MORTGAGE LOAN WAREHOUSING AGREEMENT
THIS MORTGAGE LOAN WAREHOUSING AGREEMENT (the "Agreement") is made as
of the 6th day of March, 1996, by and between EMERGENT MORTGAGE CORP., a
South Carolina corporation (the "Company"), the lenders from time to time party
hereto, their respective successors and assigns (each a "Lender" and
collectively the "Lenders"); and FIRST UNION NATIONAL BANK OF NORTH CAROLINA, a
national banking association, as administrative agent for the Lenders (in such
capacity, the "Administrative Agent").
STATEMENT OF PURPOSE
The Company has requested the Lenders to extend to the Company a
mortgage warehousing line of credit, and the Lenders have agreed to do so on the
terms and subject to the conditions set forth herein. All capitalized terms not
otherwise defined herein are defined in Paragraph 11 hereof.
Now, therefore, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows:
AGREEMENT
1 Revolving Credit Facility and Swing Line Facility.
1(a) Commitments; Regular Lending Limit. Subject to the
conditions set forth herein, the Lenders severally agree that they shall, from
time to time up to and including the Business Day immediately preceding the
Maturity Date, advance and readvance their respective Percentage Shares of loans
(the "Regular Loans" or a "Regular Loan") to the Company in principal amounts
not to exceed, in the aggregate at any one time outstanding (determined after
giving effect to the other transactions contemplated by the Loan Request
pursuant to which said Regular Loan was requested), the lesser of:
(1) The Aggregate Facility Commitment; and
(2) The Collateral Value of the Borrowing Base minus
the aggregate dollar amount of Swing Line Loans outstanding (and not
being repaid by the Regular Loans requested).
1(b) Swing Line Lending Limit. On the terms and subject to the
conditions set forth herein, First Union agrees that it shall, from time to time
up to and including the Business Day immediately preceding the Maturity Date,
make loans (the "Swing Line Loans" or a "Swing Line Loan") to the Company in
principal amounts not to exceed, in the aggregate at any one time outstanding
(determined after giving effect to the other transactions contem-
plated by the Loan Request pursuant to which said Swing Line Loan was
requested), the lesser of:
(1) The Maximum Swing Line Commitment; and
(2) The Collateral Value of the Borrowing Base
minus the aggregate dollar amount of Regular Loans outstand-
ing;
provided, however, that in calculating the availability of Swing Line Loans
under this Paragraph 1(b) at any date, the aggregate amount of Swing Line Loans
outstanding shall not include any Swing Line Loans which will be repaid with
Regular Loans to be advanced on such date in accordance with the terms of this
Agreement.
1(c) Refunding of Swing Line Loans.
(1) Prior to the occurrence of an Event of Default or
Potential Default, Swing Line Loans shall be refunded by the Lenders on
a weekly basis no later than 4:00 p.m. (Charlotte, North Carolina time)
on each Tuesday (or if not a business day, the next business day).
First Union will provide written notice of all amounts owed by the
Lenders by 2:00 p.m. (Charlotte, North Carolina time) on the day such
refunding is to occur. Such refundings shall be made by the Lenders in
accordance with their respective Percentage Shares and shall,
thereafter, be reflected as actual Regular Loans of the Lenders on the
books and records of the Administrative Agent.
(2) Upon demand by FUNB after the occurrence of any
Event of Default or Potential Default, each Lender (other than FUNB)
shall irrevocably and unconditionally purchase from FUNB, without
recourse or warranty (except that such outstanding Swing Line Loans in
fact were made in accordance with the provisions of this Agreement, and
are not subject to any Liens arising out of any act of FUNB), an
undivided interest and participation in the designated Swing Line Loans
then outstanding, by paying to FUNB, in Dollars immediately available
to FUNB an amount equal to such Lender's Percentage Share of such Swing
Line Loans, and thereafter, except as otherwise provided in the second
succeeding sentence, the Lender's respective interests in such Swing
Line Loans, and the remaining interest of FUNB in such Swing Line
Loans, shall in all respects be treated as Regular Loans under this
Agreement, but such Swing Loans shall continue to be evidenced by the
Note which evidences the Swing Line Loans, provided that the obligation
of any Lender to purchase such participation in a Swing Loan shall be
subject to the provisions of Paragraph 1(c)(4). If any Lender does not
pay any amount which it is required to pay to FUNB after giving effect
to the provisions of Paragraph 1(c)(4), FUNB shall be entitled to
recover such amount on demand from such Lender, together with interest
thereon, at the Federal Funds Rate, for each day from the date of such
demand, if made prior to 2:00
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p.m. (Charlotte, North Carolina time) on any Business Day, or, if made
after 2:00 p.m. from the next Business Day following the date of such
demand, until the date such amount is paid to FUNB by such Lender. If
such Lender does not pay such amount forthwith upon FUNB's demand
therefor, and until such time as such Lender makes the required
payment, FUNB shall be deemed to continue to have outstanding a Swing
Loan in the amount of such unpaid participation obligation for all
purposes of this Agreement other than those provisions requiring the
other Lender to purchase a participation therein. FUNB shall upon the
request of such Bank, furnish to such Lender a participation
certificate evidencing the participation purchased by such Lender.
(3) The Company hereby authorizes the Administrative
Agent to charge the Funding Account, the Settlement Account or any
other account (other than escrow or custodial accounts) maintained by
it with the Administrative Agent (up to the amount available therein)
in order to immediately pay First Union the amount of such Swing Line
Loans to the extent amounts received from the Lenders are not
sufficient to repay in full the outstanding Swing Line Loans requested
or required to be refunded. If any portion of any such amount paid to
First Union shall be recovered by or on behalf of the Company from
First Union in bankruptcy or otherwise, the loss of the amount so
recovered shall be ratably shared among all the Lenders in accordance
with their respective Percentage Shares.
(4) Notwithstanding anything contained in this
Agreement to the contrary, no Lender shall be obligated to refund any
Swing Line Loans made by First Union or purchase any participation
therein unless (i) First Union believed in good faith that all
conditions specified in Paragraph 1(b) or Paragraph 4 to the making of
such Swing Line Loans were satisfied at the time such Swing Line Loans
were made, or (ii) such Lender had actual knowledge that any such
condition had not been satisfied and failed to notify First Union in
writing prior to the time First Union made such Swing Line Loan that
First Union was not authorized to make a Swing Line Loan until such
condition had been satisfied, or (iii) the satisfaction of any such
condition that was not satisfied had been waived by the requisite
Lenders in accordance with the provisions of this Agreement, or the
making of such Swing Line Loan in the face of such non-satisfied
condition or conditions had been consented to by the requisite Lenders
in accordance with the provisions of this Agreement.
1(d) [intentionally omitted]
1(e) Interest Rate. All Loans shall bear interest at the
Alternate Base Rate unless the Company elects to have a Regular Loan bear
interest at the Applicable Eurodollar Rate, as permitted herein.
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1(f) Payment of Interest. The Company shall pay to the
Administrative Agent for the benefit of the Lenders interest on Loans
outstanding hereunder from the date disbursed to but not including the date of
payment. Interest on Alternate Rate Loans shall be payable monthly, in arrears,
as provided in Paragraph 2(d) below, and interest on Eurodollar Rate Loans shall
be payable at the end of the applicable Interest Period.
1(g) Conversion and Continuation.
(1) The Company may elect from time to time to
convert Eurodollar Rate Loans to Alternate Rate Loans by giving the
Administrative Agent at least one Business Day's prior irrevocable
notice of such election. Any conversion of Eurodollar Rate Loans may
only be made on the last day of the applicable Interest Period. Subject
to the limitation set forth in the last sentence of Paragraph 2(i)(3)
hereof, the Company may elect from time to time to convert Alternate
Rate Loans to Eurodollar Rate Loans by giving the Administrative Agent
at least three (3) Eurodollar Business Days' prior irrevocable notice
of such election. All such elections shall be made by means of a Loan
Request. No Alternate Rate Loan shall be converted into a Eurodollar
Rate Loan if an Event of Default or Potential Default has occurred and
is continuing on the day occurring three Eurodollar Business Days prior
to the date of the conversion requested by the Company or on the date
of conversion. All or any part of outstanding Loans may be converted as
provided herein, provided that partial conversions shall be in a
minimum principal amount of $1,000,000.00 or whole multiples of
$100,000.00 in excess thereof.
(2) Any Eurodollar Rate Loan may be continued as such
upon the expiration of the Interest Period with respect thereto by the
Company giving the Administrative Agent at least three Eurodollar
Business Days' prior irrevocable notice of such election as set forth
in a Loan Request; provided, however, that no Eurodollar Rate Loan may
be continued as such when any Event of Default or Potential Default has
occurred and is continuing on the day occurring three (3) Eurodollar
Business Days prior to the proposed date of such continuation or on the
date of conversion, but shall be automatically converted to an
Alternate Rate Loan on the last day of the then current Interest Period
applicable thereto, and the Administrative Agent shall notify the
Company promptly that such automatic conversion will occur. If the
Company shall fail to give notice as provided above, the Company shall
be deemed to have elected to convert the affected Eurodollar Rate Loan
to an Alternate Rate Loan on the last day of the relevant Interest
Period.
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2 Miscellaneous Lending Provisions.
2(a) Inability to Determine Rate. If the Administrative Agent
determines (which determination shall be conclusive and binding upon the
Company, provided such determination is made on a reasonable basis) that by
reason of circumstances affecting the London interbank eurodollar market
adequate and reasonable means do not exist for ascertaining the Eurodollar Rate
for any Interest Period, the Administrative Agent shall forthwith give facsimile
notice of such determination, confirmed in writing, to each Lender affected
thereby and to the Company. If such notice is given: (1) no Loan may be funded
as a Eurodollar Rate Loan, (2) any Loan that was to have been converted to a
Eurodollar Rate Loan shall, subject to the provisions hereof, be continued as an
Alternate Rate Loan and (3) any outstanding Eurodollar Rate Loan shall be
converted on the last day of the then current Interest Period with respect
thereto to an Alternate Rate Loan. Until such notice has been withdrawn by the
Administrative Agent, the Company shall not have the right to convert a Loan to
a Eurodollar Rate Loan or fund any Loan as a Eurodollar Rate Loan or to continue
a Eurodollar Rate Loan as such. The Administrative Agent shall withdraw such
notice in the event that the circumstances giving rise thereto no longer exist
and that adequate and reasonable means exist for ascertaining the Eurodollar
Rate, and following withdrawal of such notice by the Administrative Agent, the
Company shall have the right to fund any Loan as a Eurodollar Rate Loan or
convert a Loan to a Eurodollar Rate Loan or to continue a Eurodollar Rate Loan
in accordance with the terms and conditions of this Agreement.
2(b) Illegality. Notwithstanding any other provisions herein,
if any law, regulation, treaty or directive or any change therein or in the
interpretation or application thereof, shall make it unlawful for any Lender to
make or maintain Eurodollar Rate Loans as contemplated by this Agreement, upon
notice from said Lender to the Administrative Agent, the Administrative Agent
shall forthwith give facsimile notice to the Company of such illegality, and
upon giving such notice: (i) the commitment of such Lender to continue
Eurodollar Rate Loans or to convert Alternate Rate Loans to Eurodollar Rate
Loans shall be automatically cancelled and (ii) all Loans then outstanding as
Eurodollar Rate Loans, if any, shall be converted automatically to Alternate
Rate Loans at the end of their respective Interest Periods or within such
earlier period as required by law. In the event of a conversion of any such Loan
prior to the end of its applicable Interest Period, the Company hereby agrees to
promptly pay such Lender, upon demand, the amounts required pursuant to
Paragraph 2(e) below, it being agreed and understood that such conversion shall
constitute a prepayment for all purposes hereof. The provisions hereof shall
survive the termination of this Agreement and the payment of the outstanding
Loans and all other amounts payable hereunder.
2(c) Requirements of Law; Increased Costs. In the event
that any change subsequent to the date hereof in any applicable
law, order, regulation, treaty or directive issued by any central
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bank or other Governmental Authority, or in the governmental or judicial
interpretation or application thereof, or compliance by any Lender with any
request or directive (whether or not having the force of law) by any central
bank or other Governmental Authority:
(1) subjects any Lender to any tax of any kind
whatsoever with respect to this Agreement or any Loans made hereunder,
or change the basis of taxation of payments to any Lender of principal,
fee, interest or any other amount payable hereunder (except for change
in the rate of tax on the overall net income of such Lender);
(2) imposes, modifies or holds applicable any
reserve, capital requirement, special deposit, compulsory loan or
similar requirements against assets held by, or deposits or other
liabilities in or for the account of, advances or loans by, or other
credit extended by, or any other acquisition of funds by, any office of
any Lender which are not otherwise included in the determination of the
Applicable Eurodollar Rate or the Corporate Base Rate or Fed Funds
Rate; or
(3) imposes on a Lender any other condition;
and the result of any of the foregoing is to increase the cost to such
Lender of making, renewing or maintaining any Loan or to reduce any
amount receivable in respect thereof or to reduce the rate of return on
the capital of such Lender or any Person controlling such Lender, then,
in any such case, the Company shall, subject to the provisions hereof
pay to the Administrative Agent for remittance to such Lender, within
15 days (the "15 day period") of written demand made through the
Administrative Agent, any additional amounts necessary to compensate
such Lender for such additional cost or reduced amounts receivable or
rate of return as determined by such Lender with respect to this
Agreement or Loans made hereunder (unless the Company has given written
notice within the 15 day period that such Lender's Maximum Commitment
has been terminated in accordance with the proviso to this Paragraph
2(c)); provided, however, that if any Lender makes any such demand to
the Company, the Company shall have the right upon receipt of such
demand to prepay, in full, all Loans outstanding from such Lender and
all accrued interest thereon, whereupon: (i) the Aggregate Facility
Commitment will be reduced by an amount equal to such Lender's Maximum
Commitment and (ii) all rights and obligations of such Lender will be
deemed to have terminated under this Agreement and all other Credit
Documents and such Lender will no longer be a party hereto or thereto;
provided further, however, that the foregoing will not be effective
unless no Event of Default has occurred and is continuing. If any
Lender becomes entitled to claim any additional amounts pursuant to
this Paragraph 2(c), it shall promptly notify the Company of the event
by reason of which it has become so entitled. A certificate as to any
additional amounts payable pursuant to the foregoing sentence
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containing the calculation thereof in reasonable detail submitted by
such Lender to the Company shall be conclusive in the absence of
manifest error. The provisions hereof shall survive the termination of
this Agreement and payment of the outstanding Loans and all other
amounts payable hereunder.
