million
Dollars ($10,000,000).
"Servicing Facility Commitment Fee" means a fee payable by
the Borrowers in consideration of the Lender's issuance of its
Servicing Acquisition Commitment. The amount of the Servicing
Commitment Fee is set forth in Section 2.11(c) hereof.
"Servicing Facility Commitment Termination Date" means the
earlier of: (a) the close of business on August 31, 1997, as such date
may be extended from time to time pursuant to Section 2.4(c) hereof,
and (b) the date the obligation of the Lender to make further Advances
hereunder is terminated pursuant to Section 8.2 below.
"Servicing Facility Maturity Date" means the earliest of: (a)
the close of business on the date five (5) years after the Servicing
Facility Commitment Termination Date, (b) the Warehousing Maturity
Date, and (c) the date the Servicing Facility Advances become due and
payable pursuant to Section 8.2 below.
"Servicing Facility Promissory Note" means the promissory
note evidencing the Borrowers' Obligations with respect to Servicing
Facility Advances in the form of Exhibit A-3 attached hereto.
"Servicing Facility Rate" means a floating rate of interest
per annum equal to three and one-half percent (3.50%) per annum over
LIBOR. The Servicing Facility Rate shall be adjusted on and as of the
effective date of each weekly change in LIBOR. The Lender's
determination of the Servicing Facility Rate as of any date of
determination shall be conclusive and binding, absent manifest error.
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"Servicing Portfolio" means, as to any Person, the unpaid
principal balance of Mortgage Loans whose Servicing Contracts are
owned by such Person.
"Servicing Purchase Agreement" means any agreement pursuant
to which the Borrowers make any Servicing Acquisition.
"Statement Date" means the date of the most recent financial
statements of Washington and, its Subsidiaries, on a consolidated
basis delivered to the Lender under the terms of this Agreement.
"Subordinated Debt" means all indebtedness of the Borrowers
for borrowed money which is, by its terms (which terms shall have been
approved by the Lender), effectively subordinated in right of payment
to all other present and future Obligations and, solely for purposes
of Section 7.4 hereof, all indebtedness of the Borrowers which is
required to be subordinated by Section 4.1(b) or Section 6.10 hereof.
"Subsidiary" means any corporation, association or other
business entity in which more than fifty percent (50%) of the total
voting power or shares of stock entitled to vote in the election of
directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by any Person or one or more of
the other Subsidiaries of that Person or a combination thereof.
"Tangible Net Worth" means with respect to any Person at any
date, the excess of the total assets over total liabilities of such
Person on such date, each to be determined in accordance with GAAP
consistent with those applied in the preparation of the financial
statements referred to in Section 4.1(a)(5) hereof, plus loan loss
reserves and that portion of Subordinated Debt not due within one year
of such date, provided that, for purposes of this Agreement, there
shall be excluded from total assets advances or loans to shareholders,
officers or Affiliates, investments in Affiliates, assets pledged to
secure any liabilities not included in the Debt of such Person,
intangible assets, those other assets which would be deemed by HUD to
be non-acceptable in calculating adjusted net worth in accordance with
its requirements in effect as of such date, as such requirements
appear in the "Audit Guide for Audit of Approved Non-Supervised
Mortgagees", and other assets deemed unacceptable by the Lender in its
sole discretion.
"Term Loan Advance" means the disbursement by the Lender
under the Term Loan Commitment pursuant to Section 2.3 of this
Agreement.
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"Term Loan Commitment" has the meaning set forth in
Section 2.3 hereof.
"Term Loan Commitment Amount" means Ten Million Dollars
($10,000,000).
"Term Loan Commitment Fee" means a fee payable by the
Borrowers in consideration of the Lender's issuance of its
Term Loan Commitment. The amount of the Term Loan Commitment
Fee is set forth in Section 2.11 hereof.
"Term Loan Maturity Date" means the earliest of: (a) the
close of business on May 31, 2001, as such date may be extended from
time to time in writing by the Lender, in its sole discretion, (b) the
Warehousing Maturity Date, and (c) the date the Term Loan Advance
becomes due and payable pursuant to Section 8.2 below.
"Term Loan Promissory Note" means the promissory note
evidencing the Borrowers' Obligations with respect to the Term Loan
Advance in the form of Exhibit A-2 attached hereto.
"Term Loan Rate" means a floating rate of interest per annum
equal to three percent (3.00%) per annum over LIBOR. The Term Loan
Rate shall be adjusted on and as of the effective date of each weekly
change in LIBOR. The Lender's determination of the Term Loan Rate as
of any date of determination shall be conclusive and binding, absent
manifest error.
"Trust Receipt" means a trust receipt in a form approved by
and pursuant to which the Lender may deliver any document relating to
the Collateral to the Borrowers for correction or completion.
"Warehousing Advance" shall mean a disbursement by the
Lender under the Warehousing Commitment pursuant to Section 2.1 of
this Agreement.
"Warehousing Collateral" means all of the Collateral
other than the Servicing Collateral.
"Warehousing Commitment" has the meaning set forth in
Section 2.1 hereof.
"Warehousing Commitment Amount" means One Hundred Fifty
Million Dollars ($150,000,000).
"Warehousing Commitment Fee" means a fee payable by the
Borrowers in consideration of the Lender's issuance of the
Warehousing Commitment. The amount of the Warehousing
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Commitment Fee, if any, is set forth in Section 2.11(a) hereof.
"Warehousing Maturity Date" shall mean the earlier of: (a)
the close of business on August 31, 1997, as such date may be extended
from time to time in writing by the Lender, in its sole discretion, on
which date the Warehousing Commitment shall expire of its own term,
and without the necessity of action by the Lender, and (b) the date
the Warehousing Advances become due and payable pursuant to Section
8.2 below.
"Warehousing Rate" means a floating rate of interest which is
equal to one percent (1.00%) per annum over LIBOR. The Warehousing
Rate will be adjusted as of the effective date of each weekly change
in LIBOR. The Lender's determination of the Warehousing Rate as of any
date of determination shall be conclusive and binding, absent manifest
error.
"Working Capital Advance" means a Servicing Facility Advance
to provide for the Borrowers' general working capital needs.
"Working Capital Advance Request" has the meaning given
it in Section 2.5(a) hereof.
1.2 Other Definitional Provisions.
1.2(a) Accounting terms not otherwise defined
herein shall have the meanings given the terms under GAAP.
1.2(b) Defined terms may be used in the singular
or the plural, as the context requires.
1.2(c) All references to time of day shall mean the
then applicable time in Chicago, Illinois, unless expressly
provided to the contrary.
2. THE CREDIT.
2.1 The Warehousing Commitment.
2.1(a) Subject to the terms and conditions of this
Agreement and provided no Default or Event of Default has
occurred and is continuing, the Lender agrees from time to
time during the period from the Closing Date, to, but not
including, the Warehousing Maturity Date, to make Warehousing
Advances to the Borrowers, provided the total aggregate
principal amount outstanding at any one time of all such
Warehousing Advances shall not exceed the Warehousing
Commitment Amount. The obligation of the Lender to make
Warehousing Advances
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hereunder up to the Warehousing Commitment Amount is
hereinafter referred to as the "Warehousing Commitment."
Within the Warehousing Commitment, the Borrowers may borrow,
repay and reborrow. On the Closing Date, the Lender shall,
without further action by the Borrowers, make Warehousing
Advances in an amount equal to the aggregate principal
balance of all outstanding loans made pursuant to the
Existing Warehousing Agreement, other than "P&I Advances" and
"Working Capital Advances" (as defined therein), and shall
apply such Warehousing Advances to repay such outstanding
loans under the Existing Warehousing Agreement. All
Warehousing Advances under this Agreement shall constitute a
single indebtedness, and all of the Collateral shall be
security for the Warehousing Promissory Note and for the
performance of all the Obligations. Warehousing Advances
shall be made either to Washington or to Xxxxxxx, as shall be
requested by Washington or Xxxxxxx, but each Warehousing
Advance, whether made to Washington or to Xxxxxxx shall be
deemed made to or for the benefit of Washington and Xxxxxxx,
and Washington and Xxxxxxx, jointly and severally, shall be
obligated to repay any Warehousing Advances made to
Washington or Xxxxxxx under the Warehousing Commitment. With
respect to its obligation to repay Warehousing Advances made
to the other Borrower, each Borrower agrees to the terms set
forth in Exhibit L attached hereto and made a part hereof.
2.1(b) Warehousing Advances shall be used by the
Borrowers solely for the purpose of funding the acquisition
or origination of Mortgage Loans and shall be made at the
request of the Borrowers, in the manner hereinafter provided
in Section 2.2 hereof, against the pledge of such Mortgage
Loans as Collateral therefor. The following limitations on
the use of the Advance shall be applicable:
(1) No Warehousing Advance shall be made
against a Mortgage Loan which is not covered by a
Purchase Commitment for either the Mortgage Loan or
the Mortgage-backed Securities or Participation
Certificates to be created on the basis of such
Mortgage Loan.
(2) No Warehousing Advance shall be made to
Washington against Mortgage Loans other than FHA
Construction Mortgage Loans, FHA Project Mortgage
Loans, FNMA DUS Mortgage Loans, Conventional
Mortgage Loans, HUD 241 Mortgage Loans, Commercial
Mortgage Loans and Berkshire Loans.
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(3) No Warehousing Advance shall be made to
Xxxxxxx against Mortgage Loans other than FHA
Construction Mortgage Loans, FHA Project Mortgage
Loans, HUD 241 Mortgage Loans or Conventional
Mortgage Loans.
(4) Except for Warehousing Advances made on
the Closing Date used to refund loans outstanding
under the Existing Warehousing Agreement, no
Warehousing Advance shall be made against any FHA
Project Mortgage Loan, FNMA DUS Mortgage Loan,
Conventional Mortgage Loan, Commercial Mortgage Loan
or Berkshire Loan which was closed more than thirty
(30) days prior to the date of the requested
Advance.
(5) No Warehousing Advance shall be made
against an FHA Construction Mortgage Loan unless (a)
no lender other than the Lender has made loans to
the Borrowers against such Pledged Mortgage, (b) the
Lender has, at one time had or will (as provided in
Exhibit D-FHA) obtain possession of the related
Mortgage Note and Collateral Documents, and (c) the
related Mortgage Note is in the possession of a
Person other than the Borrowers or an Affiliate of
the Borrowers.
(6) The aggregate amount of HUD 241
Advances outstanding at any one time shall not
exceed Fifteen Million Dollars ($15,000,000).
(7) The aggregate amount of Commercial
Advances outstanding at any one time shall not
exceed Thirty Million Dollars ($30,000,000).
2.1(c) No Warehousing Advance shall exceed
the following amount applicable to the type of Collateral at
the time it is pledged:
(1) A Warehousing Advance made against a
Conventional Mortgage Loan pledged hereunder that is
committed for purchase by FNMA or FHLMC, the lesser
of (i) the Mortgage Note Amount or (ii) the
Committed Purchase Price.
(2) A Warehousing Advance made against a
Conventional Mortgage Loan pledged hereunder that is
committed for purchase by an Investor other than
FNMA or FHLMC, ninety-eight percent (98%) of the
lesser of (i) the Mortgage Note Amount or (ii) the
Committed Purchase Price.
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(3) A Warehousing Advance made against a
FNMA DUS Mortgage Loan pledged hereunder, the lesser
of (i) the Mortgage Note Amount or (ii) the
Committed Purchase Price.
(4) A Warehousing Advance made against an
FHA Project Mortgage Loan, an FHA Construction
Mortgage Loan or a HUD 241 Mortgage Loan pledged
hereunder, the lesser of (i) the Mortgage Note
Amount or (ii) the Committed Purchase Price.
(5) A Warehousing Advance made against
Commercial Mortgage Loan pledged hereunder,
ninety-five percent (95%) of the lesser of (i) the
Mortgage Note Amount, or (ii) the Committed
Purchase Price.
(6) A Warehousing Advance made against a
Berkshire Loan pledged hereunder, the lesser of (i)
the Mortgage Note Amount or (ii) the Committed
Purchase Price.
2.2 Procedures for Obtaining Warehousing Advances.
2.2(a) The Borrowers may obtain a Warehousing
Advance hereunder, subject to the satisfaction of the
conditions set forth in Sections 4.1 and 4.2 hereof, upon
compliance with the procedures set forth in this Section
2.2 and in the following described Exhibits, attached hereto
and made a part hereof including the delivery of all documents
listed in the following described Exhibits (the "Collateral
Documents") to the Lender, as applicable to the type of
Collateral being financed:
(1) Conventional Mortgage Loans, FNMA DUS
Mortgage Loans and Commercial Mortgage Loans, as set
forth in Exhibit D-MF/CONV/DUS hereto.
(2) FHA Project Mortgage Loans, FHA
Construction Mortgage Loans and HUD 241 Mortgage
Loans, as set forth in Exhibit D-MF/FHA hereto.
(3) Berkshire Loans, as set forth in
Exhibit D-MF/BER.
Requests for Warehousing Advances shall be initiated by the
Borrowers by delivering to the Lender, no later than one (1)
Business Day prior to any Business Day that the Borrowers
desire to borrow hereunder, a completed and signed request
for a Warehousing Advance (a "Warehousing Advance Request")
on the then current form approved by the Lender. The current
forms in use by the Lender are
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Exhibit C-MF for Warehousing Advances against Mortgage Loans
other than Berkshire Loans, and Exhibit C-MF/BER for
Warehousing Advances made to Washington against Berkshire
Loans, attached hereto and made a part hereof. The Lender
shall have the right, on not less than three (3) Business
Days' prior Notice to the Borrowers, to modify any of said
Exhibits to conform to current legal requirements or Lender
practices, and, as so modified, said Exhibits shall be deemed
a part hereof.
2.2(b) Before funding, the Lender shall have a
reasonable time (one (1) Business Day under ordinary
circumstances) to examine such Warehousing Advance Request
and the Collateral Documents to be delivered prior to such
requested Warehousing Advance, as set forth in the applicable
Exhibit hereto, and may reject such of them as do not meet
the requirements of this Agreement or of the related Purchase
Commitment.
2.2(c) The Borrowers shall hold in trust for the
Lender, and the Borrowers shall deliver to the Lender
promptly upon request, the following: (1) originals of the
Collateral Documents for which copies are required to be
delivered to the Lender pursuant to Exhibit DMF/CONV/DUS,
Exhibit D-MF/FHA or Exhibit D-MF/BER, (2) the original
lender's ALTA Policy of Title Insurance or an equivalent
thereto, (3) the environmental assessment, and (4) any other
documents relating to a Pledged Mortgage which the Lender may
request including, without limitation, certificates of
casualty or hazard insurance, credit information on the maker
of each such Mortgage Note, and other documents of all kinds
which are customarily desired for inspection or transfer
incidental to the purchase of any Mortgage Note by an
Investor and any additional documents which are customarily
executed by the seller of a Mortgage Note to an Investor.
2.2(d) To make a Warehousing Advance, the Lender
shall cause the Funding Bank to credit an account of the
Borrowers with the Funding Bank, which account shall be under
the exclusive control of the Lender, upon compliance by the
Borrowers with the terms of this Agreement. The Lender shall
determine in its sole discretion the method by which a
Warehousing Advance is made.
2.2(e) If, pursuant to the authorization given by
the Borrowers in the Funding Bank Agreement, for the purpose
of financing a Mortgage Loan against which the Lender has
made a Warehousing Advance in accordance with a Request for
Advance the Lender debits the Borrowers' Operating Account at
the Funding Bank to the extent
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necessary to cover a wire to be initiated by the Lender, and
such debit or direction results in an overdraft, the Lender
may make an additional Warehousing Advance to fund such
overdraft.
2.3 The Term Loan Commitment. Subject to the terms and
conditions of this Agreement and provided no Default or Event of
Default has occurred and is continuing, the Lender agrees, on the
Closing Date, to make a Term Loan Advance to the Borrowers in an
amount equal to the outstanding balance of the loans made pursuant to
the Existing Term Loan Agreement, but not to exceed the Term Loan
Commitment Amount. The obligation of the Lender to make the Term Loan
Advance hereunder is hereinafter referred to as the "Term Loan
Commitment." On the Closing Date, the Lender shall, without further
request by the Borrowers, make the Term Loan Advance and apply it to
repay all outstanding loans made pursuant to the Existing Term Loan
Agreement. The Term Loan Advance shall constitute a single
indebtedness, and all of the Collateral shall be security for the Term
Loan Promissory Note and for the performance of all the Obligations.
The Term Loan Advance shall be made jointly to Washington and Xxxxxxx,
and Washington and Xxxxxxx, jointly and severally, shall be obligated
to repay the Term Loan Advance. With respect to its obligation to
repay the Term Loan Advance, in the event the Term Loan Advance or any
portion thereof is deemed to be made to either Borrower (rather than
jointly to both Borrowers), the other Borrower agrees to the terms set
forth in Exhibit L attached hereto and made a part hereof.
2.4 The Servicing Facility Commitment.
2.4(a) Subject to the terms and conditions of this
Agreement and provided no Default or Event of Default has
occurred and is continuing, the Lender agrees from time to
time during the period from the Closing Date, to, but not
including, the Servicing Facility Commitment Termination
Date, to make Servicing Facility Advances to the Borrowers,
provided the total aggregate principal amount outstanding at
any one time of all such Servicing Facility Advances shall
not exceed the Servicing Facility Commitment Amount. The
obligation of the Lender to make Servicing Facility Advances
hereunder up to the Servicing Facility Commitment Amount is
hereinafter referred to as the "Servicing Facility
Commitment." Within the Servicing Facility Commitment, the
Borrowers may borrow, repay and reborrow. On the Closing
Date, the Lender shall, without further action by the
Borrowers, make Working Capital Advances in an amount equal
to the aggregate outstanding principal balance of all "P&I
Advances" and "Working Capital Advances" outstanding under
the Existing Warehousing Agreement, and
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shall apply such Working Capital Advances to repay such
outstanding loans under the Existing Warehousing Agreement.
All Servicing Facility Advances under this Agreement shall
constitute a single indebtedness, and all of the Collateral
shall be security for the Servicing Facility Promissory Note
and for the performance of all the Obligations. Servicing
Facility Advances shall be made either to Washington or to
Xxxxxxx, as shall be requested by Washington or Xxxxxxx, but
each Servicing Facility Advance, whether made to Washington
or to Xxxxxxx shall be deemed made to or for the benefit of
Washington and Xxxxxxx, and Washington and Xxxxxxx, jointly
and severally, shall be obligated to repay any Servicing
Facility Advances made to Washington or Xxxxxxx under the
Servicing Facility Commitment. With respect to its obligation
to repay Servicing Facility Advances made to the other
Borrower, each Borrower agrees to the terms set forth in
Exhibit L attached hereto and made a part hereof.
2.4(b) Servicing Facility Advances shall be made
either as Servicing Acquisition Advances or as Working
Capital Advances. Servicing Acquisition Advances shall be
used by the Borrowers solely for the purpose of financing a
part of the Servicing Acquisition Cost of a Servicing
Acquisition. Working Capital Advances shall be used to
provide for the working capital needs of the Borrowers. Each
Servicing Facility Advance shall be made at the request of
the Borrowers, in the manner hereinafter provided in Section
2.2 hereof. The following limitations on the use of the
Advance shall be applicable:
(1) No Servicing Facility Advance shall be
made if, after giving effect thereto and, in the
case of a Servicing Acquisition Advance, to the
Servicing Acquisition to be funded thereby, (i) the
aggregate outstanding principal balance of the Term
Loan Advance and all Servicing Facility Advances
would exceed the Servicing Collateral Value as of
the date of such Servicing Facility Advance, or (ii)
in the case of any Servicing Acquisition Advance,
the amount of such Servicing Acquisition Advance
would exceed seventy percent (70%) of Servicing
Acquisition Cost or, if an Appraisal is required by
the Lender, the Appraisal Value of the Nonrecourse
Servicing Contracts being acquired in such Servicing
Acquisition; provided, that for purposes of the
foregoing calculations, the following Mortgage Loans
shall be excluded: (w) Mortgage Loans on which any
payment is more than thirty (30) days past due, (x)
Mortgage Loans in
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respect of which the Borrowers have commenced
foreclosure proceedings, (y) Mortgage Loans in
respect of which any obligor is the subject of a
bankruptcy proceeding, and (z) Servicing Contracts
excluded in calculating the Adjusted Servicing
Portfolio.
(2) The aggregate amount of Working
Capital Advances outstanding at any one time shall
not exceed Five Million Dollars ($5,000,000) (the
"Working Capital Sublimit").
(3) No Servicing Acquisition Advance shall
be made to finance a Servicing Acquisition unless
the Lender shall have reviewed the documents and
information described in Section 2.5(b) in
connection with such Servicing Acquisition, and the
same shall be in all respects satisfactory to the
Lender.
2.4(c) Unless either the Lender or the Borrower, in
its sole discretion, provides the other with written notice,
on or before the sixtieth day prior to the then-effective
Servicing Facility Commitment Termination Date, that it is
not willing to extend the Servicing Facility Commitment
Termination Date (subject to an earlier termination of the
Commitments pursuant to Section 8.2), and provided no Default
or Event of Default has occurred and is continuing on the
then-effective Servicing Facility Commitment Termination
Date, the Servicing Facility Commitment Termination Date
shall be extended by one year, effective as of the
then-effective Servicing Facility Commitment Termination
Date; provided, that the Servicing Facility Commitment
Termination Date shall not be extended under this Section
2.4(c) beyond August 31, 2001.
2.5 Procedures for Obtaining Servicing Facility
Advances.
2.5(a) The Borrowers may obtain a Servicing Facility
Advance hereunder, subject to the satisfaction of the
conditions set forth in Sections 4.1 and 4.2 hereof, upon
compliance with the procedures set forth in this Section 2.5.
Requests for Servicing Acquisition Advances shall be
initiated by the Borrowers delivering to the Lender, no later
than two (2) Business Day prior to any Business Day on which
the Borrowers desire to borrow hereunder, a completed and
signed request for a Servicing Acquisition Advance (a
"Servicing Acquisition Advance Request") on the then current
form approved by the Lender. The current form in use by the
Lender is
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Exhibit C-SER attached hereto and made a part hereof.
Requests for Working Capital Advances shall be initiated by
the Borrowers delivering to the Lender, no later than one (1)
Business Day prior to any Business Day on which the Borrowers
desire to borrow hereunder, a completed and signed request
for a Working Capital Advance (a "Working Capital Advance
Request") on the then current form approved by the Lender.
The current form in use by the Lender is Exhibit C-WC
attached hereto and made a part hereof. The Lender shall have
the right, on not less than three (3) Business Days' prior
Notice to the Borrowers, to modify such Exhibits to conform
to current legal requirements or Lender practices, and, as so
modified, said Exhibit shall be deemed a part hereof.
2.5(b) The Borrowers shall deliver the following
documents, certificates and opinions related to any Servicing
Acquisition to the Lender prior to the date of such Servicing
Acquisition Advance:
(1) the following documents with respect to
Nonrecourse Servicing Contracts acquired in such
Servicing Acquisition: (i) a counterpart of the
Servicing Purchase Agreement and all other Servicing
Acquisition Documents, duly executed by each party
thereto, (ii) such information with respect to such
Servicing Contracts and the Mortgage Loans serviced
pursuant thereto as the Lender may reasonably
request, (iii) a valuation of such Servicing
Contracts prepared using the methodology and values
used in the most recent Appraisal of the Pledged
Servicing Contracts or, if required by the Lender,
an Appraisal with respect to such Servicing
Contracts and (iv) evidence satisfactory to the
Lender that, if requested by the Lender, FNMA, FHLMC
and/or GNMA, if applicable, has entered into an
Acknowledgment Agreement with respect to all such
Servicing Contracts to which it is a party
(provided, that such evidence shall not be required
if such Servicing Contracts are excluded from the
calculation of Servicing Acquisition Cost and the
Appraisal or internal valuation described above),
and that, if applicable, GNMA has received such
notice of the Lender's security interest in such
Servicing Contracts to which it is a party as may be
required thereunder or to perfect such security
interests;
(2) a certificate of the president or
chief financial officer of each of the
Borrowers, certifying that all representations
and warranties set forth in Section 5 hereof,
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including, without limitation, Section 5.4 hereof,
are true and correct as though made on and as of the
date of such Servicing Acquisition Advance;
(3) evidence satisfactory to the Lender
that all consents from and notices to FNMA, FHLMC,
GNMA, FHA, VA and other governmental agencies or
Investors required for the Borrowers to assume the
Servicing Contracts to be acquired and continue its
business after the closing of such Servicing
Acquisition have been obtained and given;
(4) evidence satisfactory to the Lender
that such Servicing Acquisition Advance and any
additional funds delivered simultaneously to such
seller will be sufficient to pay the purchase price
under such Servicing Purchase
Agreement in full;
(5) Such UCC Financing statements or
amendments as the Lender, in its sole
discretion, may request to perfect or continue
the perfection of its security interest;
(6) UCC, tax lien and judgment searches in
the appropriate public records for the seller(s) in
such Servicing Acquisition, which shall not have
disclosed the existence of any prior Lien on the
Servicing Contracts to be acquired by the Borrowers;
and
(7) such further documents, instruments,
opinions, certificates and evidence as the
Lender may reasonably request.
2.5(c) Before funding any Servicing Acquisition
Advance, the Lender shall have a reasonable time (two (2)
Business Days in ordinary circumstances) to examine the
documents delivered to it hereunder in connection with the
Servicing Acquisition to be funded by such Servicing
Acquisition Advance prior to making the requested Servicing
Acquisition Advance, and may reject such of them as are not
reasonably satisfactory to Lender.
2.5(d) To make a Servicing Acquisition
Advance, the Lender shall disburse the amount thereof in
accordance with the Request for Servicing Acquisition Advance
upon compliance by the Borrowers with the terms of this
Agreement. To make a Working Capital Advance,
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the Lender shall disburse the proceeds thereof into the
Operating Account.
2.6 Notes. The Borrowers' Obligations in respect of
Warehousing Advances shall be evidenced by a Warehousing Promissory
Note of the Borrowers in the form of Exhibit A-1 attached hereto. The
Borrowers' Obligations in respect of the Term Loan Advance shall be
evidenced by a Term Loan Promissory Note of the Borrowers
substantially in the form of Exhibit A-2 attached hereto. The
Borrowers' Obligations in respect of Servicing Facility Advances shall
be evidenced by a Servicing Facility Promissory Note of the Borrowers
in the form of Exhibit A-3 attached hereto. Each note shall be dated
as of the date hereof. The Warehousing Promissory Note, the Term Loan
Promissory Note and the Servicing Promissory Note are collectively
referred to as the "Notes". The terms "Warehousing Promissory Note,"
"Term Loan Promissory Note," "Servicing Promissory Note," "Note" or
"Notes" shall include all extensions, renewals and modifications of
the Notes and all substitutions therefor. All terms and provisions of
the Notes are hereby incorporated herein.
2.7 Interest.
2.7(a) Except as provided in Section 2.7(g), the
unpaid amount of each Warehousing Advance shall bear
interest, from the date of such Advance until paid in full,
at the Warehousing Rate.
2.7(b) Except as provided in Section 2.7(g), the
unpaid amount of each Term Loan Advance shall bear interest,
from the date of such Term Loan Advance until paid in full,
at the Term Loan Rate.
2.7(c) Except as provided in Section 2.7(g), the
unpaid amount of the Servicing Facility Advance shall bear
interest, from the date of the Servicing Facility Advance
until paid in full, at the Servicing Facility Rate.
2.7(d) The Borrowers shall be entitled to receive
certain benefits based on the average monthly Eligible
Balances of the Borrowers maintained at a Designated Bank.
For the purposes hereof, all Advances shall be called the
"Applicable Advances". After the end of each calendar month,
the Lender will calculate the interest due for the applicable
month, by electing a portion ("Balance Funded Portion") of
the Applicable Advances which is equal to the lesser of (a)
the Applicable Advances outstanding during such month or (b)
the average amount of Eligible Balances on deposit with a
Designated Bank during such month. The Balance Funded Portion
of
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the Applicable Advances shall bear interest at balance funded
rates of (1) one percent (1.00%) per annum for the Balance
Funded Portion of Warehousing Advances, (2) three and
one-half percent (3.50%) per annum for the Balance Funded
Portion of Servicing Facility Advances, and (3) three percent
(3.00%) per annum for the Balance Funded Portion of the Term
Loan Advance.
The Balance Funded Portion of the Applicable
Advances outstanding for a month shall be determined by (a)
first, deducting the average amount of the Term Loan Advance
outstanding for a month from the average amount of Eligible
Balances during such month, but only to the extent of the
average amount of Eligible Balances, (b) second, to the
extent Eligible Balances remain for such month, deducting the
average amount of the Servicing Facility Advances outstanding
for a month from the remaining average amount of Eligible
Balances during such month, but only to the extent of the
remaining average amount of Eligible Balances, and (c) third,
to the extent Eligible Balances remain for such month,
deducting the average amount of Warehousing Advances
outstanding for a month from the remaining average amount of
Eligible Balances during such month, but only to the extent
of the remaining average amount of Eligible Balances.
If, for any month, a portion of the average amount
of Eligible Balances remains ("Remainder") after the Balance
Funded Portion has been deducted, the Lender shall provide a
benefit in the form of an "Earnings Credit" on the Remainder
portion of the Eligible Balances maintained in time deposit
accounts with the Designated Bank, and the Lender shall
provide a benefit in the form of an "Earnings Allowance" on
the Remainder portion of the Eligible Balances maintained in
demand deposit accounts with the Designated Bank. Any
Earnings Allowance shall be used first and any Earnings
Credit shall be used second as a credit against accrued
Miscellaneous Charges and fees, including, but not limited to
Commitment Fees and may be used, at the Lender's option, to
reduce accrued interest. Any Earnings Allowance not used
during the month in which the benefit was received shall be
accumulated for use and must be used during the calendar year
in which the benefit was received. Any Earnings Credit not
used during the month in which the benefit was received shall
be used to provide a cash benefit to the Borrowers.
The Lender's determination of the Balance Funded
Portion, the Earnings Credit and the Earnings Allowance for
any month shall be determined by the Lender in its sole
discretion and shall be conclusive and binding
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absent manifest error. In no event shall the benefit
received by the Borrowers exceed the Depository Benefit.