2(d) Funding. A Lender shall be entitled to fund all or any
portion of the Loans in any manner it may determine in its sole discretion, but
all calculations and transactions hereunder shall be conducted as though such
Lender actually funds all Eurodollar Loans through the purchase in London of
offshore dollar deposits in the amount of the relevant Eurodollar Rate Loan in
maturities corresponding to the applicable Interest Period.
2(e) Funding Indemnification -- Prepayment. In addition to all
other payment obligations hereunder, in the event any Loan which is outstanding
as a Eurodollar Rate Loan is prepaid prior to the last day of the applicable
Interest Period, whether following a voluntary prepayment or a mandatory
prepayment, the Company shall immediately pay to the Lenders holding the
Eurodollar Rate Loans prepaid, through the Administrative Agent, an amount equal
to the excess, if any, of (i) the amount of interest which would have accrued on
the principal amount of the Eurodollar Rate Loan so prepaid to the last day of
the Interest Period for such Eurodollar Rate Loan at the applicable rate of
interest hereunder for such Eurodollar Rate Loan over (ii) the interest
component of the amount the Administrative Agent would have bid in the London
Interbank Market for dollar deposits of leading banks of amounts comparable to
such principal amount repaid and maturities comparable to such period, as
reasonably determined by the Administrative Agent, together with an additional
amount compensating each such Lender for losses and expenses incurred by each
such Lender in connection with such prepayment, including, without limitation,
such as may arise out of a re-employment of funds obtained by such Lender and
from fees payable to terminate the deposits from which such funds were obtained,
such losses, and expenses and the method of calculation thereof being set forth
in reasonable detail and a statement delivered to the Company by each such
Lender. Under no circumstances shall any Lender have any obligation to remit
monies to the Company upon prepayment of any Eurodollar Rate Loan even under
circumstances which do not result in the necessity of the payment by the Company
of any amount hereunder. The provisions hereof shall survive termination of this
Agreement and payment of the outstanding Loans and all amounts payable
hereunder.
2(f) Funding Indemnification -- Default or Failure to Continue
or Convert. In addition to all other payment obligations hereunder, in the event
the Company shall fail to continue or to make a conversion to a Eurodollar Rate
Loan after the Company has given notice thereof as provided in Paragraph 1(g)
above, or if after giving a notice to have the Lenders make Eurodollar Rate
Loans, the Lenders are not obligated to do so due to the existence of an Event
of Default or Potential Default, then the Company shall immediately pay to the
Administrative Agent for the benefit of the
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Lenders an additional amount compensating the Lenders for losses and expenses
incurred by the Lenders in connection with such failure to continue or convert a
Eurodollar Loan, or the occurrence of an Event of Default or Potential Default
including, without limitation, such as may arise out of re-employment of funds
obtained by the Lenders and from fees payable to terminate the deposits from
which such funds were obtained, such losses and expenses and the method of
calculation thereof being set forth in reasonable detail in a statement
delivered to the Company by the Administrative Agent. The provisions hereof
shall survive termination of this Agreement and payment of the outstanding Loans
and all other amounts payable hereunder.
2(g) Use of Proceeds. The proceeds of all Loans shall be
used by the Company for the purpose of originating and acquiring
Eligible Mortgage Loans.
2(h) Note. The obligation of the Company to repay the Regular
Loans shall be evidenced by a note payable to the order of each Lender in the
form attached hereto as Exhibit A-1 and the obligation of the Company to repay
the Swing Line Loans shall be evidenced by a note payable to the order of First
Union in the form attached hereto as Exhibit A-2 (collectively, the "Notes").
2(i) Request For Loans; Making of Loans.
(1) If the Company desires to borrow a Regular Loan
bearing interest at the Alternate Base Rate, the Company shall make a
Loan Request to the Administrative Agent no later than 12:00 noon
(Charlotte, North Carolina time) on the proposed funding date, which
Loan Request shall be forwarded promptly by the Administrative Agent to
the Lenders by facsimile transmission no later than 1:00 p.m.
(Charlotte, North Carolina time) on such date. The Lenders shall make
available the amount of their respective Percentage Shares of the
proposed Regular Loan by crediting the amount thereof in immediately
available, same day funds to the Funding Account no later than 4:00
p.m. (Charlotte, North Carolina time) on such date.
(2) If the Company desires to borrow a Swing Line
Loan, the Company shall make a Loan Request to First Union no later
than 12:00 noon (Charlotte, North Carolina time) on the proposed
funding date and First Union shall make available the amount of the
Swing Line Loan by crediting the amount thereof in immediately
available, same day funds to the Funding Account no later than 4:00
p.m. (Charlotte, North Carolina time) on such date.
(3) If the Company desires to borrow or continue a
Eurodollar Loan or to convert an Alternate Rate Loan to a Eurodollar
Loan as provided in Paragraph 1(g) above, the Company shall make a Loan
Request to the Administrative Agent no later than 12:00 noon
(Charlotte, North Carolina time) on
8
the day occurring at least three (3) Eurodollar Business Days prior to
the date of the borrowing, conversion or continuation requested
therein, which Loan Request shall be forwarded promptly by the
Administrative Agent to the Lenders by facsimile transmission no later
than 1:00 p.m. (Charlotte, North Carolina time) on the date of receipt.
The Lenders shall make available the amount of their respective
Percentage Shares of the proposed Eurodollar Rate Loans by crediting
the amount thereof in immediately available, same day funds to the
Funding Account no later than 2:00 p.m. (Charlotte, North Carolina
time) on the requested funding date. Notwithstanding any provision
hereof to the contrary, the parties agree that the Company may have
only three (3) outstanding Eurodollar Rate Loans at any time and that
each Eurodollar Rate Loan shall be in a minimum principal amount of
$1,000,000.00 or whole multiples of $100,000.00 in excess thereof.
2(j) Interest and Fee Billing and Payment. The Administrative
Agent shall (1) in the case of Alternate Rate Loans on or before the fifth
Business Day of each month, and (2) in the case of Eurodollar Rate Loans, on the
last day of the applicable Interest Period, deliver to the Company an interest
and fee billing for the immediately preceding month or Interest Period, as the
case may be, which billing shall set forth interest accrued and payable on Loans
and fees payable hereunder for such period and which billing shall be payable,
in the case of a billing delivered pursuant to subparagraph (1) above, no later
than the second Business Day following receipt thereof by the Company and, in
the case of a billing delivered pursuant to subparagraph (2) above, on the last
day of the applicable Interest Period.
2(k) Repayment of Principal. Subject to the prepayment
requirements of Paragraph 2(p) below and the required application of proceeds
from the sale or other disposition of Mortgage Loans as provided in the Security
Agreement, the Company shall pay the principal amount of all Alternate Rate
Loans on the Maturity Date and the Company shall pay the principal amount of
each Eurodollar Rate Loan on the last day of the applicable Interest Period
relating thereto.
2(l) Borrowing Base Conformity.
(1) The Company shall cause to be maintained with the
Collateral Agent a Borrowing Base such that the Collateral Value of the
Borrowing Base is not less than, at any date, the sum of the aggregate
dollar amount of outstanding Loans.
(2) The Company shall prepay Loans to the
Administrative Agent on behalf of the Lenders, upon telephonic or
facsimile demand by the Administrative Agent, on any day in the amount
by which the aggregate principal amount of outstanding Loans exceeds
the Collateral Value of the Borrowing Base, said prepayment to be made
on the date on which demand is made by the Administrative Agent if made
prior to 4:00 p.m.
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(Charlotte, North Carolina time) or, if made later than 4:00 p.m.
(Charlotte, North Carolina time), before 9:00 a.m. (Charlotte, North
Carolina time) on the next Business Day.
(3) If at such time as the Company shall be required
to prepay Loans under this Paragraph 2(l) there shall not have occurred
and be continuing an Event of Default or Potential Default hereunder,
in lieu of prepaying the Loans as required, the Company may deliver to
the Collateral Agent additional Eligible Mortgage Loans such that the
Collateral Value of the Borrowing Base, after giving effect to the
inclusion of such Eligible Mortgage Loans in the Borrowing Base, shall
be in compliance with the requirements of subparagraphs (1) and (2)
above.
2(m) Nature and Place of Payments. All payments made on
account of the Obligations shall be made to the Administrative Agent for
distribution to the Lenders and the Administrative Agent is hereby irrevocably
authorized to debit the Settlement Account on account thereof and distribute
amounts held therein as provided in Paragraph 2(q) below on account thereof. All
payments made on account of the Obligations shall be made without setoff or
counterclaim in lawful money of the United States of America in immediately
available same day funds, free and clear of and without deduction for any taxes,
fees or other charges of any nature whatsoever imposed by any taxing authority
and if received by the Administrative Agent by 4:00 p.m. (Charlotte, North
Carolina time) such payment will be credited on the next succeeding Business Day
received. If a payment is received after 4:00 p.m. (Charlotte, North Carolina
time) by the Administrative Agent, such payment will be credited on the second
(2nd) succeeding Business Day and interest thereon shall be payable at the then
applicable rate until credited. All amounts received by the Administrative Agent
on account of the Obligations shall be disbursed by the Administrative Agent to
the applicable Lenders by wire transfer on the date of receipt if received by
the Administrative Agent by the applicable deadline for payment thereof as
specified above, or if received later, on the next succeeding Business Day. If
any payment required to be made by the Company hereunder becomes due and payable
on a day other than a Business Day, the due date thereof shall be extended to
the next succeeding Business Day and interest thereon shall be payable at the
then applicable rate during such extension.
2(n) Post-Maturity Interest. Any Obligations not paid when due
(whether at stated maturity, upon acceleration or otherwise) shall bear interest
from the date due (or from such later date as may be required by applicable law
for the imposition of a late charge) until paid in full at a per annum rate
equal to two percent (2%) above the interest rate otherwise applicable thereto,
or, if such Obligations do not otherwise bear interest, two percent (2%) above
the Alternate Base Rate; provided, however, in no event will such amount exceed
the maximum rate permitted by applicable law.
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2(o) Computations. All computations of interest and fees
payable hereunder shall be based upon a year of 360 days for the actual number
of days elapsed.
2(p) Prepayments.
(1) The Company may voluntarily prepay Loans
hereunder (including an Eurodollar Rate Loan subject to Paragraph 2(e))
in whole or in part at any time.
(2) Loans hereunder are subject to mandatory
prepayment pursuant to Paragraph 2(l) above and, in addition, by
application of proceeds of the sale or other disposition of Collateral
as provided in the Security Agreement.
(3) The Company shall pay in connection with any
prepayment in full of all outstanding Loans in connection with a
termination of this Agreement, all interest accrued but unpaid at the
time of such prepayment concurrently with such prepayment.
2(q) Allocation of Payments Received.
(1) Prior to the occurrence of an Event of Default
and acceleration of all Loans outstanding hereunder or termination of
the commitment of the Lenders to advance Loans hereunder, principal
amounts received by the Administrative Agent shall be allocated (i)
first, to First Union in payment of any Swing Line Loans outstanding
which have not been refunded with Regular Loans, then (ii) next, among
the Lenders on account of the Obligations pro rata in accordance with
their respective Regular Repayment Shares.
(2) Following the occurrence of an Event of Default
and acceleration of all Loans outstanding hereunder or termination of
the commitments of the Lenders to advance Loans hereunder, all amounts
received by the Administrative Agent on account of the Obligations
shall be disbursed by the Administrative Agent as follows:
(i) First, to the payment of reasonable
costs and expenses incurred by the Administrative Agent in the
performance of its duties and enforcement of its rights under
the Credit Documents, including, without limitation, all
reasonable costs and expenses of collection, reasonable
attorneys' fees, court costs and foreclosure expenses;
(ii) Second, to First Union in payment of
any Swing Line Loans outstanding which have not been refunded
with Regular Loans;
(iii) Third, to the Lenders, pro rata in
accordance with their respective Regular Repayment
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Shares, until the outstanding Loans and other Obligations
shall have been paid in full; and
(iv) Fourth, to such Persons as may be legally
entitled thereto.