Either party hereto may terminate the benefits
provided for in this Section, effective immediately upon
Notice to the other party, if the terminating party shall
have determined (which determination shall be conclusive and
binding absent manifest error) at any time that any
applicable law, rule, regulation, order or decree or any
interpretation or administration thereof by any governmental
authority charged with the interpretation or administration
thereof, or compliance by such party with any request or
directive (whether or not having the force of law) of any
such authority, shall make it unlawful or impossible for such
party to continue to offer or receive the benefits provided
for in this Section.
2.7(e) Interest shall be computed on the basis of a
360-day year and applied to the actual number of days elapsed
in each interest calculation period and shall be payable
monthly in arrears, on the first day of each month,
commencing with the first month following the Closing Date
and on the Maturity Date.
2.7(f) If, for any reason, no interest is due on an
Advance, the Borrowers agree to pay to the Lender an
administrative fee equal to one day of interest on such
Advances at a rate of one and one-half percent (1-1/2%) per
annum. Administrative and other fees shall be due and payable
in the same manner as interest is due and payable hereunder.
2.7(g) After the occurrence and during the
continuation of an Event of Default hereunder, the Lender may
give Notice to the Borrowers that the unpaid amount of each
Advance shall bear interest, until paid in full, at a rate of
interest (the "Default Rate") equal to two percent (2%) per
annum over the applicable rate provided in the applicable
subsection of this Section 2.7 or, if no rate is applicable,
the highest rate then applicable to any outstanding Advance.
2.8 Principal Payments.
2.8(a) The outstanding principal amount of
all Warehousing Advances shall be payable in full on the
Warehousing Maturity Date.
2.8(b) The outstanding principal amount of the Term
Loan Advance shall be payable in twenty (20) equal quarterly
installments, due on the first day of each Calendar Quarter
following the Closing Date. Such
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installments shall be in an amount equal to one-fortieth
(1/40) of the amount of the Term Loan Advance each. The
remaining principal balance of the Term Loan Advance shall be
payable on the Term Loan Maturity Date.
2.8(c) The outstanding principal amount of the
Servicing Facility Advances as of the Servicing Facility
Commitment Termination Date shall be payable in twenty (20)
equal quarterly installments, due on the first day of each
Calendar Quarter beginning after the Servicing Facility
Commitment Termination Date. Each such installment shall be
in an amount equal to one-twentieth (1/20) of the aggregate
outstanding principal balance of the Servicing Facility
Advances on the Servicing Facility Commitment Termination
Date. The remaining principal balance of the Servicing
Facility Advances shall be payable on the Servicing Facility
Maturity Date.
2.8(d) The Borrowers shall have the right to prepay
the outstanding Advances in whole or in part, from time to
time, without premium or penalty. All prepayments of the Term
Loan Advance, and all prepayments of the Servicing Facility
Advances made after the Servicing Facility Commitment
Termination Date, shall be applied to the installments due
thereon in the inverse order of their maturities.
2.8(e) All payments of outstanding Advances from the
proceeds of the sale or other disposition of Pledged
Mortgages and Pledged Securities shall be paid directly by
the Investor to the Cash Collateral Account to be applied
against the Obligations.
2.8(f) The Borrowers shall be obligated to pay to
the Lender, without the necessity of prior demand or notice
from the Lender, and the Borrowers authorize the Lender to
cause the Funding Bank to charge the Borrowers' account for,
the amount of any outstanding Advance against a specific
Pledged Mortgage, upon the earliest occurrence of any of the
following events:
(1) For an FHA Construction Mortgage Loan,
ninety (90) days elapse from the date of each
Advance made by the Lender against such Pledged
Mortgage, and for any other Mortgage Loan other than
a Pledged Mortgage to be exchanged for a FNMA
Mortgage-backed Security, ninety (90) days elapse
from the date of the initial Advance made by the
Lender against such Pledged Mortgage, whether or not
such Pledged Mortgage is included in an Eligible
Mortgage Pool.
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(2) For Mortgage Loans other than FNMA DUS
Mortgage Loans to be exchanged for a FNMA
Mortgage-backed Security, forty-five (45) days elapse
from the date the Pledged Mortgage was delivered to
an Investor for examination and purchase, without
the purchase being made, or upon rejection of the
Pledged Mortgage as unsatisfactory by an Investor.
(3) For FNMA DUS Mortgage Loans to be
exchanged for a FNMA Mortgage-backed Security,
seventy-five (75) days elapse from the date such
FNMA DUS Mortgage Loan was delivered to FNMA for
examination, and the issuance of a Pledged Security,
without the Pledged Security being issued, or upon
rejection of the Pledged Mortgage as unsatisfactory
by FNMA.
(4) On the date an Advance was made and the
Pledged Mortgage which was to have been funded by
such Advance is not closed and funded.
(5) For a Conventional Multi-family
Mortgage Loan, FNMA DUS Mortgage Loan, FHA Project
Mortgage Loan, HUD 241 Mortgage Loan, FHA
Construction Mortgage Loan or Conventional Health
Care Mortgage Loan, one (1) Business Day elapses
from the date an Advance was made against any
Mortgage Loan, without receipt of those Collateral
Documents relating to such Mortgage Loan required to
be delivered on such date under Exhibit
D-MF/CONV/DUS, Exhibit D-MF/FHA, or Exhibit D-MF/BER
hereto, or such Collateral Documents, upon
examination by the Lender, are found not to be in
compliance with the requirements of this Agreement
or the related Purchase Commitment.
(6) Ten (10) Business Days elapse from the
date a Collateral Document was delivered to the
Borrowers for correction or completion under a Trust
Receipt, without being returned to the Lender.
(7) Three (3) Business Days after the date
on which the Lender notifies the Borrowers that a
Pledged Mortgage is determined to have been
originated based on untrue, incomplete or inaccurate
information, whether or not the Borrowers had
knowledge of such misrepresentation or incorrect
information, or that the Pledged Mortgage is
defaulted and has remained in default for a period
of sixty (60) days or more.
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(8) On the mandatory delivery date of the
related Purchase Commitment and the specific Pledged
Mortgage was not delivered under the Purchase
Commitment prior to such mandatory delivery date or
the Purchase Commitment is terminated.
(9) Upon sale, maturity or other
disposition of the Pledged Mortgage.
(10) Payment of any Lien prior to a HUD 241
Mortgage Loan is delinquent, and remains delinquent,
for a period of sixty (60) days or more.
(11) If the Pledged Mortgage is included in
a Mortgage Pool, then if the Mortgage Pool is an
Eligible Mortgage Pool, upon sale of the
Mortgage-backed Security, or if the Mortgage Pool is
not an Eligible Mortgage Pool, upon delivery of the
Pledged Mortgage to the pool custodian.
(12) For an Advance made to Washington
against a Berkshire Loan, two (2) days elapse from
the date of the initial Advance made by the Lender
without the Pledged Security to be exchanged for a
one hundred percent (100%) participation in such
Berkshire Loan having been issued, or upon any
determination by FNMA not to purchase such one
hundred percent (100%) participation.
2.8(g) The outstanding amount of any Advance made
pursuant to Section 2.2(e) shall be payable in full within
one (1) Business Day after the date of such Advance.
2.8(h) The Borrowers shall give Notice to the Lender
(telephonically, to be followed by written notice) of the
Pledged Mortgages or Pledged Securities for which proceeds
have been received. Upon receipt of such Notice the Advances
against such Pledged Mortgages or Pledged Securities shall be
repaid and such Pledged Mortgages or Pledged Securities shall
be considered to have been redeemed from pledge. The Lender
is entitled to rely upon the Borrowers' affirmation that
deposits in the Cash Collateral Account represent payment
from Investors for the purchase of Pledged Mortgages or
Pledged Securities as specified by the Borrowers. In the
event that the payment from an Investor for the purchase of
Pledged Mortgages or Pledged Securities is less than the
outstanding Advances against such Pledged Mortgages or the
Mortgage Loans backing Pledged Securities, the Lender
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is authorized to cause the Funding Bank to charge the
Borrowers' account for an amount equal to such deficiency.
Provided no Default or Event of Default exists, the Lender
shall return any excess payment from an Investor for Pledged
Mortgages or Pledged Securities
to the Borrowers.
2.8(i) In addition to the payments required pursuant
to Section 2.8(f), the Borrowers shall be obligated to pay to
the Lender, without the necessity of prior demand or notice
from the Lender, and the Borrowers authorize the Lender to
cause the Funding Bank to charge the Borrowers' account if
the principal amount of any Pledged Mortgage is prepaid in
whole or in part while an Advance is outstanding against such
Pledged Mortgage, for the amount of such prepayment, to be
applied to such Advance.
2.8(j) If at any time the aggregate outstanding
principal balance of all Servicing Facility Advances and the
Term Loan Advance exceeds the Servicing Collateral Value, the
Borrowers shall prepay either the outstanding Term Loan
Advances or the outstanding Servicing Facility
Advances in the amount of such excess.
2.9 Expiration of Commitments. Unless extended or terminated
earlier as permitted hereunder, the Warehousing Commitment shall
expire of its own term, and without the necessity of action by the
Lender, at the close of business on the Warehousing Maturity Date. The
Term Loan Commitment shall expire of its own term, and without the
necessity of action by the Lender, at the close of business on the
Closing Date. The Servicing Facility Commitment shall expire of its
own term, and without the necessity of action by the Lender, at the
close of business on the Servicing Facility Commitment Termination
Date.
2.10 Method of Making Payments.
2.10(a) Except as otherwise specifically provided
herein, all payments hereunder shall be made to the Lender
not later than the close of business on the date when due
unless such date is a non-Business Day, in which case, such
payment shall be due on the first Business Day thereafter,
and shall be made in lawful money of the United States of
America in immediately available funds transferred via wire
to accounts designated by the Lender from time to time.
2.10(b) Upon an Event of Default, and without the
necessity of prior demand or notice from the Lender, the
Borrowers authorize the Lender to cause the Funding Bank
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to charge the Borrowers' account for any Obligations due
and owing the Lender.
2.11 Commitment Fees.
2.11(a) The Borrowers agree to pay to the Lender a
Warehousing Commitment Fee for the period from the Closing
Date until the date set forth in clause (a) of the definition
of Warehousing Maturity Date, in the amount of one-eighth
percent (1/8%) per annum of One Hundred Million Dollars
($100,000,000), which Warehousing Commitment Fee shall be
paid monthly in advance and shall be computed on the basis of
a 365-day year and applied to the actual number of days
elapsed in such calendar month. On the Closing Date, the
Borrowers shall pay the prorated portion of the monthly
Warehousing Commitment Fee due from the Closing Date to the
last day of the current calendar month. Thereafter, the
Borrowers shall make monthly payments of the Warehousing
Commitment Fee on the first (1st) day of each calendar month.
If the Warehousing Maturity Date is other than the last day
of a calendar month, the Borrowers shall pay the prorated
portion of the monthly Warehousing Commitment Fee due from
the beginning of the then current calendar month to and
including the Warehousing Maturity Date. The Borrowers shall
not be entitled to a reduction in the amount of the
Warehousing Commitment Fee in the event the Warehousing
Commitment Amount is reduced or in the event that the
Warehousing Commitment is terminated at the request of the
Borrowers or as a result of an Event of Default. If the
Warehousing Commitment terminates at the request of the
Borrowers or as a result of an Event of Default, the unpaid
balance of the Warehousing Commitment Fee shall be due and
payable in full on the date of such termination.
2.11(b) The Borrowers agree to pay to the Lender a
Term Loan Commitment Fee for the period from the Closing Date
until the Term Loan Maturity Date, in the amount of (i) on
the Closing Date, one-fifth percent (1/5%) per annum of the
Term Loan Commitment Amount for the period from the Closing
Date until the end of the then-current month, and (ii) on the
first day of each month thereafter, one-fifth (1/5%) per
annum of the outstanding principal balance of the Term Loan
on such date, which Term Loan Commitment Fee shall be paid
monthly in advance and shall be computed on the basis of a
365-day year and applied to the actual number of days elapsed
in such month. If the Term Loan Maturity Date is other than
the last day of a month, the Borrowers shall pay the prorated
portion of the quarterly Term Loan Commitment Fee due from
the beginning of the then current
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month to and including the Term Loan Maturity Date. The
Borrowers shall not be entitled to a refund of any portion of
the Term Loan Commitment Fee previously paid in the event the
Term Loan Advance is prepaid, either voluntarily by the
Borrowers or as a result of an Event of Default.
2.11(c) The Borrowers agree to pay to the Lender a
Servicing Facility Commitment Fee for the period from the
Closing Date until the later to occur of (i) the date set
forth in clause (a) of the definition of Servicing Facility
Commitment Termination Date or (ii) the Servicing Facility
Maturity Date, in the amount of one-fifth percent (1/5%) per
annum of (i) from the Closing Date until the end of the month
in which the Servicing Facility Commitment Termination Date
occurs, the Servicing Facility Commitment Amount, and (ii)
thereafter, the aggregate outstanding principal balance of
the Servicing Facility Advances as of the first day of each
month, which Servicing Facility Commitment Fee may be paid
quarterly in advance and shall be computed on the basis of a
365-day year and applied to the actual number of days elapsed
in such month. On the Closing Date, the Borrowers shall pay
the prorated portion of the monthly Servicing Facility
Commitment Fee due from the Closing Date to the last day of
the current month. Thereafter, the Borrowers shall make
monthly payments of the Servicing Facility Commitment Fee on
the first (1st) day of each month. If the Servicing Facility
Maturity Date is other than the last day of a month, the
Borrowers shall pay the prorated portion of the quarterly
Servicing Facility Commitment Fee due from the beginning of
the then current month to and including the Servicing
Facility Maturity Date. The Borrowers shall not be entitled
to a reduction in the amount of the Servicing Facility
Commitment Fee, in the event the Servicing Facility
Commitment Amount is reduced or in the event that the
Servicing Facility Commitment is terminated at the request of
the Borrowers or as a result of an Event of Default or in the
event the Servicing Facility Advances are prepaid after the
Servicing Facility Commitment Termination Date, either
voluntarily by the Borrowers or as a result of an Event of
Default. If the Servicing Facility Commitment terminates at
the request of the Borrowers or as a result of an Event of
Default, or if the Servicing Facility Advances are prepaid
after the Servicing Facility Commitment Termination Date,
either voluntarily by the Borrowers or as a result of an
Event of Default, the unpaid balance of the Servicing
Facility Commitment Fee shall be due and payable in full on
the date of such termination.
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2.12 Miscellaneous Charges. The Borrowers agree to reimburse
the Lender for miscellaneous charges and expenses (collectively,
"Miscellaneous Charges") incurred by or on behalf of the Lender in
connection with the handling and administration of Advances, and to
reimburse the Lender for Miscellaneous Charges incurred by or on
behalf of the Lender in connection with the handling and
administration of the Collateral. For the purposes hereof,
Miscellaneous Charges shall include, but not be limited to, charges
for wire transfers, charges for security delivery fees, charges for
overnight delivery of Collateral to Investors, Funding Bank's service
charges and Designated Bank's service charges. Miscellaneous Charges
are due when incurred, but shall not be delinquent if paid within
fifteen (15) days after receipt of an invoice or an account analysis
statement from the Lender.
2.13 Interest Limitation. All agreements between the
Borrowers and the Lender are hereby expressly limited so that in no
contingency or event whatsoever, whether by reason of acceleration of
maturity of this Agreement or the Notes or otherwise, shall the amount
paid or agreed to be paid to the Lender for the use, forbearance,
loaning or retention of the Advances secured by this Agreement exceed
the maximum permissible under applicable law. If from any
circumstances whatsoever, fulfillment of any provisions hereof or of
the Notes, or any other document securing this Agreement at any time
given shall involve transcending the limit of validity prescribed by
law, then, the obligation to be fulfilled shall automatically be
reduced to the limit of such validity, and if from any circumstances
the Lender should ever receive as interest an amount which would
exceed the highest lawful rate of interest, such amount which would be
in excess of interest shall be applied to the reduction of the
principal balance secured by the Notes and not to the payment of
interest thereunder. This provision shall control every other
provision of all agreements between the Borrowers and Lender and shall
also be binding upon and available to any subsequent holder of the
Notes.
3. COLLATERAL.
3.1 Grant of Security Interest. As security for the payment
of the Notes and for the performance of all of the Borrowers'
Obligations, the Borrowers hereby assign and transfer to the Lender
all right, title and interest in and to and grants a security interest
to the Lender in the following described property (the "Collateral"):
3.1(a) All Mortgage Loans, including all Mortgage
Notes and Mortgages evidencing or securing such Mortgage
Loans, which from time to time are delivered or caused to be
delivered to the Lender (including delivery to a third
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party on behalf of the Lender), come into the possession,
custody or control of the Lender for the purpose of
assignment or pledge or in respect of which an Advance has
been made by the Lender hereunder and, with respect to the
Berkshire Loans, the Berkshire Master Notes and all of
Washington's right, title and interest in and to the
Berkshire Master Agreement and the "Loan Documents" (as
defined therein) (the "Pledged Mortgages").
3.1(b) All Mortgage-backed Securities and
Participation Certificates which are from time to time
created in whole or in part on the basis of the Pledged
Mortgages or are delivered or caused to be delivered to, or
are otherwise in the possession of the Lender, or its agent,
bailee or custodian as assignee, or pledged to the Lender, or
for such purpose are registered by book-entry in the name of,
the Lender (including delivery to or registration in the name
of a third party on behalf of the Lender) hereunder or in
respect of which from time to time an Advance has been made
by the Lender hereunder (the "Pledged Securities").
3.1(c) All commitments issued by the FHA to insure
any Mortgage Loans included in the Pledged Mortgages; all
guaranties related to Pledged Securities; all Purchase
Commitments held by the Borrowers covering the Pledged
Mortgages or the Pledged Securities and all proceeds
resulting from the sale thereof to Investors pursuant
thereto; and all personal property, contract rights,
servicing and servicing fees and income or other proceeds,
amounts and payments payable to the Borrowers as compensation
or reimbursement, accounts and general intangibles of
whatsoever kind relating to the Pledged Mortgages, the
Pledged Securities, said FHA commitments and the Purchase
Commitments, and all other documents or instruments relating
to the Pledged Mortgages and the Pledged Securities,
including, without limitation, any interest of the Borrowers
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
the Pledged Mortgages.
3.1(d) All Nonrecourse Servicing Contracts now
owned or hereafter created or acquired by the Borrowers.
3.1(e) All rights of the Borrowers to receive
payments under or by virtue of the Servicing Contracts
described in Section 3.1(d) and the Acknowledgement
Agreements, whether as servicing fees, servicing income,
damages, amounts payable upon the cancellation or
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termination of any such Servicing Contract, interests on
the foregoing, or otherwise.
3.1(f) Any agreement pursuant to which any Servicing
Contract described in Section 3.1(d) or the stock of any
Subsidiary that owned (at the time of acquisition or at any
time thereafter) or owns any such Servicing Contract was
acquired or is sold by the Borrowers, and all documents
executed or delivered in connection with any such acquisition
or sale.
3.1(g) All right, title and interest of the
Borrowers in and to 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 the Borrowers relating to the
Collateral.
3.1(h) All now existing or hereafter acquired cash
delivered to or otherwise in the possession of the Lender or
its agent, bailee or custodian or designated on the books and
records of the Borrowers as assigned and pledged to the
Lender.
3.1(i) 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 thereof are sold, collected, exchanged or otherwise
disposed of, whether such disposition is voluntary or
involuntary, including, without limitation, all rights to
payment with respect to any cause of action affecting or
relating to the Collateral or proceeds thereof.
The grant of the security interest under Sections 3.1(d) and 3.1(e)
above is subject and subordinate to the rights of FNMA, FHLMC or GNMA,
as applicable, in and to any Servicing Contracts to which FNMA, FHLMC
or GNMA is a party. The Lender acknowledges that (i) each Borrower is
entitled to servicing income with respect to a given Mortgage Pool
only as long as such Borrower is an issuer in good standing, (ii) upon
either Borrower's loss of issuer status, the Lender's rights to
servicing income related to the affected Mortgage Pool(s) also
terminate, and (iii) the pledge of rights to servicing income conveys
no rights (such as the right to become a substitute
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servicer or issuer) that are not otherwise specifically provided for
in the applicable GNMA or Investor guide.
3.2 Release of Security Interest in Collateral.
3.2(a) Pledged Mortgages shall be released from the
Lender's security interest only against payment to the Lender
of the Release Amount in connection with such Pledged
Mortgages.
3.2(b) If Pledged Mortgages are to be transferred to
a pool custodian or to FHLMC or FNMA for inclusion in a
Mortgage Pool, the Lender's security interest in such Pledged
Mortgages shall be released only against payment to the
Lender of the Release Amount in connection with such Pledged
Mortgages. If the Lender's security interest in the Pledged
Mortgages comprising the Mortgage Pool is not released prior
to the issuance of the Mortgage-backed Security or
Participation Certificate, then the Mortgage-backed Security
or Participation Certificate, when issued, shall be a Pledged
Security. The Lender's security interest shall continue in
such Pledged Mortgages and the Pledged Security. The Lender
shall be entitled to possession of such Pledged Security in
the manner provided below.
3.2(c) If Pledged Mortgages are transferred to an
Approved Custodian and included in an Eligible Mortgage Pool,
the Lender's security interest in the Pledged Mortgages
comprising the Eligible Mortgage Pool shall be released upon
the issuance of the Mortgage-backed Security, which shall be
a Pledged Security. The Lender's security interest in such
Pledged Security shall be released only against payment to
the Lender of the Release Amount in connection with the
Pledged Mortgages backing such Pledged Security. The Lender
shall be entitled to possession of such Pledged Security in
the manner provided below.
3.2(d) The Lender shall have the exclusive right to
the possession of the Pledged Securities or, if the Pledged
Securities are not to be issued in certificated form or are
to be issued in certificated form and registered exclusively
in the name of, and held by, a clearing agency or its
nominee, shall have the right to have the book entries for
the Pledged Securities issued in the Lender's name or the
name or names of its designees, and the Lender shall have the
right to cause delivery of the Pledged Securities to be made
to the Investor or the book entries registered in the name of
the Investor or the Investor's designee only against payment
therefor. The Borrowers acknowledge that the
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Lender may enter into one or more standing arrangements with
other financial institutions for the issuance of Pledged
Securities in book entry form in the name of such other
financial institutions, as agent or financial intermediary
for the Lender, and the Borrowers agree upon request of the
Lender, to execute and deliver to such other financial
institutions the Borrowers' written concurrence in any such
standing arrangements.
3.2(e) Prior to the occurrence of an Event of
Default, the Borrowers may redeem a Pledged Mortgage or
Pledged Security from the Lender's security interest by
notifying the Lender of its intention to redeem such Pledged
Mortgage or Pledged Security from pledge and either (a)
paying, or causing an Investor to pay, to the Lender, for
application to prepayment of the principal balance of the
Notes, the Release Amount in connection with such Pledged
Mortgage or Pledged Security, or (b) delivering substitute
Collateral which, in addition to being acceptable to the
Lender in its sole discretion will, when included with the
Collateral, result in a Collateral Value of all Collateral
held by the Lender which is at least equal to the aggregate
outstanding Advances.
3.2(f) Following the occurrence of a Default or
Event of Default, the Lender may, with no liability to the
Borrowers or any Person, continue to release its security
interest in any Pledged Mortgage or Pledged Security against
payment of the Release Amount in connection with such Pledged
Mortgage or Pledged Security.
3.2(g) The Release Amount in connection with any
Pledged Mortgage shall be (i) prior to the occurrence of an
Event of Default, the principal amount of the Advances made
against such Pledged Mortgage, and (ii) from and after the
occurrence and during the continuance of an Event of Default,
the Committed Purchase Price of such Pledged Mortgage or, if
there is no Purchase Commitment therefor, the amount paid to
the Lender in a commercially reasonable disposition thereof.
3.3 Delivery of Additional Collateral or Mandatory
Prepayment. At any time that the aggregate Collateral Value of the
Pledged Mortgages and Pledged Securities then pledged hereunder is
less than the aggregate amount of the Warehousing Advances then
outstanding hereunder, the Lender may request, and the Borrowers shall
within two (2) Business Days after Notice by the Lender (a) deliver to
the Lender for pledge hereunder additional Mortgage Loans and/or cash,
with a Collateral Value sufficient to cover the difference between
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the Collateral Value of the Pledged Mortgages and Pledged Securities
pledged and the aggregate amount of Warehousing Advances outstanding
hereunder, and/or (b) repay the Warehousing Advances in an amount
sufficient to reduce the aggregate balance thereof outstanding to or
below the Collateral Value of the Pledged Mortgages and Pledged
Securities pledged hereunder.
3.4 Collection and Servicing Rights. So long as no Event of
Default shall have occurred and be continuing, the Borrowers shall be
entitled to service and receive and collect directly all sums payable
to the Borrowers in respect of the Collateral other than proceeds of
any Purchase Commitment or proceeds of the sale of any Collateral.
Following the occurrence of any Event of Default, the Lender or its
designee shall thereafter be entitled to service and receive and
collect all sums payable to the Borrowers in respect of the
Collateral, and in such case (a) the Lender or its designee in its
discretion may, in its own name, in the name of the Borrowers or
otherwise, demand, xxx for, collect or receive any money or property
at any time payable or receivable on account of or in exchange for any
of the Collateral, but shall be under no obligation to do so, (b) the
Borrowers shall, if the Lender so requests, hold in trust for the
benefit of the Lender and forthwith pay to the Lender at its office
designated by Notice hereunder, all amounts thereafter received by the
Borrowers upon or in respect of any of the Collateral, advising the
Lender as to the source of such funds, and (c) all amounts so received
and collected by the Lender shall be held by it as part of the
Collateral.
3.5 Return of Collateral at End of Commitment. If (a) the
Commitments shall have expired or been terminated, and (b) no
Advances, interest or other Obligations evidenced by the Notes or
payable under the Loan Documents shall be outstanding and unpaid, the
Lender shall release its security interest in the Collateral, and
deliver all Collateral in its possession to the Borrowers, in each
case at the Borrowers expense. The receipt of the Borrowers for any
Collateral released or delivered to the Borrowers pursuant to any
provision of this Agreement shall be a complete and full acquittance
for the Collateral so returned, and the Lender shall thereafter be
discharged from any liability or responsibility therefor.
3.6 Release of Collateral.
3.6(a) The Lender may deliver documents
relating to the Collateral to the Borrowers for correction or
completion pursuant to a Trust Receipt.
3.6(b) Prior to the occurrence of a Default
or Event of Default, upon delivery by the Borrowers to the
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Lender of shipping instructions pursuant to Exhibit
DMF/CONV/DUS, Exhibit D-MF/FHA or Exhibit D-MF/BER, the
Lender will transmit Pledged Mortgages or Pledged Securities
and all related loan documents or pool documents to the
applicable Investor, Approved Custodian
or other party.
3.6(c) Upon receipt of Notice from the Borrowers
under Section 2.8(h) hereof, and repayment of the Release
Amount with respect to a Pledged Mortgage identified by the
Borrowers, any Collateral Documents relating to the redeemed
Pledged Mortgage or Mortgage Loan backing a Pledged Security
which have not been delivered to an Investor or Approved
Custodian shall be released by the Lender to or at the
direction of the Borrowers.
4. CONDITIONS PRECEDENT.
4.1 Initial Advance. The obligation of the Lender to
make the initial Advance under this Agreement is subject to
the satisfaction, in the sole discretion of the Lender, on or
before the date thereof of the following conditions precedent:
4.1(a) The Lender shall have received the following,
all of which must be satisfactory in form and content to the
Lender, in its sole discretion:
(1) The Notes and this Agreement duly
executed by the Borrowers.
(2) The Borrowers' articles of
incorporation as certified by the Secretary of State
of Delaware and a copy of the Borrowers' bylaws
certified by the corporate secretary of the
Borrowers, or a Certificate of the Borrowers stating
that there has been no change in either the articles
of incorporation or bylaws since those most recently
delivered in connection with the Existing
Warehousing Agreement or the Existing Term
Agreement, and certificates of good standing dated
no less recently than ninety (90) days prior to the
date of this Agreement.
(3) Resolutions of the board of directors
of the Borrowers, certified as of the date of this
Agreement by their corporate secretary, authorizing
the execution, delivery and performance of this
Agreement and the other Loan Documents, and all
other instruments or documents to be delivered by
the Borrowers pursuant to this Agreement.
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(4) A certificate of the Borrowers'
corporate secretary as to the incumbency and
authenticity of the signatures of the officers of
the Borrowers executing this Agreement and the other
Loan Documents and each Advance Request and all
other instruments or documents to be delivered
pursuant hereto (the Lender being entitled to rely
thereon until a new such certificate has been
furnished to the Lender).
(5) Financial statements of Washington and
its Subsidiaries, on a consolidated basis,
containing a balance sheet as of December 31, 1995,
and related statements of income, changes in
stockholders' equity and cash flows for the period
ended on such date, all prepared in accordance with
GAAP applied on a basis consistent with prior
periods and audited by independent certified public
accountants of recognized standing acceptable to the
Lender.
(6) Financial statements of Washington and
its Subsidiaries, on a consolidated basis,
containing a balance sheet as of March 31, 1996,
related statements of income and changes in
stockholders' equity for the period ended on such
date prepared in accordance with GAAP applied on a
basis consistent with Washington's most recent
audited financial statements.
(7) A favorable written opinion of counsel
to the Borrowers, dated as of the date of this
Agreement substantially in the form of Exhibit H
attached hereto, addressed to the Lender.
(8) Uniform Commercial Code, tax lien and
judgment searches of the appropriate public records
in the States of California, Delaware, New Jersey
and Virginia for the Borrowers, which search shall
not have disclosed the existence of any prior Lien
on the Collateral other than in favor of the Lender
or as permitted hereunder.
(9) An executed copy of the Berkshire
Master Agreement.
(10) Executed copies of the Berkshire
Master Notes.
(11) An executed copy of the FNMA Special
Pool Purchase Contract related thereto.
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(12) An executed original of a bailee
agreement with respect to the Berkshire Master Notes
among Washington, the Lender and FNMA, in form and
substance satisfaction to the Lender.
(13) Copies of the certificates, documents
or other written instruments which evidence the
Borrowers' eligibility described in Section 5.13
hereof, all in form and substance satisfactory to
the Lender.
(14) Copies of the Borrowers' errors and
omissions insurance policy or mortgage impairment
insurance policy, and blanket bond coverage policy,
or certificates in lieu of policies, all in form and
content satisfactory to the Lender, showing
compliance by the Borrowers as of the date of this
Agreement with the related provisions of Section
6.8 hereof.