2(r) Fees. The Company shall pay the following fees:
(1) To the Administrative Agent for the account of
the Lenders: (i) an annual commitment fee, equal to (x) the Aggregate
Facility Commitment in effect for the applicable period minus (y) the
daily average of the aggregate outstanding principal amounts of the
Loans during such period and then multiplying such result by (z)
0.125%, with such fee to be payable quarterly in arrears; provided,
however, that no such fee will be charged for any quarter in which the
daily average of the aggregate outstanding principal amounts of the
Loans exceeds forty percent (40%) of the Aggregate Facility Commitment
and provided further, however, that no such fee will be payable for the
period prior to April 1, 1996; (ii) an annual facility fee, equal to
(y) the Aggregate Facility Commitment multiplied by (z) 0.1% with such
fee being payable prior to the Lenders making the first Loan hereunder
and thereafter, on each anniversary of the date of this Agreement to
the extent, that the Maturity Date has been extended in accordance with
the provisions hereof; and (iii) an monthly wet loan usage fee equal to
(x) the daily average of Wet Advances outstanding during such month
multiplied by (y) 0.75% and divided by (z) 12 with such fee being
payable in arrears. The fee described in clause (i) above will be
shared among the Lenders in proportion to the excess of each Lender's
Maximum Commitment over the daily average of the aggregate principal
balance of the Loans outstanding from such Lender during the quarter
for which the fee is computed. The fee described in clause (ii) above
will be shared among the Lenders in proportion to their respective
Percentage Shares. The fee described in clause (iii) above will be
shared among the Lenders in proportion to the daily average of the
respective Repayment Shares during such month.
(2) To the Administrative Agent for its own account,
such arrangement and administration fees as have been agreed to in
writing by the Company and the Administrative Agent, by agreement of
the Company and the Administrative Agent.
(3) To the Collateral Agent for its own account,
such collateral handling fees as are agreed to in writing by
the Company and the Collateral Agent.
(4) The Company's obligations to pay the fees
referred to in this Paragraph 2(r) shall survive the repayment in full
of the Loans and this Agreement and the other Credit
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Documents will remain in full force and effect until all such fees are
paid in full.
2(s) Foreign Lender Certifications. Each Lender that is not
incorporated under the laws of the United States of America or a state thereof
agrees that it will deliver to the Company and the Administrative Agent (i) two
duly completed copies of United States Internal Revenue Service Form 1001 or
4224 or successor applicable form, as the case may be, or other manner of
certification, establishing that payments of interest hereunder are either not
subject to or totally exempt from United States Federal withholding tax and (ii)
an Internal Revenue Service Form W-8 or W-9 or successor applicable form. Each
such Lender also agrees to deliver to the Company and the Administrative Agent
two further copies of the said Form 1001 or 4224 and Form W-8 or W-9, or
successor applicable forms or other manner of certification, as the case may be,
on or before the date that any such form expires or becomes obsolete or after
the occurrence of any event requiring a change in the most recent form
previously delivered by such Lender to the Company, and such extensions or
renewals thereof as may reasonably be requested by the Company or the
Administrative Agent, unless in any such case an event (including, without
limitation, any change in treaty, law or regulation) has occurred prior to the
date on which any such delivery would otherwise be required which renders all
such forms inapplicable or which would prevent such Lender from duly completing
and delivering any such form with respect to it and such Lender so advises the
Company and the Administrative Agent. Such Lender shall certify (i) in the case
of a Form 1001 or 4224, that it is entitled to receive payments under this
Agreement without deduction or withholding of any United States federal income
taxes and (ii) in the case of a Form W-8 or W-9, that it is entitled to an
exemption from United States backup withholding tax.
3 Security Agreement; Guaranties; Additional Documents.
3(a) Security Agreement and Financing Statements. On or
before the date hereof, the Company shall execute and deliver to
the Administrative Agent and Collateral Agent: (1) a security and
collateral agency agreement in the form of that attached hereto as
Exhibit B (the "Security Agreement"), pursuant to which the Company
shall pledge, assign and grant to the Collateral Agent for the
benefit of the Lenders a perfected, first priority security
interest in and lien upon the Collateral as security for the
Obligations, and (2) such UCC financing statements as the
Collateral Agent may request.
3(b) Parent Guaranties. On or before the date hereof, the
Company shall cause to be executed and delivered to the Administrative Agent by
each of the Parent Guarantors a continuing guaranty substantially in the form of
that attached hereto as Exhibit C-1 (collectively, the "Parent Guaranties").
3(c) Affiliate Guaranty. On or before the date hereof,
the Company shall cause to be executed and delivered to the
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Administrative Agent by CII a continuing guaranty substantially in the form of
that attached hereto as Exhibit C-2 (the "Affiliate Guaranty").
3(d) Further Documents. The Company agrees to execute and
deliver and to cause to be executed and delivered to the Collateral Agent from
time to time such confirmatory and supplementary security agreements, financing
statements and other documents, instruments and agreements as the Collateral
Agent may reasonably request, which are in the Collateral Agent's judgment
necessary or desirable to obtain for the Lenders the benefit of the Credit
Documents and the Collateral.
4 Conditions to Making of Loans.
4(a) First Loan. As conditions precedent to any Lender's
obligation to make the first Loan hereunder:
(1) The Company shall have delivered, or shall have
caused to be delivered, to the Administrative Agent, in form and
substance satisfactory to the Administrative Agent and its counsel,
each of the following (with sufficient copies for each of the Lenders):
(i) A duly executed copy of this Agreement;
(ii) A duly executed copy of the Security
Agreement, of each of the Guaranties and of the
Subordination Agreement;
(iii) Duly executed copies of each of the Notes;
(iv) Duly executed copies of all financing
statements and other documents, instruments and agreements,
properly executed, deemed necessary or appropriate by the
Collateral Agent, in its reasonable discretion, to obtain for
the Collateral Agent on behalf of the Lenders a perfected,
first priority security interest in and lien upon the
Collateral;
(v) Such credit applications, financial
statements, authorizations and such information concerning the
Company or any of the Guarantors or the business, operations
and conditions (financial and otherwise) of the Company or any
of the Guarantors as any Lender may reasonably request;
(vi) Certified copies of resolutions of the Board
of Directors of each of the Company and the Guarantors
approving the execution and delivery of the Credit Documents
to which such Person is a party, the performance of the
Obligations and any other obligations thereunder and the
consummation of the transactions contemplated thereby;
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(vii) A certificate of the Secretary or an
Assistant Secretary of each of the Company and the Guarantors
certifying the names and true signatures of the officers of
such Person authorized to execute and deliver the Credit
Documents to which such Person is a party;
(viii) A copy of the Articles of Incorporation of
each of the Company and the Guarantors, certified by the
respective Secretary or an Assistant Secretary of such Person
as of the date of this Agreement as being accurate and
complete;
(ix) A copy of the Bylaws of each of the Company
and the Guarantors, certified by the respective Secretary or
an Assistant Secretary of such Person as of the date of this
Agreement as being accurate and complete;
(x) A certificate (A) of the Secretary of
State of the State of South Carolina, certifying as of a
recent date that the Company is in good standing; (B) of the
Secretary of State of South Carolina, certifying as of a
recent date that EFC is in good standing; (C) of the Secretary
of State of the State of South Carolina, certifying as of a
recent date that EGI is in good standing; and (D) of the
Secretary of State of the State of South Carolina, certifying
as of a recent date that CII is in good standing;
(xi) An opinion of counsel for the Company and
the Guarantors substantially in the form of Exhibit D attached
hereto and covering such other matters as the Administrative
Agent may reasonably request;
(xii) Evidence satisfactory to the
Administrative Agent that each of the Funding Account and
the Settlement Account has been opened;
(xiii) A duly completed Borrowing Base Schedule
dated as of the date of the first Loan hereunder and
certified by the Company to be true in all respects;
(xiv) A Covenant Compliance Certificate
demonstrating in detail satisfactory to the Administrative
Agent and the Lenders that (A) the Company is in compliance
with the covenants set forth in Paragraphs 7(j) and 7(k)
below, (B) EGI is in compliance with the covenants set forth
in Paragraphs 11(l) and 11(m) of the Parent Guaranty to which
EGI is a party, and (C) CII is in compliance with the
covenants set forth in Paragraph 11(l) of the Affiliate
Guaranty; and
15
(xv) A written selection by the Company of
either the Applicable Corporate Base Rate or the Applicable
Fed Funds Rate as the Alternate Base Rate.
(2) All acts and conditions (including, without
limitation, the obtaining of any necessary regulatory approvals and the
making of any required filings, recordings or registrations) required
to be done and performed and to have happened precedent to the
execution, delivery and performance of the Credit Documents and to
constitute the same legal, valid and binding obligations, enforceable
in accordance with their respective terms, shall have been done and
performed and shall have happened in due and strict compliance with all
applicable laws.
(3) All documentation, including, without limitation,
documentation for corporate and legal proceedings in connection with
the transactions contemplated by the Credit Documents shall be
satisfactory in form and substance to the Administrative Agent and its
counsel.
(4) All fees required to be paid on or before the
date hereof pursuant to Paragraph 2(r) above shall have been paid prior
to (or will be paid concurrently with) the making of the first Loan
hereunder.
(5) The Company shall have delivered to the
Administrative Agent a true and complete copy of the CII Management
Agreement duly executed by all parties thereto.
4(b) Ongoing Loans. As conditions precedent to any Lender's
obligation to make any Loan hereunder, including the first Loan and including
the conversion of any Loan to another type of Loan or the continuation of any
Eurodollar Rate Loan after the end of an Interest Period, at and as of the date
of advance, conversion or continuance thereof;
(1) There shall have been delivered to the
Administrative Agent a Loan Request therefor;
(2) The representations and warranties of the Company
and Guarantors contained in the Credit Documents shall be accurate and
complete in all respects as if made on and as of the date of such
advance, conversion or continuance;
(3) There shall not have occurred an Event of
Default or Potential Default;
(4) Following the funding of the requested Loan, (i)
the aggregate principal amount of Loans outstanding will not exceed the
lesser of (a) the Aggregate Facility Commitment and (b) the Collateral
Value of the Borrowing Base, and (ii) the aggregate principal amount of
Loans outstanding advanced by any Lender will not exceed its Maximum
Commitment;
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(5) There shall not have occurred any material
adverse change in the financial condition, assets, nature of assets,
operations or prospects of the Company or the Guarantors from that
represented in this Agreement, the other Credit Documents, or the
documents or information furnished to the Administrative Agent or the
Lenders in connection herewith or therewith; and
(6) The Required Documents for the Mortgage Loan(s)
being funded therewith shall have been received by the Collateral Agent
(except as otherwise provided in subparagraph (n) of the definition of
Eligible Mortgage Loan).
By making a Loan Request to the Administrative Agent hereunder, the Company
shall be deemed to have represented and warranted the accuracy and completeness
of the statements set forth in subparagraphs (b)(2) through (b)(6) above.
5 Representations and Warranties of the Company.
The Company represents and warrants to the Administrative Agent and
each Lender that:
5(a) Financial Condition. The consolidated financial
statements of EGI, dated the Statement Date and the Interim Date, copies of
which have been furnished to the Administrative Agent, are complete and correct
and have been prepared to present fairly, in accordance with GAAP, the financial
condition of EGI and its Subsidiaries (including, without limitation, the
Company) at such dates and the results of the operations and changes in
financial position of EGI and its Subsidiaries (including, without limitation,
the Company) for the fiscal periods then ended.
5(b) No Change. As of the date hereof, there has been no
material adverse change in the business, operations, assets or financial or
other condition of the Company, the Guarantors or any of their Subsidiaries from
that shown on the consolidated financial statements dated as of the Interim Date
referred to in Paragraph 5(a) above.
5(c) Corporate Existence; Compliance with Law. The
Company: (1) is duly organized, validly existing and in good
standing as a corporation under the laws of the State of South
Carolina and is qualified to do business in each jurisdiction where
its ownership of property or conduct of business requires such
qualification and where failure to qualify could have a material
adverse effect on the Company or its property or business or on the
ability of the Company to pay or perform the Obligations, (2) has
the corporate power and authority and the legal right to own and
operate its property and to conduct business in the manner in which
it does and proposes so to do, and (3) is in compliance with all
Requirements of Law and Contractual Obligations including, without
limitation, the federal Consumer Credit Protection Act, the federal
Real Estate Settlement Procedures Act, the federal Equal Credit
17
Opportunity Act, the federal Truth-in-Lending Act, and the regulations
promulgated thereunder, the failure to comply with which could have a material
adverse effect on the business, operations, assets or financial or other
condition of the Company or on the Collateral or the Collateral Value of the
Borrowing Base.
5(d) Corporate Power; Authorization; Enforceable Obligations.
The Company has the corporate power and authority and the legal right to
execute, deliver and perform the Credit Documents and has taken all necessary
corporate action to authorize the execution, delivery and performance of the
Credit Documents. The Credit Documents have been duly executed and delivered on
behalf of the Company and constitute legal, valid and binding obligations of the
Company enforceable against the Company in accordance with their respective
terms, subject to the effect of applicable bankruptcy and other similar laws
affecting the rights of creditors generally and the effect of equitable
principles whether applied in an action at law or a suit in equity.
5(e) No Legal Bar. The execution, delivery and performance of
the Credit Documents, the borrowing hereunder and the use of the proceeds
thereof, will not violate any Requirement of Law or any Contractual Obligation
of the Company the violation of which could have a material adverse effect on
the business, operations, assets or financial or other condition of the Company
or on the Collateral or the Collateral Value of the Borrowing Base or create or
result in the creation of any Lien (except the Lien created by the Security
Agreement) on any assets of the Company.
5(f) No Material Litigation. Except as disclosed on Exhibit E
hereto, no litigation, investigation or proceeding of or before any court,
arbitrator or Governmental Authority is pending or, to the knowledge of the
Company, threatened by or against the Company or against any of its properties
or revenues which is likely to be adversely determined and which, if adversely
determined, is likely to have a material adverse effect on the business,
operations, property or financial or other condition of the Company or on the
Collateral or the Collateral Value of the Borrowing Base.