(15) Executed financing statements in
recordable form covering the Collateral and ready
for filing in all jurisdictions required by the
Lender.
(16) Receipt by the Lender of any fees due
on the date hereof, including, but not limited to,
Commitment Fees and document production fees.
(17) Evidence that all accounts necessary
into which Advances will be funded have been
established at the Funding Bank and receipt of a
fully executed Funding Bank Agreement.
4.1(b) All directors, officers and shareholders of
the Borrowers, all Affiliates of the Borrowers or of any
Subsidiary of the Borrowers, to whom or to any of whom the
Borrowers shall be indebted as of the date of this Agreement,
which indebtedness has a term of more than one (1) year or is
in excess of Five Hundred Thousand Dollars ($500,000) shall
have subordinated such indebtedness to the Obligations, by
executing a Subordination of Debt Agreement, in the form of
Exhibit F hereto; and the Lender shall have received an
executed copy of any such Subordination of Debt Agreement,
certified by the corporate secretary of the Borrowers to be
true and complete and in full force and effect as of the date
of the Advance.
4.2 Each Advance. The obligation of the Lender to make
the initial and each subsequent Advance under this Agreement
is subject to the satisfaction, in the sole discretion of the
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Lender, as of the date of each such Advance, of the following
additional conditions precedent:
4.2(a) The Borrowers shall have delivered to the
Lender the Advance Request and Collateral Documents, called
for under, and shall have satisfied the procedures set forth
in, Section 2.2 hereof and the applicable Exhibits hereto
described in that Section, according to the requested
Advance. All items delivered to the Lender shall be
satisfactory to the Lender in form and content, and the
Lender may reject such of them as do not meet the
requirements of this Agreement or of the related Purchase
Commitment.
4.2(b) The Lender shall have received evidence
satisfactory to it as to the making and/or continuation of
any book entry or the due filing and recording in all
appropriate offices of all financing statements and other
instruments as may be necessary to perfect the security
interest of the Lender in the Collateral under the Uniform
Commercial Code of Minnesota or other applicable law.
4.2(c) The representations and warranties of the
Borrowers contained in Article 5 hereof shall be accurate and
complete in all material respects as if made on and as of the
date of each Advance.
4.2(d) The Borrowers shall have performed all
agreements to be performed by it hereunder, and after giving
effect to the requested Advance, there shall exist no Default
or Event of Default hereunder.
4.2(e) The Borrowers shall not have incurred any
material liabilities, direct or contingent, other than in the
ordinary course of its business, since the Statement Date.
4.2(f) The Lender shall have received from counsel
for the Borrowers, if requested by the Lender in its sole
discretion, an updated opinion, in form and substance
satisfactory to the Lender, addressed to the Lender and dated
as of the date of such Advance, covering such of the matters
as the Lender may reasonably request.
Delivery of an Advance Request by the Borrowers shall be
deemed a representation by the Borrowers that all conditions set forth
in this Section 4.2 shall have been satisfied as of the date of such
Advance.
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5. REPRESENTATIONS AND WARRANTIES.
The Borrowers hereby represents and warrants to the Lender,
as of the date of this Agreement and as of the date of each Advance
Request and the making of each Advance, that:
5.1 Organization; Good Standing; Subsidiaries. Each of the
Borrowers and each Subsidiary of the Borrowers is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, has the full legal power and
authority to own its property and to carry on its business as
currently conducted and is duly qualified as a foreign corporation to
do business and is in good standing in each jurisdiction in which the
transaction of its business makes such qualification necessary, except
in jurisdictions, if any, where a failure to be in good standing has
no material adverse effect on the business, operations, assets or
financial condition of the Borrowers or any such Subsidiary. For the
purposes hereof, good standing shall include qualification for any and
all licenses and payment of any and all taxes required in the
jurisdiction of its incorporation and in each jurisdiction in which
the Borrowers transact business. The Borrowers have no Subsidiaries
except as set forth on Exhibit G hereto. Exhibit G sets forth with
respect to each such Subsidiary, its name, address, place of
incorporation, each state in which it is qualified as a foreign
corporation, and the percentage ownership of its capital stock by the
Borrowers.
5.2 Authorization and Enforceability. The Borrowers have the
power and authority to execute, deliver and perform this Agreement,
the Notes and all other Loan Documents to which the Borrowers are
party and to make the borrowings hereunder. The execution, delivery
and performance by the Borrowers of this Agreement, the Notes and all
other Loan Documents to which the Borrowers are party and the making
of the borrowings hereunder and thereunder, have been duly and validly
authorized by all necessary corporate action on the part of the
Borrowers (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 conflict with or violate any provision of law, of any judgments
binding upon the Borrowers, or of the articles of incorporation or
by-laws of the Borrowers, conflict with or result in a breach of or
constitute a default or require any consent under, or result in the
creation of any Lien upon any property or assets of the Borrowers
other than the Lien on the Collateral granted hereunder, or result in
or require the acceleration of any indebtedness of the Borrowers
pursuant to any agreement, instrument or indenture to which the
Borrowers are a party or by which the Borrowers or their property may
be bound or affected. This Agreement, the Notes and all other Loan
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Documents contemplated hereby or thereby constitute legal, valid, and
binding obligations of the Borrowers, enforceable in accordance with
their respective terms, except as limited by bankruptcy, insolvency or
other such laws affecting the enforcement of creditors' rights.
5.3 Approvals. The execution and delivery of this Agreement,
the Notes and all other Loan Documents and the performance of the
Borrowers' obligations hereunder and thereunder and the validity and
enforceability hereof and thereof do not require any license, consent,
approval or other action of any state or federal agency or
governmental or regulatory authority other than those which have been
obtained and remain in full force and effect.
5.4 Financial Condition. The balance sheet of Washington and
its Subsidiaries, on a consolidated basis, as at the Statement Date,
and the related statements of income and changes in stockholders'
equity for the fiscal period ended on the Statement Date, heretofore
furnished to the Lender, fairly present the financial condition of
Washington and its Subsidiaries as at the Statement Date and the
results of its operations for the fiscal period ended on the Statement
Date. The Borrowers have, on the 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, said balance sheet and related statements, and at the present time
there are no material unrealized or anticipated losses from any loans,
advances or other commitments of the Borrowers except as heretofore
disclosed to the Lender in writing. Said financial statements were
prepared in accordance with GAAP applied on a consistent basis
throughout the periods involved. Since the Statement Date, there has
been no material adverse change in the business, operations, assets or
financial condition of the Borrowers (and their Subsidiaries), nor is
the Borrowers aware of any state of facts which (with or without
notice or lapse of time or both) would or could result in any such
material adverse change.
5.5 Litigation. There are no actions, claims, suits or
proceedings pending or, to the knowledge of the Borrowers, threatened
or reasonably anticipated against or affecting the Borrowers or any
Subsidiary of the Borrowers in any court or before any arbitrator or
before any government commission, board, bureau or other
administrative agency which, if adversely determined, may reasonably
be expected to result in any material and adverse change in the
business, operations, assets or financial condition of the Borrowers
as a whole, or which would affect the validity or enforceability of
this Agreement, the Notes or any other Loan Document.
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5.6 Compliance with Laws. Neither the Borrowers nor any
Subsidiary of the Borrowers are in violation of any provision of any
law, or of any judgment, award, rule, regulation, order, decree, writ
or injunction of any court or public regulatory body or authority
which might have a material adverse effect on the business,
operations, assets or financial condition of the Borrowers as a whole
or which would affect the validity or enforceability of this
Agreement, the Notes or any other Loan Document.
5.7 Regulations G and U. The Borrowers are not engaged
principally, or as one of their 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 Advances made hereunder will
be used to purchase or carry any Margin Stock or to extend credit to
others for the purpose of purchasing or carrying any Margin Stock.
5.8 Investment Company Act. Neither of the Borrowers is
an "investment company" or controlled by an "investment
company" within the meaning of the Investment Company Act of
1940, as amended.
5.9 Payment of Taxes. The Borrowers and each of their
Subsidiaries has filed or caused to be filed all federal, state and
local income, excise, property and other tax returns with respect to
the operations of the Borrowers and their Subsidiaries which are
required to be filed, all such returns are true and correct, and the
Borrowers and each of their Subsidiaries has paid or caused to be paid
all taxes as shown on such returns or on any assessment, to the extent
that such taxes have become due, including, but not limited to, all
FICA payments and withholding taxes, if appropriate; provided, that
with respect to Xxxxxxx such representations are limited to periods
ending after September 11, 1991. The amounts reserved, as a liability
for income and other taxes payable, in the financial statements
described in Section 5.4 hereof are sufficient for payment of all
unpaid federal, state and local income, excise, property and other
taxes, whether or not disputed, of the Borrowers and their Subsidiaries
accrued for or applicable to the period and on the dates of such
financial statements and all years and periods prior thereto and for
which either Borrower or any of their Subsidiaries may be liable in
its own right or as transferee of the assets of, or as successor to,
any other Person.
5.10 Agreements. Neither of the Borrowers nor any
Subsidiary of the Borrowers is a party to any agreement,
instrument or indenture or subject to any restriction
materially and adversely affecting its business, operations,
assets or financial condition, except as disclosed in the
financial statements described in Section 5.4 hereof. Neither
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of the Borrowers nor any Subsidiary of the Borrowers is in default in
the performance, observance or fulfillment of any of the obligations,
covenants or conditions contained in any agreement, instrument, or
indenture which default could have a material adverse effect on the
business, operations, properties or financial condition of the
Borrowers as a whole. No holder of any indebtedness of either of the
Borrowers or of any of their Subsidiaries has given notice of any
asserted default thereunder, and no liquidation or dissolution of
either of the Borrowers or of any of their Subsidiaries and no
receivership, insolvency, bankruptcy, reorganization or other similar
proceedings relative to either of the Borrowers or of any of their
Subsidiaries or any of its properties is pending, or to the knowledge
of the Borrowers, threatened.
5.11 Title to Properties. Each of the Borrowers and each
Subsidiary of the Borrowers has good, valid, insurable (in the case of
real property) and marketable title to all of its properties and
assets (whether real or personal, tangible or intangible) reflected on
the financial statements described in Section 5.4 hereof, except for
such properties and assets as have been disposed of since the date of
such financial statements as no longer used or useful in the conduct
of its business or as have been disposed of in the ordinary course of
business, and all such properties and assets are free and clear of all
Liens except as disclosed in such financial statements.
5.12 ERISA. All plans ("Plans") of a type described in
Section 3(3) of ERISA in respect of which either of the Borrowers or
any Subsidiary of the Borrowers is an "Employer," as defined in
Section 3(5) of ERISA, are in substantial compliance with ERISA, and
none of such Plans is insolvent or in reorganization, has an
accumulated or waived funding deficiency within the meaning of Section
412 of the Internal Revenue Code, and neither of the Borrowers nor any
Subsidiary of the Borrowers has incurred any material liability
(including any material contingent liability) to or on account of any
such Plan pursuant to Sections 4062, 4063, 4064, 4201 or 4204 of
ERISA; and no proceedings have been instituted to terminate any such
Plan, and no condition exists which presents a material risk to either
of the Borrowers or a Subsidiary of the Borrowers of incurring a
liability to or on account of any such Plan pursuant to any of the
foregoing Sections of ERISA. No Plan or trust forming a part thereof
has been terminated since September 1, 1974.
5.13 Eligibility. The Borrowers are approved and qualified
and in good standing as a lender or seller/servicer, as set forth
below, and meet all requirements applicable to its status as such:
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5.13(a) Washington and Xxxxxxx are FHA approved
mortgagees, eligible to originate, purchase, hold, sell and
service FHA fully insured Mortgage Loans.
5.13(b) Xxxxxxx is a GNMA approved seller/
servicer of Mortgage Loans and issuer of Mortgage-backed
Securities guaranteed by GNMA.
5.13(c) Washington and Xxxxxxx are FNMA approved
seller/servicers of Mortgage Loans, eligible to originate,
purchase, hold, sell and service Mortgage Loans to be sold to
FNMA.
5.13(d) Washington is a FNMA approved and qualified
Delegated Underwriting and Servicing Lender, eligible to
process, underwrite, hold, sell to FNMA and service FNMA
Mortgage Loans under the DUS Program.
5.13(e) Xxxxxxx and Washington are FHLMC approved
seller/servicers of Mortgage Loans, eligible to originate,
purchase, hold, sell and service Mortgage Loans to be sold to
FHLMC.
5.14 Place of Business. The chief executive office and
principal place of business of Washington is 0000 Xxxxxx Xxxx Xxxx,
Xxxxx 000, Xxxxxx, XX 00000. The chief executive office and principal
place of business of Xxxxxxx is 000 Xxxxxxxx Xxxxxx, Xxxxxx, Xxx Xxxxxx
00000.
5.15 Special Representations Concerning Warehousing
Collateral. The Borrowers hereby represent and warrant to the
Lender, as of the date of this Agreement and as of the date of
each Advance Request and the making of each Advance, that:
5.15(a) The applicable Borrower is the legal and
equitable owner and holder, free and clear of all Liens
(other than Liens granted hereunder), of the Pledged
Mortgages and the Pledged Securities. All Pledged Mortgages,
Pledged Securities and Purchase Commitments have been duly
authorized and validly issued to the 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 the Lender,
subject to no other Liens.
5.15(b) Each Borrower has, and will continue to
have, the full right, power and authority to pledge the
Collateral pledged and to be pledged by it hereunder.
5.15(c) Any Mortgage Loan and any related document
included in the Pledged Mortgages (1) has been duly executed
and delivered by the parties thereto at a
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closing held not more than thirty (30) days prior to the date
of the initial Advance Request for such Mortgage Loan, except
with respect to an Advance Request for a Berkshire Advance,
(2) has been made in compliance with all requirements of the
Real Estate Settlement Procedures Act, Equal Credit
Opportunity Act, the federal Truth-In-Lending Act and all
other applicable laws and regulations, (3) is and will
continue to be valid and enforceable in accordance with its
terms, without defense or offset, (4) has not been modified
or amended except in writing, which writing is part of the
Collateral Documents, nor any requirements thereof waived,
(5) has been evaluated or appraised in accordance with Title
XI of FIRREA, and (6) complies and will continue to comply
with the terms of this Agreement and, if applicable, with the
related Purchase Commitment held by the Borrowers. Except for
FHA Construction Mortgage Loans and the Berkshire Master
Notes, each Mortgage Loan has been fully advanced in the face
amount thereof. Each First Mortgage is a first Lien on the
premises described therein and each Second Mortgage is
secured by a second Lien on the premises described therein,
and has or will have a title insurance policy, in American
Land Title Association form or equivalent thereof, from a
recognized title insurance company, insuring the priority of
the Lien of the Mortgage and meeting the usual requirements
of Investors purchasing such Mortgage Loans.
5.15(d) No default has occurred and is continuing
for more than sixty (60) days under any Mortgage Loan
included in the Pledged Mortgages without the Advance against
such Pledged Mortgage having been repaid in accordance with
Section 2.8(f)(7) hereof, provided, however, that with
respect to Pledged Mortgages which have already been pledged
as Collateral hereunder, if any default has occurred, the
Borrowers will promptly notify the Lender.
5.15(e) The Borrowers have complied and will
continue to comply with all laws, rules and regulations in
respect of the FHA insurance of each Mortgage Loan included
in the Pledged Mortgages designated by either Borrower as an
FHA insured Mortgage Loan, and such insurance is and will
continue to be in full force and effect.
5.15(f) All fire and casualty policies covering the
premises encumbered by each Mortgage included in the Pledged
Mortgages (1) name and will continue to name the applicable
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)
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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 from time to time
available.
5.15(g) Pledged Mortgages secured by premises
located in a special flood hazard area designated as such by
the Director of the Federal Emergency Management Agency are
and shall continue to be covered by special flood insurance
under the National Flood Insurance Program.
5.15(h) Each FHA insured Mortgage Loan pledged
hereunder meets all applicable governmental requirements for
such insurance. Each Pledged Mortgage, against which an
Advance is made on the basis of a Purchase Commitment, meets
all requirements of such Purchase Commitment. The Borrowers
shall assure that Pledged Mortgages which are intended to be
used in the formation of Mortgage-backed Securities shall
comply or, prior to the formation of any such Mortgage-backed
Security, shall comply with the requirements of the
governmental instrumentality, department or agency
guaranteeing such Mortgage-backed Security.
5.15(i) For Pledged Mortgages which will be used to
back GNMA Mortgage-backed Securities, the applicable Borrower
has received from GNMA a Confirmation Notice or Confirmation
Notices for Request Additional Commitment Authority and for
Request Pool Numbers, and there remains available thereunder
a commitment on the part of GNMA sufficient to permit the
issuance of GNMA Mortgage-backed Securities in an amount at
least equal to the amount of such Pledged Mortgages
designated by the Borrowers as the Mortgage Loans to be used
to back such GNMA Mortgage-backed Securities; each such
Confirmation Notice is in full force and effect; each of such
Pledged Mortgages has been assigned by the Borrowers to one
of such Pool Numbers and a portion of the available GNMA
Commitment has been allocated thereto by the Borrowers, in an
amount at least equal to such Pledged Mortgages; and each
such assignment and allocation has been reflected in the
books and records of the Borrowers.
5.15(j) At the time of any Advance to Washington
against a Berkshire Loan, (i) the Berkshire Master Agreement
and the Berkshire Master Notes are in full force and effect
and constitute the legal, valid and binding obligations of
the parties thereto, enforceable against such parties in
accordance with their terms, (ii) all of the Mortgages and
pledges of Mortgage Notes included in the "Collateral Pool"
(as defined in the
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Berkshire Master Agreement) are in full force and effect,
constitute the legal, valid and binding obligations of the
parties thereto, enforceable against such parties in
accordance with their terms, and, in the case of Mortgages,
constitute valid, perfected first priority Liens on the
underlying property, subject only to Liens specified as
exceptions in the original title insurance policy related
thereto, and in the case of pledges of Mortgage Notes,
constitute a valid, perfected first priority Lien on such
Mortgage Note, which is in turn secured by valid, perfected,
first priority Liens on the underlying property, subject only
to Liens specified in the original file policy related
thereto; and (iii) such Berkshire Loan is or was made, and
each of Washington and Berkshire LP is, in compliance with
all terms of the Berkshire Master Agreement and the FNMA
Special Pool Purchase Contract related thereto.
5.16 Servicing. Attached hereto as Exhibit E-1 is a true and
complete list of the Borrowers' Servicing Portfolio. All of the
Borrowers' Servicing Contracts are in full force and effect, and
except as otherwise indicated, are unencumbered by Liens. No default
or event which, with notice or lapse of time or both, would become a
default, exists under any such Servicing Contract.
5.17 Special Representations Concerning Servicing Collateral.
Attached hereto as Exhibit E-2 is a true and complete list of the
Borrowers' Pledged Servicing Contracts as of the date of this
Agreement. The Borrowers hereby represent and warrant to the Lender,
as of the Closing Date and as of the date of each Servicing Facility
Advance Request and the making of each Servicing Facility Advance,
that:
5.17(a) The Borrowers are the legal and equitable
owners and holders, free and clear of all Liens (other than
Liens granted hereunder), of the Servicing Contracts pledged
hereunder, and the Servicing Contracts have been and will
continue to be validly pledged or assigned to the Lender,
subject to no other Liens.
5.17(b) The Borrowers have, and will continue to
have, the full right, power and authority to pledge the
Servicing Contracts pledged and to be pledged by them
hereunder, subject to the rights of FNMA, FHLMC, GNMA or any
applicable Investor.
5.17(c) All of the servicing rights under
the Servicing Contracts pledged hereunder hereby constitute
direct servicing rights.
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5.17(d) Each Servicing Contract pledged hereunder is
in full force and effect, each Servicing Contract pledged
hereunder is legal, valid and enforceable in accordance with
its terms and no default or event which, with notice or lapse
of time or both, would become a default, exists under any
such Servicing Contract.
5.17(e) Each right to the payment of money under the
Servicing Contracts pledged hereunder is genuine and
enforceable in accordance with its terms against the parties
obligated to pay the same ("Obligor"), which terms have not
been modified or waived in any respect or to any extent.
5.17(f) To the best of the Borrowers' knowledge, the
amount represented by the Borrowers to the Lender as owing by
an obligor under each Mortgage Loan being serviced under a
Servicing Contract pledged hereunder is the correct amount
actually and unconditionally owing by such obligor.
5.17(g) To the best of the Borrowers' knowledge, no
obligor has any defense, set off, claim or counterclaim
against the Borrowers which can be asserted against the
Lender, whether in any proceeding to enforce the Lender's
rights in the related Mortgage Loan or otherwise.
5.17(h) The Borrowers have not sold, assigned or
otherwise transferred any rights associated with the Mortgage
Loans being serviced under a Servicing Contract pledged
hereunder.
5.17(i) Except for Acknowledgement Agreements, no
consent of any obligor or any other Person is required for
the grant of the security interest provided herein by the
Borrowers in any of the Collateral including, without
limitation, the Servicing Contracts pledged hereunder, or any
computer software being utilized by the Borrowers pursuant to
license, lease or otherwise, other than consents which have
been obtained, nor will any consent need to be obtained upon
the occurrence of an Event of Default for the Lender to
exercise its rights with respect to any of the Collateral
except as set forth in the Acknowledgement Agreements.
6. AFFIRMATIVE COVENANTS.
The Borrowers hereby covenant and agree that, so long as any
of the Commitments is outstanding or there remain any Obligations to
be paid or performed under this Agreement or under any other Loan
Document, the Borrowers shall:
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6.1 Payment of Notes. Punctually pay or cause to be
paid all Obligations payable hereunder and under the Notes in
accordance with the terms hereof and thereof.
6.2 Financial Statements and Other Reports. Deliver to
the Lender:
6.2(a) As soon as available and in any event within
forty-five (45) days after the end of each calendar month,
statements of income and changes in stockholders' equity of
Washington and its 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 such calendar
month, and the related balance sheet as at the end of the
immediately preceding month, all in reasonable detail and
certified as to the fairness of presentation by the chief
financial officer of Washington, subject, however, to
year-end audit adjustments.
6.2(b) As soon as available and in any event within
ninety (90) days after the close of each fiscal year of
Washington, statements of income, changes in stockholders'
equity and cash flow of Washington and its Subsidiaries, on a
consolidated basis, for such year, and the related balance
sheet as at the end of such year (setting forth in
comparative form the corresponding figures for the preceding
fiscal year), all in reasonable detail and accompanied by an
opinion in form and substance satisfactory to the Lender and
prepared by an accounting firm reasonably satisfactory to the
Lender, or other independent certified public accountants of
recognized standing selected by Washington and acceptable to
the Lender, as to said financial statements and a certificate
signed by the chief financial officer of Washington stating
that said financial statements fairly present the financial
condition and results of operations of Washington and its
Subsidiaries as at the end of, and for, such year.
6.2(c) Together with each delivery of financial
statements required in Section 6.2 (a) for the last month of
any fiscal quarter, and each delivery of financial statements
required in Section 6.2(b), an Officer's Certificate
substantially in the form of Exhibit I-MF hereto: (1) setting
forth in reasonable detail all calculations necessary to show
that the Borrowers are in compliance with the requirements of
Sections 7.6, 7.7, 7.8, 7.9, 7.10, 7.11, 7.12 and 7.13 hereof
as of the end of such month or year (or, if the Borrowers are
not in compliance, showing the extent of non-compliance and
specifying the period of non-compliance and what actions
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the Borrowers have taken, are taking or propose to take with
respect thereto); (2) certifying that the Borrowers were, as
of the end of the period, in compliance and in good standing
with applicable HUD, GNMA, or Investor net worth
requirements; and (3) stating that the signers have reviewed
the terms of this Agreement and have made, or caused to be
made under their supervision, a review in reasonable detail
of the transactions and conditions of the Borrowers and their
Subsidiaries during the accounting period covered by such
financial statements and that such review has not disclosed
the existence during or at the end of such accounting period,
and that the signers do not have knowledge of the existence
as of the date of the Officer's Certificate, of any Default
or Event of Default or if any Default or Event of Default
existed or exists, specifying the nature and period of the
existence thereof and what action the Borrowers have taken,
are taking and propose to take with respect thereto.
6.2(d) As soon as available and in any event within
forty-five (45) days after the end of each calendar month, a
consolidated report (the "Servicing Portfolio Report") as of
the end of the calendar month detailing, as to all Mortgage
Loans the servicing rights to which are owned by the
Borrowers (specified by investor type, recourse and
non-recourse) regardless of whether such Mortgage Loans are
Pledged Mortgages and which report shall indicate Mortgage
Loans which (A) are current and in good standing, (B) are
more than 30, 60 or 90 days past due, respectively, (C) are,
for Mortgage Loans serviced with recourse, more than three
hundred sixty (360) days past due, (D) are the subject of
pending bankruptcy or foreclosure proceedings, or (E) have
been converted (through foreclosure or other proceedings in
lieu thereof) by the Borrowers into real estate owned by the
Borrowers.
6.2(e) As soon as available and in any event within
ninety (90) days after the end of each fiscal year of the
Borrowers, a consolidated report (the "Loan Production
Report") as of the end of the fiscal year, presenting the
total dollar volume and the number of Mortgage Loans
originated or purchased during the fiscal year, specified by
property type and loan type or Investor (e.g. FHA, GNMA,
FNMA, FHLMC, etc.)
6.2(f) Reports in respect of the Pledged Mortgages,
Pledged Securities and Pledged Servicing Contracts, in such
detail and at such times as the Lender in its discretion may
reasonably request at any time or from time to time.
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6.2(g) As of the last day of June and December of
each year (to be delivered with the financial statements
required under Sections 6.2(a) and (b), respectively, as of
such dates), and at any time at the request of the Lender,
obtain an Appraisal of the Pledged Servicing Contracts; if
the borrowers shall at any time fail to obtain an Appraisal
required by this Section 6.2(g), the Lender may obtain such
Appraisal, and the Borrowers shall reimburse the Lender for
its costs and expenses incurred in connection therewith.
6.2(h) As soon as available and in any event within
forty-five (45) days after the end of each calendar quarter,
a valuation of the Pledged Servicing Contracts prepared by
the Borrowers using the methodology and values used in the
most recent Appraisal thereof.
6.2(i) Copies of all regular or periodic financial
and other reports, if any, which the Borrowers shall file
with the Securities and Exchange Commission or any
governmental agency successor thereto and copies of any
audits completed by HUD, GNMA, FNMA or FHLMC. Copies of the
Mortgage Bankers' Financial Reporting Forms (FHLMC Form
1055/FNMA Form 1002) which the Borrowers shall have filed
with FNMA or FHLMC, in such detail and at such times as the
Lender in its direction may request at any time and from time
to time.
6.2(j) From time to time, with reasonable
promptness, such further information regarding the business,
operations, properties or financial condition of the
Borrowers as the Lender may reasonably request.
6.3 Maintenance of Existence; Conduct of Business. Preserve
and maintain their corporate existence in good standing and all of
their rights, privileges, licenses and franchises necessary or
desirable in the normal conduct of their business, including, without
limitation, their eligibility as lender, seller/servicer and issuer
described under Section 5.13 hereof; conduct their businesses in an
orderly and efficient manner; maintain a net worth of acceptable
assets as required for maintaining the Borrowers' eligibility as
lender, seller/servicer and issuer described under Section 5.13
hereof; and make no change in the nature or character of their
businesses or engage in any business in which they were not engaged
on the date of this Agreement.
6.4 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
materially adversely affect the business, operations, assets,
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or financial condition of the Borrowers, except where contested in
good faith and by appropriate proceedings.
6.5 Inspection of Properties and Books. Permit authorized
representatives of the Lender or any Participant to discuss the
business, operations, assets and financial condition of the Borrowers
and their Subsidiaries with their officers and employees and to
examine their books of account and make copies or extracts thereof,
all at such reasonable times as the Lender or any Participant may
request; provided, that prior to the occurrence of a Default or an
Event of Default, the Borrowers shall have no obligation to permit any
such visitation or examination on not less than two (2) Business Days
notice from the Lender or any Participant. The Borrowers will provide
their accountants with a copy of this Agreement promptly after the
execution hereof and will instruct their accountants to answer
candidly any and all questions that the officers of the Lender or any
Participant or any authorized representatives of the Lender or any
Participant may address to them in reference to the financial
condition or affairs of the Borrowers and their Subsidiaries. The
Borrowers may have their representatives in attendance at any meetings
between the officers or other representatives of the Lender or any
Participant and the Borrowers' accountants held in accordance with
this authorization.
6.6 Notice. Give prompt Notice to the Lender, after the
Borrowers have actual or constructive notice thereof, of (a) any
action, suit or proceeding instituted by or against either Borrower or
any of their 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
Five Hundred Thousand Dollars ($500,000), or any such proceedings
threatened against either Borrower or any of their Subsidiaries in a
writing to either Borrower or such Subsidiary containing the details
thereof, (b) the filing, recording or assessment of any federal, state
or local tax Lien against either Borrower, or any of their assets or
any of their Subsidiaries, (c) the occurrence of any Event of Default
hereunder or the occurrence of any Default and continuation thereof
for five (5) days, (d) the suspension, revocation or termination of
either Borrower's eligibility, in any respect, as approved lender,
seller/servicer or issuer as described under Section 5.13 hereof, (e)
the involuntary transfer, loss or termination of any Servicing
Contract to which either Borrower is a party, or which is held for
the benefit of either Borrower, and the reason for such transfer,
loss or termination, if known to either Borrower, and (f) any other
action, event or condition of any nature which may lead to or result
in a material adverse effect upon the business, operations, assets, or
financial condition of the Borrowers
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and their Subsidiaries or which, with or without notice or lapse of
time or both, would constitute a default under any other agreement,
instrument or indenture to which either Borrower or any of their
Subsidiaries is a party or to which either Borrower or any of their
Subsidiaries, their properties or assets, may be subject.
6.7 Payment of Debt, Taxes, etc. Pay and perform all
obligations and indebtedness of either Borrower, and cause to be paid
and performed all obligations and indebtedness of their Subsidiaries,
promptly and in accordance with the terms thereof and pay and
discharge or cause to be paid and discharged promptly all taxes,
assessments and governmental charges or levies imposed upon either
Borrower or their Subsidiaries or upon their respective income,
receipts or properties before the same shall become past due, as well
as all lawful claims for labor, materials and supplies or otherwise
which, if unpaid, might become a Lien or charge upon such properties
or any part thereof; provided, however, that either Borrower and their
Subsidiaries shall not be required to pay taxes, assessments or
governmental charges or levies or claims for labor, materials or
supplies for which the Borrowers or their Subsidiaries shall have
obtained an adequate bond or adequate insurance or which are being
contested in good faith and by proper proceedings which are being
reasonably and diligently pursued and for which proper reserves have
been created.
6.8 Insurance. Maintain (a) errors and omissions insurance or
mortgage impairment insurance, and blanket bond coverage, with such
companies and in such amounts as satisfy prevailing requirements
applicable to a lender, seller/servicer and issuer described under
Section 5.13 hereof, and (b) liability insurance and fire and other
hazard insurance on its properties, with responsible insurance
companies approved by the Lender, in such amounts and against such
risks as is customarily carried by similar businesses operating in the
same vicinity; and (c) within thirty (30) days after Notice from the
Lender, obtain such additional insurance as the Lender shall
reasonably require, all at the sole expense of the Borrowers. Copies
of such policies shall be furnished to the Lender without charge upon
request of the Lender.
6.9 Closing Instructions. Indemnify and hold the Lender
harmless from and against any loss, including reasonable attorneys'
fees and costs, attributable to the failure of a title insurance
company, agent or approved attorney to comply with the disbursement or
instruction letter or letters of the Borrowers relating to any
Mortgage Loan. The Lender shall have the right to pre-approve the
closing instructions of the Borrowers to the title insurance company,
agent or attorney in
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any case where the Mortgage Loan to be created at settlement is
intended to be warehoused by the Borrowers to be included as
Collateral pursuant hereto.
6.10 Subordination of Certain Indebtedness. Cause any
indebtedness of either Borrower, incurred after the date of this
Agreement, to any shareholder, director or officer of either Borrower,
or to any Affiliate of either Borrower or of any Subsidiary of either
Borrower, which indebtedness has a term of more than one (1) year or
is in excess of Five Hundred Thousand Dollars ($500,000) to be
subordinated to all Obligations, by the execution of a Subordination
of Debt Agreement in the form of Exhibit F hereto and deliver to the
Lender an executed copy of said Agreement, certified by the corporate
secretary of the applicable Borrower to be true and complete and in
full force and effect.
6.11 Other Loan Obligations. Perform all material obligations
under the terms of each loan agreement, note, mortgage, security
agreement or debt instrument by which either Borrower is bound or to
which any of its property is subject, and promptly notify the 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 J hereto is a true
and complete list of all such lines of credit or agreements as of the
date hereof and the Borrowers hereby agree to give the Lender at least
thirty (30) days Notice before entering into any additional lines of
credit or agreements.
6.12 Use of Proceeds of Advances. Use the proceeds of each
Advance solely for the purpose set forth in Section 2.1(b), 2.3 or
2.4(b) for Advances of that type.
6.13 Special Affirmative Covenants Concerning Collateral.
6.13(a) Warrant and defend the right, title and
interest of the Lender in and to the Collateral against the
claims and demands of all Persons whomsoever.
6.13(b) Service or cause to be serviced all Mortgage
Loans in accordance with the standard requirements of the
issuers of Purchase Commitments covering the same and all
applicable HUD, FNMA and FHLMC requirements, including
without limitation taking all actions necessary to enforce
the obligations of the obligors under such Mortgage Loans.
The Borrowers shall 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 the same. The
Borrowers
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shall hold all escrow funds collected in respect of Pledged
Mortgages and Mortgage Loans backing Pledged Securities in
trust, without commingling the same with non-custodial funds,
and apply the same for the purposes for which such funds were
collected.
6.13(c) Execute and deliver to the Lender such
Uniform Commercial Code financing statements with respect to
the Collateral as the Lender may request. The Borrowers shall
also, at the request of the Lender, execute and deliver to
the Lender, and obtain the execution and delivery by FNMA,
FHLMC and/or GNMA of, Acknowledgment Agreements in the forms
from time to time promulgated by FNMA, FHLMC or GNMA, as
applicable, with respect to the FNMA, FHLMC and/or GNMA
Servicing Contracts included in the Collateral. The Borrowers
shall also execute and deliver to the Lender such further
instruments of sale, pledge or assignment or transfer, and
such powers of attorney, as may reasonably be requested by
the Lender, and shall do and perform all matters and things
necessary or desirable to be done or observed, for the
purpose of effectively creating, maintaining and preserving
the security and benefits intended to be afforded the Lender
under this Agreement. The Lender shall have all the rights
and remedies of a secured party under the Uniform Commercial
Code of Minnesota, or any other applicable law, in addition
to all rights provided for herein.
6.13(d) Notify the Lender within two (2) Business
Days of any default under, or of the termination of, any
Purchase Commitment relating to any Pledged Mortgage,
Eligible Mortgage Pool, or Pledged Security.
6.13(e) Promptly comply in all respects with the
terms and conditions of all Purchase Commitments, and all
extensions, renewals and modifications or substitutions
thereof or thereto. The Borrowers will cause to be delivered
to the Investor the Pledged Mortgages and Pledged Securities
to be sold under each Purchase Commitment not later than
three (3) Business Days prior to the mandatory delivery date
thereof.
6.13(f) Maintain, at their principal office or in a
regional office approved by the Lender, or in the office of a
computer service bureau engaged by the Borrowers and approved
by the Lender and, upon request, make available to the Lender
the originals, or copies in any case where the originals have
been delivered to the Lender or to an Investor, of its
Mortgage Notes and Mortgages included in Pledged Mortgages,
Mortgage-backed Securities delivered to the Lender as Pledged
Securities,
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Purchase Commitments, and all related Mortgage Loan documents
and instruments, and all files, surveys, certificates,
correspondence, appraisals, computer programs, tapes, discs,
cards, accounting records and other information and data
relating to the Collateral.
6.13(g) Promptly provide the Lender with copies of
any amendment, supplement, restatement or other modification
of the Berkshire Master Agreement, the Berkshire Master Notes
or the FNMA Special Pool Purchase Contract related thereto.
7. NEGATIVE COVENANTS.
The Borrowers hereby covenant and agree that, so long as any
of the Commitments are outstanding or there remain any Obligations to
be paid or performed, the Borrowers shall not, either directly or
indirectly, without the prior written consent of the Lender:
7.1 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 excluding the sale
of Mortgage Loans with recourse in the ordinary course of the
Borrowers' businesses.
7.2 Sale or Pledge of Servicing Contracts. Sell, pledge or
grant a security interest in any existing or future Servicing
Contracts of either Borrower other than to the Lender, except as
otherwise expressly permitted in this Agreement, or omit to take any
action required to keep all such Servicing Contracts in full force and
effect; provided, however, that if no Default or Event of Default has
occurred and is continuing, (a) servicing on individual Mortgage Loans
may be sold concurrently with and incidental to the sale of such
Mortgage Loans (with servicing released) in the ordinary course of the
Borrowers' business, and (b) Servicing Contracts may be sold by the
Borrowers or any Subsidiary in the ordinary course of business as long
as (i) after giving effect to any such sale, the requirements of
Section 7.10 will be satisfied, and (ii) after giving effect to any
prepayments of Servicing Facility Advances and the Term Loan Advance
made with the proceeds of such sale, no further prepayments will be
required pursuant to Section 2.8(j) hereof.
7.3 Merger; Sale of Assets; Acquisitions. Liquidate,
dissolve, consolidate or merge or sell any substantial part of
their assets, or acquire any substantial part of the assets of
another other than (a) Nonrecourse Servicing Contracts
acquired in the ordinary course of the Borrowers' business,
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and (b) the stock or assets of a Person engaged principally in
the mortgage banking business.
7.4 Deferral of Subordinated Debt. Pay in advance of the
stated maturity thereof any Subordinated Debt of the Borrowers or, if
a Default or Event of Default hereunder shall have occurred, make any
payment of any kind thereafter on such Subordinated Debt until all
Obligations have been paid and performed in full and any applicable
preference period has expired.
7.5 Loss of Eligibility. Take any action that would cause
either Borrower to lose all or any part of its status as an eligible
lender, seller/servicer and issuer as described under Section 5.13
hereof.
7.6 Debt to Adjusted Tangible Net Worth Ratio. Permit
the ratio of Debt to Adjusted Tangible Net Worth of Washington
and its Subsidiaries, on a consolidated basis, at any time to
exceed 15 to 1.
7.7 Minimum Adjusted Tangible Net Worth. Permit
Adjusted Tangible Net Worth of Washington and its
Subsidiaries, on a consolidated basis, at any time to be less
than Fifteen Million Dollars ($15,000,000).
7.8 Liquidity. Permit the ratio of Liquid Assets to
Adjusted Tangible Net Worth of Washington and its
Subsidiaries, on a consolidated basis, at any time to be less
than twenty-five percent (25%).
7.9 Maximum Pass-Throughs. Permit the ratio of (a) the
aggregate cumulative outstanding amount of advances to or on behalf of
defaulting mortgagors paid or required to have been paid by the
Borrowers on Mortgage Loans and Mortgage-backed Securities to (b)
Adjusted Tangible Net Worth of Washington and its Subsidiaries, on a
consolidated basis, at any time to exceed thirty-five percent (35%).
7.10 Minimum Adjusted Servicing Portfolio. Permit the
outstanding Adjusted Servicing Portfolio of the Borrowers to
be less than Three Billion Dollars ($3,000,000,000).
7.11 Debt Service Coverage Ratio. Permit the Debt
Service Coverage Ratio, measured as of the last day of any
fiscal quarter, to be less than 1.50 to 1.00.
7.12 Delinquency Ratio. Permit the Delinquency Ratio to
exceed ten percent (10%).
7.13 Transactions with Affiliates. Directly or
indirectly (a) make any loan, advance, extension of credit or
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capital contribution to any of its Affiliates, (b) transfer, sell,
pledge, assign or otherwise dispose of any of its assets to or on
behalf of such Affiliates, (c) merge or consolidate with or purchase
or acquire assets from such Affiliates, or (d) pay management fees to
or on behalf of such Affiliates; provided, that nothing in this
Section 7.13 shall restrict transactions between the Borrowers.
7.14 Special Negative Covenants Concerning Collateral.
7.14(a) The Borrowers shall not amend or modify, or
waive any of the terms and conditions of, or settle or
compromise any claim in respect of, any Pledged Mortgages or
Pledged Securities.
7.14(b) The Borrowers shall not sell, assign,
transfer or otherwise dispose of, or grant any option with
respect to, or pledge or otherwise encumber (except pursuant
to this Agreement or as permitted herein) any of the
Collateral or any interest therein.
7.14(c) The Borrowers shall not make any compromise,
adjustment or settlement in respect of any of the Collateral
or accept other than cash in payment or liquidation of the
Collateral.
7.14(d) At any time that a Berkshire Advance is
outstanding, Washington shall not amend, supplement, restate
or otherwise modify the Berkshire Master Agreement, the
Berkshire Master Notes or the FNMA Special Pool Purchase
Contract related thereto.
8. DEFAULTS; REMEDIES.
8.1 Events of Default. The occurrence of any of the
following conditions or events shall be an event of default
("Event of Default"):
8.1(a) Failure to pay the principal of any Advance
when due, whether at stated maturity, by acceleration, or
otherwise; or failure to pay any installment of interest on
any Advance or any other amount due under this Agreement
within ten (10) days after the due date; or failure to pay,
within any applicable grace period, the principal or interest
on any other indebtedness of the Borrowers due the Lender; or
8.1(b) Failure of the Borrowers or any of their
Subsidiaries to pay, or any default in the payment of any
principal or interest on, any other indebtedness or in the
payment of any contingent obligation within any period of
grace provided; breach or default with respect
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to any other material term of any other indebtedness or of
any loan agreement, mortgage, indenture or other agreement
relating thereto, if the effect of such breach or default is
to cause, or to permit the holder or holders thereof (or a
trustee on behalf of such holder or holders) to cause,
indebtedness of the Borrowers or their Subsidiaries in the
aggregate amount of Five Hundred Thousand Dollars ($500,000)
or more to become or be declared due prior to its stated
maturity (upon the giving or receiving of notice, lapse of
time, both, or otherwise); or
8.1(c) Failure of the Borrowers to perform
or comply with any term or condition applicable to them
contained in Sections 6.3, 6.12, and 6.13 or in any Section
of Article 7 of this Agreement; or
8.1(d)(1) Any of the Borrowers' representations or
warranties made or deemed made herein or in any other Loan
Document shall be inaccurate or incomplete in any material
respect on the date as of which made or deemed made, or (2)
any of the Borrower's representations or warranties made or
deemed made in any statement or certificate at any time given
by either Borrower in writing pursuant hereto or thereto
shall be inaccurate or incomplete in any material respect on
the date as of which made or deemed made and, if such
inaccuracy or incompleteness was unintentional, the same has
not been cured within ten (10) days after (i) receipt by the
Borrowers of Notice thereof from the Lender, (ii) receipt by
the Lender of Notice thereof from the Borrowers, or (iii) the
date the Borrowers should have notified the Lender thereof
pursuant to Section 6.6(c); or
8.1(e) The Borrowers shall default in the
performance of or compliance with any term contained in this
Agreement or any other Loan Document other than those
referred to above in Subsections 8.1(a), 8.1(c) or 8.1(d) and
such default shall not have been remedied or waived within
thirty (30) days after the earliest of (i) receipt by the
Borrowers of Notice from the Lender of such default, (ii)
receipt by the Lender of Notice from the Borrowers of such
default, or (iii) the date the Borrowers should have notified
the Lender of such default pursuant to Section 6.6 (c); or
8.1(f) (1) A court having jurisdiction shall enter a
decree or order for relief in respect of either Borrower or
any Subsidiary of either Borrower in an involuntary case
under any applicable bankruptcy, insolvency or other similar
law in respect of either Borrower or any Subsidiary of either
Borrower now or
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hereafter in effect, which decree or order is not stayed;
either Borrower or any Subsidiary of either Borrower shall
consent to the entry of any such decree or order; or a filing
of a voluntary case under any applicable bankruptcy,
insolvency or other similar law in respect of either Borrower
or any Subsidiary of either Borrower has occurred; or any
other similar relief shall be granted under any applicable
federal or state law; or (2) the filing of an involuntary
case in respect of either Borrower or any Subsidiary of
either Borrower under any applicable bankruptcy, insolvency
or other similar law; or a decree or order of a court having
jurisdiction for the appointment of a receiver, liquidator,
sequestrator, trustee, custodian or other officer having
similar powers over either Borrower or any Subsidiary of
either Borrower, or over all or a substantial part of their
respective property, shall have been entered; or the
involuntary appointment of an interim or permanent receiver,
trustee or other custodian of either Borrower or any
Subsidiary of either Borrower for all or a substantial part
of their respective property; or the issuance of a warrant of
attachment, execution or similar process against any
substantial part of the property of either Borrower or any
Subsidiary of either Borrower, and the continuance of any
such events in Subsection (2) above for sixty (60) days
unless dismissed, bonded off or discharged; or
8.1(g) Either Borrower or any Subsidiary of either
Borrower shall consent to the appointment of or taking
possession by a receiver, trustee or other custodian for all
or a substantial part of its property; the making by either
Borrower or any Subsidiary of either Borrower of any
assignment for the benefit of creditors; or the inability or
failure of either Borrower or any Subsidiary of either
Borrower, or the admission by either Borrower or any
Subsidiary of either Borrower in writing of its inability, to
pay its debts as such debts become due; or
8.1(h) Failure of either Borrower to perform any
contractual obligations which it may have to repurchase
Mortgage Loans, if such obligations in the aggregate exceed
One Million Dollars ($1,000,000); or
8.1(i) Any money judgment, writ or warrant of
attachment, or similar process involving in any case an
amount in excess of Five Hundred Thousand Dollars ($500,000)
shall be entered or filed against either Borrower or any
Subsidiary of either Borrower or any of their respective
assets and shall remain undischarged, unvacated, unbonded or
unstayed for a period of thirty
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(30) days or in any event later than five (5) days prior
to the date of any proposed sale thereunder; or
8.1(j) Any order, judgment or decree shall be
entered against either Borrower decreeing the dissolution or
split up of either Borrower and such order shall remain
undischarged or unstayed for a period in excess of twenty
(20) days; or
8.1(k) Any Plan maintained by either Borrower or any
Subsidiary of either Borrower shall be terminated within the
meaning of Title IV of ERISA or a trustee shall be appointed
by an appropriate United States district court to administer
any Plan, or the Pension Benefit Guaranty Corporation (or any
successor thereto) shall institute proceedings to terminate
any Plan or to appoint a trustee to administer any Plan if as
of the date thereof such Borrower's liability or any such
Subsidiary's liability (after giving effect to the tax
consequences thereof) to the Pension Benefit Guaranty
Corporation (or any successor thereto) for unfunded
guaranteed vested benefits under the Plan exceeds the then
current value of assets accumulated in such Plan by more than
Twenty-Five Thousand Dollars ($25,000) (or in the case of a
termination involving either Borrower or any Subsidiary of
either Borrower as a "substantial employer" (as defined in
Section 4001(a)(2) of ERISA) the withdrawing employer's
proportionate share of such excess shall exceed such amount);
or
8.1(l) Either Borrower or any Subsidiary of either
Borrower as employer under a Multiemployer Plan shall have
made a complete or partial withdrawal from such Multiemployer
Plan and the plan sponsor of such Multiemployer Plan shall
have notified such withdrawing employer that such employer
has incurred a withdrawal liability in an annual amount
exceeding Twenty-Five Thousand Dollars ($25,000); or
8.1(m) Either Borrower shall purport to disavow its
obligations hereunder or shall contest the validity or
enforceability hereof; or the Lender's security interest on
any portion of the Collateral shall become unenforceable or
otherwise impaired; provided that, subject to the Lender's
approval, no Event of Default shall occur as a result of such
impairment if all Advances made against any such Collateral
shall be paid in full within ten (10) days of the date of
such impairment; or
8.1(n) (a) The Parent shall consent to the
appointment of a conservator or receiver or liquidator in
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any insolvency, readjustment of debt, marshalling of assets
and liabilities or similar proceedings of or relating to the
Parent or of or relating to all or substantially all of its
property, or (b) a decree or order of a court or agency or
supervisory authority having jurisdiction over the Parent for
the appointment of a conservator or receiver or liquidator in
any insolvency, readjustment of debt, marshalling of assets
and liabilities or similar proceedings, or the winding up or
liquidation of its affairs, shall have been entered against
the Parent, or (c) the Parent shall admit in writing its
inability to pay its debts generally as they become due, file
a petition to take advantage of any applicable insolvency or
reorganization statute, make any assignment for the benefit
of its creditors or voluntarily suspend payment of its
obligations; or
8.1(o) NHP Financial Services, Ltd. shall cease
owning, directly or indirectly, all of the capital stock of
Washington, or Washington shall cease owning, directly, all
of the capital stock of Xxxxxxx; or
8.2 Remedies.
8.2(a) Upon the occurrence of any Event of Default
described in Sections 8.1(f) or 8.1(g), the Commitments
shall be terminated and the unpaid principal amount of and
accrued interest on the Notes and all other Obligations shall
automatically become due and payable, without presentment,
demand or other requirements of any kind, all of which are
hereby expressly waived by the Borrowers.
8.2(b) Upon the occurrence of any Event of Default,
other than those described in Sections 8.1(f) and 8.1(g),
the Lender may, by Notice to the Borrowers, terminate the
Commitments and/or declare all Obligations to be immediately
due and payable, whereupon the same shall forthwith become
due and payable, together with all accrued interest thereon,
and the obligation of the Lender to make any Advances shall
thereupon terminate.
8.2(c) Upon the occurrence of any Event of Default,
the Lender may also do any of the following:
(1) Foreclose upon or otherwise enforce its
security interest in and Lien on the Collateral to
secure all payments and performance of the
Obligations in any manner permitted by law or
provided for hereunder.
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(2) Notify all obligors in respect of
Collateral that the Collateral has been assigned to
the Lender and that all payments thereon are to be
made directly to the Lender or such other party as
may be designated by the Lender; settle, compromise,
or release, in whole or in part, any amounts owing
on the Collateral, any such obligor or any Investor
or any portion of the Collateral, on terms
acceptable to the Lender; enforce payment and
prosecute any action or proceeding with respect to
any and all Collateral; and where any such
Collateral is in default, foreclose on and enforce
security interests in, such Collateral by any
available judicial procedure or without judicial
process and sell property acquired as a result of
any such foreclosure.
(3) Act, or contract with a third party to
act, as servicer or subservicer of each item of
Collateral requiring servicing and perform all
obligations required in connection with Servicing
Contracts and Purchase Commitments, such third
party's fees to be paid by the Borrowers.
(4) Require the Borrowers to assemble the
Collateral and/or books and records relating thereto
and make such available to the Lender at a place to
be designated by the Lender.
(5) Enter onto property where any
Collateral or books and records relating thereto are
located and take possession thereof with or without
judicial process.
(6) Prior to the disposition of the
Collateral, prepare it for disposition in any manner
and to the extent the Lender deems appropriate.
(7) Exercise all rights and remedies of a
secured creditor under the Uniform Commercial Code
of Minnesota or other applicable law, including, but
not limited to, selling or otherwise disposing of
the Collateral, or any part thereof, at one or more
public or private sales, whether or not such
Collateral is present at the place of sale, for cash
or credit or future delivery, on such terms and in
such manner as the Lender may determine, including,
without limitation, sale pursuant to any applicable
Purchase Commitment. If notice is required under
such applicable law, the Lender will give the
Borrowers not less than ten (10) days'
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notice of any such public sale or of the date after
which any private sale may be held. The Borrowers
agree that ten (10) days' notice shall be reasonable
notice. The Lender may, without notice or
publication, adjourn any public or private sale or
cause the same to be adjourned from time to time by
announcement at the time and place fixed for the
sale, and such sale may be made at any time or place
to which the same may be so adjourned. In case of
any sale of all or any part of the Collateral on
credit or for future delivery, the Collateral so
sold may be retained by the Lender until the selling
price is paid by the purchaser thereof, but the
Lender shall not incur any liability in case of the
failure of such purchaser to take up and pay for the
Collateral so sold and, in case of any such failure,
such Collateral may again be sold upon like notice.
The Lender may, however, instead of exercising the
power of sale herein conferred upon it, proceed by a
suit or suits at law or in equity to collect all
amounts due upon the Collateral or to foreclose the
pledge of and sell the Collateral or any portion
thereof under a judgment or decree of a court or
courts of competent jurisdiction, or both.
(8) Proceed against the Borrowers on the
Notes.
8.2(d) The Lender shall incur no liability as a
result of the sale or other disposition of the Collateral, or
any part thereof, at any public or private sale or
disposition. The Borrowers hereby waive (to the extent
permitted by law) any claims they may have against the Lender
arising by reason of the fact that the price at which the
Collateral may have been sold at such private sale was less
than the price which might have been obtained at a public
sale or was less than the aggregate amount of the outstanding
Advances and the unpaid interest accrued thereon, even if the
Lender accepts the first offer received and does not offer
the Collateral to more than one offeree, provided such sale
was commercially reasonable in all other respects. Any sale
of Collateral pursuant to the terms of a Purchase Commitment,
or any other disposition of Collateral arranged by the either
Borrower, whether before or after the occurrence of an Event
of Default, shall be deemed to have been made in a
commercially reasonable manner.
8.2(e) The Borrowers acknowledge that Mortgage Loans
and Mortgage-backed Securities are collateral of a type which
is customarily sold on a recognized market.
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The Borrowers waive any right they may have to prior notice
of the sale of any Pledged Mortgage or Pledged Security, and
agrees that the Lender may purchase any Pledged Mortgages or
Pledged Securities at a private sale of such Collateral.
8.2(f) The Borrowers specifically waive and releases
(to the extent permitted by law) any equity or right of
redemption, all rights of redemption, stay or appraisal which
the Borrowers have or may have under any rule of law or
statute now existing or hereafter adopted, and any right to
require the Lender to (1) proceed against any Person, (2)
proceed against or exhaust any of the Collateral or pursue
its rights and remedies as against the Collateral in any
particular order, or (3) pursue any other remedy in its
power. The Lender shall not be required to take any steps
necessary to preserve any rights of the Borrowers against
holders of mortgages prior in lien to the Lien of any
Mortgage included in the Collateral or to preserve rights
against prior parties.
8.2(g) The Lender may, but shall not be obligated
to, advance any sums or do any act or thing necessary to
uphold and enforce the Lien and priority of, or the security
intended to be afforded by, any Mortgage included in the
Collateral, including, without limitation, payment of
delinquent taxes or assessments and insurance premiums. All
advances, charges, costs and expenses, including reasonable
attorneys' fees and disbursements, incurred or paid by the
Lender in exercising any right, power or remedy conferred by
this Agreement, or in the enforcement hereof, together with
interest thereon, at the Default Rate, from the time of
payment until repaid, shall become a part of the principal
balance outstanding hereunder and under the Notes.
8.2(h) No failure on the part of the Lender to
exercise, and no delay in exercising, any right, power or
remedy provided hereunder, at law or in equity shall operate
as a waiver thereof; nor shall any single or partial exercise
by the Lender of any right, power or remedy provided
hereunder, at law or in equity preclude any other or further
exercise thereof or the exercise of any other right, power or
remedy. Without intending to limit the foregoing, all
defenses based on the statute of limitations are hereby
waived by the Borrowers to the extent permitted by law. The
remedies herein provided are cumulative and are not exclusive
of any remedies provided at law or in equity.
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8.2(i) The Borrowers acknowledge that the Borrowers
(or either of them) and the Lender have entered into, and may
from time to time hereafter enter into, agreements
("Acknowledgment Agreements") with FNMA, FHLMC, GNMA or any
other Investor in order to obtain the consent of FNMA, FHLMC,
GNMA or such other Investor to the assignment of and security
interest granted in the Servicing Contracts pursuant to
Section 3 hereof, as the same may be amended from time to
time. The Borrowers further acknowledge that the
Acknowledgment Agreements may contain certain provisions
concerning the enforcement by the Lender of its security
interest in the Servicing Contracts subject thereto. The
Borrowers agree that the disposition of their rights in any
Servicing Contract pursuant to the terms of the applicable
Acknowledgment Agreement shall be deemed commercially
reasonable within the meaning of Section 9-504(3) of the
Uniform Commercial Code of Minnesota. The Borrowers hereby
waive any claims they might otherwise have against the Lender
as a result of the Lender's compliance with the terms of any
Acknowledgment Agreement.
8.3 Application of Proceeds. The proceeds of any sale,
disposition or other enforcement of the Lender's security interest in
all or any part of the Collateral shall be applied by the Lender:
First, to the payment of the costs and expenses of such sale
or enforcement, including reasonable compensation to the Lender's
agents and counsel, and all expenses, liabilities and advances made or
incurred by or on behalf of the Lender in connection therewith;
Second, to the payment of interest accrued and unpaid on
the Notes;
Third, to the payment of any other Obligations due (other
than principal and interest) under this Agreement and the Loan
Documents;
Fourth, to the payment of the outstanding principal
balance of the Notes; and
Finally, to the payment to the Borrowers, or to their
successors or assigns, or as a court of competent jurisdiction may
direct, of any surplus then remaining from such proceeds.
If the proceeds of any such sale, disposition or other
enforcement are insufficient to cover the costs and expenses of such
sale, as aforesaid, and the payment in full of all Obligations, the
Borrowers shall remain liable for any deficiency.
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8.4 Lender Appointed Attorney-in-Fact. The Lender is hereby
appointed the attorney-in-fact of the Borrowers, with full power of
substitution, for the purpose of carrying out the provisions hereof
and taking any action and executing any instruments which the Lender
may deem necessary or advisable to accomplish the purposes hereof,
which appointment as attorney-in-fact is irrevocable and coupled with
an interest. Without limiting the generality of the foregoing, the
Lender shall have the right and power to give notices of its security
interest in the Collateral to any Person, either in the names of the
Borrowers or in their own name, to endorse all Pledged Mortgages or
Pledged Securities payable to the order of either Borrower, to change
or cause to be changed the book-entry registration or name of
subscriber or Investor on any Pledged Security, or to receive, endorse
and collect all checks made payable to the order of either Borrower
representing any payment on account of the principal of or interest
on, or the proceeds of sale of, any of the Pledged Mortgages or
Pledged Securities and to give full discharge for the same. Except to
the extent the Lender is granted the power to take any action covered
by the foregoing power of attorney prior to the occurrence of an Event
of Default under the Loan Documents, the Lender agrees not to exercise
the foregoing power of attorney prior to the occurrence of an Event of
Default.
8.5 Right of Set-Off. If the Borrowers shall default in the
payment of the Notes, any interest accrued thereon, or any other sums
which may become payable hereunder when due, or in the performance of
any of its other obligations or liabilities under this Agreement, the
Lender, shall have the right, at any time and from time to time,
without notice, to set-off and to appropriate or apply any and all
property or indebtedness of any kind at any time held or owing by the
Lender to or for the credit or the account of the Borrowers against
and on account of the Obligations of the Borrowers under the Notes and
this Agreement, irrespective of whether or not the Lender shall have
made any demand hereunder and whether or not said Obligations shall
have matured.
9. NOTICES.
All notices, demands, consents, requests and other
communications required or permitted to be given or made hereunder
(collectively, "Notices") shall, except as otherwise expressly
provided hereunder, be in writing and shall be delivered in person or
telecopied or mailed, first class or delivered by overnight courier,
return receipt requested, postage prepaid, addressed to the respective
parties hereto at their respective addresses hereinafter set forth or,
as to any such party, at such other address as may be designated by it
in a Notice to the other. All Notices shall be conclusively deemed to
have been properly given or made when duly
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delivered, in person, by telecopy or by overnight courier, or if
mailed, on the date of receipt as noted on the return receipt,
addressed as follows:
if to the Borrowers: Washington Mortgage Financial
Group, Ltd.