5(g) Taxes. To the best of the Company's knowledge, all tax
returns that are required to be filed by or on behalf of the Company have been
filed and all taxes shown to be due and payable on said returns or on any
assessments made against the Company or any of its property (other than taxes
which are being contested in good faith by appropriate proceedings and as to
which the Company has established adequate reserves in conformity with GAAP)
have been paid and taxes which unknown to the Company were not paid.
5(h) Investment Company Act. The Company is not an
"investment company" or a company "controlled" by an "investment
company" within the meaning of the Investment Company Act of 1940,
as amended.
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5(i) Federal Reserve Board Regulations. The Company is not
engaged and will not engage, principally or as one of its important activities,
in the business of extending credit for the purpose of "purchasing" or
"carrying" any "margin stock" within the respective meanings of such terms under
Regulation U. No part of the proceeds of any Loan issued hereunder will be used,
directly or indirectly, for "purchasing" or "carrying" "margin stock" as so
defined or for any purpose which violates, or which would be inconsistent with,
the provisions of the Regulations of the Board of Governors of the Federal
Reserve System.
5(j) ERISA. The Company and each of its ERISA Affiliates are
in compliance in all respects with the requirements of ERISA and no Reportable
Event has occurred under any Plan maintained by the Company or any of its ERISA
Affiliates which is likely to result in the termination of such Plan for
purposes of Title IV of ERISA.
5(k) Assets. The Company has good and marketable title to all
property and assets reflected in the financial statements referred to in
Paragraph 5(a) above, except property and assets sold or otherwise disposed of
in the ordinary course of business subsequent to the respective dates thereof.
The Company has no outstanding Liens on any of its properties or assets and
there are no security agreements to which the Company is a party, nor any title
retention agreements, whether in the form of leases or otherwise, of any
personal property except as permitted under Paragraph 7(a) below.
5(l) Securities Acts. The Company has not issued any
unregistered securities in violation of the registration requirements of
Paragraph 5 of the Securities Act of 1933, as amended, or any other law, and is
not violating any rule, regulation or requirement under the Securities Act of
1933, as amended, or the Securities and Exchange Act of 1934, as amended. The
Company is not required to qualify an indenture under the Trust Indenture Act of
1939, as amended, in connection with its execution and delivery of the Note.
5(m) Consents, etc. No consent, approval, authorization of, or
registration, declaration or filing with, any Governmental Authority is required
on the part of the Company in connection with the execution and delivery of the
Credit Documents (other than filings to perfect the security interests granted
by it) or the performance of or compliance with the terms, provisions and
conditions hereof or thereof.
5(n) No Other Warehousing Indebtedness. The Company will have
no other mortgage warehousing Indebtedness other than that shown on Exhibit I
attached hereto, and such mortgage warehousing Indebtedness shown on Exhibit I
attached hereto, together with the Indebtedness evidenced by this Agreement,
shall constitute the sole mortgage warehousing Indebtedness of the Company.
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5(o) Ownership. Schedule II attached hereto and
incorporated herein by reference lists all of the shareholders of
Company as of the effective date of this Agreement.
5(p) Subsidiaries. As of the effective date of this
Agreement, the Company has no Subsidiaries.
6 Affirmative Covenants. The Company hereby covenants and agrees with
the Administrative Agent and each Lender that, as long as any Obligations remain
unpaid or any Lender has any obligation to make Loans hereunder, the Company
shall:
6(a) Financial Statements. Furnish or cause to be
furnished to the Lenders:
(1) Within ninety (90) days after the last day of
each fiscal year of EGI, consolidated and consolidating statements of
income (and, in the case of the consolidated statement, cash flows) for
EGI for such year and consolidated and consolidating balance sheets for
EGI as of the end of such year (with the foregoing consolidating
statements to separately display the income and balance sheet of the
Company in a format reasonably acceptable to the Administrative Agent),
presented fairly in all material respects in accordance with GAAP and
accompanied by an unqualified report of a firm of independent certified
public accountants of nationally recognized standing and including
therewith a copy of any management letter from such certified public
accountants;
(2) Within thirty (30) days after the last day of
each month, (i) unaudited consolidated and consolidating statements of
income (and, in the case of the consolidated statement, cash flows) for
EGI for such month, and unaudited consolidated and consolidating
balance sheets for EGI as of the end of such month (with the foregoing
consolidating statements to separately display the income and balance
sheet of the Company in a format reasonably acceptable to the
Administrative Agent), and (ii) a Covenant Compliance Certificate of an
Authorized Officer of the Company, whose position is executive vice
president or higher, stating that such financial statements are
presented fairly in all material respects and in accordance with GAAP,
subject to year-end audit adjustments, and demonstrating in detail
reasonably satisfactory to the Administrative Agent the Company's
compliance with the financial covenants set forth in Paragraphs 7(j)
and 7(k) below as of and at the end of such month and further
certifying that neither the Company, nor any Affiliate thereof is in
default under the terms and conditions of any agreement evidencing or
securing any Indebtedness of such entity.
20
6(b) Certificates; Reports; Other Information.
(1) Furnish or cause to be furnished to each
Lender:
(i) Within thirty (30) days after the last
day of each calendar month, a Monthly Operating Report;
(ii) Promptly, such additional financial and
other information, including, without limitation, financial
statements of the Company, and information regarding the
Collateral as any Lender may from time to time reasonably
request;
(iii) Promptly, and in any event within five (5)
business days after received, sent or filed by the Company,
(i) copies of any and all forms, reports, supplements or other
documents of any kind filed by the Company or any Affiliate of
the Company with the Securities Commission of the State of
South Carolina; and (ii) copies of all correspondence between
the Securities Commission of the State of South Carolina and
any of the Company or any Affiliate of the Company; and
(iv) Promptly, and in any event within
twenty (20) business days after filed by the Company or any
Affiliate of the Company, copies of any and all forms,
reports, supplements or other documents of any kind filed by
the Company or any Affiliate of the Company with the
Securities and Exchange Commission.
(2) Furnish or cause to be furnished to the
Administrative Agent, no less frequently than monthly, within ten (10)
days after the last day of each calendar month unless otherwise
requested in writing by the Administrative Agent and more frequently at
Administrative Agent's request, a report for such month showing, for
all Eligible Mortgage Loans included in the Borrowing Base during such
month, (i) the current unpaid principal balance of such Eligible
Mortgage Loans, and (ii) the payment status of such Eligible Mortgage
Loans, including information regarding delinquencies of such Eligible
Mortgage Loans as of the end of such month.
6(c) Payment of Indebtedness. Pay or otherwise satisfy at or
before maturity or before it becomes delinquent or accelerated, as the case may
be, all its Indebtedness (including taxes), except Indebtedness being contested
in good faith by appropriate proceedings and for which provision is made to the
satisfaction of the Lenders and the Administrative Agent for the payment thereof
in the event the Company is found to be obligated to pay such Indebtedness and
which Indebtedness is thereupon promptly paid by the Company.
21
6(d) Maintenance of Existence and Properties. Maintain
its corporate existence and obtain and maintain all rights,
privileges, licenses, approvals, franchises, properties and assets
necessary or desirable in the normal conduct of its business,
including but not limited to all approvals with respect to the
Securities and Exchange Commission or the Securities Commission of
the State of South Carolina, and comply with all Contractual
Obligations and Requirements of Law (including, without limitation,
any Requirements of Law under or in connection with ERISA, the
federal Consumer Credit Protection Act, the federal Real Estate
Settlement Procedures Act, the federal Equal Credit Opportunity
Act, the federal Truth-in-Lending Act, and any regulations
promulgated thereunder), except where the failure to so comply is
not likely to have a material adverse effect on the business,
operations, assets or financial or other condition of the Company
or on the Collateral or the Collateral Value of the Borrowing Base.
6(e) Inspection of Property; Books and Records; Audits.
(1) Keep proper books of record and account in which
full, true and correct entries in conformity with GAAP and all
Requirements of Law shall be made of all dealings and transactions in
relation to its business and activities; and
(2) Permit: (i) representatives of any Lender to (A)
visit and inspect any of its properties and examine and make abstracts
from any of its books and records at any reasonable time and as often
as may reasonably be desired by such Lender (but, prior to the
occurrence of an Event of Default, only upon not less than two Business
Days' prior notice), and (B) discuss the business, operations,
properties and financial and other condition of the Company with
officers and employees of the Company, and with its independent
certified public accountants, and (ii) representatives of any Lender to
conduct periodic operational audits of the Company's business and
operations.
6(f) Notices. Promptly give written notice to the
Administrative Agent (which shall promptly transmit a copy of such notice to
each of the Lenders) of:
(1) The occurrence of any Potential Default or
Event of Default known to responsible management personnel of
the Company and the proposed method of cure thereof;
(2) Any litigation or proceeding affecting the
Company, any Guarantor or the Collateral which could have a material
adverse effect on the Collateral, the Collateral Value of the Borrowing
Base or the business, operations, property, or financial or other
condition of the Company or a Guarantor;
22
(3) A material adverse change known to responsible
management personnel of the Company or any Guarantor in the business,
operations, property or financial or other condition of the Company;
and
(4) Any changes in the following senior management
positions of the Company or any Guarantor: President, Chief
Executive Officer, Chief Operating Officer, Chief Financial
Officer, or any Executive Vice President.
6(g) Expenses. Pay all reasonable out-of-pocket costs and
expenses (including fees and disbursements of legal counsel) of (1) the
Administrative Agent and the Collateral Agent: (y) incident to the preparation
and negotiation of the Credit Documents, including with respect to or in
connection with any waiver or amendment thereof or thereto, or (z) associated
with any periodic audits conducted pursuant to Paragraph 6(e)(2)(ii) above, and
(2) of the Administrative Agent, the Collateral Agent and each of the Lenders
incident to the enforcement of payment of the Obligations, whether by judicial
proceedings or otherwise, including, without limitation, in connection with
bankruptcy, insolvency, liquidations reorganization moratorium or other similar
proceedings involving the Company, the Guarantors or a "workout" of the
Obligations. The obligations of the Company and the Guarantors under this
Paragraph 6(g) shall be effective and enforceable whether or not any Loan is
advanced by the Lenders hereunder and shall survive payment of all other
Obligations.
6(h) Credit Documents. Comply with and observe all terms
and conditions of the Credit Documents.
6(i) Insurance. Obtain and maintain insurance with responsible
companies in such amounts and against such risks as are usually carried by
corporations engaged in similar businesses similarly situated, including,
without limitation, errors and omissions coverage in form and substance
acceptable to the Administrative Agent, and will maintain an insurance policy
containing fidelity coverage, and furnish the Administrative Agent on request
full information as to all such insurance, and to provide within five (5) days
after receipt, certificates or other documents evidencing the renewal of each
such policy.
6(j) CII Management Agreement. Company with and observe
all terms and conditions of the CII Management Agreement.
6(k) Underwriting Standards. Originate and acquire
Mortgage Loans in accordance with the Company's current
underwriting standards in the form attached hereto as Exhibit N and
incorporated herein by this reference.
7 Negative Covenants. The Company hereby agrees that, as
long as any Obligations remain unpaid or any Lender has any
23
obligation to make Loans hereunder, the Company shall not at any
time, directly or indirectly:
7(a) Liens. Create, incur, assume or suffer to exist, any Lien
upon the Collateral except as contemplated by the Security Agreement, or create,
incur, assume or suffer to exist any Lien upon any of its other property and
assets (including servicing rights) except:
(1) Liens for current taxes, assessments or other
governmental charges which are not delinquent or which remain payable
without penalty, or the validity of which are contested in good faith
by appropriate proceedings upon stay of execution of the enforcement
thereof, provided the Company shall have set aside on its books and
shall maintain adequate reserves for the payment of same in conformity
with GAAP;
(2) Liens, deposits or pledges made to secure
statutory obligations, surety or appeal bonds, or bonds for the release
of attachments or for stay of execution, or to secure the performance
of bids, tenders, contracts (other than for the payment of borrowed
money), leases or for purposes of like general nature in the ordinary
course of the Company's business; and
(3) Purchase money security interests for property
(except Mortgage Loans) hereafter acquired, conditional sale
agreements, or other title retention agreements, with respect to
property hereafter acquired; provided, however, that no such security
interest or agreement shall affect any servicing rights or extend to
any property other than the property acquired.
7(b) Indebtedness. Create, incur, assume or suffer to
exist, or otherwise become or be liable in respect of any Indebt-
edness except:
(1) The Obligations;
(2) CII Subordinated Debt; and
(3) Federal and state taxes payable.
7(c) Consolidation and Merger; Change of Business. Liquidate
or dissolve or enter into any consolidation, merger, partnership, joint venture,
syndicate or other combination or make any change in the nature of its business
as a mortgage banker as currently conducted, or conduct any business other than
a mortgage banking business; provided, however, that the foregoing restrictions
will not be construed to prohibit the Company from entering into customary
correspondent contracts.
24
7(d) Acquisitions. Without the prior consent of the Majority
Lenders (which consent shall not be unreasonably withheld), purchase or acquire
or incur liability for the purchase or acquisition of any or all of the assets
or business of any Person, other than in the normal course of business as
currently conducted.
7(e) Transfer of Stock. Permit the acquisition, purchase,
redemption, retirement, transfer or issuance of any shares of its capital stock
now or hereafter outstanding which would result in EFC or EGI owning less than
one hundred percent (100%) of its outstanding capital stock.