WMF/Xxxxxxx, Xxxxx Associates
Limited
0000 Xxxxxx Xxxx Xxxx, Xxxxx 000
Xxxxxx, XX 00000
Attention: Xxxxxx Xxxxxxx, CFO
Telecopier No.: (000) 000-0000
if to the Lender: Residential Funding Corporation
0000 Xxxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xxxx Xxxxxxx, Director
Telecopier No.: (000) 000-0000
with a copy to: Residential Funding Corporation
0000 Xxxxxxxxxx Xxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx, Esq.
Telecopier No.: (000) 000-0000
10. REIMBURSEMENT OF EXPENSES; INDEMNITY.
The Borrowers shall: (a) pay a documentation production fee
of Four Thousand Dollars ($4,000) in connection with the preparation
and negotiation of this Agreement; (b) pay such additional
documentation production fees, as the Lender may require and all
reasonable out-of-pocket costs and expenses of the Lender, including,
without limitation, reasonable fees and service charges of counsel
(including allocated costs of internal counsel), in connection with
the amendment, enforcement and administration of this Agreement, the
Notes, and other Loan Documents and the making and repayment of the
Advances and the payment of interest thereon (provided, that this
clause (b) shall not apply to the preparation or negotiation of this
Agreement); (c) indemnify, pay, and hold harmless the Lender and any
holder of the Notes from and against, any and all present and future
stamp, documentary and other similar taxes with respect to the
foregoing matters and save the Lender and the holder or holders of the
Notes harmless from and against any and all liabilities with respect
to or resulting from any delay or omission to pay such taxes; and (d)
indemnify, pay and hold harmless the Lender and any of its officers,
directors, employees or agents and any subsequent holder of the Notes
(collectively called the "Indemnitees") from and against any and all
liabilities, obligations, losses, damages, penalties, judgments,
suits, and
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reasonable costs, expenses and disbursements of any kind or nature
whatsoever (including without limitation, the reasonable fees and
disbursements of counsel of the Indemnitees (including allocated costs
of internal counsel) in connection with any investigative,
administrative or judicial proceeding, whether or not such Indemnitees
shall be designated a party thereto) which may be imposed upon,
incurred by or asserted against such Indemnitees in any manner
relating to or arising out of this Agreement, the Notes, or any other
Loan Document or any of the transactions contemplated hereby or
thereby (the "Indemnified Liabilities"); provided, however, that the
Borrowers shall have no obligation hereunder with respect to
Indemnified Liabilities arising from any action or inaction by the
Borrowers explicitly directed by the Lender in writing, or 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, the Borrowers shall contribute
the maximum portion which 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 the Borrowers contained in Subsection (d) shall survive the
expiration or termination of this Agreement and the payment in full of
the Notes. Reasonable attorneys' fees and disbursements incurred in
enforcing, or on appeal from, a judgment pursuant hereto shall be
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. As to Subsection (d), the Lender and any
holder of the Notes which is an assignee of the Lender shall use its
best efforts to give Borrowers' notice of any such investigative,
administrative or judicial proceeding, and the Borrowers shall have
the right to consult in the defense of or the negotiation relating to
any such matter at Borrowers' expense.
11. FINANCIAL INFORMATION.
All financial statements and reports furnished to the Lender
hereunder shall 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 the last fiscal year ended (except
to the extent otherwise required to conform to good accounting
practice).
12. MISCELLANEOUS.
12.1 Terms Binding Upon Successors; Survival of
Representations. The terms and provisions of this Agreement
Washington/Xxxxxxx:6/13/96
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81
shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns. All representations,
warranties, covenants and agreements herein contained on the part of
the Borrowers shall survive the making of any Advance and the
execution of the Notes, and shall be effective so long as any of the
Commitments are outstanding hereunder or there remain any Obligations
to be paid or performed.
12.2 Assignment. This Agreement may not be assigned by the
Borrowers. This Agreement and the Notes along with the Lender's
security interest in any or all of the Collateral, may, at any time,
be transferred or assigned, in whole or in part, by the Lender, and
any assignee thereof may enforce this Agreement, the Notes and such
security interest.
12.3 Amendments. Except as otherwise provided in this
Agreement, this Agreement may not be amended, modified or supplemented
unless such amendment, modification or supplement is set forth in a
writing signed by the parties hereto.
12.4 Governing Law. This Agreement and the other Loan
Documents shall be governed by the laws of the State of
Minnesota, without reference to its principles of conflicts of
laws.
12.5 Participations. The Lender may at any time sell, assign
or grant participations in, or otherwise transfer to any other Person
(a "Participant"), all or part of the Obligations. Without limitation
of the exclusive right of the Lender to collect and enforce such
Obligations, the Borrowers agree that each disposition will give rise
to a debtor-creditor relationship of the Borrowers to the Participant,
and the Borrowers authorize 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 the Borrowers which may be
in the hands of such Participant. The Borrowers authorize the Lender
to disclose to any prospective Participant and any Participant any and
all information in the Lender's possession concerning the Borrowers,
this Agreement and the Collateral.
12.6 Relationship of the Parties. This Agreement provides for
the making of Advances by the Lender, in its capacity as a lender, to
the Borrowers, in their capacity as borrowers, and for the payment of
interest, repayment of principal by the Borrowers to the Lender, and
for the payment of certain fees by the Borrowers to the Lender. The
relationship between the Lender and the Borrowers is limited to that
of creditor/secured party, on the one hand, and debtors, on the other
hand. The provisions herein for compliance with financial covenants
and delivery of financial
Washington/Xxxxxxx:6/13/96
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statements are intended solely for the benefit of the Lender to
protect its interests as lender in assuring payments of interest and
repayment of principal and payment of certain fees, and nothing
contained in this Agreement shall be construed as permitting or
obligating the Lender to act as a financial or business advisor or
consultant to the Borrowers, as permitting or obligating the Lender to
control the Borrowers or to conduct the Borrowers' operations, as
creating any fiduciary obligation on the part of the Lender to the
Borrowers, or as creating any joint venture, agency, or other
relationship between the parties hereto other than as explicitly and
specifically stated in this Agreement. The Borrowers acknowledge that
they have had the opportunity to obtain the advice of experienced
counsel of its own choosing in connection with the negotiation and
execution of this Agreement and to obtain the advice of such counsel
with respect to all matters contained herein. The Borrowers further
acknowledge that they are experienced with respect to financial and
credit matters and have made their own independent decisions to apply
to the Lender for credit and to execute and deliver this Agreement.
12.7 Severability. If any provision of this Agreement shall
be declared to be illegal or unenforceable in any respect, such
illegal or unenforceable provision shall be and become absolutely null
and void and of no force and effect as though such provision were not
in fact set forth herein, but all other covenants, terms, conditions
and provisions hereof shall nevertheless continue to be valid and
enforceable.
12.8 Operational Reviews. From time to time upon request, the
Borrowers shall permit the Lender or its representative access to
their premises and records for the purpose of conducting a review of
the Borrowers' general mortgage business methods, policies, and
procedures, auditing loan files and reviewing financial and
operational aspects of the Borrowers' businesses.
12.9 Consent to Credit References. The Borrowers hereby
consent to the disclosure of information regarding the Borrowers and
their relationships with the Lender to Persons making credit inquiries
to the Lender. This consent is revocable by the Borrowers at any time
upon Notice to the Lender as provided in Section 9 hereof.
12.10 Consent to Jurisdiction. The Borrowers hereby agree
that any action or proceeding under the Loan Documents, the Notes or
any document delivered pursuant hereto may be commenced against them
in any court of competent jurisdiction within the State of Minnesota,
by service of process upon the Borrowers by first class registered or
certified mail, return receipt requested, addressed to the Borrowers
at their address
Washington/Xxxxxxx:6/13/96
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83
last known to the Lender. The Borrowers agree that any such suit,
action or proceeding arising out of or relating to this Agreement or
any other such document may be instituted in the Hennepin County,
State District Court or in the United States District Court for the
District of Minnesota at the option of the Lender; and the Borrowers
hereby waive any objection to the jurisdiction or venue of any such
court with respect to, or the convenience of any court as a forum for,
any such suit, action or proceeding. Nothing herein shall affect the
right of the Lender to accomplish service of process in any other
manner permitted by law or to commence legal proceedings or otherwise
proceed against the Borrowers in any other jurisdiction or court.
12.11 Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but
all such counterparts shall together constitute but one and the same
instrument.
12.12 Entire Agreement. This Agreement, the Notes and the
other Loan Documents represent the final agreement among the parties
hereto and thereto with respect to the subject matter hereof and
thereof, and may not be contradicted by evidence of prior or
contemporaneous oral agreements among such parties. There are no oral
agreements among the parties with respect to the subject matter hereof
and thereof.
12.13 WAIVER OF JURY TRIAL. THE BORROWERS AND THE LENDER EACH
HEREBY (a) COVENANTS AND AGREES NOT TO ELECT A TRIAL BY JURY OF ANY
ISSUE TRIABLE OF RIGHT BY A JURY, AND (b) WAIVES ANY RIGHT TO TRIAL BY
JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER
EXIST. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS SEPARATELY GIVEN,
KNOWINGLY AND VOLUNTARILY, BY THE BORROWERS AND THE LENDER, AND THIS
WAIVER IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH
ISSUE AS TO WHICH THE RIGHT OF A JURY TRIAL WOULD OTHERWISE ACCRUE.
THE LENDER AND THE BORROWERS IS EACH HEREBY AUTHORIZED AND REQUESTED
TO SUBMIT THIS AGREEMENT TO ANY COURT HAVING JURISDICTION OVER THE
SUBJECT MATTER AND THE PARTIES HERETO, SO AS TO SERVE AS CONCLUSIVE
EVIDENCE OF THE FOREGOING WAIVER OF THE RIGHT TO JURY TRIAL. FURTHER,
THE BORROWERS AND THE LENDER EACH HEREBY 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 JURY TRIAL PROVISION.
12.14 Joint and Several Liability. The promises and
agreements herein shall be construed to be and are hereby
declared to be the joint and several promises and agreements
of each of the Borrowers and shall constitute the joint and
several obligation of each of the Borrowers and shall be fully
Washington/Xxxxxxx:6/13/96
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84
binding upon and enforceable against each of the Borrowers. The
release of any party to this Agreement shall not affect or release the
joint and several liability of any other party. The Lender may, at its
option, enforce this Agreement against one or both of the Borrowers,
and the Lender shall not be required to resort to enforcement against
each of the Borrowers and the failure to proceed against or join each
of the Borrowers shall not affect the joint and several liability of
each of the Borrowers.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date first above written.
WASHINGTON MORTGAGE FINANCIAL GROUP,
LTD., a Delaware corporation
By: /s/ XXXXXX X. XXXXXXX
---------------------------------------
Its: EVP
--------------------------------------
WMF/XXXXXXX, XXXXX ASSOCIATES
LIMITED, a Delaware corporation
By: /s/ XXXXXX X. XXXXXXX
---------------------------------------
Its: Vice Chairman
--------------------------------------
RESIDENTIAL FUNDING CORPORATION,
a Delaware corporation
By: /s/ XXXX X. XXXXXXX
---------------------------------------
Its: Director
--------------------------------------
STATE OF VIRGINIA )
) ss
COUNTY OF FAIRFAX )
On June 18, 1996, before me, a Notary Public, personally appeared
Xxxxxx X. Xxxxxxx, the EVP of WASHINGTON MORTGAGE FINANCIAL GROUP, LTD., a
Delaware corporation, personally known to me (or proved to me on the basis of
satisfactory evidence) to be the person whose name is subscribed to the within
instrument and acknowledged to me that he/she executed the same in his/her
authorized capacity, and that by his/her signature on the instrument the
person, or the entity upon behalf of which the person acted, executed the
instrument.
WITNESS my hand and official seal.
/s/ XXXXXX X. XXXX
-------------------------------
Notary Public
(SEAL) My Commission Expires: 2/28/99
Washington/Xxxxxxx:6/13/96
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85
STATE OF VIRGINIA )
) ss
COUNTY OF FAIRFAX )
On June 18, 1996, before me, a Notary Public, personally appeared
Xxxxxx X. Xxxxxxx, the Vice Chairman of WMF/XXXXXXX, XXXXX ASSOCIATES LIMITED,
a Delaware corporation, personally known to me (or proved to me on the basis of
satisfactory evidence) to be the person whose name is subscribed to the within
instrument and acknowledged to me that he/she executed the same in his/her
authorized capacity, and that by his/her signature on the instrument the
person, or the entity upon behalf of which the person acted, executed the
instrument.
WITNESS my hand and official seal.
/s/ XXXXXX X. XXXX
-------------------------------
Notary Public
(SEAL) My Commission Expires: 2/28/99
STATE OF VIRGINIA )
) ss
COUNTY OF FAIRFAX )
On June 25th, 1996, before me, a Notary Public, personally appeared
Xxxx X. Xxxxxxx, the Director of RESIDENTIAL FUNDING CORPORATION, a Delaware
corporation, personally known to me (or proved to me on the basis of
satisfactory evidence) to be the person whose name is subscribed to the within
instrument and acknowledged to me that she executed the same in her
authorized capacity, and that by her signature on the instrument the
person, or the entity upon behalf of which the person acted, executed the
instrument.
WITNESS my hand and official seal.
/s/ XXXXXX X. XXXXX
-------------------------------
Notary Public
(SEAL) My Commission Expires: 11/23/96
XXXXXX X. XXXXX
NOTARY PUBLIC STATE OF MARYLAND
My Commission Expires November 23, 1996
Washington/Xxxxxxx:6/13/96
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86
EXHIBIT A-1
WAREHOUSING PROMISSORY NOTE
$150,000,000 Date: June 14, 1996
FOR VALUE RECEIVED, the undersigned, WASHINGTON MORTGAGE
FINANCIAL GROUP, LTD., a Delaware corporation, and WMF/XXXXXXX, XXXXX
ASSOCIATES LIMITED, a Delaware corporation (herein collectively called the
"Borrowers", and individually as "Co-Borrower"), hereby promises to pay to the
order of RESIDENTIAL FUNDING CORPORATION, a Delaware corporation (the "Lender"
or, together with its successors and assigns, the "Holder") whose principal
place of business is 0000 Xxxxxxxxxx Xxxx Xxxx., Xxxxx 000, Xxxxxxxxxxx,
Xxxxxxxxx 00000, or at such other place as the Holder may designate from time
to time, the principal sum of One Hundred Fifty Million Dollars ($150,000,000)
or so much thereof as may be outstanding from time to time pursuant to the
Warehousing Credit and Security Agreement described below, and to pay interest
on said principal sum or such part thereof as shall remain unpaid from time to
time, from the date of each Advance until repaid in full, and all other fees
and charges due under the Agreement, at the rates and at the times set forth in
the Agreement. All payments hereunder shall be made in lawful money of the
United States and in immediately available funds.
This Note is given to evidence an actual warehouse line of
credit in the above amount and is the Warehousing Promissory Note referred to
in that certain Warehousing Credit and Security Agreement ("the Agreement")
dated the date hereof between the Borrowers and the Lender, as the same may be
amended or supplemented from time to time, and is entitled to the benefits
thereof. Reference is hereby made to the Agreement (which is incorporated
herein by reference as fully and with the same effect as if set forth herein at
length) for a description of the Collateral, a statement of the covenants and
agreements, a statement of the rights and remedies and securities afforded
thereby and other matters contained therein. Capitalized terms used herein,
unless otherwise defined herein, shall have the meanings given them in the
Agreement.
This Note may be prepaid in whole or in part at any time
without premium or penalty.
Should this Note be placed in the hands of attorneys for
collection, the Borrowers agree to pay, in addition to principal and interest,
fees and charges due under the Agreement, any and all costs of collecting this
Note, including reasonable attorneys' fees and expenses.
Washington/Xxxxxxx:6/13/96 1
87
The Borrowers hereby waive demand, notice, protest and
presentment.
The promises and agreements herein shall be construed to be
and are hereby declared to be the joint and several promises and agreements of
each Co-Borrower and shall constitute the joint and several obligation of each
Co-Borrower and shall be fully binding upon and enforceable against each
Co-Borrower. The release of any party to this Note shall not affect or release
the joint and several liability of any other party. The Lender may at its
option enforce this Note against one or all of the Co-Borrower, and the Lender
shall not be required to resort to enforcement against each Co-Borrower and the
failure to proceed against or join each Co-Borrower shall not affect the joint
and several liability of each Co-Borrower.
This Note shall be construed and enforced in accordance with
the laws of the State of Minnesota, without reference to its principles of
conflicts of law.
IN WITNESS WHEREOF, the Borrowers have executed this Note as
of the day and year first above written.
WASHINGTON MORTGAGE FINANCIAL GROUP,
LTD., a Delaware corporation
By:
----------------------------------
Its:
---------------------------------
WMF/XXXXXXX, XXXXX ASSOCIATES
LIMITED, a Delaware corporation
By:
----------------------------------
Its:
---------------------------------
Washington/Xxxxxxx:6/13/96 2
88
STATE OF ________________ )
) ss
COUNTY OF ______________ )
On _________________, 1996, before me, a Notary Public,
personally appeared ________________________________, the ____________________
of WASHINGTON MORTGAGE FINANCIAL GROUP, LTD., a Delaware corporation,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized
capacity, and that by his/her signature on the instrument the person, or the
entity upon behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
---------------------------------
Notary Public
(SEAL) My Commission Expires:
-----------
STATE OF _______________ )
) ss
COUNTY OF ______________ )
On _________________, 1996, before me, a Notary Public,
personally appeared ________________________________, the __ __________________
of WMF/XXXXXXX, XXXXX ASSOCIATES LIMITED, a Delaware corporation, personally
known to me (or proved to me on the basis of satisfactory evidence) to be the
person whose name is subscribed to the within instrument and acknowledged to me
that he/she executed the same in his/her authorized capacity, and that by
his/her signature on the instrument the person, or the entity upon behalf of
which the person acted, executed the instrument.
WITNESS my hand and official seal.
--------------------------------
Notary Public
(SEAL) My Commission Expires:
----------
Washington/Xxxxxxx:6/13/96 3
89
EXHIBIT A-2
TERM LOAN PROMISSORY NOTE
$10,000,000 Date: June 14, 1996
FOR VALUE RECEIVED, the undersigned, WASHINGTON MORTGAGE
FINANCIAL GROUP, LTD., a Delaware corporation, and WMF/XXXXXXX, XXXXX
ASSOCIATES LIMITED, a Delaware corporation (herein collectively called the
"Borrowers", and individually as "Co-Borrower"), hereby promises to pay to the
order of RESIDENTIAL FUNDING CORPORATION, a Delaware corporation (the "Lender"
or, together with its successors and assigns, the "Holder") whose principal
place of business is 0000 Xxxxxxxxxx Xxxx Xxxx., Xxxxx 000, Xxxxxxxxxxx,
Xxxxxxxxx 00000, or at such other place as the Holder may designate from time
to time, the principal sum of Ten Million Dollars ($10,000,000) or so much
thereof as may be outstanding from time to time pursuant to the Warehousing
Credit and Security Agreement described below, and to pay interest on said
principal sum or such part thereof as shall remain unpaid from time to time,
from the date of each Advance until repaid in full, and all other fees and
charges due under the Agreement, at the rates and at the times set forth in the
Agreement. All payments hereunder shall be made in lawful money of the United
States and in immediately available funds.
This Note is given to evidence an actual warehouse line of
credit in the above amount and is the Term Loan Promissory Note referred to in
that certain Warehousing Credit and Security Agreement ("the Agreement") dated
the date hereof between the Borrowers and the Lender, as the same may be
amended or supplemented from time to time, and is entitled to the benefits
thereof. Reference is hereby made to the Agreement (which is incorporated
herein by reference as fully and with the same effect as if set forth herein at
length) for a description of the Collateral, a statement of the covenants and
agreements, a statement of the rights and remedies and securities afforded
thereby and other matters contained therein. Capitalized terms used herein,
unless otherwise defined herein, shall have the meanings given them in the
Agreement.
This Note may be prepaid in whole or in part at any time
without premium or penalty.
Should this Note be placed in the hands of attorneys for
collection, the Borrowers agree to pay, in addition to principal and interest,
fees and charges due under the Agreement, any and all costs of collecting this
Note, including reasonable attorneys' fees and expenses.
Washington/Xxxxxxx:6/13/96 1
90
The Borrowers hereby waive demand, notice, protest and
presentment.
The promises and agreements herein shall be construed to be
and are hereby declared to be the joint and several promises and agreements of
each Co-Borrower and shall constitute the joint and several obligation of each
Co-Borrower and shall be fully binding upon and enforceable against each
Co-Borrower. The release of any party to this Note shall not affect or release
the joint and several liability of any other party. The Lender may at its
option enforce this Note against one or all of the Co-Borrower, and the Lender
shall not be required to resort to enforcement against each Co-Borrower and the
failure to proceed against or join each Co-Borrower shall not affect the joint
and several liability of each Co-Borrower.
This Note shall be construed and enforced in accordance with
the laws of the State of Minnesota, without reference to its principles of
conflicts of law.
IN WITNESS WHEREOF, the Borrowers have executed this Note as
of the day and year first above written.
WASHINGTON MORTGAGE FINANCIAL GROUP,
LTD., a Delaware corporation
By:
--------------------------------------
Its:
-------------------------------------
WMF/XXXXXXX, XXXXX ASSOCIATES
LIMITED, a Delaware corporation
By:
--------------------------------------
Its:
-------------------------------------
Washington/Xxxxxxx:6/13/96 2
91
STATE OF ________________ )
) ss
COUNTY OF ______________ )
On _________________, 1996, before me, a Notary Public,
personally appeared ________________________________, the ___________________
of WASHINGTON MORTGAGE FINANCIAL GROUP, LTD., a Delaware corporation,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized
capacity, and that by his/her signature on the instrument the person, or the
entity upon behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
---------------------------------
Notary Public
(SEAL) My Commission Expires:
-----------
STATE OF _______________ )
) ss
COUNTY OF ______________ )
On _________________, 1996, before me, a Notary Public,
personally appeared ________________________________, the ____________________
of WMF/XXXXXXX, XXXXX ASSOCIATES LIMITED, a Delaware corporation, personally
known to me (or proved to me on the basis of satisfactory evidence) to be the
person whose name is subscribed to the within instrument and acknowledged to me
that he/she executed the same in his/her authorized capacity, and that by
his/her signature on the instrument the person, or the entity upon behalf of
which the person acted, executed the instrument.
WITNESS my hand and official seal.
---------------------------------
Notary Public
(SEAL) My Commission Expires:
-----------
Washington/Xxxxxxx:6/13/96 3
92
EXHIBIT A-3
SERVICING FACILITY PROMISSORY NOTE
$10,000,000 Date: June 14, 1996
FOR VALUE RECEIVED, the undersigned, WASHINGTON MORTGAGE
FINANCIAL GROUP, LTD., a Delaware corporation, and WMF/XXXXXXX, XXXXX
ASSOCIATES LIMITED, a Delaware corporation (herein collectively called the
"Borrowers", and individually as "Co-Borrower"), hereby promises to pay to the
order of RESIDENTIAL FUNDING CORPORATION, a Delaware corporation (the "Lender"
or, together with its successors and assigns, the "Holder") whose principal
place of business is 0000 Xxxxxxxxxx Xxxx Xxxx., Xxxxx 000, Xxxxxxxxxxx,
Xxxxxxxxx 00000, or at such other place as the Holder may designate from time
to time, the principal sum of Ten Million Dollars ($10,000,000) or so much
thereof as may be outstanding from time to time pursuant to the Warehousing
Credit and Security Agreement described below, and to pay interest on said
principal sum or such part thereof as shall remain unpaid from time to time,
from the date of each Advance until repaid in full, and all other fees and
charges due under the Agreement, at the rates and at the times set forth in the
Agreement. All payments hereunder shall be made in lawful money of the United
States and in immediately available funds.
This Note is given to evidence an actual warehouse line of
credit in the above amount and is the Servicing Facility Promissory Note
referred to in that certain Warehousing Credit and Security Agreement ("the
Agreement") dated the date hereof between the Borrowers and the Lender, as the
same may be amended or supplemented from time to time, and is entitled to the
benefits thereof. Reference is hereby made to the Agreement (which is
incorporated herein by reference as fully and with the same effect as if set
forth herein at length) for a description of the Collateral, a statement of the
covenants and agreements, a statement of the rights and remedies and securities
afforded thereby and other matters contained therein. Capitalized terms used
herein, unless otherwise defined herein, shall have the meanings given them in
the Agreement.
This Note may be prepaid in whole or in part at any time
without premium or penalty.
Should this Note be placed in the hands of attorneys for
collection, the Borrowers agree to pay, in addition to principal and interest,
fees and charges due under the Agreement, any and all costs of collecting this
Note, including reasonable attorneys' fees and expenses.
Washington/Xxxxxxx:6/13/96 1
93
The Borrowers hereby waive demand, notice, protest and
presentment.
The promises and agreements herein shall be construed to be
and are hereby declared to be the joint and several promises and agreements of
each Co-Borrower and shall constitute the joint and several obligation of each
Co-Borrower and shall be fully binding upon and enforceable against each
Co-Borrower. The release of any party to this Note shall not affect or release
the joint and several liability of any other party. The Lender may at its
option enforce this Note against one or all of the Co-Borrower, and the Lender
shall not be required to resort to enforcement against each Co-Borrower and the
failure to proceed against or join each Co-Borrower shall not affect the joint
and several liability of each Co-Borrower.
This Note shall be construed and enforced in accordance with
the laws of the State of Minnesota, without reference to its principles of
conflicts of law.
IN WITNESS WHEREOF, the Borrowers have executed this Note as
of the day and year first above written.
WASHINGTON MORTGAGE FINANCIAL GROUP,
LTD., a Delaware corporation
By:
-------------------------------------------
Its:
------------------------------------------
WMF/XXXXXXX, XXXXX ASSOCIATES
LIMITED, a Delaware corporation
By:
-------------------------------------------
Its:
------------------------------------------
Washington/Xxxxxxx:6/13/96 2
94
STATE OF ________________ )
) ss
COUNTY OF ______________ )
On _________________, 1996, before me, a Notary Public,
personally appeared ________________________________, the __ __________________
of WASHINGTON MORTGAGE FINANCIAL GROUP, LTD., a Delaware corporation,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized
capacity, and that by his/her signature on the instrument the person, or the
entity upon behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
----------------------------------
Notary Public
(SEAL) My Commission Expires:
------------
STATE OF _______________ )
) ss
COUNTY OF ______________ )
On _________________, 1996, before me, a Notary Public,
personally appeared ________________________________, the __ __________________
of WMF/XXXXXXX, XXXXX ASSOCIATES LIMITED, a Delaware corporation, personally
known to me (or proved to me on the basis of satisfactory evidence) to be the
person whose name is subscribed to the within instrument and acknowledged to me
that he/she executed the same in his/her authorized capacity, and that by
his/her signature on the instrument the person, or the entity upon behalf of
which the person acted, executed the instrument.
WITNESS my hand and official seal.
----------------------------------
Notary Public
(SEAL) My Commission Expires:
------------
Washington/Xxxxxxx:6/13/96 3
95
EXHIBIT B
(INTENTIONALLY OMITTED)
Washington/Xxxxxxx:6/13/96
96
EXHIBIT C-MF
REQUEST FOR ADVANCE AGAINST MULTIFAMILY, HEALTH CARE
AND COMMERCIAL MORTGAGE LOANS
_____ THIRD PARTY ORIGINATION
_____ CONVENTIONAL MORTGAGE LOAN
_____ FNMA _____ FHLMC _____ OTHER
_____ REFUNDER
_____ FNMA DUS MORTGAGE LOAN
_____ REFUNDER
_____ FHA PROJECT MORTGAGE LOAN _____ GNMA
_____ SECOND
_____ REFUNDER
_____ FHA CONSTRUCTION MORTGAGE LOAN
_____ COMMERCIAL MORTGAGE LOAN
_____ CONDUIT MORTGAGE LOAN
Mortgage Company: WASHINGTON MORTGAGE FINANCIAL GROUP, LTD. and
WMF/XXXXXXX, XXXXX ASSOCIATES LIMITED
Loan No.: __________________________________ Warehouse Date: ___________________
Project Name: ______________________________ Contract/Pool No.: ________________
Mortgage Note Amount:_______________________ Interest Rate: ____________________
Mortgage Note Date: _______________________
Advance Amount: ____________________________
Approved Warehouse Amt: ____________________ Endorsement Amt: _________________
Cumulative Endorsement Amt: ________________
Investor: __________________________________ Expiration Date: _________________
Committed Purchase Price: __________________
Title Company/Closing Agent: __________________________________________________________________
Title Contact Person: ______________________ Phone No.: _______________________
Security Rate: ________ Issue Date: ________ Maturity Date: ___________________
WIRE TRANSFER INFORMATION
Wire Amount:_________________________________ Date of Wire: ___________
Receiving Bank:______________________________ ABA No.: ___________
City & State: ________________________________________________________________________
Credit Account Name:___________________________ Number: ____________
Advise:________________________________________ Phone: ____________
For new value this day received, and as collateral security for the
payment of any and all indebtedness and liability of the Mortgage Company under
that certain Credit and Security Agreement dated as of June 14, 1996, as may be
amended from time to time, by and between the Company and RESIDENTIAL FUNDING
CORPORATION (the "Lender"), the Company creates and grants in favor and for the
benefit of the Lender a security interest in and to the Mortgage Note
evidencing the Mortgage Loan described in this Advance Request.
Washington/Xxxxxxx:6/13/96
97
The Company agrees to cause the Mortgage Note to be delivered to the
Lender, on the next Business Day following the date of the Advance made to fund
the Mortgage Loan.
AUTHORIZED SIGNATURE(S)
-------------------------- ---------------------------------
- 2 -
Washington/Xxxxxxx:6/13/96
98
EXHIBIT C-MF/BER
REQUEST FOR ADVANCE AGAINST BERKSHIRE LOANS
Mortgage Company: WASHINGTON MORTGAGE FINANCIAL GROUP, LTD.
Berkshire Loan Amount:_________________ Warehouse Date:________________
Berkshire Loan Date:___________________ Interest Rate:_________________
Berkshire Note Balance:________________
RFC Advance Amount:____________________
Approved Warehouse Amt: _______________ Endorsement Amt: _____________
Cumulative Endorsement Amt: ___________
Investor:________________________ Expiration Date: _______________
Investor Purchase Price: _____________________________
Title Company/Closing Agent: ______________________________________________________________________
Title Contact Person (if applicable):_________________ Phone No.: ______________
Security Rate: ________ Issue Date: ________ Maturity Date: _________
WIRE TRANSFER INFORMATION
Wire Amount:_________________________________ Date of Wire: ___________
Receiving Bank:______________________________ ABA No.: ___________
City & State: _____________________________________________________________________________________
Credit Account Name:___________________________ Number: ____________
Advise:________________________________________ Phone: ____________
AUTHORIZED SIGNATURE(S)
-------------------------- ---------------------------------
WAMtg./Xxxxxxx:6/13/96
99
EXHIBIT C-SER
SERVICING ACQUISITION ADVANCE REQUEST
Date:_________________, 199_
Reference is made to that certain Credit and Security Agreement
between WASHINGTON MORTGAGE FINANCIAL GROUP, INC., a Delaware corporation,
WMF/PAIGE, ASSOCIATES LIMITED, a Delaware corporation (the "Borrowers"), and
RESIDENTIAL FUNDING CORPORATION, a Delaware corporation (the "Lender"), dated
as of June 14, 1996 (as the same may be amended, modified, supplemented,
renewed or restated from time to time, the "Agreement"). All capitalized terms
used herein and all Section numbers given herein refer to those terms and
Sections set forth in the Agreement. This Servicing Acquisition Advance
Request is submitted to the Lender pursuant to Section 2.5(a).
The undersigned hereby requests a Servicing Acquisition Advance for a
Servicing Acquisition in the aggregate principal amount of $_______ to be made
on __________, 199_.
The Servicing Collateral Value as of the date of the requested
Advance, including the value of the Servicing Acquisition to be funded by this
Servicing Acquisition Advance, will be $__________. The Borrowers represent
and warrant that they have no reason to believe that such amount is incorrect.
The aggregate principal amount of the Servicing Facility Advances outstanding
after giving effect to the Servicing Facility Advance requested hereby will not
exceed the Servicing Facility Commitment Amount, and the aggregate principal
amount of the Term Loan Advance and the Servicing Facility Advances outstanding
after giving effect to the Servicing Facility Advance requested hereby will not
exceed the Servicing Collateral Value as set forth in the preceding sentence.
The amount of the requested Servicing Acquisition Advance does not exceed the
maximum amount permitted therefor under Section 2.4(b)(1)(ii) of the Agreement.
Attached hereto are the following documents submitted pursuant to
Section 2.5(b) of the Agreement:
_____ 1. A counterpart of the Purchase Agreement and all other
Servicing Acquisition Documents.
_____ 2. A current Servicing Portfolio Report.
_____ 3. A copy of the most recent Appraisal of the Servicing
Contracts currently owned by the Borrowers, if
required by the Lender.
_____ 4. An Appraisal of the Nonrecourse Servicing Contracts
to be acquired, if requested by the Lender.
100
EXHIBIT C-SER
Page 2
_____ 5. Letter of direction from the Borrowers to the Lender
directing disbursement of the proceeds of the
Servicing Acquisition Advance to the seller under the
Servicing Purchase Agreement.
_____ 6. Prior to the final disbursement of proceeds for
a particular Servicing Acquisition all consents from
and notices to FNMA, FHLMC or GNMA required for the
Borrowers to assume the Servicing Contracts to be
acquired and FNMA and FHLMC acknowledgements.
The representations and warranties of the Borrowers set forth in
Section 5 of the Agreement are true and correct in all material respects on and
as of the date hereof as if made on and as of such date.
No Event of Default has occurred and is continuing.
Since the Statement Date, there has been no material adverse change in
the business, financial condition or results of operation of the Borrowers and
their Subsidiaries, taken as a whole.
WASHINGTON MORTGAGE FINANCIAL GROUP,
LTD., a Delaware corporation
By:___________________________
Its:__________________________
WMF/XXXXXXX, XXXXX ASSOCIATES
LIMITED, a Delaware corporation
By:___________________________
Its:__________________________
Washington/Xxxxxxx:6/13/96
101
EXHIBIT C-WC
WORKING CAPITAL ADVANCE REQUEST
Date:
-------------------
Reference is made to that certain Credit and Security Agreement
between WASHINGTON MORTGAGE FINANCIAL GROUP, LTD., a Delaware corporation and
WMF/XXXXXXX, XXXXX ASSOCIATES LIMITED, a Delaware corporation (the
"Borrowers"), and RESIDENTIAL FUNDING CORPORATION, a Delaware corporation (the
"Lender"), dated as of June 14, 1996 (as the same may be amended, modified,
supplemented, renewed or restated from time to time, the "Agreement"). All
capitalized terms used herein and all Section numbers given herein refer to
those terms and Sections set forth in the Agreement. This Working Capital
Advance Request is submitted to the Lender pursuant to Section 2.5(a) of the
Agreement.
The undersigned hereby requests a Working Capital Advance in the
aggregate principal amount of $________________ to be made on __________,
199___. The amount of the Working Capital Advances requested are not more than
the amount permitted by the Agreement to be borrowed pursuant to this Advance
Request.
The Servicing Collateral Value as of the date hereof is
$_______________. The Borrowers represent and warrant that they have no reason
to believe that such amount is incorrect. The aggregate principal amount of
the Servicing Facility Advances outstanding after giving effect to the
Servicing Facility Advance requested hereby will not exceed the Servicing
Facility Commitment Amount, and the aggregate principal amount of the Term Loan
Advance and the Servicing Facility Advances outstanding after giving effect to
the Servicing Facility Advance requested hereby will not exceed the Servicing
Collateral Value as set forth in the preceding sentence.
The Borrowers hereby certify that no Default or Event of Default has
occurred and is continuing and that all of the Borrowers' representations and
warranties in this Advance Request and the Agreement are currently true and
correct and (to the extent applicable on or after their respective dates) are
hereby republished. Since the Statement Date, there has been no material
adverse change in the business, financial condition or results of operation of
the Borrowers and their Subsidiaries, taken as a whole. The Borrowers
acknowledge that the Lender will rely on the truth of each statement in this
Advance Request in making the requested Working Capital Advances.
METHOD OF ADVANCE
( ) Wire Transfer
Amount of Wire: __________________ Date of Wire:_____________________
Credit Acct. No.: ________________ Credit Acct. Name:________________
ABA No.: _________________________ Bank Name:________________________
Account to Debit: ________________ City & State:_____________________
Ref: ________________ Advise: ___________________ Phone: _____________
WASHINGTON MORTGAGE FINANCIAL GROUP,
LTD., a Delaware corporation
By:
------------------------------------
Its:
-----------------------------------
WMF/XXXXXXX, XXXXX ASSOCIATES
LIMITED, a Delaware corporation
By:
------------------------------------
Its:
-----------------------------------
FOR RFC INTERNAL USE ONLY
Repetitive Code:____________________ Date:_________________________
Wire Initiator's Initials:__________ Wire Verifier's Initials:_____
Washington/Xxxxxxx:6/13/96
102
EXHIBIT D-MF/BER
PROCEDURES AND DOCUMENTATION FOR
WAREHOUSING BERKSHIRE LOANS
The following procedures and documentation requirements must be
observed in all respects by Washington. All documents must be satisfactory to
the Lender in its sole discretion. Terms used below, which are not otherwise
defined, shall have the meanings given them in the Agreement. The term
"Mortgagee" as used below shall have the same meaning as the term "Washington".
The FNMA form numbers referred to herein are for convenience only and
Washington shall use the equivalent forms required at the time of delivery of
the Mortgage Loans or Mortgage-backed Securities.
I. FOR EACH ADVANCE:
The Lender must receive the following:
(1) Original signed Request for Advance (Exhibit C-MF).
(2) In the case of the initial Berkshire Advance, the original
Berkshire Master Notes, endorsed by Washington in blank and
without recourse (fax with original to follow within one (1)
Business Day).
(3) Original Advance Confirmation Instrument with respect to the
Berkshire Loan (for initial Berkshire Advance, fax with
original to follow within one (1) Business Day).
(4) Original Xxxxxx Mae Participation Certificate evidencing
FNMA's 100% participation interest in such Berkshire Loan (for
initial Berkshire Advance, fax with original to follow within
one (1) Business Day).
(5) Copy of Investor's Purchase Commitment for the
Mortgage-backed Security.
(6) In the case of (a) the initial Berkshire Advance and (b) the
first Berkshire Advance made after an additional Mortgage or
pledged Mortgage Note is added to the Collateral Pool under
the Berkshire Master Agreement, a copy of the title insurance
commitment to issue a policy of title insurance marked to show
the final policy exceptions (within one (1) Business Day).
(7) Check payable to the Lender for the Warehousing Fee (if
applicable).
II. DELIVERY OF DOCUMENTS
Upon instruction by Washington, accompanied by signed Securities Delivery
Instructions in the form attached hereto as Schedule I, the Lender will make
arrangements for delivery of the original Advance Confirmation Instrument and
Xxxxxx Xxx Participation Certificate to the FNMA office specified by Washington
under a
Washington/Xxxxxxx:6/13/96
103
cover letter referring to the bailee agreement among Washington, the Lender and
FNMA with respect to the Berkshire Master Notes. Upon receipt of a
Mortgage-backed Security, the Lender will deliver such Mortgage-backed Security
to the Investor which issued the Purchase Commitment. Mortgage-backed
Securities will be released to the Investor only upon payment of the purchase
proceeds to the Lender. Cash proceeds of sales of Mortgage-backed Securities
shall be applied to any amounts outstanding under the Commitments. Provided no
Default exists, the Lender shall return any excess proceeds of the sale of
Mortgage-backed Securities to the Borrowers.
- 2 -
Washington/Xxxxxxx:6/13/96
104
SCHEDULE I
RESIDENTIAL FUNDING CORPORATION
WAREHOUSING LENDING DIVISION
Security Delivery Instructions
INSTRUCTIONS MUST BE RECEIVED TWO (2) BUSINESS DAYS IN ADVANCE OF
PICK-UP/DELIVERY
BOOK-ENTRY DATE: ______________________ SETTLEMENT DATE: _____________________________________
ISSUER:________________________________ SECURITY: $___________________________________________
NO. OF CERTIFICATES: __________________ 1)__________________________
2)__________________________
3)__________________________
CUSIP #______________
Pool #_______________ MI#______________ Coupon Rate:__________________________________________
Issue Date:(M/D/Y) _______________________ Maturity Date:(M/D/Y)________________________________
POOL TYPE (circle one):
GNMA: GNMA I GNMA II
FHLMC: FIXED ARM DISCOUNT NOTE
FNMA: FIXED ARM DISCOUNT NOTE DEBENTURES REMIC
-----------------------------------------------------------------------------------------------------
DELIVER TO:_______________________________ ( ) Versus Payment
_______________________________ DVP AMT. $________________________________________
_______________________________ ( ) Free Delivery
DELIVER TO:_______________________________ ( ) Versus Payment
_______________________________ DVP AMT. $________________________________________
_______________________________ ( ) Free Delivery
DELIVER TO:_______________________________ ( ) Versus Payment
_______________________________ DVP AMT. $________________________________________
_______________________________ ( ) Free Delivery
-----------------------------------------------------------------------------------------------------
AUTHORIZED SIGNATURE:________________________________________________________________________________
TITLE: ________________________________________________________________________________
105
EXHIBIT D-MF/CONV/DUS
PROCEDURES AND DOCUMENTATION FOR WAREHOUSING
CONVENTIONAL MULTIFAMILY, FNMA DUS, HEALTH CARE AND
COMMERCIAL MORTGAGE LOANS
The following procedures and documentation requirements must
be observed in all respects by the Company. All documents must be satisfactory
to the Lender in its sole discretion. Terms used below, which are not
otherwise defined, shall have the meanings given them in the Agreement. The
FNMA and FHLMC form numbers referred to herein are for convenience only and the
Company shall use the equivalent forms required at the time of delivery of the
Pledged Mortgage or Pledged Security.
I. AT LEAST THREE (3) BUSINESS DAYS PRIOR TO THE ADVANCE DATE:
The Lender must receive a letter signed by the Company
providing the following information on the Pledged Mortgage:
(1) Mortgagor's name;
(2) Project name;
(3) Company's case/loan number;
(4) Expected Advance date;
(5) Mortgage Note Amount;
(6) Name and address of title company or
settlement attorney and contact person.
II. AT LEAST ONE (1) BUSINESS DAY PRIOR TO THE DATE OF AN ADVANCE:
The Lender must receive the following:
(1) Original signed Request for Advance (Exhibit
C-MF);
(2) For FHLMC-committed Conventional Mortgage Loans the
signed Conventional Multifamily Immediate Delivery Purchase
Contract and Prior Approval Conversion Amendment (FHLMC Form
64A);
(3) For FNMA-committed Conventional Mortgage Loans, a copy of
the signed Mortgage Purchase and Delivery Commitment (FNMA
Form 4257);
(4) For FNMA DUS Mortgage Loans, a copy of the signed FNMA
Mandatory Delivery Commitment-Multifamily Delegated
Underwriting;
(5) For other Conventional Mortgage Loans, Health Care Mortgage
Loans and Commercial Mortgage Loans, a copy of the Purchase
Commitment for the Pledged Mortgage;
(6) If a Mortgage-backed Security is to be issued, a copy of
Purchase Commitment for the Pledged Security;
(7) If Participation Certificate is to be issued, a copy of
Participation and Servicing Agreement;
Washington/Xxxxxxx:6/13/96 Rev:12/13/95
106
(8) Original Lender escrow instructions letter to the title
company or the settlement attorney, countersigned by an
authorized representative of the title company or the
settlement attorney to be involved with the transaction;
(9) If the Company is not the mortgagee on the Mortgage, a copy
of the assignment of Mortgage by the mortgagee to the Company
which was sent for recordation on or before the date of the
Advance;
(10) Original assignment of the Mortgage to the Lender in
recordable form but unrecorded;
(11) Original assignment of the security agreement to the
Lender in recordable form but unrecorded;
(12) Original assignment of the UCC financing statements to the
Lender in recordable form but unrecorded; and
(13) Check payable to the Lender for the Warehousing Fee (if
applicable).
Upon receipt of the letter required under Section I above, in form and
substance satisfactory to the Lender, the Lender will issue its escrow
instruction letter to the title company or the settlement attorney.
The Advance, when wired by the Lender to the title company or the
settlement attorney, shall be held in an escrow account of the title
company or the settlement attorney and disbursed in accordance with
the closing letter of the Company or its counsel when authorized by
the Lender in its escrow instruction letter. No Advance will be made
by the Lender prior to its receipt of all Collateral Documents
required under Section II above. Disbursement will be authorized only
after the title company or settlement attorney takes possession, on
behalf of the Lender, of the signed Mortgage Note, endorsed by the
Company in blank and without recourse, and the title company has
issued its title insurance policy. Immediately after disbursement,
the title company or settlement attorney shall be required to transmit
the Mortgage Note and certified true copy of the title insurance
policy directly to the Lender. In the event the Pledged Mortgage is
not closed and the related Mortgage recorded by 3:00 p.m. on the date
of the Advance, the title company or the settlement attorney is
instructed to return the Advance immediately to the Lender.
The foregoing arrangements, permitting funding of the Advance when the
Mortgage Note has been delivered to a third person on behalf of, and
as agent and bailee for the Lender, and before the Mortgage Note is
received by the Lender, are for the convenience of the Company. All
risk of loss or nondelivery of the Mortgage Note is that of the
Company, and the Lender has no liability or responsibility therefor.
Washington/Xxxxxxx:6/13/96 - 2 - Rev:12/13/95
107
III. ON NEXT BUSINESS DAY FOLLOWING THE ADVANCE DATE:
The Lender must receive the following:
(1) The original Mortgage Note, endorsed by the Company in blank
and without recourse. If the Company is not the named holder
of the Mortgage Note, the Mortgage Note must bear an
endorsement from the holder to the Company;
(2) A copy of the title insurance policy or the title insurance
commitment to issue a policy marked to show the final policy
exceptions, which:
(a) Names as insured the Company and/or
the Investor, and their successors
and assigns, as their interests may
appear;
(b) Shows effective date and time which
is on or after the date and time of
disbursement of the Advance from
escrow; and
(c) Sets forth an insured amount which
is equal to or greater than the Advance amount.
(3) If a Participation Certificate is issued, original
Participation Certificate evidencing one hundred percent
(100%) of the undivided interests in the pool of Pledged
Mortgages;
(4) If a Participation Certificate is issued, original signed
Stock/Bond Power or equivalent Assignment for the
Participation Certificate issued from the Company to the
Lender (or from the Investor to the Lender if the
Participation Certificate was issued in the name of the
Investor);
IV. AS SOON AS POSSIBLE FOLLOWING THE ADVANCE DATE, AND NO LATER THAN
ONE (1) BUSINESS DAY PRIOR TO THE DATE THE INVESTOR OR THE APPROVED
CUSTODIAN MUST RECEIVE THE PLEDGED MORTGAGE:
The Lender must receive the following:
(1) Signed shipping instructions for the delivery of the
Pledged Mortgage including the following:
(a) Name and address of the Investor or
the Approved Custodian to which the
Collateral Documents are to be
shipped, the desired shipping date
and the preferred method of
delivery;
(b) For delivery of the Participation
Certificate, the name and address of
the Investor to which the
Participation Certificate is to be
delivered;
(c) Name of project securing the Pledged Mortgage;
(d) Date the Investor or the Approved Custodian must
receive the Pledged Mortgage; and
(e) Instructions for endorsement of the Mortgage Note.
(2) For FHLMC-committed Conventional Mortgage Loans, the
following additional documents must be received:
Washington/Xxxxxxx:6/13/96 - 3 - Rev:12/13/95
108
(a) Original Contract Delivery Summary
(FHLMC Form 381) marked to indicate
that the mortgages being delivered
are subject to a security interest.
(b) For cash payments, the signed
original Wire Transfer Authorization
for a Cash Warehouse Delivery (FHLMC
Form 987), showing the Lender as
warehouse lender and specifying the
Cash Collateral Account as the
receiving account for loan purchase
proceeds.
(c) Completed, but not signed, Warehouse
Lender Release of Security Interest
(FHLMC Form 996), to be signed by
the Lender.
(3) For FNMA-committed Conventional Mortgage Loans and FNMA DUS
Mortgage Loans, the following additional documents must be
received:
(a) For cash payments, the signed
original Wire Transfer Request (FNMA
Form 4639), specifying the Cash
Collateral Account as the receiving
account for loan purchase proceeds.
(b) Executed bailee letter with Schedule A (in form
approved by FNMA and the Lender).
(4) The remainder of the documents required for shipping to the
Investor as specified by the Investor or in the applicable
Seller/Servicer Guide.
The Lender exclusively shall deliver the Mortgage Note and other
original Collateral Documents evidencing the Pledged Mortgage and
related pool documents to an Investor or an Approved Custodian, unless
otherwise agreed in writing.
V. IF A MORTGAGE-BACKED SECURITY IS TO BE ISSUED BY FNMA, AS SOON AS
POSSIBLE FOLLOWING CLOSING, BUT NO LATER THAN ONE (1) BUSINESS DAY
PRIOR TO SETTLEMENT DATE FOR A PLEDGED SECURITY THE LENDER MUST
RECEIVE:
(1) An original Delivery Schedule (FNMA Form 2014), instructing
FNMA to issue the Mortgage-backed Security in the name of the
Company, to deliver the Pledged Security to the Lender's
custody account at Chemical Bank NY (CHEMICAL
NYC/GEOCUST/XX0000000), and bearing the following
instructions: "These instructions may not be changed without
the prior written approval of Residential Funding Corporation,
Xxxxxxx X. Xxxxxx Director or Xxxxx Xxxxx, Director."
(2) The signed Securities Delivery Instructions form attached
hereto as Schedule I.
Upon instruction by the Company, the Lender shall complete the endorsement of
the Mortgage Note. If no Mortgage-backed Security is to be issued, the Lender
shall deliver the Mortgage Note and the other documents required for shipping
to the Investor as specified
Washington/Xxxxxxx:6/13/96 - 4 - Rev:12/13/95
109
by the Investor or in the applicable Seller/Servicer Guide with a bailee letter
to the Investor who issued the Purchase Commitment for the Pledged Mortgage or
to an Approved Custodian for such Investor. If a Mortgage-backed Security is
to be issued, the Lender shall deliver the Mortgage Note, the other documents
required for shipping and the Delivery Schedule with a bailee letter to FNMA or
to an Approved Custodian for FNMA. If Participation Certificates are to be
issued, the Lender will retain possession of the original Mortgage Note until
the proceeds of the sale of all related Participation Certificates have been
received by the Lender.
Upon receipt of a Pledged Security, the Lender will deliver the Pledged
Security to the Investor which issued the Purchase Commitment for the Pledged
Security. The Pledged Security will be released to the Investor only upon
payment of the purchase proceeds to the Lender. Cash proceeds of the sale of a
Pledged Mortgage or a Pledged Security shall be applied to the related Advance
outstanding under the Commitment. Provided no Default exists, the Lender shall
return any excess proceeds of the sale of a Pledged Mortgage or a Pledged
Security to the Company, unless otherwise instructed in writing.
- 5 -
Washington/Xxxxxxx:6/13/96 Rev:12/13/95
110
SCHEDULE I
RESIDENTIAL FUNDING CORPORATION
WAREHOUSING LENDING DIVISION
Security Delivery Instructions
INSTRUCTIONS MUST BE RECEIVED TWO (2) BUSINESS DAYS IN ADVANCE OF
PICK-UP/DELIVERY
BOOK-ENTRY DATE: ______________________ SETTLEMENT DATE: _____________________________________
ISSUER:________________________________ SECURITY: $___________________________________________
NO. OF CERTIFICATES: __________________ 1)__________________________
2)__________________________
3)__________________________
CUSIP #______________
Pool #_______________ MI#______________ Coupon Rate:__________________________________________
Issue Date:(M/D/Y) _______________________ Maturity Date:(M/D/Y)________________________________
POOL TYPE (circle one):
GNMA: GNMA I GNMA II
FHLMC: FIXED ARM DISCOUNT NOTE
FNMA: FIXED ARM DISCOUNT NOTE DEBENTURES REMIC
-----------------------------------------------------------------------------------------------------
DELIVER TO:_______________________________ ( ) Versus Payment
_______________________________ DVP AMT. $________________________________________
_______________________________ ( ) Free Delivery
DELIVER TO:_______________________________ ( ) Versus Payment
_______________________________ DVP AMT. $________________________________________
_______________________________ ( ) Free Delivery
DELIVER TO:_______________________________ ( ) Versus Payment
_______________________________ DVP AMT. $________________________________________
_______________________________ ( ) Free Delivery
-----------------------------------------------------------------------------------------------------
AUTHORIZED SIGNATURE:________________________________________________________________________________
TITLE: ________________________________________________________________________________
111
EXHIBIT D-MF/FHA
PROCEDURES AND DOCUMENTATION FOR WAREHOUSING
FHA PROJECT LOANS AND FHA CONSTRUCTION MORTGAGE LOANS
The following procedures and documentation requirements must
be observed in all respects by the Company. All documents must be satisfactory
to the Lender in its sole discretion. Terms used below, which are not
otherwise defined, shall have the meanings given them in the Agreement. The HUD
form numbers referred to herein are for convenience only and the Company shall
use the equivalent forms required at the time of delivery of a Pledged Mortgage
or a Pledged Security.
I. AT LEAST THREE (3) BUSINESS DAYS PRIOR TO THE ADVANCE DATE:
The Lender must receive a letter signed by the Company
providing the following information on the Pledged Mortgage:
(1) Mortgagor's name;
(2) Project name;
(3) Company's case/loan number;
(4) Expected Advance date;
(5) Mortgage Note Amount;
(6) Name and address of Company's counsel to be present
at closing; and
(7) Name and address of title company or settlement
attorney and contact person.
II. AT LEAST ONE (1) BUSINESS DAY PRIOR TO THE ADVANCE DATE:
The Lender must receive the following:
(1) Original signed Request for Advance (Exhibit C-MF);
(2) Copy of FHA Firm Commitment to insure;
(3) If no Mortgage-backed Security is to be issued, a
copy of Purchase Commitment for the Pledged Mortgage;
(4) If a Mortgage-backed Security is to be issued:
(a) Copy of Purchase Commitment for the
Mortgage-backed Security;
(b) Copy of Confirmation Notice for Request
Additional Commitment Authority from GNMA;
and
(c) Copy of Confirmation Notice for Request Pool
Numbers.
(5) If Pledged Mortgage is an FHA Construction Mortgage
Loan, then, in addition to (3) and (4) above, a copy
of Purchase Commitment for related FHA Project
Mortgage Loan or, if a Mortgage-backed Security is to
be issued backed by the related FHA Project Mortgage
Loan, a copy of the Purchase Commitment for the
Mortgage-backed Security;
Washington/Xxxxxxx:6/13/96 Rev:12/12/95
112
(6) If Participation Certificate is to be issued, a copy
of Participation and Servicing Agreement;
(7) Original Lender closing instructions letter to the
Company's counsel, countersigned by the counsel to be
involved with the transaction;
(8) Original Lender escrow instructions letter to the
title company or the settlement attorney,
countersigned by an authorized representative of the
title company or the settlement attorney to be
involved with the transaction;
(9) For FHA Construction Mortgage Loans, a copy of the
Application for Insurance of Advance of Mortgage
Proceeds (HUD Form 92403) signed by an authorized
representative of HUD;
(10) Original assignment of the Mortgage to the Lender in
recordable form but unrecorded;
(11) Original assignment of the security agreement to the
Lender in recordable form but unrecorded;
(12) Original assignment of the UCC financing statements
to the Lender in recordable form but unrecorded;
and
(13) Check payable to the Lender for the Warehousing
Fee, if applicable.
Upon receipt of the Company's letter required under Section I
above, the Lender will issue its closing instructions letter
to the Company's counsel and its escrow instructions letter to
the title company or the settlement attorney. The Advance,
when wired by the Lender to the title company or the
settlement attorney, shall be held in an escrow account of the
title company or the settlement attorney and disbursed in
accordance with the closing instructions letter of the Company
or its counsel when authorized by the Lender in its escrow
instructions letter. No Advance will be made by the Lender
prior to its receipt of all Collateral Documents required
under Section II above.
At closing, the title company or the settlement attorney shall
take possession on behalf of, and as agent and bailee for the
Lender, of (a) the signed Mortgage Note, endorsed by the
Company in blank and without recourse, and (b) the title
insurance policy.
After taking possession of the Mortgage Note and the title
insurance policy, the title company or the settlement attorney
is authorized to release the Mortgage Note and the title
insurance policy to Company's counsel pursuant to a trust
receipt signed by the Company's counsel, in a form approved by
the Lender. The trust receipt requires the Company's counsel
to (a) acknowledge receipt of the Mortgage Note, (b)
acknowledge the security interest of the Lender in the
Mortgage Note, (c) agree that the Mortgage Note is being
delivered to the Company's counsel solely for the purpose of
- 2 -
Washington/Xxxxxxx:6/13/96 Rev:12/12/95
113
obtaining HUD's endorsement, and (d) deliver the Mortgage
Note, endorsed by HUD, and the title insurance policy directly
to the Lender.
The title company or the settlement attorney is authorized to
disburse the Advance from escrow upon advice of the Company's
counsel, which may be telephonic, that the Mortgage Note has
been endorsed by HUD.
The foregoing arrangements, permitting funding of the Advance
when the Mortgage Note has been delivered to a third person on
behalf of, and as agent and bailee for the Lender, and before
the Mortgage Note is received by the Lender, are for the
convenience of the Company. All risk of loss or nondelivery
of the Mortgage Note is that of the Company, and the Lender
has no liability or responsibility therefor.
III. ON NEXT BUSINESS DAY FOLLOWING THE ADVANCE DATE:
The Lender must receive the following:
(1) Original signed Mortgage Note, endorsed by the
Company in blank and without recourse and endorsed
for insurance by HUD;
(2) Original title insurance policy, which:
(a) Contains recording information filled in on
the schedules pertaining to the Pledged
Mortgage, UCC financing statements and
regulatory agreement;
(b) Names as insured the "Mortgagee and/or the
Secretary of the Department of Housing and
Urban Development, and their successors and
assigns, as their interests may appear";
(c) Shows effective date and time which is on or
after the date and time of disbursement of
the Advance from escrow; and
(d) Sets forth an insured amount which is equal
to or greater than the Advance amount.
(3) If a Participation Certificate is issued, original
Participation Certificate evidencing one hundred
percent (100%) of the undivided interests in the
pool of Pledged Mortgages;
(4) If a Participation Certificate is issued, original
signed Stock/Bond Power or equivalent Assignment for
the Participation Certificate issued from the
Company to the Lender (or from the Investor to the
Lender if the Participation Certificate was issued
in the name of the Investor).
IV. AS SOON AS POSSIBLE FOLLOWING THE ADVANCE DATE, AND NO LATER
THAN ONE (1) BUSINESS DAY PRIOR TO DATE THE INVESTOR OR THE
APPROVED CUSTODIAN MUST RECEIVE THE PLEDGED MORTGAGE:
- 3 -
Washington/Xxxxxxx:6/13/96 Rev:12/12/95
114
The Lender must receive signed shipping instructions for the
delivery of the Pledged Mortgage including the following:
(1) Name and address of the Investor or the Approved
Custodian to which the Collateral Documents are to be
shipped, the desired shipping date and the preferred
method of delivery;
(2) For delivery of the Participation Certificate, the
name and address of the Investor to which the
Participation Certificate is to be delivered;
(3) Name of project securing the Pledged Mortgage;
(4) Date the Investor or the Approved Custodian must
receive the Pledged Mortgage; and
(5) Instructions for endorsement of the Mortgage Note.
The Lender exclusively shall deliver the Mortgage Note and
other original Collateral Documents evidencing the Pledged
Mortgage and related pool documents to an Investor or an
Approved Custodian, unless otherwise agreed in writing.
V. IF GNMA MORTGAGE-BACKED SECURITY IS TO BE ISSUED, AS SOON AS
POSSIBLE FOLLOWING CLOSING, BUT NO LATER THAN ONE (1) BUSINESS
DAYS PRIOR TO SETTLEMENT DATE FOR A PLEDGED SECURITY THE
LENDER MUST RECEIVE:
(1) The signed original Schedule of Subscribers (HUD Form
11705) instructing GNMA to issue the Mortgage-backed
Security in the name of the Company and designating
Chemical Bank NY as agent for the Lender, as the
subscriber, and to deliver the Pledged Security to
the Lender's custody account at Chemical Bank NY
(CHEMICAL BANK AS AGENT FOR RESIDENTIAL FUNDING
CORPORATION SEG ACCT MANUF/CUST/XX0000000) and
bearing the following instructions: "These
instructions may not be changed without prior written
approval of Residential Funding Corporation, Xxxxxxx
X. Xxxxxx, Vice President or Xxxxx Xxxxx, Regional
Operations Manager."