7(f) Subsidiaries. Without the prior consent of the
Majority Lenders (which consent shall not be unreasonably
withheld), organize any Subsidiary other than SPEs.
7(g) Investments; Advances; Guaranties. Make or commit to make
any advance, loan or extension of credit (other than Mortgage Loans made in the
ordinary course of the Company's business) or capital contribution to, or
purchase any stocks, bonds, notes, debentures or other securities of, or make
any other investment in, or guaranty the indebtedness or other obligations of,
any Person; provided, however, that the Company shall be permitted to (i) make
repayments to CII of CII Subordinated Debt, subject, however, to the terms of
the Subordination Agreement, and (ii) guaranty the CI Facility.
7(h) Sale of Assets. Sell, lease, assign, transfer or
otherwise dispose of any of the assets of the Company or its Subsidiaries (other
than obsolete or worn out property), whether now owned or hereafter acquired,
other than in the ordinary course of business as currently conducted and at fair
market value (it being expressly agreed and understood that the sale or other
disposition of Mortgage Loans with or without servicing released and of mortgage
servicing rights is in the ordinary course of business).
7(i) Dividends. Without the prior consent of the Majority
Lenders, during any fiscal quarter, declare and pay any dividends, or return any
capital, to its shareholders or authorize or make any other distribution,
payment or delivery of property or cash to its shareholders as such (except for
payments to CII under the CII Management Agreement), or redeem, retire, purchase
or otherwise acquire, directly or indirectly, for a consideration, any shares of
any class of its capital stock now or hereafter outstanding (or any option or
warrants issued by it for or with respect to its capital stock), or set aside
any funds for any of the foregoing purposes; provided, however, that the Company
shall make no dividend or distribution under this Paragraph 7(i) if, at the time
of or after giving effect to such dividend or distribution, an Event of Default
shall have occurred and be continuing.
25
7(j) Liabilities to Book New Worth Ratio. Permit its ratio
at any date of Adjusted Total Liabilities to Adjusted Net Worth to be
more than 10.0:1.0.
7(k) Minimum Book Net Worth. Permit its Book Net Worth to
be less than the sum of (i) $250,000.00 plus (ii) 100% of all capital
contributions made to the Company on or after the date of this
Agreement.
7(l) Underwriting Standards. Without the prior consent of the
Majority Lenders, alter its current Mortgage Loan origination and underwriting
standards in any material manner from those disclosed to the Lenders and
attached hereto as Exhibit N.
7(m) CII Management Agreement. (i) Except as permitted in the
definition of "CII Management Agreement" in Paragraph 11 hereof, modify the CII
Management Agreement or (ii) without the prior consent of the Majority Lenders,
terminate the CII Management Agreement.
8 Events of Default. Upon the occurrence of any of the
following events (an "Event of Default"):
8(a) The Company shall fail to pay principal or interest on
any loan when due or any amount payable pursuant to Paragraph 2(l)(2) above when
due or any fee payable pursuant to Paragraph 2(r) above within five (5) Business
Days after the due date for such fee; or
8(b) Any representation or warranty made or deemed made by the
Company or any of the Guarantors in any Credit Document or in connection with
any Credit Document shall be inaccurate or incomplete in any respect on or as of
the date made or deemed made; or
8(c) The Company shall fail to maintain its corporate
existence or shall default in the observance or performance of any covenant or
agreement contained in Paragraph 7 above or in the Security Agreement; provided,
however, that the failure of the Company to perform any covenant contained in
Paragraph 7(j) above, shall not constitute an Event of Default hereunder unless
such failure has continued uncured for thirty (30) days; or
8(d) The Company shall fail to observe or perform any other
term or provision contained in the Credit Documents and such failure shall
continue for thirty (30) days after the Company has received notice of such
failure; or
8(e) The Company shall default in any payment of principal of
or interest on any Indebtedness or in any payment of principal or of interest
with respect to Indebtedness owed by the Company to any financial institution,
or any other event shall occur, the effect of which is to permit such
Indebtedness to be declared or otherwise to become due prior to its stated
maturity; or
26
8(f) (1) The Company or any of the Guarantors shall commence
any case, proceeding or other action (i) relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking to have an order for relief entered
with respect to the Company or any of the Guarantors, or seeking to adjudicate
the Company or any of the Guarantors a bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, winding-up, liquidation, dissolution,
composition or other relief with respect to the Company or any of the Guarantors
or the debts of any of them, or (ii) seeking appointment of a receiver, trustee,
custodian or other similar official for the Company or for all or any
substantial part of the Company's assets, or the Company or any of the
Guarantors shall make a general assignment for the benefit of its or their
creditors; or (2) there shall be commenced against the Company or any of the
Guarantors any case, proceeding or other action of a nature referred to in
clause (1) above which (i) results in the entry of an order for relief or any
such adjudication or appointment, or (ii) remains undismissed, undischarged or
unbonded for a period of sixty (60) days; or (3) there shall be commenced
against the Company or any of the Guarantors any case, proceeding or other
action seeking issuance of a warrant of attachment, execution, distraint or
similar process against all or substantially all of the assets of any of them
which results in the entry of an order for any such relief which shall not have
been vacated, discharged, stayed, satisfied or bonded pending appeal within
sixty (60) days from the entry thereof; or (4) the Company or any of the
Guarantors shall take any action in furtherance of, or indicating its or their
consent to, approval of, or acquiescence in (other than in connection with a
final settlement), any of the acts set forth in clauses (1), (2) or (3) above;
or (5) the Company or any of the Guarantors shall generally not, or shall be
unable to, or shall admit in writing its or their inability to pay its or their
debts as they become due; or
8(g) (1) The Company or any of its ERISA Affiliates shall
engage in any "prohibited transaction" (as defined in Section 406 of ERISA or
Section 4975 of the Code) involving any Plan, (2) any "accumulated funding
deficiency" (as defined in Section 302 of ERISA), whether or not waived, shall
exist with respect to any Plan, (3) a Reportable Event shall occur with respect
to, or proceedings shall commence to have a trustee appointed, or a trustee
shall be appointed, to administer or to terminate, any Single Employer Plan,
which Reportable Event or institution of proceedings is, in the reasonable
opinion of the Administrative Agent, likely to result in the termination of such
Plan for purposes of Title IV of ERISA, and, in the case of a Reportable Event,
the continuance of such Reportable Event unremedied for ten days after notice of
such Reportable Event pursuant to Section 4043(a), (c) or (d) of ERISA is given
or the continuance of such proceedings for ten days after commencement thereof,
as the case may be, (4) any Single Employer Plan shall terminate for purposes of
Title IV of ERISA, (5) any withdrawal liability to a Multiemployer Plan shall be
incurred by the Company or any of its ERISA
27
Affiliates or (6) any other event or condition shall occur or exist; and in each
case in clauses (1) through (6) above, such event or condition, together with
all other such events or conditions, if any, is likely to subject the Company or
any of its respective ERISA Affiliates to any tax, penalty or other liabilities
in the aggregate material in relation to the business, operations, property or
financial or other condition of the Company or any of its ERISA Affiliates; or
8(h) One or more judgments or decrees shall be entered against
the Company and all such judgments or decrees shall not have been vacated,
discharged, stayed, satisfied or bonded pending appeal within sixty (60) days
from the entry thereof; or
8(i) Any of the Guarantors shall fail to observe or perform
any term or provision of the Guaranty to which such Guarantor is a party or any
covenant contained in any Guaranty is breached or any of the Guarantors or shall
attempt to rescind or revoke such Guaranty, with respect to future transactions
or otherwise; or
8(j) Any acquisition, purchase, redemption, retirement,
transfer or issuance of the Company's capital stock shall occur in violation of
Paragraph 7(e) above; or
8(k) Any acquisition, purchase, redemption, retirement,
transfer or issuance of the capital stock of EFC or the Company shall occur
which would result in EGI failing to own directly or indirectly one hundred
percent (100%) of the outstanding capital stock of the Company; or
8(l) An event of default shall occur under the CII
Facility; or
8(m) A default or event of default shall occur under any
credit or financing agreement to which any Affiliate of the Company is a party,
any applicable cure period provided for in such credit or financing agreement
shall have lapsed, and such default or event of default shall have continued
uncured for thirty (30) days following the lapse of such cure period, if any
(provided, however, that notwithstanding the foregoing, the occurrence of a
payment default under any such credit or financing agreement shall constitute an
automatic and immediate Event of Default hereunder).
THEN:
(1) Automatically upon the occurrence of an Event of
Default under Paragraph 8(f) above;
(2) At the option of any Lender upon the occurrence
of an Event of Default under Paragraph 8(a) above; and
28
(3) In all other cases, at the option of the Majority
Lenders,
each Lender's obligation to make Loans hereunder shall terminate and the
principal balance of outstanding Loans and interest accrued but unpaid thereon
shall become immediately due and payable, without demand upon or presentment to
the Company, which are expressly waived by the Company. Upon the occurrence of
any Event of Default hereunder, and promptly upon notice by the Administrative
Agent to the other Lenders, if (a) the ratio of the amount of Loans outstanding
held by any Lender to the aggregate amount of Loans outstanding held by all
Lenders at the time of determination exceeds (b) such Lender's Percentage Share,
then each Lender shall purchase or sell, as applicable, for cash and at face
value and without recourse, such participations in the Loans made by the other
Lenders as shall be necessary to cause (x) the ratio of the amount of Loans
outstanding held by any Lender to the aggregate amount of Loans outstanding held
by all Lenders at such date to equal (y) such Lender's Percentage Share;
provided, however, that no Lender will be required to purchase a participation
in a Swing Loan which, by application of Paragraph 1(c)(3), it would not have
been obligated to refund.
9 The Administrative Agent and the Collateral Agent.
9(a) Appointment. Each Lender irrevocably appoints the
Administrative Agent and the Collateral Agent (each, an "Agent") as the agent
for such Lender under the Credit Documents and each such Lender hereby
irrevocably authorizes each Agent as the agent for such Lender, to take such
action on its behalf under the provisions of the Credit Documents and to
exercise such powers and perform such duties as are expressly delegated thereto
by the terms of the Credit Documents, together with such other powers as are
reasonably incidental thereto. No Agent shall have any duties or
responsibilities except those expressly set forth therein, or any fiduciary
relationship with any Lender, and no implied covenants, responsibilities,
obligations or liabilities shall be read into the Credit Documents or otherwise
exist against any Agent.
9(b) Delegation of Duties. Each of the Administrative Agent
and the Collateral Agent may execute any of its duties under the Credit
Documents by or through agents or attorneys-in-fact and shall be entitled to
advice of counsel concerning such duties. Neither the Administrative Agent nor
the Collateral Agent shall be responsible for the negligence or misconduct of
any agents or attorneys-in-fact selected by it with reasonable care.
9(c) Exculpatory Provisions. No Agent nor any of its officers,
directors, employees, agents, counsel, attorneys-in-fact or Affiliates shall be
(1) liable to any Lender, any other Agent, or the Company for any action taken
or omitted to be taken by it or such Person under or in connection with the
Credit Documents (except for its or such Person's own gross negligence or
willful
29
misconduct), or (2) responsible in any manner to any of the Lenders, the other
Agent or the Company for: (i) any recitals, statements, representations or
warranties made by the Company or any officer thereof contained in the Credit
Documents or in any certificate, report, statement or other document referred to
or provided for in, or received by such Agent under or in connection with, the
Credit Documents (except such as are prepared by such Agent and, then, only to
the extent such Agent is responsible for verification of the accuracy and
completeness of the information contained therein or the facts upon which such
information is based as expressly provided herein) or for the value, validity,
effectiveness, genuineness, enforceability, collectability or sufficiency of the
Credit Documents or for any failure of the Company to perform its obligations
thereunder or (ii) any action taken or omitted to be taken by the Collateral
Agent with respect to the Collateral in accordance with written instructions
given as permitted hereunder or (iii) assuring compliance of the Credit
Documents and the transactions contemplated by the Credit Documents with any law
or regulation binding on such Person, it being expressly acknowledged, agreed
and understood that each such Person has obtained independent advice
satisfactory to it in all such respects. No Agent shall be under any obligation
to any Lender to ascertain or to inquire as to the observance or performance of
any of the agreements contained in, or conditions of, the Credit Documents
(other than agreements required to be complied with by such Agent thereunder and
subject to the standards of care set forth herein with respect thereto) or to
inspect the properties, books or records of the Company. Each Agent shall be
entitled to refrain from exercising any discretionary powers or actions under
this Agreement or any other Loan Document until it shall have received the prior
written consent of one hundred percent (100%) of the Lenders to such action.
9(d) Reliance by Agents. Each Agent shall be entitled to rely,
and shall be fully protected in relying, upon any note, writing, resolution,
notice, consent, certification, affidavit, letter, cablegram, telegram,
telecopy, telex or teletype message, statement, order or other document or
conversation believed by it to be genuine and correct and to have been signed,
sent or made by the proper Person or Persons and upon advice and statements of
legal counsel (including, without limitation, counsel to the Company),
independent accountants and other experts selected by such Agent. Each Agent may
deem and treat the payee of any Note as the owner thereof for all purposes
unless a written notice of assignment, negotiation or transfer thereof shall
have been filed with such Agent. Each Agent shall be fully justified in failing
or refusing to take any action under the Credit Documents unless it shall first
receive such advice or concurrence of the Majority Lenders (or all Lenders, as
required under the Credit Documents) or it shall first be indemnified to its
satisfaction by the Lenders against any and all liability and expense which may
be incurred by it by reason of taking or continuing to take any action (other
than liability and expense arising out of such Agent's gross negligence
30
or willful misconduct). Each Agent shall in all cases be fully protected in
acting, or in refraining from acting, under the Credit Documents in accordance
with a request of the Majority Lenders (or all Lenders, if applicable) absent
gross negligence and willful misconduct on the part of such Agent in the method
in which it acts or refrains from acting in accordance therewith, and such
request and any action taken or failure to act pursuant thereto shall be binding
upon all the Lenders.