(2) Completed but not signed Release of Security Interest
(HUD Form 11711A) to be signed by the Lender.
(3) The signed Securities Delivery Instructions form
attached hereto as Schedule I.
Upon instruction by the Company, the Lender shall complete the endorsement of
the Mortgage Note. If no GNMA Mortgage-backed Security is to be issued, the
Lender shall deliver the Mortgage Note and title insurance policy with a bailee
letter to the Investor who issued the Purchase Commitment for the Pledged
Mortgage or an Approved Custodian for the Investor. If a GNMA Mortgage-backed
Security is to be issued, the Lender shall deliver the Mortgage Note, the title
insurance policy, the Release of
- 4 -
Washington/Xxxxxxx:6/13/96 Rev:12/12/95
115
Security Interest, and the Schedule of Subscribers with a bailee letter to an
Approved Custodian for GNMA.
Upon receipt of a Pledged Security, the Lender will deliver the Pledged
Security to the Investor which issued the Purchase Commitment for the Pledged
Security. The Pledged Security will be released to the Investor only upon
payment of the purchase proceeds to the Lender. Cash proceeds of the sale of a
Pledged Mortgage or a Pledged Security shall be applied to the related Advance
outstanding under the Commitment. Provided no Default exists, the Lender shall
return any excess proceeds of the sale of a Pledged Mortgage or a Pledged
Security to the Company, unless otherwise instructed in writing.
VI. FOR SUBSEQUENT FHA CONSTRUCTION MORTGAGE LOAN ADVANCES:
A. AT LEAST ONE (1) BUSINESS DAY PRIOR TO THE DATE OF
THE ADVANCE:
The Lender must receive the following:
(1) Original signed Request for Advance (Exhibit
C-MF); and
(2) Application for Insurance of Advance of
Mortgage Proceeds (HUD Form 92403) signed
by authorized representative of HUD.
B. ON THE DAY OF THE ADVANCE:
The Lender must receive evidence of title insurance
coverage in an amount equal to the amount of the
Advance (verbal assurance from the title company to
be followed by a copy of the title insurance policy
endorsement immediately following closing).
C. AS SOON AS POSSIBLE FOLLOWING THE ADVANCE DATE, AND
NO LATER THAN ONE (1) BUSINESS DAY PRIOR TO DATE THE
INVESTOR OR THE APPROVED CUSTODIAN MUST RECEIVE THE
PLEDGED MORTGAGE:
FOLLOW SAME INSTRUCTIONS AS SECTION IV ABOVE.
D. IF A GNMA MORTGAGE-BACKED SECURITY IS TO BE ISSUED:
FOLLOW SAME INSTRUCTIONS AS SECTION V ABOVE.
- 5 -
Washington/Xxxxxxx:6/13/96 Rev:12/12/95
116
SCHEDULE I
RESIDENTIAL FUNDING CORPORATION
WAREHOUSING LENDING DIVISION
Security Delivery Instructions
INSTRUCTIONS MUST BE RECEIVED TWO (2) BUSINESS DAYS IN ADVANCE OF
PICK-UP/DELIVERY
BOOK-ENTRY DATE: ______________________ SETTLEMENT DATE: _____________________________________
ISSUER:________________________________ SECURITY: $___________________________________________
NO. OF CERTIFICATES: __________________ 1)__________________________
2)__________________________
3)__________________________
CUSIP #______________
Pool #_______________ MI#______________ Coupon Rate:__________________________________________
Issue Date:(M/D/Y) _______________________ Maturity Date:(M/D/Y)________________________________
POOL TYPE (circle one):
GNMA: GNMA I GNMA II
FHLMC: FIXED ARM DISCOUNT NOTE
FNMA: FIXED ARM DISCOUNT NOTE DEBENTURES REMIC
-----------------------------------------------------------------------------------------------------
DELIVER TO:_______________________________ ( ) Versus Payment
_______________________________ DVP AMT. $________________________________________
_______________________________ ( ) Free Delivery
DELIVER TO:_______________________________ ( ) Versus Payment
_______________________________ DVP AMT. $________________________________________
_______________________________ ( ) Free Delivery
DELIVER TO:_______________________________ ( ) Versus Payment
_______________________________ DVP AMT. $________________________________________
_______________________________ ( ) Free Delivery
-----------------------------------------------------------------------------------------------------
AUTHORIZED SIGNATURE:________________________________________________________________________________
TITLE: ________________________________________________________________________________
117
EXHIBIT D-SA [OMITTED]
EXHIBIT E-1 [OMITTED]
EXHIBIT E-2 [OMITTED]
EXHIBIT F-1
RESIDENTIAL FUNDING CORPORATION
SUBORDINATION OF DEBT AGREEMENT
_______________________, 19___
To: Residential Funding Corporation
0000 Xxxxxxxxxx Xxxx Xxxx., Xxxxx 000
Xxxxxxxxxxx, Xxxxxxxxx 00000
(hereinafter referred to as the "Lender")
The undersigned (hereinafter referred to as the "Creditor"),
creditor of WASHINGTON MORTGAGE FINANCIAL GROUP, LTD., a Delaware corporation
(hereinafter referred to as the "Company"), desires that the Lender extend or
continue to extend such financial accommodations to the Company as the Company
may require and as the Lender may deem proper. For the purpose of inducing the
Lender to grant, continue or renew such financial accommodations, and in
consideration thereof, the Creditor agrees as follows:
1. That at the present time the Company is indebted to the
Creditor in the principal amounts set forth below:
PRINCIPAL AMOUNT
TYPE OF FACILITY OF DEBT FROM THE
OR LOAN COMPANY
----------------------------- -------------------------
----------------------------- -------------------------
----------------------------- -------------------------
----------------------------- -------------------------
----------------------------- -------------------------
(Notes, if any, are to be delivered to the Lender)
2. That all claims of the Creditor against the Company now or
hereafter existing are and shall be at all times subject and
subordinate to any and all claims now or hereafter which the
Lender may have against the Company (and all extensions,
renewals, modifications, replacements and substitutions of or
for the same), for so long as any such claim or claims of the
Lender shall exist.
3. That the Creditor shall not (a) except to the extent expressly
permitted in Section 4 hereof, receive payment of or collect,
in whole or in part, or xxx upon, any claim or claims now or
hereafter existing which the Creditor may hold against the
Washington/Xxxxxxx:6/13/96 1
118
Company; (b) sell, assign, transfer, pledge, hypothecate or
encumber such claim or claims except subject expressly to this
Agreement; (c) enforce any lien the Creditor may now or in the
future have on any debt owing by the Company to the Creditor;
and/or (d) join in any petition in bankruptcy, assignment for
the benefit of creditors or creditors' agreement, except as
directed by the Lender, so long as any claim of the Lender
against the Company, or commitment of the Lender to extend
credit to the Company, is in existence.
4. So long as no event described in clauses (a) through (d) of
Section 6 below (a "Liquidation Event") shall have occurred
and no default shall have occurred in payment or performance
of any obligation of the Company to the Lender, regularly
scheduled payments of interest and principal on the claims of
the Creditor may be made as and when the same become due and
payable (it being understood that no prepayment shall be made
of such claims and no modification or acceleration, for
default or otherwise, of such maturity dates shall be
permitted). After the occurrence of a Liquidation Event or of
default in payment or performance of any obligation of the
Company to the Lender, no interest and no principal payments
on the claims of the Creditor shall be made without the prior
written consent of the Lender. The subordination of claims of
the Creditor hereunder shall remain in effect so long as there
shall be outstanding any obligation of the Company to the
Lender (for this purpose, the Company shall be deemed
obligated to the Lender so long as the Lender shall have
outstanding any commitment to make any loan to the Company,
whether or not any such loan shall have been made or
advanced).
5. In the event that any Creditor receives a payment from the
Company in violation of the terms of this Agreement, such
Creditor (a) shall hold such money in trust for the benefit of
Lender, (b) shall segregate such payment from (and shall not
commingle such payment with any of) the other funds of such
Creditor, and (c) shall forthwith remit such payment to Lender
in the exact form received (but with any necessary
endorsement).
6. In case of (a) any assignment by the Company for the benefit
of creditors, (b) any bankruptcy proceedings instituted by or
against the Company, (c) the appointment of any receiver for
the Company's business or assets, or (d) any dissolution or
winding up of the affairs of the Company, the Company and any
assignee, trustee in bankruptcy, receiver, or other person or
persons in charge, are hereby directed to pay to the Lender
the full amount of the Lender's claim against the Company
before making any payment of principal or interest to the
Creditor and the Creditor hereby sells, transfers, sets over
and assigns to the Lender all claims the Creditor may now or
Washington/Xxxxxxx:6/13/96 2
119
hereafter have against the Company and in any security
therefor, and the proceeds thereof, and all rights to any
payments, dividends or other distributions arising therefrom.
If the Creditor does not file a proper claim or proof of debt
in the form required in such proceeding prior to thirty (30)
days before the expiration of the time to file such claim in
such proceedings, then the Lender has the right (but no
obligation) to do so and is hereby authorized to file an
appropriate claim or claims for and on behalf of the Creditor.
7. For violation of this Agreement, the Creditor shall be liable
to the Lender for all loss and damage sustained by reason of
such breach, and upon any such violation, the Lender may
accelerate the maturity of its claims against the Company, at
the Lender's option.
8. The Creditor will, at any time and from time to time, promptly
execute and deliver all further instruments and documents, and
take all further action, that may be reasonably necessary in
order to protect any right or interest granted hereby or to
enable the Lender to exercise and enforce its rights and
remedies hereunder.
9. The Creditor will not amend, extend or in any way modify the
terms of its claims against the Company, as such terms exist
as of the date of this Agreement, without the prior written
consent of the Lender. The Creditor agrees to provide to the
Lender, upon the occurrence thereof, notice of the existence
of any event of default (however defined or described) under
any document or agreement relating to its claims against the
Company, or any condition, act or event, which with the giving
of notice or the passage of time or both would constitute an
event of default (however defined or described) thereunder.
10. All rights and interest of the Lender hereunder, and all
agreements and obligations of the Creditor hereunder, shall
remain in full force and effect irrespective of:
(a) any sale, assignment, pledge, encumbrance or
other disposition of the claims of the Lender against the
Company (the "Senior Claims") and/or any document or
instrument executed in connection therewith;
(b) any change in the time, manner or place of
payment of, or in any other terms of, all or any of the Senior
Claims, or any refinancing thereof, or any other amendment,
modification, extension or renewal of or waiver of or any
consent to departure from any document or instrument relating
thereto, including, without limitation, changes in the terms
of the repayment of loan proceeds, modifications, extensions
or renewals of payment dates, changes in interest rate or the
Washington/Xxxxxxx:6/13/96 3
120
advancement of additional funds by the Lender in its
discretion; or
(c) any exchange, release or nonperfection of any
collateral, or any release or amendment or waiver of or
consent to departure from any guaranty, for all or any of the
Senior Claims.
11. This Agreement shall continue to be effective or be
reinstated, as the case may be, if at any time any payment or
performance of all or any portion of the Senior Claims is
rescinded or must otherwise be returned by the Lender or any
other party to the documents relating thereto upon the
insolvency, bankruptcy or reorganization of any such party or
otherwise, all as though such payment had not been made.
12. The Creditor hereby waives promptness, diligence, notice of
acceptance and any other notice with respect to this Agreement
and any requirement that the Lender protect, secure, perfect
or insure any security interest or lien or any property
subject thereto or exhaust any right or take any action
against the Creditor or any other person or entity or any
collateral.
13. No failure on the part of the Lender to exercise, and no delay
in exercising, any right hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any right
hereunder preclude any other or further exercise thereof or
the exercise of any other right. The remedies herein provided
are cumulative and not exclusive of any remedies provided by
law.
14. No amendment or waiver of any provision of this Agreement nor
consent to any departure by the Creditor therefrom shall in
any event be effective unless the same shall be in writing and
signed by the Lender, and then such waiver or consent shall be
effective only in the specific instance and for the specific
purpose for which given.
15. The Creditor agrees to pay upon demand, to the Lender the
amount of any and all expenses, including the reasonable fees
and expenses of its counsel and all court costs and other
reasonable litigation expenses, including but not limited to
expert witness fees, document copying expenses, exhibit
preparation costs, and courier, postage and communication
expenses, which the Lender may incur in connection with the
exercise or enforcement of any of its rights or interest
hereunder.
16. All notices, request and demands that may be required or
otherwise provided for or contemplated under the terms of this
Agreement shall, whether or not so stated, be in writing, and
Washington/Xxxxxxx:6/13/96 4
121
shall be given by any of the following means: (a) personal
delivery; (b) reputable overnight courier service; or (c)
registered or certified first class mail, return receipt
requested. Any notice, request or demand sent pursuant to
clause (a) above shall be deemed received upon personal
delivery, and if sent pursuant to clause (b) shall be deemed
received on the next business day following delivery to the
courier service, and if sent pursuant to clause (c) shall be
deemed received three (3) days following deposit in the mail.
The addresses for notices are as follows:
If to the Creditor, addressed to:
----------------------------------
----------------------------------
----------------------------------
If to the Lender, addressed to :
Residential Funding Corporation
0000 Xxxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xxxx Xxxxxxx, Director
Telecopier No.: (000) 000-0000
Such addresses may be changed by written notice to the other
parties given in the manner provided above.
17. This Agreement shall be governed in all respects by the laws
of the State of Minnesota and shall be binding upon and shall
inure to the benefit of the Creditor, the Lender and the
Company, and their respective heirs, executors,
administrators, personal representatives, successors and
assigns. This Agreement and any claim or claims of the Lender
pursuant hereto may be assigned by the Lender, in whole or in
part, at any time, without notice to the Creditor or the
Company.
----------------------------------
(CREDITOR)
Washington/Xxxxxxx:6/13/96 5
122
[THE FOLLOWING ACKNOWLEDGEMENT IS TO BE USED FOR A CORPORATION.]
STATE OF _______________ )
) ss
COUNTY OF ______________ )
On _________________, 19___ before me, a Notary Public,
personally appeared ________________________________, the ____________________
of _____________________________________, personally known to me (or proved to
me on the basis of satisfactory evidence) to be the person whose name is
subscribed to the within instrument and acknowledged to me that he/she executed
the same in his/her authorized capacity, and that by his/her signature on the
instrument the person, or the entity upon behalf of which the person acted,
executed the instrument.
WITNESS my hand and official seal.
----------------------------------
Notary Public
(SEAL) My Commission Expires:
------------
[THE FOLLOWING ACKNOWLEDGEMENT IS TO BE USED FOR AN INDIVIDUAL.]
STATE OF _______________ )
) ss
COUNTY OF ______________ )
The foregoing instrument was acknowledged before me this _____
day of _________________, 19__, by _____________________________.
----------------------------------
Notary Public
My Commission Expires:
------------
Washington/Xxxxxxx:6/13/96 6
123
ACCEPTANCE OF SUBORDINATION OF DEBT
AGREEMENT BY THE COMPANY
The Company named in the Subordination of Debt Agreement set
forth hereinbefore, hereby (i) represents and warrants to the Lender that it is
presently indebted to the Creditor executing said Subordination of Debt
Agreement in the aggregate principal amount of _____________________________
Dollars ($______________________); and (ii) accepts and consents to the
Subordination of Debt Agreement, and agrees to be bound by all of the
provisions thereof and to recognize all priorities and other rights granted
thereby to RESIDENTIAL FUNDING CORPORATION, a Delaware corporation, its
successors and assigns, and to perform in accordance therewith.
WASHINGTON MORTGAGE FINANCIAL GROUP,
LTD., a Delaware corporation
By:
--------------------------------
Its:
-------------------------------
Dated:
---------------------
Washington/Xxxxxxx:6/13/96 7
124
EXHIBIT F-2
RESIDENTIAL FUNDING CORPORATION
SUBORDINATION OF DEBT AGREEMENT
_______________________, 19___
To: Residential Funding Corporation
0000 Xxxxxxxxxx Xxxx Xxxx., Xxxxx 000
Xxxxxxxxxxx, Xxxxxxxxx 00000
(hereinafter referred to as the "Lender")
The undersigned (hereinafter referred to as the "Creditor"),
creditor of WMF/XXXXXXX, XXXXX ASSOCIATES LIMITED, a Delaware corporation
(hereinafter referred to as the "Company"), desires that the Lender extend or
continue to extend such financial accommodations to the Company as the Company
may require and as the Lender may deem proper. For the purpose of inducing the
Lender to grant, continue or renew such financial accommodations, and in
consideration thereof, the Creditor agrees as follows:
1. That at the present time the Company is indebted to the
Creditor in the principal amounts set forth below:
PRINCIPAL AMOUNT
TYPE OF FACILITY OF DEBT FROM THE
OR LOAN COMPANY
----------------------------- -------------------------
----------------------------- -------------------------
----------------------------- -------------------------
----------------------------- -------------------------
----------------------------- -------------------------
(Notes, if any, are to be delivered to the Lender)
2. That all claims of the Creditor against the Company now or
hereafter existing are and shall be at all times subject and
subordinate to any and all claims now or hereafter which the
Lender may have against the Company (and all extensions,
renewals, modifications, replacements and substitutions of or
for the same), for so long as any such claim or claims of the
Lender shall exist.
3. That the Creditor shall not (a) except to the extent expressly
permitted in Section 4 hereof, receive payment of or collect,
in whole or in part, or xxx upon, any claim or claims now or
hereafter existing which the Creditor may hold against the
Washington/Xxxxxxx:6/13/96 1
125
Company; (b) sell, assign, transfer, pledge, hypothecate or
encumber such claim or claims except subject expressly to this
Agreement; (c) enforce any lien the Creditor may now or in the
future have on any debt owing by the Company to the Creditor;
and/or (d) join in any petition in bankruptcy, assignment for
the benefit of creditors or creditors' agreement, except as
directed by the Lender, so long as any claim of the Lender
against the Company, or commitment of the Lender to extend
credit to the Company, is in existence.
4. So long as no event described in clauses (a) through (d) of
Section 6 below (a "Liquidation Event") shall have occurred
and no default shall have occurred in payment or performance
of any obligation of the Company to the Lender, regularly
scheduled payments of interest and principal on the claims of
the Creditor may be made as and when the same become due and
payable (it being understood that no prepayment shall be made
of such claims and no modification or acceleration, for
default or otherwise, of such maturity dates shall be
permitted). After the occurrence of a Liquidation Event or of
default in payment or performance of any obligation of the
Company to the Lender, no interest and no principal payments
on the claims of the Creditor shall be made without the prior
written consent of the Lender. The subordination of claims of
the Creditor hereunder shall remain in effect so long as there
shall be outstanding any obligation of the Company to the
Lender (for this purpose, the Company shall be deemed
obligated to the Lender so long as the Lender shall have
outstanding any commitment to make any loan to the Company,
whether or not any such loan shall have been made or
advanced).
5. In the event that any Creditor receives a payment from the
Company in violation of the terms of this Agreement, such
Creditor (a) shall hold such money in trust for the benefit of
Lender, (b) shall segregate such payment from (and shall not
commingle such payment with any of) the other funds of such
Creditor, and (c) shall forthwith remit such payment to Lender
in the exact form received (but with any necessary
endorsement).
6. In case of (a) any assignment by the Company for the benefit
of creditors, (b) any bankruptcy proceedings instituted by or
against the Company, (c) the appointment of any receiver for
the Company's business or assets, or (d) any dissolution or
winding up of the affairs of the Company, the Company and any
assignee, trustee in bankruptcy, receiver, or other person or
persons in charge, are hereby directed to pay to the Lender
the full amount of the Lender's claim against the Company
before making any payment of principal or interest to the
Creditor and the Creditor hereby sells, transfers, sets over
and assigns to the Lender all claims the Creditor may now or
Washington/Xxxxxxx:6/13/96 2
126
hereafter have against the Company and in any security
therefor, and the proceeds thereof, and all rights to any
payments, dividends or other distributions arising therefrom.
If the Creditor does not file a proper claim or proof of debt
in the form required in such proceeding prior to thirty (30)
days before the expiration of the time to file such claim in
such proceedings, then the Lender has the right (but no
obligation) to do so and is hereby authorized to file an
appropriate claim or claims for and on behalf of the Creditor.
7. For violation of this Agreement, the Creditor shall be liable
to the Lender for all loss and damage sustained by reason of
such breach, and upon any such violation, the Lender may
accelerate the maturity of its claims against the Company, at
the Lender's option.
8. The Creditor will, at any time and from time to time, promptly
execute and deliver all further instruments and documents, and
take all further action, that may be reasonably necessary in
order to protect any right or interest granted hereby or to
enable the Lender to exercise and enforce its rights and
remedies hereunder.
9. The Creditor will not amend, extend or in any way modify the
terms of its claims against the Company, as such terms exist
as of the date of this Agreement, without the prior written
consent of the Lender. The Creditor agrees to provide to the
Lender, upon the occurrence thereof, notice of the existence
of any event of default (however defined or described) under
any document or agreement relating to its claims against the
Company, or any condition, act or event, which with the giving
of notice or the passage of time or both would constitute an
event of default (however defined or described) thereunder.
10. All rights and interest of the Lender hereunder, and all
agreements and obligations of the Creditor hereunder, shall
remain in full force and effect irrespective of:
(a) any sale, assignment, pledge, encumbrance or
other disposition of the claims of the Lender against the
Company (the "Senior Claims") and/or any document or
instrument executed in connection therewith;
(b) any change in the time, manner or place of
payment of, or in any other terms of, all or any of the Senior
Claims, or any refinancing thereof, or any other amendment,
modification, extension or renewal of or waiver of or any
consent to departure from any document or instrument relating
thereto, including, without limitation, changes in the terms
of the repayment of loan proceeds, modifications, extensions
or renewals of payment dates, changes in interest rate or the
Washington/Xxxxxxx:6/13/96 3
127
advancement of additional funds by the Lender in its
discretion; or
(c) any exchange, release or nonperfection of any
collateral, or any release or amendment or waiver of or
consent to departure from any guaranty, for all or any of the
Senior Claims.
11. This Agreement shall continue to be effective or be
reinstated, as the case may be, if at any time any payment or
performance of all or any portion of the Senior Claims is
rescinded or must otherwise be returned by the Lender or any
other party to the documents relating thereto upon the
insolvency, bankruptcy or reorganization of any such party or
otherwise, all as though such payment had not been made.
12. The Creditor hereby waives promptness, diligence, notice of
acceptance and any other notice with respect to this Agreement
and any requirement that the Lender protect, secure, perfect
or insure any security interest or lien or any property
subject thereto or exhaust any right or take any action
against the Creditor or any other person or entity or any
collateral.
13. No failure on the part of the Lender to exercise, and no delay
in exercising, any right hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any right
hereunder preclude any other or further exercise thereof or
the exercise of any other right. The remedies herein provided
are cumulative and not exclusive of any remedies provided by
law.
14. No amendment or waiver of any provision of this Agreement nor
consent to any departure by the Creditor therefrom shall in
any event be effective unless the same shall be in writing and
signed by the Lender, and then such waiver or consent shall be
effective only in the specific instance and for the specific
purpose for which given.
15. The Creditor agrees to pay upon demand, to the Lender the
amount of any and all expenses, including the reasonable fees
and expenses of its counsel and all court costs and other
reasonable litigation expenses, including but not limited to
expert witness fees, document copying expenses, exhibit
preparation costs, and courier, postage and communication
expenses, which the Lender may incur in connection with the
exercise or enforcement of any of its rights or interest
hereunder.
16. All notices, request and demands that may be required or
otherwise provided for or contemplated under the terms of this
Agreement shall, whether or not so stated, be in writing, and
Washington/Xxxxxxx:6/13/96 4
128
shall be given by any of the following means: (a) personal
delivery; (b) reputable overnight courier service; or (c)
registered or certified first class mail, return receipt
requested. Any notice, request or demand sent pursuant to
clause (a) above shall be deemed received upon personal
delivery, and if sent pursuant to clause (b) shall be deemed
received on the next business day following delivery to the
courier service, and if sent pursuant to clause (c) shall be
deemed received three (3) days following deposit in the mail.
The addresses for notices are as follows:
If to the Creditor, addressed to:
----------------------------------
----------------------------------
----------------------------------
If to the Lender, addressed to :
Residential Funding Corporation
0000 Xxxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xxxx Xxxxxxx, Director
Telecopier No.: (000) 000-0000
Such addresses may be changed by written notice to the other
parties given in the manner provided above.
17. This Agreement shall be governed in all respects by the laws
of the State of Minnesota and shall be binding upon and shall
inure to the benefit of the Creditor, the Lender and the
Company, and their respective heirs, executors,
administrators, personal representatives, successors and
assigns. This Agreement and any claim or claims of the Lender
pursuant hereto may be assigned by the Lender, in whole or in
part, at any time, without notice to the Creditor or the
Company.
---------------------------------
(CREDITOR)
Washington/Xxxxxxx:6/13/96 5
129
[THE FOLLOWING ACKNOWLEDGEMENT IS TO BE USED FOR A CORPORATION.]
STATE OF _______________ )
) ss
COUNTY OF ______________ )
On _________________, 19___ before me, a Notary Public,
personally appeared ________________________________, the ____________________
of _____________________________________, personally known to me (or proved to
me on the basis of satisfactory evidence) to be the person whose name is
subscribed to the within instrument and acknowledged to me that he/she executed
the same in his/her authorized capacity, and that by his/her signature on the
instrument the person, or the entity upon behalf of which the person acted,
executed the instrument.
WITNESS my hand and official seal.
----------------------------------
Notary Public
(SEAL) My Commission Expires:
-----------
[THE FOLLOWING ACKNOWLEDGEMENT IS TO BE USED FOR AN INDIVIDUAL.]
STATE OF _______________ )
) ss
COUNTY OF ______________ )
The foregoing instrument was acknowledged before me this _____
day of _________________, 19__, by _____________________________.
----------------------------------
Notary Public
My Commission Expires:
------------
Washington/Xxxxxxx:6/13/96 6
130
ACCEPTANCE OF SUBORDINATION OF DEBT
AGREEMENT BY THE COMPANY
The Company named in the Subordination of Debt Agreement set
forth hereinbefore, hereby (i) represents and warrants to the Lender that it is
presently indebted to the Creditor executing said Subordination of Debt
Agreement in the aggregate principal amount of _____________________________
Dollars ($______________________); and (ii) accepts and consents to the
Subordination of Debt Agreement, and agrees to be bound by all of the
provisions thereof and to recognize all priorities and other rights granted
thereby to RESIDENTIAL FUNDING CORPORATION, a Delaware corporation, its
successors and assigns, and to perform in accordance therewith.
WMF/XXXXXXX, XXXXX ASSOCIATES
LIMITED, a Delaware corporation
By:
------------------------------------
Its:
-----------------------------------
Dated:
--------------------------------------
Washington/Xxxxxxx:6/13/96 7
000
XXXXXXX X
XXXXXXXXXXXX
XXXXXX
QUALIFIED
TO DO
NAME INCORPORATED BUSINESS OWNED (%)
---- ------------ --------- ---------
WASHINGTON MORTGAGE FINANCIAL GROUP, LTD.
-----------------------------------------
WMF/Xxxxxxx, Xxxxx Associates Limited DE 08/08/79 CA, VA, NJ 100%
Sheffield Acquisition Corp. TN 10/07/92 Inactive 100%
Vienna Mortgage Corporation VA 06/06/84 Inactive 100%
WMF/XXXXXXX, XXXXX ASSOCIATED LIMITED
-------------------------------------
None
132
EXHIBIT H
FORM OF OPINION OF COUNSEL
Residential Funding Corporation
Attention: Xxxxxx X. Xxxxx
0000 Xxxxxxxxxx Xxxx Xxxx., Xxxxx 000
Xxxxxxxxxxx, Xxxxxxxxx 00000
Re: $150,000,000 Loan (the "Loan") under Credit and Security
Agreement (the "Agreement") by and between RESIDENTIAL FUNDING
CORPORATION, a Delaware corporation (the "Lender") and
WASHINGTON MORTGAGE FINANCIAL GROUP, LTD., a Delaware
corporation ("Washington"), and WMF/XXXXXXX, XXXXX ASSOCIATES
LIMITED, a Delaware corporation ("Xxxxxxx") (hereinafter
collectively referred to as the "Borrowers") and secured by
the "Collateral" (as defined in the Agreement).
Gentlemen:
We are special counsel to the Borrowers in connection with the
Loan. As counsel, we have prepared and/or examined the following documents:
1. Executed copy of the Warehousing Promissory Note, dated June
14, 1996, made by the Borrowers payable to the order of the
Lender, in the principal amount of One Hundred Fifty Million
Dollars ($150,000,000).
2. Executed copy of the Term Loan Promissory Note, dated June 14,
1996, made by the Borrowers payable to the order of the
Lender, in the principal amount of Ten Million Dollars
($10,000,000).
3. Executed copy of the Servicing Facility Promissory Note, dated
June 14, 1996, made by the Borrowers payable to the order of
the Lender, in the principal amount of Ten Million Dollars
($10,000,000).
4. Executed copy of the Credit and Security Agreement by and
between the Borrowers and the Lender, dated June 14, 1996 (the
"Agreement").
5. Undated UCC Financing Statements perfecting a security
interest in collateral, tangible and intangible.
6. The Articles of Incorporation of Washington, together with
amendments thereto, as certified by the Secretary of State of
the State of Delaware.
Washington/Xxxxxxx:6/13/96 1
133
7. The Bylaws of Washington, as certified on
__________________________, 19____ by the Secretary of
Washington as then being complete, accurate and in effect.
8. Resolutions of the Board of Directors of Washington, adopted
at a meeting held on ____________________, 19_____, as
certified by the Secretary of Washington on
_________________________, 19_____ as then being complete,
accurate and in effect, authorizing the borrowing of the Loan
and the execution and delivery of and performance under the
Agreement.
9. Certificate of Good Standing for Washington, dated
______________________, 19_____, issued by the Secretary of
State of the State of Delaware.(1)
10. The Articles of Incorporation of Xxxxxxx, together with
amendments thereto, as certified by the Secretary of State of
the State of Delaware.
11. The Bylaws of Xxxxxxx, as certified on
__________________________, 19____ by the Secretary of Xxxxxxx
as then being complete, accurate and in effect.
12. Resolutions of the Board of Directors of Xxxxxxx, adopted at a
meeting held on ____________________, 19_____, as certified by
the Secretary of Xxxxxxx on __________________________, 19____
as then being complete, accurate and in effect, authorizing
the borrowing of the Loan and the execution and delivery of
and performance under the Agreement.