9(e) Notice of Default; Agreement to Advance. No Agent
shall be deemed to have knowledge or notice of the occurrence of
any Event of Default or Potential Default hereunder unless such
Agent has received notice from a Lender or the Company referring to
the Credit Documents, describing such Event of Default or Potential
Default and stating that such notice is a "notice of default". In
the event that any Agent receives such a notice, such Agent shall
give notice thereof to the Lenders and the other Agent. The
Collateral Agent shall take such action with respect to such Event
of Default or Potential Default as shall be reasonably directed by
the Majority Lenders (or all Lenders, as required under the Credit
Documents), through the Administrative Agent; provided, however,
that unless and until the Collateral Agent shall have received such
directions, the Collateral Agent may (but shall not be obligated
to) take such action or refrain from taking such action (in each
case consistent with the provisions of the Credit Documents), with
respect to such Event of Default or Potential Default as it shall
deem advisable in the best interest of the Lenders.
9(f) Non-Reliance on Agent and Other Lenders. Each
Lender expressly acknowledges that no Agent nor any of its
officers, directors, employees, agents, attorneys-in-fact or
Affiliates has made any representations or warranties to it and
that no act by such Agent hereafter taken, including any review of
the affairs of the Company, shall be deemed to constitute any
representation or warranty by such Agent to any Lender. Each
Lender represents to each Agent that it has, independently and
without reliance upon such Agent or any other Lender or their
respective counsel, and based on such documents and information as
it has deemed appropriate, made its own appraisal of and inves-
tigation into the business, operations, property, financial and
other condition and creditworthiness of the Company and made its
own decision to extend credit hereunder and enter into the Credit
Documents. Each Lender also represents that it will, independently
and without reliance upon any Agent or any other Lender, and based
on such documents, information and legal advice (including, without
limitation, advice of regulatory counsel to it) as it shall deem
appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in entering into the Credit Documents and
taking or not taking action thereunder, and to make such investiga-
tion as it deems necessary to inform itself as to the business,
operations, property, financial and other condition and
creditworthiness of the Company. Except for notices, reports and
other documents expressly required to be furnished to the Lenders
31
by an Agent hereunder, such Agent shall not have any duty or responsibility to
provide any Lender with any legal advice or credit or other information
concerning the business, operations, property, financial and other condition or
creditworthiness of the Company which may come into the possession of such Agent
or any of its officers, directors, employees, agents, attorneys-in-fact or
Affiliates.
9(g) Indemnification. The Company agrees to indemnify, defend
and hold harmless each Agent in its capacity as such and each Lender from and
against any and all claims, obligations, penalties, actions, suits, judgments,
costs, disbursements, losses, liabilities and damages (including, without
limitation, attorneys' fees) of any kind whatsoever which may at any time be
imposed on, assessed against or incurred by such Person in any way (1) relating
to or arising out of the Credit Documents or any documents contemplated by or
referred to therein or the transactions contemplated thereby or any action taken
or omitted to be taken by such Person in connection with the foregoing;
provided, the Company shall not be liable for any portion of any such claims,
obligations, etc., arising out of or resulting from the gross negligence or
willful misconduct of such Person or (2) resulting from any action taken or
omitted to be taken by such Person in accordance with written instructions given
as provided in the Credit Documents or (3) relating to any one or more of the
matters covered by Paragraph 9(c) above. The Lenders agree to indemnify and hold
harmless each Agent in its capacity as such ratably in accordance with their
Percentage Shares to the extent required by the Company hereunder if any Agent
is not reimbursed by the Company hereunder and without limiting the obligation
of the Company to do so. The indemnification obligations of the Company and
Lenders under this Paragraph 9(g) shall survive termination of this Agreement
and payment in full of the Obligations.
9(h) Agent in Its Individual Capacity. Any Agent and its
Affiliates may make loans to, accept deposits from and generally engage in any
kind of business with the Company as though such Agent were not an Agent
hereunder. With respect to such loans made or renewed by them and any note
issued to them hereunder, each Agent shall have the same rights and powers under
the Credit Documents as any Lender hereunder and may exercise the same as though
it were not an Agent, and the terms " Lender" and "Lenders" shall include Agents
in their individual capacities.
9(i) Successor Agents. The Administrative Agent or the
Collateral Agent may resign as such under the Credit Documents upon ninety (90)
days' prior written notice to the other parties hereto. If an Agent shall
resign, then, on or before the effective date of such resignation, the Majority
Lenders shall appoint a successor agent reasonably acceptable to the Company or,
if the Majority Lenders are unable to agree on the appointment of a successor
agent, such Agent shall appoint a successor agent for the Lenders, which
successor agent shall be reasonably acceptable to the
32
Company, whereupon such successor agent shall succeed to the rights, powers and
duties of such Agent, and the term "Collateral Agent" or "Administrative Agent",
as applicable, shall mean such successor agent effective upon its appointment,
and the former Agent's rights, powers and duties shall be terminated without any
other or further act or deed on the part of such former Agent or any of the
parties to this Agreement or any of the other Credit Documents or successors
thereto. After any Agent's resignation hereunder, the provisions of this
Paragraph 9(i) shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was Agent under the Credit Documents.
9(j) Sharing of Set-Offs. If any Lender (a "benefitted
Lender") shall at any time receive any payment of all or part of the Obligations
held by it or receive any collateral in respect thereof (whether voluntarily or
involuntarily, by set-off or otherwise) in a greater proportion than any such
payment to and collateral received by any other Lender, if any, in respect of
such other Lender's portion of the Obligations, or interest thereon, such
benefitted Lender shall purchase for cash from the other Lenders such portion of
each such other Lender's Obligations, or shall provide such other Lenders with
the benefits of such collateral, or the proceeds thereof, as shall be necessary
to cause such benefitted Lender to share the excess payment or benefits of such
collateral or proceeds ratably with each of the Lenders; provided, however, that
if all or any portion of such excess payment or benefits is thereafter recovered
from such benefitted Lender, such purchase shall be rescinded, and the purchase
price and benefits returned, to the extent of such recovery but without
interest. The Company agrees that each Lender so purchasing a portion of another
Obligations may exercise all rights of payment (including, without limitation,
rights of set-off) with respect to such portion as fully as if such Lender were
the direct holder of such portion.
10 Miscellaneous Provisions.
10(a) Assignment. The Company may not assign its rights or
obligations under this Agreement without the prior written consent of 100% of
the Lenders. Subject to the foregoing, all provisions contained in this
Agreement or any document or agreement referred to herein or relating hereto
shall inure to the benefit of the Agents and the Lenders, and their successors
and assigns, and shall be binding upon the Company, its successors and assigns.
10(b) Amendment. This Agreement may be amended by the
Administrative Agent, an assigning Lender and the party accepting the assignment
solely in order to reflect an assignment under Paragraph 10(i) hereof. Except as
set forth in the preceding sentence, neither this Agreement nor any of the other
Credit Documents may be amended or terms or provisions hereof or thereof waived
unless such amendment or waiver is in writing and signed by the Majority Lenders
and the Company; provided, however, that
33
without the prior written consent of one hundred percent (100%) of the Lenders
and the Company, no amendment or waiver shall:
(1) Waive or amend any term or provision of Para-
graphs 2(b), 2(c), 9(g) or 9(j) above or this Paragraph 10(b);
(2) Waive or amend the definitions of Eligible
Mortgage Loan, Unit Collateral Value or Collateral Value of the
Borrowing Base or any defined term used in any of the preceding defined
terms or the provisions of Paragraph 2(l) above;
(3) Reduce the principal of, or rate of interest on,
the Loans or reduce any fees payable hereunder or extend the required
payment dates of any of the Obligations;
(4) Modify the Aggregate Facility Commitment;
(5) Except to the extent permitted by the proviso in
Paragraph 2(c), modify any Lender's Percentage Share of the Aggregate
Facility Commitment or any Lender's Maximum Commitment;
(6) Modify the definition of "Majority Lenders",
"Percentage Share", "Regular Repayment Share" or "Repayment Share";
(7) Extend the Maturity Date;
(8) Release any Collateral except as expressly
permitted under the Credit Documents; or
(9) Modify any provision in the Credit Documents
which expressly requires consent of one hundred percent (100%) of the
Lenders.
In addition, no amendment or waiver shall, unless agreed to in writing by the
Administrative Agent, modify the rights or duties of the Administrative Agent.
It is expressly agreed and understood that the failure by the required Lenders
to elect to accelerate amounts outstanding hereunder or to terminate the
obligation of the Lenders to make Loans hereunder shall not constitute an
amendment or waiver of any term or provision of this Agreement.
10(c) Cumulative Rights; No Waiver. The rights, powers and
remedies of the Administrative Agent and the Lenders under the Credit Documents
are cumulative and in addition to all rights, powers and remedies provided under
any and all agreements among the Company and the Administrative Agent and the
Lenders relating hereto, at law, in equity or otherwise. Any delay or failure by
the Administrative Agent or the Lenders to exercise any right, power or remedy
shall not constitute a waiver thereof by the Administrative Agent and the
Lenders, and no single or partial
34
exercise by the Administrative Agent, and the Lenders of any right, power or
remedy shall preclude other or further exercise thereof or any exercise of any
other rights, powers or remedies.
10(d) Entire Agreement. This Agreement, the other Credit
Documents and the documents and agreements referred to herein or therein embody
the entire agreement and understanding between the parties hereto and supersede
all prior agreements and understandings relating to the subject matter hereof
and thereof.
10(e) Survival. All representations, warranties, covenants and
agreements on the part of the Company contained in the Credit Documents shall
survive the termination of this Agreement and shall be effective until the
Obligations are paid and performed in full or longer as expressly provided
herein.
10(f) Notices. All notices given by any party to the others
under the Credit Documents shall be in writing unless otherwise provided for
herein, delivered personally, by facsimile or by depositing the same in the
United States mail, registered, with postage prepaid, addressed to the party at
the address set forth on Schedule II attached hereto. Any party may change the
address to which notices are to be sent by notice of such change to each other
party given as provided herein. Such notices shall be effective on the date
received or, if mailed, on the third Business Day following the date mailed.
10(g) Governing Law/Waiver of Jury Trial. This Agreement shall
be governed by and construed in accordance with the laws of the State of North
Carolina. TO THE EXTENT PERMITTED BY LAW, THE COMPANY HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN
CONNECTION WITH THE CREDIT DOCUMENTS. THIS PROVISION IS A MATERIAL INDUCEMENT
FOR THE AGENTS AND THE LENDERS ENTERING INTO THE CREDIT DOCUMENTS.
10(h) Sub-Participation by Lenders. Any Lender may at any time
sell a participating interests in any of the Obligations held by such Lender and
its commitments hereunder only with the prior written consent of the
Administrative Agent and, so long as no Event of Default exists and is
continuing, the Company, and provided further that:
(1) No participation which may be permitted under
this Paragraph 10(h) shall relieve such Lender from its obligations
hereunder or under any other Credit Document;
(2) Such Lender shall remain solely responsible for
the performance of such obligations;
(3) The Company, the Administrative Agent, the
Collateral Agent and the other Lenders shall continue to deal
solely and directly with such Lender in connection with such
35
Lender's rights and obligations under the Credit Documents;
and
(4) The participation agreement between such Lender
and the participant (the "Participant") shall provide that the sole
voting rights of the Participant are with respect to those items on
which such Lender is entitled to vote pursuant to Paragraphs 10(b)(2),
10(b)(3), 10(b)(7) and 10(b)(8) above or any vote to amend Paragraph
10(b).
10(i) Assignments by Lenders. Any Lender may assign up to
fifty percent (50%) of such Lender's Maximum Commitment provided that the
minimum amount to be assigned is $5,000,000 and provided, further, however, that
after such assignment such Lender retains a Maximum Commitment of not less than
$5,000,000, subject to the consent of the Company (so long as no Event of
Default exists and is continuing), which consent shall not be unreasonably
withheld, to any other Lender or to any other party not a party to this
Agreement as of the date hereof; provided, however, that the accepting Lender or
other accepting party shall be a financial institution with capital of at least
$250,000,000; except that any Lender may at any time pledge or assign all or any
portion of such Lender's rights under this Agreement and the other Credit
Documents to a Federal Reserve Bank. Any assignment hereunder shall be in form
and content approved by the Administrative Agent which such approval shall not
be unreasonably withheld. Upon any such assignment (i) this Agreement will be
amended by the parties hereto and by the party receiving the assignment to
reflect such assignment, (ii) the Company will deliver an updated Commitment
Schedule to the Administrative Agent and the Lenders reflecting such assignment,
(iii) the outstanding Loans will be reallocated among the Lenders (including the
party receiving the assignment) in accordance with such updated Commitment
Schedule, and (iv) if the party receiving the assignment is not currently a
party to the Agreement, the Company will deliver a Note to such party.
10(j) Addition of New Lender. The Company may at any time
propose that a financial institution become an additional Lender hereunder other
than by assignment of the Maximum Commitment of an existing Lender; provided,
however, that such additional party shall be a financial institution with
capital of at least $250,000,000 and shall be subject to the consent of the
Administrative Agent, which consent shall not be unreasonably withheld. Upon the
addition of any such party as an additional Lender hereunder, (i) this Agreement
will be amended by the parties hereto and by the party becoming an additional
Lender hereunder to reflect the addition of such party as a Lender hereunder,
(ii) the Company will deliver an updated Commitment Schedule to the
Administrative Agent and the Lenders reflecting the addition of such party as a
Lender, (iii) the outstanding Loans will be reallocated among the Lenders
(including the additional Lender) in accordance with such updated
Commitment Schedule, and (iv) the Company will deliver a Note to such party.
36
10(k) Counterparts. This Agreement and the other Credit
Documents (other than the Notes) may be executed in any number of counterparts,
all of which together shall constitute one agreement.
11 Definitions. For purposes of this Agreement, the terms
set forth below shall have the following meanings:
"Additional Required Documents" shall mean for any Mortgage Loan those
items described on Exhibit F attached hereto.
"Administrative Agent" shall have the meaning given such term in the
introductory paragraph hereof.
"Adjusted Net Worth" shall mean, with respect to the Company, the sum
of its Book Net Worth plus the CII Subordinated Debt.
"Adjusted Total Liabilities" shall mean, (i) with respect to the
Company, the Total Liabilities of the Company excluding the CII Subordinated
Debt and, (ii) with respect to EGI, the Total Liabilities of EGI excluding the
CII Investor Obligations.
"Affiliate" shall mean, as to any Person, any other Person directly or
indirectly controlling, controlled by or under direct or indirect common control
with, such Person. "Control" as used herein means the power to direct the
management and policies of such Person.
"Affiliate Guaranty" shall have the meaning given such term in
Paragraph 3(c) above, as such instrument may be amended, extended or replaced
from time to time.
"Aggregate Facility Commitment" shall mean, at any time, the sum of the
Lenders' Maximum Commitments at such time, which sum shall equal $70,000,000.
"Agreement" shall mean this Agreement, as the same may be amended,
extended or replaced from time to time.
"Alternate Base Rate" shall mean either the Applicable Corporate Base
Rate or the Applicable Fed Funds Rate as selected from time to time by a written
notice from the Company to the Administrative Agent, subject however, to the
following conditions: (i) once the Company has selected either the Applicable
Corporate Base Rate or the Applicable Fed Funds Rate as the Alternate Base Rate,
the rate so selected will remain the Alternate Base Rate for all purposes of
this Agreement until the other rate is selected by the Company by giving written
notice of such selection to the Administrative Agent and (ii) the Company may
not elect to change its then selected Alternate Base Rate after the occurrence
and during the continuance of a Potential Default or an Event of Default.
37
"Alternate Rate Loan" shall mean a Loan at such time as it is bearing
interest at the Alternate Base Rate.
"Applicable Corporate Base Rate" shall mean, at any time, the Corporate
Base Rate at such time plus zero percent (0.00%) per annum.
"Applicable Eurodollar Rate" shall mean the rate per annum (rounded
upward, if necessary, to the next higher 1/32 of one percent (.03125%))
calculated in accordance with the following formula on each Business Day:
ER +
Applicable Eurodollar Rate = 1-ERP 2.25%
ER = Eurodollar Rate
ERP = Eurodollar Reserve Percentage
"Applicable Fed Funds Rate" shall mean the Fed Funds Rate plus 2.5% per
annum.
"Approved Investor" shall mean any Person pre-approved in writing
(which pre-approval may be limited in dollar amounts by type and otherwise) by
the Administrative Agent (including those shown on Schedule IV) and which
approval has not been revoked by such Administrative Agent in its sole
discretion (such revocation to be effective on the tenth Business Day following
notice thereof given to the Companies in writing). (It being agreed that
Administrative Agent will promptly notify the Lenders in writing of any
additional Approved Investor or any previous Approved Investor for which
approval has been revoked.)
"Book Net Worth" of any Person shall mean the excess of total assets of
such Person and its consolidated Subsidiaries, as determined in accordance with
GAAP, over Total Liabilities of such Person and its consolidated Subsidiaries.
"Borrowing Base" shall mean at any date all Eligible Mortgage Loans
delivered to and held by the Collateral Agent or otherwise identified as
Collateral under the Security Agreement as collateral security for the
Obligations.
"Borrowing Base Schedule" shall mean a schedule prepared by the
Administrative Agent and certified to by the Company in the form of that
attached hereto as Exhibit G.
"Business Day" shall mean any day other than a Saturday, a Sunday or a
day on which banks in Charlotte, North Carolina are authorized or obligated to
close their regular banking business.
"Capitalized Lease Obligations" of any Person shall mean the
obligations of such Person to pay rent or other amounts under any lease of (or
other arrangement conveying the right to use) real or
38
personal property, or a combination thereof, which obligations are required to
be classified and accounted for as capital leases on a balance sheet of such
Person under GAAP and, for the purposes of this Agreement, the amount of such
obligations at any time shall be the capitalized amount thereof at such time
determined in accordance with GAAP.
"Cash and Cash Equivalents" shall mean (i) negotiable currency and
coins of the United States held by the Company, (ii) balances in non-restricted
bank deposit accounts maintained by or for the benefit of the Company which are
freely accessible by the Company, (iii) securities held by or for the benefit of
the Company which are issued or directly and fully guaranteed or insured by the
United States or any agency or instrumentality thereof (provided that the full
faith and credit of the United States is pledged in support thereof) having
maturities of not more than six (6) months from the date of acquisition, (iv)
time deposits and certificates of deposit of any commercial bank incorporated in
the United States of recognized standing having capital and surplus in excess of
$500,000,000 held by or for the benefit of the Company with maturities of not
more than six months from the date of acquisition by the Company, (v)
investments of the Company in money market funds substantially all the assets of
which are comprised of securities of the types described in clauses (iii) or
(iv) above and (vi) funds which are available to the Company under any revolving
lines of credit.
"Change of Control" shall mean if the persons who are directors of the
Company as of the date hereof (together with those who subsequently become
directors of the Company and whose election, or nomination for election by the
Company's stockholders, is approved by the vote of at least three-quarters of
the directors who were either directors as of the date hereof or directors
elected or nominated to succeed them as herein provided), shall cease to
constitute a majority of the Board of Directors of the Company.
"CII" shall mean Carolina Investors, Inc., a South Carolina
corporation.
"CII Facility" shall mean that certain revolving credit facility
extended by First Union to CII pursuant to the terms of that certain Mortgage
Loan Warehousing Agreement dated as of November 22, 1994 between CII and First
Union and any and all agreements, documents and instruments executed in
connection therewith, as any of such items may be amended, extended or replaced
from time to time.
"CII Investor Obligations" shall mean those obligations of CII to pay
principal and interest to holders of CII's Subordinated Debentures (Series S,
Series T, Series W, Series U, Series V and Series A) and Floating Rate Senior
Notes (Series 90, Series 91, Series 92, Series 93, Series 94, Series 95 and
Series 96) each as listed on page 10 in that certain Prospectus of CII dated
March 1,
39
1995 describing the Series A Subordinated Debentures and the Series 96
Floating Rate Senior Notes, together with those obligations of CII to pay
principal and interest to holders of any similar subordinated debentures or
floating rate senior notes issued by CII subsequent to the above series.
"CII Management Agreement" shall mean that certain Management Agreement
of even date herewith between the Company and CII substantially in the form
attached hereto as Exhibit M as same may be amended from time to time, subject
however, to the consent of the Majority Lenders.
"CII Subordinated Debt" shall mean indebtedness of the Company payable
to CII the repayment of which has been subordinated to the repayment of the
Obligations pursuant to the Subordination Agreement.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Collateral" shall have the meaning given such term in the
Security Agreement.
"Collateral Agent" shall mean First Union National Bank of North
Carolina or such other Person which may be designated as such in accordance with
the terms of the Credit Documents.
"Collateral Value of the Borrowing Base" shall mean at any date the sum
of the Unit Collateral Values of all Eligible Mortgage Loans included in the
Borrowing Base at such date (including Eligible Mortgage Loans shipped to a
permanent investor for purchase pending delivery of the sales proceeds thereof
to the Settlement Account).
"Commonly Controlled Entity" of a Person shall mean a Person, whether
or not incorporated, which is under common control with such Person within the
meaning of Section 414(c) of the Internal Revenue Code.
"Company" shall have the meaning given such term in the introductory
paragraph hereof.
"Contact Office" shall mean the office of the Administrative
Agent at One First Union Center, 000 Xxxxx Xxxxxxx Xxxxxx,
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000.
"Contractual Obligation" as to any Person shall mean any provision of
any security issued by such Person or of any agreement, instrument or
undertaking to which such Person is a party or by which it or any of its
property is bound.
"Corporate Base Rate" shall mean a rate per annum equal to the rate
announced from time to time by the Administrative Agent to be
40
its "Prime Rate" as such "Prime Rate" may change from time to time, said
changes to occur on the first date the "Prime Rate" changes; it being
understood that the "Prime Rate" is the rate announced by the Administrative
Agent from time to time as its "Prime Rate" and is not necessarily the lowest
interest rate charged by the Administrative Agent to its customers.
"Covenant Compliance Certificate" shall mean a certificate in the form
of Exhibit H attached hereto.
"Credit Documents" shall mean this Agreement, the Security Agreement,
the Guaranties, the Note, the Subordination Agreement and each other document,
instrument and agreement executed by the Company or the Guarantors in connection
herewith, as any of the same may be amended, extended or replaced from time to
time.
"EBITDA" shall mean, with respect to EGI for each fiscal quarter, (i)
Net Income for such quarter, plus (ii) the sum of the following to the extent
deducted in the determination of Net Income: (x) Interest, (y) income and
franchise taxes and (z) depreciation and amortization expense, in each case
determined on a consolidated basis and in accordance with GAAP.
"EFC" shall mean Emergent Financial Corporation, a South
Carolina corporation.
"EGI" shall mean Emergent Group, Inc., a South Carolina
corporation.
"Eligible Mortgage Loan" shall mean a Mortgage Loan with respect to
which each of the following statements shall be accurate and complete (and the
Company by confirming the inclusion of such Mortgage Loan in any computation of
the Collateral Value of the Borrowing Base shall be deemed to so represent and
warrant to the Administrative Agent, the Collateral Agent and the Lenders at and
as of the date of such computation):
(a) Said Mortgage Loan is a binding and valid obligation of
the Obligor thereon, in full force and effect and enforceable in accordance with
its terms.
(b) Said Mortgage Loan is genuine in all respects as appearing
on its face and as represented in the books and records of the Company and all
information set forth therein is true and correct.
(c) Said Mortgage Loan is free of any default of any party
thereto (including the Company), other than as expressly permitted pursuant to
subparagraph (d) below, counterclaims, offsets and defenses and from any
rescission, cancellation or avoidance, whether by operation of law or otherwise.
41
(d) No payment under said Mortgage Loan is more than thirty
(30) days (computed as of the last day of the calendar month immediately prior
to the date of determination) past due the payment due date set forth in the
underlying promissory note and deed of trust (or mortgage).
(e) Said Mortgage Loan contains the entire agreement of the
parties thereto with respect to the subject matter thereof, has not been
modified or amended in any respect and is free of concessions or understandings
with the Obligor thereon of any kind not expressed in writing therein.
(f) Said Mortgage Loan is in all respects as required by and
in accordance with all applicable laws and regulations governing the same,
including, without limitation, the federal Consumer Credit Protection Act, the
federal Real Estate Settlement Procedures Act, the federal Equal Credit
Opportunity Act, the federal Truth-in-Lending Act, and the regulations
promulgated thereunder and all applicable usury laws and restrictions, and all
notices, disclosures and other statements or information required by law or
regulation to be given, and any other act required by law or regulation to be
performed, in connection with said Mortgage Loan have been given and performed
as required.
(g) All advance payments and other deposits on said Mortgage
Loan have been paid in cash, and no part of said sums has been loaned, directly
or indirectly, by the Company to the Obligor and there have been no prepayments
on account of said Mortgage Loan, and said Mortgage Loan has been fully
advanced.
(h) At all times said Mortgage Loan will be free and clear of
all Liens, except in favor of the Collateral Agent for the benefit of the
Lenders.
(i) The Property covered by said Mortgage Loan is insured
against loss or damage by fire and all other hazards normally included within
standard extended coverage in accordance with the provisions of said Mortgage
Loan with the Company named as a loss payee thereon.
(j) The Property covered by said Mortgage Loan is free and
clear of all Liens except of the Company subject only to (1) the Lien of current
real property taxes and assessments not yet due and payable; (2) covenants,
conditions and restrictions, rights of way, easements and other matters of the
public record, as of the date of recording, as are acceptable to mortgage
lending institutions generally and specifically referred to in a lender's title
insurance policy delivered to the originator of the Mortgage Loan and (i)
referred to or otherwise considered in the appraisal made for the originator of
the Mortgage Loan or (ii) which do not materially adversely affect the appraised
value of the Property as set forth in such appraisal; (3) other matters to which
like properties are commonly subject which do not materially interfere
42
with the benefits of the security intended to be provided by the Mortgage Loan
or the use, enjoyment, value or marketability of the related Property; (4) Liens
subordinate in priority to the Lien in favor of the Company; and (5) in the case
of second priority Mortgage Loans, one (1) lien superior in priority to the Lien
in favor of the Company.