13. Certificate of Good Standing for Xxxxxxx, dated
______________________, 19_____, issued by the Secretary of
State of the State of Delaware.(2)
The above enumerated items, numbered 1, 2 and 3 are
collectively referred to as the "Loan Documents."
The opinions which follow are subject to the following
assumptions, limitations and qualifications:
---------------------
(1)A certificate of good standing, dated as of a date within ninety (90)
days of the date of the Agreement, for the state where the Company is
incorporated and for each state where the Company is transacting business as
a foreign corporation should be listed.
(2)A certificate of good standing, dated as of a date within ninety (90)
days of the date of the Agreement, for the state where the Company is
incorporated and for each state where the Company is transacting business as
a foreign corporation should be listed.
Washington/Xxxxxxx:6/13/96 2
134
A. We have assumed the genuineness of all signatures, other than
of the Borrowers, the authenticity of all documents submitted
to us as originals, and the conformity with the original
documents of all documents submitted to us as reproduced
copies, and the authenticity of all such latter documents.
B. We have assumed the organization, existence, good standing and
capacity of all persons and entities other than the Borrowers,
and that such parties, other than the Borrowers, have the
right, power and authority to execute and deliver the Loan
Documents and to perform thereunder.
C. We have assumed that the Lender's obligations under the
Agreement are within the powers of the Lender and have been
duly and validly authorized and that the Agreement has been
duly executed and validly delivered by the Lender.
D. As to various questions of fact material to this opinion, we
have made such factual inquiries of the Borrowers, and have
examined such other documents and made such examinations of
applicable laws, as we have deemed necessary for purposes of
the opinions expressed herein. However, where we state that a
matter is to the best of our knowledge, we have relied upon
the written statements of the officers of the Borrowers, with
no inquiry as to the facts other than as necessary to
establish that such reliance was reasonable on our part.
Based upon such examinations and investigations, and such
other investigations and examinations as we have deemed necessary for the
purposes of the opinions expressed herein, and subject to the assumptions
stated above in paragraphs A through D, inclusive, and in our capacity as
special counsel for the Borrowers, we are of the opinion that:
[OPINIONS CONCERNING WASHINGTON]
1. Washington is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction in
which it is incorporated and has the full legal power and
authority to own its property and to carry on its business as
currently conducted.
2. Washington is duly qualified to do business as a foreign
corporation and is in good standing in all jurisdictions where
the ownership of its property or the conduct of its business
makes such qualification necessary.
3. Washington has the power and authority to execute, deliver and
perform the Loan Documents. The execution, delivery and
performance of the Loan Documents by Washington, including
without limitation, the borrowings under the Agreement and the
Washington/Xxxxxxx:6/13/96 3
135
pledge of the Collateral, have been duly and validly
authorized by all necessary actions on the part of
Washington.
4. The Loan Documents have been duly executed and delivered by
Washington. The Loan Documents constitute the legal, valid
and binding obligations of Washington and are enforceable in
accordance with their respective terms against Washington,
except that enforceability may be limited by applicable
bankruptcy, insolvency, reorganization or other similar laws
affecting the rights of creditors, and general principles of
equity.
5. Washington is not an "investment company" or "controlled" by
an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
[OPINIONS CONCERNING XXXXXXX]
6. Xxxxxxx is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction in which
it is incorporated and has the full legal power and authority
to own its property and to carry on its business as currently
conducted.
7. Xxxxxxx is duly qualified to do business as a foreign
corporation and is in good standing in all jurisdictions where
the ownership of its property or the conduct of its business
makes such qualification necessary.
8. Xxxxxxx has the power and authority to execute, deliver and
perform the Loan Documents. The execution, delivery and
performance of the Loan Documents by Xxxxxxx, including
without limitation, the borrowings under the Agreement and the
pledge of the Collateral, have been duly and validly
authorized by all necessary actions on the part of Xxxxxxx.
9. The Loan Documents have been duly executed and delivered by
Xxxxxxx. The Loan Documents constitute the legal, valid and
binding obligations of Xxxxxxx and are enforceable in
accordance with their respective terms against Xxxxxxx, except
that enforceability may be limited by applicable bankruptcy,
insolvency, reorganization or other similar laws affecting the
rights of creditors, and general principles of equity.
10. Xxxxxxx is not an "investment company" or "controlled" by an
"investment company" within the meaning of the Investment
Company Act of 1940, as amended.
[OPINIONS CONCERNING BOTH BORROWERS]
11. Upon delivery to the Lender of those items of Collateral
consisting of promissory notes secured by mortgages or deeds
Washington/Xxxxxxx:6/13/96 4
136
of trust ("Pledged Mortgages") or mortgage-backed securities
("Pledged Securities"), or in the case of Pledged Securities
issued in book-entry form or issued in certificated form and
delivered to a clearing corporation (as such term is defined
in the Uniform Commercial Code) or its nominee, upon (a)
registration of such Pledged Securities in the name of a
financial intermediary (as such term is defined in the Uniform
Commercial Code) in an account containing only customer
securities, (b) the notation of Lender's security interest in
such Pledged Securities on the records of such financial
intermediary, by book entry or otherwise, and (c) the sending
by such financial intermediary to the Lender of confirmation
of such notation, the Lender will have a valid and perfected
first security interest therein. We assume, in giving this
opinion, that such items of Collateral will be owned by one of
the Borrowers and that, at the time the Lender's security
interest is noted on the records of any financial
intermediary, such Pledged Securities will be free of any
interest created through the Federal Reserve Bank, clearing
corporation and/or financial intermediary. With respect to
Pledged Mortgages, the laws of certain jurisdictions may
require the recordation of an assignment of such deeds of
trust or mortgages in order to perfect a security interest in
the deed of trust or mortgage (as opposed to the notes secured
thereby). If the Lender does not record its assignment of
deeds of trust or mortgages in such jurisdictions, we express
no opinion as to the Lender's perfected security interest in
such deeds of trust and mortgages (as opposed to the notes
secured thereby) constituting part of the Collateral.
12. The execution, delivery and performance by the Borrowers of
the Loan Documents will not (i) conflict with or violate any
provision of the Articles of Incorporation or By-laws of
either Borrower; (ii) require any license, approval or other
action by any governmental authority that has not been
obtained; (iii) to the best of our knowledge, result in the
creation of any lien, charge or encumbrance upon any property
or assets of either Borrower other than in favor of the
Lender; (iv) to the best of our knowledge, result in a
violation or breach of any term or provision, constitute a
default under, or result in or require the acceleration of any
indebtedness of either Borrower pursuant to, any agreement or
other instrument to which either Borrower may be bound or to
which Xxxxxxx or any of its property may be subject; or (v)
result in any violation of the provisions of any law or any
order of any court or, to the best of our knowledge, any
governmental agency, to which either Borrower may be bound or
to which either Borrower or any of its property may be
subject.
13. To the best of our knowledge, there are no actions, suits, or
proceedings pending or threatened against or affecting either
Washington/Xxxxxxx:6/13/96 5
137
Borrower, in any court or before any arbitrator or
governmental authority which, if adversely determined, may
reasonably be expected to result in any material and adverse
change in the business, operations, assets or financial
condition of Xxxxxxx as a whole.
14. The making of the Advances as contemplated by the Agreement
will not violate Regulation G of the Board of Governors of the
Federal Reserve System.
This opinion may be relied upon by you and your successors and
assigns and by any participant in the Loan.
All capitalized terms used herein, not otherwise defined
herein, shall have the meanings given such terms in the Agreement.
Very truly yours,
------------------------------------
By:
---------------------------------
Washington/Xxxxxxx:6/13/96 6
138
EXHIBIT I-MF
OFFICER'S CERTIFICATE
Reference is made to that certain Credit and Security Agreement
between WASHINGTON MORTGAGE FINANCIAL GROUP, LTD., a Delaware corporation
("Washington"), and WMF/XXXXXXX, XXXXX ASSOCIATES LIMITED, a Delaware
corporation ("Xxxxxxx," Washington and Xxxxxxx are hereinafter collectively
referred to as the "Borrowers"), and RESIDENTIAL FUNDING CORPORATION, a
Delaware corporation (the "Lender"), dated as of June 14, 1996 (as the same may
be amended, modified, supplemented, renewed or restated from time to time, the
"Agreement"). All capitalized terms used herein and all Section numbers given
herein refer to those terms and Sections set forth in the Agreement. This
Officer's Certificate is submitted to the Lender pursuant to Section 6.2(c) of
the Agreement.
The undersigned hereby certifies to the Lender that as of the close of
business on ____________, 19__ ("Statement Date",) and with respect to the
Borrowers and their Subsidiaries on a consolidated basis:
1. As illustrated in the attached calculations supporting this
Officer's Certificate, the Borrowers met the covenants set
forth in Sections 7.6, 7.7, 7.8, 7.9, 7.10, 7.11, 7.12, and
7.13, or if the Borrowers did not meet any of such covenants,
a detailed explanation is attached setting forth the nature
and period of the existence of the Default and the action the
Borrowers have taken, are taking, and propose to take with
respect thereto.
2. No Servicing Contracts have been sold or pledged by the
Borrowers except as permitted under the terms of the
Agreement.
3. No payments in advance of the scheduled maturity date have been made
with respect to any Subordinated Debt. The Borrowers have incurred no
Debt required to be subordinated pursuant to Section 6.10.
4. The Borrowers were in compliance with the applicable HUD, GNMA, and
Investor net worth requirements, and in good standing with VA, HUD,
GNMA, and each Investor.
5. I have reviewed the terms of the Agreement and have made, or caused to
be made under my supervision, a review in reasonable detail of the
transactions and conditions of the Borrowers (and, if applicable,
their Subsidiaries) and such review has not disclosed the existence,
and I have no knowledge of the existence, of any Default or Event of
Default, or if any
Washington/Xxxxxxx:6/13/96
1
139
Default or Event of Default existed or exists, a detailed explanation
is attached specifying the nature and period of the existence of the
Default and the action the Borrowers have taken, are taking and
propose to take with respect thereto.
6. Pursuant to Section 6.2 of the Agreement, enclosed are the financial
statements of the Borrowers as of the Statement Date. The financial
statements for the period ending on the Statement Date fairly present
the financial condition and results of operations of the Borrowers
(and, if applicable, its Subsidiaries) as at the Statement Date.
Dated:
--------------------------------------
WASHINGTON MORTGAGE FINANCIAL GROUP,
LTD., a Delaware corporation
By:
----------------------------------
Its:
---------------------------------
WMF/XXXXXXX, XXXXX ASSOCIATES
LIMITED, a Delaware corporation
By:
----------------------------------
Its:
---------------------------------
Washington/Xxxxxxx:6/13/96
2
140
CALCULATIONS SUPPORTING OFFICER'S CERTIFICATE
Borrowers Names: WASHINGTON MORTGAGE FINANCIAL GROUP, LTD. and
WMF/XXXXXXX, XXXXX ASSOCIATES LIMITED and its
Subsidiaries
Statement Date:
All financial calculations set forth herein are as of the Statement Date.
I. TANGIBLE NET WORTH
Tangible Net Worth of Washington is:
Excess of total assets over total liabilities: $_________
Plus: Loan loss reserves: $_________
Plus: Subordinated Debt not due within one year
of the Statement Date (or any portion
thereof): $_________
Minus: Advances to owners, officers or
Affiliates: $_________
Minus: Investments in Affiliates: $_________
Minus: Assets pledged to secure liabilities
not included in Debt: $_________
Minus: Intangible assets: $_________
Minus: Any other HUD nonacceptable assets: $_________
Minus: Other assets unacceptable to the
Lender: $_________
TANGIBLE NET WORTH $_________
II. ADJUSTED TANGIBLE NET WORTH
A. Adjusted Tangible Net Worth of Washington is:
Tangible Net Worth (from IA above) $_________
Minus: Capitalized excess servicing fees: $_________
Minus: Capitalized servicing rights: $_________
Plus: Deferred taxes arising from capitalized
excess servicing fees and capitalized
servicing rights: $_________
Plus: .005 times Adjusted Servicing Portfolio
(from IIIA below): $_________
ADJUSTED TANGIBLE NET WORTH $_________
B. Requirements of Section 7.7 of the Agreement:
MINIMUM ADJUSTED TANGIBLE NET WORTH OF $15,000,000.
C. COVENANT SATISFIED:______ COVENANT NOT SATISFIED: ______
Washington/Xxxxxxx:6/13/96
3
141
III. ADJUSTED SERVICING PORTFOLIO
A. Adjusted Servicing Portfolio of the Borrowers is:
Servicing Portfolio owned by the Borrowers is: $_________
Minus: The unpaid principal balance of Mortgage Loans:
Past due 60 days or more: $_________
That are Commercial, FNMA DUS,
or FHA co-insured: $_________
Sold with recourse: $_________
For which the Servicing Contracts
are pledged: $_________
Serviced by Borrowers for others under
subservicing arrangements: $_________
ADJUSTED SERVICING PORTFOLIO $_________
B. Requirements of Section 7.10 of the Agreement:
ADJUSTED SERVICING PORTFOLIO OF $3,000,000,000.
C. COVENANT SATISFIED:______ COVENANT NOT SATISFIED:______
IV. DEBT OF THE BORROWERS
Total liabilities $_________
Minus: Loan loss reserves: $_________
of the Statement Date (or any portion
thereof): $_________
Minus: Deferred taxes arising from capitalized
excess servicing fees and capitalized
servicing rights: $_________
DEBT $_________
V. RATIO OF DEBT TO ADJUSTED TANGIBLE NET WORTH
A. The ratio of Debt to Adjusted Tangible Net Worth (IV to
II.A) is: ________to 1
B. Requirements of Section 7.6 of the Agreement:
The ratio of Debt to Adjusted Tangible Net Worth shall not
exceed 15 to 1.
C. COVENANT SATISFIED:_____ COVENANT NOT SATISFIED:_____
VI. LIQUID ASSETS OF THE BORROWERS
Cash $_________
Plus: Funds on deposit in any United States bank $_________
Washington/Xxxxxxx:6/13/96
4
142
Plus: Investment grade commercial paper $_________
Plus: Money market funds $_________
Plus: Marketable securities $_________
Plus: Mortgage Loans and Mortgage-backed Securities
held for sale $_________
Minus: Outstanding liabilities secured by Mortgage Loans
and Mortgage-backed Securities held for sale $_________
LIQUID ASSETS $_________
VII. LIQUIDITY
A. The ratio of Liquid Assets to Adjusted Tangible Net Worth
(V to II) is: ________to 1
B. Requirements of Section 7.8 of the Agreement:
The ratio of Liquid Assets to Adjusted Tangible Net Worth
shall not be less than twenty-five percent (25%).
C. COVENANT SATISFIED:_____ COVENANT NOT SATISFIED:_____
VIII. MAXIMUM PASS-THROUGHS
A. The aggregate cumulative outstanding amount of advances to or
on behalf of defaulting mortgagors paid or required to have
been paid by the Borrowers on Mortgage Loans and
Mortgage-backed Securities ("Pass-throughs") is:
$_________
B. The ratio of Pass-throughs to Adjusted Tangible Net Worth
(VII.A to II.A) is: __________to 1
C. Requirements of Section 7.9 of the Agreement:
The ratio of Pass-throughs to Adjusted Tangible Net Worth
shall not exceed thirty-five percent (35%).
D. COVENANT SATISFIED:______ COVENANT NOT SATISFIED:_____
IX. DEBT SERVICE COVERAGE RATIO
A. Net income for the previous four quarters: $_________
Plus: Income tax expenses: $_________
Minus: Income taxes paid: $_________
Plus: Depreciation, amortization and other non-cash
deductions: $_________
Minus: Non-cash revenue: $_________
Minus: Dividends and distributions: $_________
Plus: Term Loan/Servicing Facility interest
expenses: $_________
FUNDS FROM OPERATIONS $_________
Washington/Xxxxxxx:6/13/96
5
143
B. Scheduled Term Loan/Servicing Facility principal payment
(following four quarters): $_________
Plus: Term Loan/Servicing Facility interest expenses
(previous four quarters):
$_________
Annual debt payments $_________
C. The ratio of XA to XB is: __________to 1.00
D. Requirements of Section 7.11 of the Agreement:
Permit the Debt Service Coverage Ratio, measured as of the
first day of any fiscal quarter, to be less than 1.50 to
1.00.
E. COVENANT SATISFIED:______ COVENANT NOT SATISFIED: ______
X. DELINQUENCY RATIO
A. Unpaid Principal Balance of Mortgage Loans Serviced that
are:
30 or more days past due: $_________
Foreclosure: $_________
In Bankruptcy: $_________
TOTAL $_________
B. Unpaid Principal Balance of all Mortgage Loans Serviced
by Borrowers: $_________
C. The ratio of XIA to XIB (expressed as a percentage): __________%
D. Requirements of Section 7.12 of the Agreement:
The Delinquency Ratio shall not exceed 10%.
E. COVENANT SATISFIED:_____ COVENANT NOT SATISFIED:_____
XI. TRANSACTIONS WITH AFFILIATES
A. Loans, advances, and extensions of credit made by the
Borrowers to their Affiliates total: $_________
B. Capital contributions made by the Borrowers to their
Affiliates total: $_________
C. Management fees paid to Affiliates during the current
fiscal year total: $_________
D. Transfers, sales, pledges, assignments or other
dispositions of assets made by the Borrowers to their
Affiliates total: $_________
Washington/Xxxxxxx:6/13/96
6
144
E. Requirements of Section 7.13 of the Agreement:
1. No loans, advances or extensions of credit shall be
made by the Borrowers to Affiliates.
COVENANT SATISFIED:_____ COVENANT NOT SATISFIED:_____
2. No capital contributions shall be made by the
Borrowers to any Affiliate.
COVENANT SATISFIED:_____ COVENANT NOT SATISFIED:_____
3. No transfers, sales, pledges assignments or other
dispositions of assets by the Borrowers to
Affiliates.
COVENANT SATISFIED:_____ COVENANT NOT SATISFIED:_____
4. No Management fees shall be paid by the Borrowers
to Affiliates.
COVENANT SATISFIED:_____ COVENANT NOT SATISFIED:_____
Washington/Xxxxxxx:6/13/96
145
EXHIBIT J
SCHEDULE OF EXISTING LINES OF CREDIT
LENDER NAME COMMITMENT AMOUNT EXPIRATION DATE
----------- ----------------- ---------------
Residential Funding Corporation $80 million 5/31/96
Residential Funding Corporation $10 million 6/96
NationsBank $15 million 5/31/96
Sequoia National Bank $500,000 4/01/97
146
EXHIBIT K-1
FORM FOR FUNDING BANK
LETTER AGREEMENT
(Letterhead of the Company)
June 14, 1996
The First National Bank of Chicago
Xxx Xxxxx Xxxxx Xxxxxx
Xxxxxxx, XX 00000
Gentlemen:
The undersigned, WASHINGTON MORTGAGE FINANCIAL GROUP, LTD. (the
"Company"), hereby authorizes The First National Bank of Chicago (the "Funding
Bank") to permit Residential Funding Corporation (the "Lender") to debit and
access information on the Company's accounts held by the Funding Bank as
outlined below. The Company hereby directs and authorizes the Funding Bank to
follow the directions of the Lender in debiting such accounts.
The Company authorizes the Lender to access account information from
time to time for the Company's operating account no.________________________
(the "Operating Account") for the purpose of verifying balance information. In
addition, the Company requests that the Lender, and the Company hereby
authorizes the Lender, to debit the Operating Account to the extent necessary
to cover (a) wires to be initiated by the Lender in accordance with the
Company's instructions as set forth in the Request for Advance for the purposes
permitted in the Credit and Security Agreement (the "Agreement") by and between
the Company and the Lender; and (b) for amounts due and owing to the Lender,
including but not limited to principal, interest and fees.
Upon the termination or expiration of the Agreement, the Company
hereby authorizes the Lender to close the Operating Account and any other
accounts which have been established by the Company and the Lender to
facilitate transactions under the Agreement, and the Company directs the
Funding Bank to follow the directions of the Lender in closing such accounts.
The Company hereby directs and authorizes the Funding Bank to follow all of the
foregoing instructions of the Lender.
Very truly yours,
WASHINGTON MORTGAGE FINANCIAL GROUP,
LTD., a Delaware corporation
By:
------------------------------------
Its:
-----------------------------------
ACKNOWLEDGED AND AGREED THIS
_______DAY OF_____________, 19___.
THE FIRST NATIONAL BANK OF CHICAGO
By:
------------------------------------
Its:
-----------------------------------
Washington/Xxxxxxx:6/13/96
147
EXHIBIT K-2
FORM FOR FUNDING BANK
LETTER AGREEMENT
(Letterhead of the Company)
June 14, 1996
The First National Bank of Chicago
Xxx Xxxxx Xxxxx Xxxxxx
Xxxxxxx, XX 00000
Gentlemen:
The undersigned, WMF/XXXXXXX, XXXXX ASSOCIATES LIMITED (the
"Company"), hereby authorizes The First National Bank of Chicago (the "Funding
Bank") to permit Residential Funding Corporation (the "Lender") to debit and
access information on the Company's accounts held by the Funding Bank as
outlined below. The Company hereby directs and authorizes the Funding Bank to
follow the directions of the Lender in debiting such accounts.
The Company authorizes the Lender to access account information from
time to time for the Company's operating account no.______________________ (the
"Operating Account") for the purpose of verifying balance information. In
addition, the Company requests that the Lender, and the Company hereby
authorizes the Lender, to debit the Operating Account to the extent necessary
to cover (a) wires to be initiated by the Lender in accordance with the
Company's instructions as set forth in the Request for Advance for the purposes
permitted in the Credit and Security Agreement (the "Agreement") by and between
the Company and the Lender; and (b) for amounts due and owing to the Lender,
including but not limited to principal, interest and fees.
Upon the termination or expiration of the Agreement, the Company
hereby authorizes the Lender to close the Operating Account and any other
accounts which have been established by the Company and the Lender to
facilitate transactions under the Agreement, and the Company directs the
Funding Bank to follow the directions of the Lender in closing such accounts.
The Company hereby directs and authorizes the Funding Bank to follow all of the
foregoing instructions of the Lender.
Very truly yours,
WMF/XXXXXXX, XXXXX ASSOCIATES
LIMITED, a Delaware corporation
By:
------------------------------------
Its:
-----------------------------------
ACKNOWLEDGED AND AGREED THIS
_______DAY OF_____________, 19___.
THE FIRST NATIONAL BANK OF CHICAGO
By:
------------------------------------
Its:
-----------------------------------
Washington/Xxxxxxx:6/13/96
148
EXHIBIT L
TERMS OF GUARANTEED OBLIGATIONS
Each Borrower hereby agrees to the following terms with respect to
Advances made by the Lender to the other Borrower:
1. Each Borrower irrevocably, unconditionally and absolutely
guarantees to the Lender the due and prompt payment, and not just the
collectibility, of the principal of, and interest, fees and late charges and
all other indebtedness, if any, on the Advances made to the other Borrower when
due, whether at maturity, by acceleration or otherwise all at the times and
places and at the rates described in, and otherwise according to the terms of
the Notes and the Agreement, whether now existing or hereafter created or
arising.
2. Each Borrower further hereby irrevocably, unconditionally and
absolutely guarantees to the Lender the due and prompt performance by the other
Borrower of all duties, agreements and obligations of the other Borrower
contained in the Notes and the Agreement, and the due and prompt payment of all
costs and expenses incurred, including, without limitation, attorneys' fees,
court costs and all other litigation expenses (including but not limited to
expert witness fees, exhibit preparation, and courier, postage, communication
and document copying expenses), in enforcing the payment and performance of the
Notes and the Agreement from the other Borrower (the payment and performance of
the items set forth in Paragraphs 1 and 2 of this Exhibit M are collectively
referred to as the ("Other Borrower Debt").
3. In the event the other Borrower shall at any time fail to pay the
Lender any Other Borrower Debt when due, whether by acceleration or otherwise,
each Borrower promises to pay such amount to the Lender forthwith, together
with all collection costs and expenses, including, without limitation,
attorneys' fees, court costs and all other litigation expenses (including but
not limited to expert witness fees, exhibit preparation, and courier, postage,
communication and document copying expenses).
4. Each Borrower does hereby (a) agree to any modifications of any
terms or conditions of any Other Borrower Debt and/or to any extensions or
renewals of time of payment or performance by the other Borrower; (b) agree
that it shall not be necessary for the Lender to resort to legal remedies
against the other Borrower, nor to take any action against any other Person
obligated (an "Obligor") on or against any collateral for payment or
performance of the Other Borrower Debt before proceeding against such Borrower;
(c) agree that no release of the other Borrower or any other guarantor or
Obligor, or of any collateral, for the Other Borrower Debt, whether by
operation of law or by any act of the Lender, with or without notice to such
Borrower, shall release such Borrower;
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and (d) waive notice of demand, dishonor, notice of dishonor, protest, and
notice of protest and waive, to the extent permitted by law, all benefit of
valuation, appraisement, and exemptions under the laws of the State of
Minnesota or any other state or territory of the United States.
5. The obligations of each Borrower for the Other Borrower Debt shall
be primary, absolute and unconditional, and shall remain in full force and
effect without regard to, and shall not be impaired or affected by: (a) the
genuineness, validity, regularity or enforceability of, or any amendment or
change in the Agreement or the Notes, or any change in or extension of the
manner, place or terms of payment of, all or any portion of the Other Borrower
Debt; (b) the taking or failure to take any action to enforce the Agreement or
the Notes, or the exercise or failure to exercise any remedy, power or
privilege contained therein or available at law or otherwise, or the waiver by
the Lender of any provisions of the Agreement or the Notes; (c) any impairment,
modification, change, release or limitation in any manner of the liability of
the other Borrower or its estate in bankruptcy, or of any remedy for the
enforcement of the other Borrower's liability, resulting from the operation of
any present or future provision of the bankruptcy laws or any other statute or
regulation, or the dissolution, bankruptcy, insolvency, or reorganization of
the other Borrower; (d) the merger or consolidation of the other Borrower, or
any sale or transfer by the other Borrower of all or part of its assets or
property; (e) any claim such Borrower may have against the other Borrower or
any other Obligor, including any claim of contribution; (f) the release, in
whole or in part, of any other guarantor (if more than one), the other Borrower
or any other Obligor; (g) any other action or circumstance which (with or
without notice to or knowledge of such Borrower) might in any manner or to any
extent vary the risks of such Borrower or otherwise constitute a legal or
equitable discharge or defense, it being understood and agreed by each Borrower
that its obligations for the Other Borrower Debt shall not be discharged except
by the full payment and performance of the Other Borrower Debt.
6. The Lender shall have the right to determine how, when and what
application of payments and credits, if any, whether derived from either
Borrower or from any other source, shall be made on the Obligations and any
other indebtedness owed by either Borrower and/or any other Obligor to the
Lender; provided, that no payments made by either Borrower to the Lender shall
be applied to any Obligations or other indebtedness not then due and payable.
7. The obligations of each Borrower hereunder shall continue to be
effective, or be automatically reinstated, as the case may be, if at any time
the performance or the payment, as the case may be, in whole or in part, of any
of the Other Borrower Debt is rescinded or must otherwise be restored or
returned by the Lender
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(as a preference, fraudulent conveyance or otherwise) upon the insolvency,
bankruptcy, dissolution, liquidation or reorganization of either Borrower or
any other person or upon or as a result of the appointment of a custodian,
receiver, trustee or other officer with similar powers with respect to either
Borrower or any other Person, or any substantial part of its property, or
otherwise, all as though such payments had not been made. If an Event of
Default shall at any time have occurred and be continuing or shall exist and
declaration of default or acceleration under or with respect to the Other
Borrower Debt shall at such time be prevented by reason of the pendency against
either Borrower or any other Person of a case or proceeding under a bankruptcy
or insolvency law, each Borrower agrees that its obligations for the Other
Borrower Debt shall be deemed to have been declared in default or accelerated
with the same effect as if such obligations had been declared in default and
accelerated in accordance with their respective terms and each Borrower shall
forthwith perform or pay, as the case may be, as required hereunder in
accordance with the terms hereunder without further notice or demand.
8. Each Borrower hereby irrevocably waives any claim or other rights
that he may now or hereafter acquire against other Borrower that arises from
the existence, payment, performance or enforcement of such Borrower's
obligations for the Other Borrower Debt, including any right of subrogation,
reimbursement, exoneration or indemnification, any right to participate in any
claim or remedy of the Lender against the other Borrower or any collateral that
the Lender now has or hereafter acquires, whether or not such claim, remedy or
right arises in equity or under contract, statute or common law, including the
right to take or receive from the other Borrower directly or indirectly, in
cash or other property or by set-off or in any manner, payment or security on
account of such claim or other rights. If any amount shall be paid to either
Borrower in violation of the preceding sentence and the Other Borrower Debt
shall not have been paid and performed in full, such amount shall be deemed to
have been paid to such Borrower for the benefit of, and held in trust for, the
Lender and shall forthwith be paid to the Lender to be credited and applied to
the Other Borrower Debt, whether matured or unmatured. Notwithstanding the
blanket waiver of subrogation rights as set forth above, each Borrower hereby
specifically acknowledges that any subrogation rights which it may have against
the other Borrower or any collateral that the Lender now has or hereafter
acquires may be destroyed by a nonjudicial foreclosure of the collateral. This
may give such Borrower a defense to a deficiency judgment against it. Such
Borrower hereby irrevocably waives such defense. Each Borrower acknowledges
that it will receive direct and indirect benefits from the arrangements
contemplated by the Agreement and the Notes and that the waivers set forth in
this Section are knowingly made in contemplation of such benefits.
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9. No postponement or delay on the part of the Lender in the
enforcement of any right with respect to the Obligations of either Borrower,
including, without limitation, the Other Borrower Debt, shall constitute a
waiver of such right and all rights of the Lender hereunder shall be cumulative
and not alternative and shall be in addition to any other rights granted to the
Lender in any other agreement or by law.
10. Any indebtedness of either Borrower now or hereafter held by the
other Borrower is hereby subordinated to the indebtedness of the Borrowers to
the Lender, and such indebtedness of either Borrower to the other Borrower
shall, if the Lender so requests, be collected, enforced and received by the
Borrower to which it is owed as trustee for the Lender and be paid over to the
Lender on account of the indebtedness of the other Borrower to the Lender.
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