(k) If said Mortgage Loan has been withdrawn from the
possession of the Collateral Agent and:
(1) If said Mortgage Loan was withdrawn by the
Company for purposes of correcting clerical or other nonsubstantive
documentation problems pursuant to a trust receipt, as permitted under
Paragraph 6 of the Security Agreement, the Unit Collateral Value of
said Mortgage Loan when added to the Unit Collateral Value of other
Mortgage Loans included in the calculation of the Collateral Value of
the Borrowing Base the promissory notes for which have been similarly
withdrawn by the Company does not exceed $3,000,000, and the promissory
note and other documents relating to said Mortgage Loan are returned to
the Collateral Agent within ten (10) calendar days from the date of
withdrawal; and
(2) If said Mortgage Loan was shipped by the
Collateral Agent directly to a permanent investor for purchase, the
full purchase price therefor has been received by the Collateral Agent
(or said Mortgage Loan has been returned to the Collateral Agent)
within twenty-one (21) days from the date of shipment by the Collateral
Agent.
(l) The outstanding principal balance of such Mortgage Loan
does not exceed $200,000; provided, however, that the outstanding principal
balance of any Mortgage Loan may exceed $200,000 so long as (i) the outstanding
principal balance of such Mortgage Loan is not greater than $350,000, and (ii)
the Unit Collateral Value of such Mortgage Loan, when added to the Unit
Collateral Value of all other Mortgage Loans with respect to which the
outstanding principal balance is greater than $200,000, shall not exceed ten
percent (10%) of the Aggregate Facility Commitment.
(m) The Property shall be improved, such improvements to
consist of a completed one-to-four unit single family residence, including, but
not limited to, a condominium, planned unit development or townhouse but
excluding in any event a co-op or mobile home.
(n) There has been delivered to the Collateral Agent the
Required Documents for said Mortgage Loan; provided, however, that a Mortgage
Loan, the Required Documents for which have not been delivered to the Collateral
Agent, may be an Eligible Mortgage Loan and may be included in the Borrowing
Base so long as (i) the Required Documents for such Mortgage Loan shall have
been delivered to the Collateral Agent within seven (7) Business Days of the
43
inclusion of such Mortgage Loan in the Borrowing Base; (ii) the Unit Collateral
Value of said Mortgage Loan when added to the Unit Collateral Value of all other
Mortgage Loans included in the Borrowing Base for which the Required Documents
have not been delivered to the Collateral Agent, does not exceed thirty-five
percent (35%) of the Aggregate Facility Commitment during the first seven (7)
and last five (5) Business Days of any calendar month and does not exceed
fifteen percent (15%) at any other time.
(o) Said Mortgage Loan is not subject to any servicing
arrangement with any Person other than the Company nor are any servicing rights
relating to said Mortgage Loan subject to any Lien, claim, interest or negative
pledge in favor of any Person other than as permitted hereunder.
(p) The Promissory Note evidencing said Mortgage Loan was
dated no more than ninety (90) days prior to its inclusion in the Borrowing
Base.
(q) Said Mortgage Loan has not previously been included in the
Borrowing Base, then shipped to an investor and returned, for whatever reason,
to the Collateral Agent.
(r) The Company obtained an appraisal in connection with the
origination of said Mortgage Loan as would satisfy all appraisal requirements
for said Mortgage Loan if such had been originated by a federally insured
depositary institution.
(s) Said Mortgage Loan is secured by a first or second
priority mortgage or deed of trust on the Property covered thereby; provided,
however, a second priority Mortgage Loan will not be an Eligible Mortgage Loan
if the Unit Collateral Value of such Mortgage Loan when added to the Unit
Collateral Values of all other second priority Mortgage Loans exceeds
twenty-five percent (25%) of the Aggregate Facility Commitment.
(t) Said Mortgage Loan is not a revolving credit
facility;
(u) The proceeds of said Mortgage Loan were used by the
Obligor thereon to purchase the Property and improvements thereon covered
thereby or to refinance a previous loan secured by the Property and improvements
thereon covered thereby, and were not used by the Obligor thereon to construct
the improvements on the Property covered thereby.
(v) No real property taxes or insurance payments due and
payable with respect to the Property (or escrow installments therefor) covered
by said Mortgage Loan are past due the payment due date thereof.
(w) Said Mortgage Loan has not been included in the Borrowing
Base for more than one hundred twenty (120) days.
44
(x) Said Mortgage Loan, in the reasonable judgment of the
Administrative Agent, is otherwise consistent in all respects with traditional
standards imposed by whole loan purchasers, relevant rating agencies and pool
insurers for classification as at least a "B" or "C" Mortgage Loan.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as the same may from time to time be supplemented or amended.
"ERISA Affiliate" shall mean, with respect to any Person, any trade or
business (whether or not incorporated) that is a member of the group of which
such Person is a member and which is treated as a single employer under Section
414 of the Internal Revenue Code of 1986, as amended, and the rules and
regulations thereunder in effect from time to time.
"Eurodollar Business Day" shall mean a Business Day upon which
commercial banks in London, England and New York, New York are open for domestic
and international business (including dealings in United States dollars).
"Eurodollar Rate" shall mean with respect to each Eurodollar, the rate
obtained on page 3750 of Telerate as being the rate at which deposits in
immediately available U.S. dollars having a maturity equal to the applicable
Interest Period for such Eurodollar Loan are offered to or by reference banks in
the London interbank market, as determined by the Administrative Agent at the
opening of business on a two (2) day forward commitment basis.
"Eurodollar Rate Loan" shall mean a Loan at such time as it is bearing
interest at the Applicable Eurodollar Rate.
"Eurodollar Reserve Percentage" shall mean for any day, that percentage
expressed as a decimal, which is in effect on such day, as specified by the
Board of Governors of the Federal Reserve System (or any successor) for
determining the maximum aggregate reserve requirement (including all basis,
supplemental, marginal and other reserves) which is imposed on eurocurrency
liabilities.
"Event of Default" shall have the meaning set forth in
Paragraph 8 above.
"Fair Market Value" shall mean, with respect to any Mortgage Loan, the
market bid price obtainable for such Mortgage Loan, as determined on a
reasonable basis by the Administrative Agent at such time as it shall elect or
as shall be reasonably requested by any Lender.
"Fed Funds Rate" shall mean for any day a fluctuating interest rate per
annum equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers for such day as
45
reported by the Federal Reserve Bank of New York, or if no longer so reported
then as published in Statistical Release H.15 of the Federal Reserve System, or
if such rate is no so published for any week, the average of the quotations for
such day on such transactions received by the Administrative Agent from three
(3) Federal funds brokers of recognized standing selected by the Administrative
Agent.
"First Union" shall mean First Union National Bank of North
Carolina, a national banking association.
"Fixed Charge Ratio" shall mean with respect to EGI for each fiscal
quarter the ratio of (i) the sum of (y) EBITDA for such period reduced by all
non-cash income, including non-cash gains recorded on the sale of loans or
securities during such period plus (z), without duplication, all non-cash
charges of EGI (on a consolidated basis) for such period (including, without
limitation, amortization of loan sale gain), to (ii) Interest of EGI accrued
during such quarter.
"Funding Account" shall mean Account No. 2000000849256 main-
tained in Company's name alone with Administrative Agent at the
Contact Office.
"GAAP" shall mean generally accepted accounting principles in the
United States of America in effect from time to time.
"Governmental Authority" shall mean any nation or governments any state
or other political subdivision thereof, or any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Guaranties" shall mean, collectively, the Parent Guaranties and the
Affiliate Guaranty, and "Guaranty" shall mean any of such instruments, as the
context requires.
"Guarantors" shall mean, collectively, the Parent Guarantors and CII,
and "Guarantor" shall mean any of the foregoing Persons, as the context
requires.
"Indebtedness" of any Person shall mean all items of indebtedness
which, in accordance with GAAP and practices thereof, would be included in
determining liabilities as shown on the liability side of a statement of
condition of such Person as of the date as of which indebtedness is to be
determined, including: without limitation, all obligations for money borrowed
and Capitalized Lease Obligations, and shall also include all indebtedness and
liabilities of others assumed or guaranteed by such Person or in respect of
which such Person is secondarily or contingently liable (other than by
endorsement of instruments in the course of collection) whether by reason of any
agreement to acquire such indebtedness or to supply or advance sums or
otherwise.
46
"Interest" shall mean for any Person the aggregate interest expense of
such Person (calculated without regard to any limitations on the payment
thereof), imputed interest on any Capitalized Lease Obligations, commissions,
discounts and other fees and charges owed with respect to letters of credit and
unused commitments and net costs under interest rate protection agreements, all
determined in conformity with GAAP.
"Interest Period" shall mean with respect to any Eurodollar Rate Loan,
the period commencing on the date advanced and ending one month, two months, or
three months thereafter, as designated in the related Loan Request; provided,
however, that (a) any Interest Period which would otherwise end on a day which
is not a Eurodollar Business Day shall be extended to the next succeeding
Eurodollar Business Day unless by such extension it would fall in another
calendar month, in which case such Interest Period shall end on the immediately
preceding Eurodollar Business Day; (b) any Interest Period applicable to a
Eurodollar Rate Loan which begins on a day for which there is no numerically
corresponding day in the calendar month during which such Interest Period is to
end shall, subject to the provisions of clause (a) hereof, end on the last day
of such calendar month; and (c) no such Interest Period shall extend beyond the
Maturity Date.
"Interim Date" shall mean September 30, 1995.
"Lender" shall have the meaning given such term in the introductory
paragraph hereof.
"Lien" shall mean any security interest, mortgage, pledge, lien, claim
on property, charge or encumbrance (including any conditional sale or other
title retention agreement), any lease in the nature thereof, and the filing of
or agreement to give any financing statement under the Uniform Commercial Code
of any jurisdiction.
"Loan" shall mean either a Regular Loan or a Swing Line Loan and
"Loans" shall mean all Regular Loans and all Swing Line Loans.
"Loan Request" shall mean a request for a Loan conveyed to the
Administrative Agent from a duly authorized officer of the Company substantially
in the form of that attached hereto as Exhibit L, with such request to be
confirmed in writing upon the request of the Administrative Agent.
"Majority Lenders" shall mean (i) prior to the occurrence of an Event
of Default, those Lenders holding sixty-six and two-thirds percent (66 2/3%) of
the Aggregate Facility Commitment; and (ii) after the occurrence and during the
continuance of an Event of Default, those Lenders holding sixty-six and
two-thirds percent (66 2/3%) of the Loans outstanding under the Agreement.
47
"Maturity Date" shall mean the earlier of: (a) the 364th day following
the date of this Agreement, as such date may be extended from time to time in
writing by one hundred percent (100%) of the Lenders, in their sole discretion
and (b) the date the Lenders terminate their obligation to make further Loans
hereunder pursuant to Paragraph 8 above.
"Maximum Commitment" shall mean, with respect to any Lender, the dollar
amount specified as such Lender's "Maximum Commitment" in the Commitment
Schedule attached hereto as Schedule III.
"Maximum Swing Line Commitment" shall mean with respect to First Union,
the lesser of (i) the excess of its Maximum Commitment over its Percentage Share
of all Regular Loans then outstanding and (ii) $10,000,000.
"Monthly Operating Report" shall mean a report with respect to the
Company and CII, collectively, substantially in the form of that attached hereto
as Exhibit K.
"Mortgage Loan" shall mean a residential real estate secured loan,
including, without limitation: (a) a promissory note, any reformation thereof
and related deed of trust (or mortgage) and security agreement; (b) all
guaranties and insurance policies, including, without limitation, all mortgage
and title insurance policies and all fire and extended coverage insurance
policies and rights of the Company to return premiums or payments with respect
thereto; and (c) all right, title and interest of the Company in the Property
covered by said deed of trust (or mortgage).
"Multiemployer Plan" shall mean, as to the Company or any of its ERISA
Affiliates, a Plan of such Person which is a multi-employer plan as defined in
Section 4001(a)(3) of ERISA.
"Net Income" shall mean, with respect to EGI for any period, any net
earnings (or net loss) of EGI for such period determined in accordance with GAAP
on a consolidated basis.
"Notes" shall mean have the meaning given such term in Paragraph 2(h)
hereof.
"Obligations" shall mean any and all debts, obligations and liabilities
of the Company to the Lenders, the Administrative Agent or the Collateral Agent
(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 Credit Documents.
"Obligor" shall mean the Person or Persons obligated to pay the
Indebtedness which is the subject of a Mortgage Loan.
48
"Parent Guaranties" shall have the meaning given such term in Paragraph
3(b) above, as both or either of such instruments may be amended, extended or
replaced from time to time, and "Parent Guaranty" shall mean either of such
instruments, as the context requires.
"Parent Guarantors" shall mean, collectively, EFC and EGI, and "Parent
Guarantor" shall mean either of the foregoing Persons, as the context requires.
"Participant" shall have the meaning given such term in Paragraph 10(h)
above.
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA and any successor thereto.
"Percentage Share" shall mean, with respect to each Lender, the ratio
expressed as a percentage which (a) such Lender's Maximum Commitment bears to
(b) the Aggregate Facility Commitment.
"Person" shall mean any corporation, natural person, firm, joint
venture, partnerships, trust, unincorporated organization or Governmental
Authority.
"Plan" shall mean, as the Company or any of its ERISA Affiliates, any
pension plan that is covered by Title IV of ERISA and in respect of which such
Person or a Commonly Controlled Entity of such Person is an "employer" as
defined in Section 3(5) of ERISA.
"Potential Default" shall mean an event which but for the lapse of time
or the giving of notice, or both, would constitute an Event of Default.
"Proceeds" shall mean whatever is receivable or received when
Collateral or proceeds are sold, collected, exchanged or otherwise disposed of,
whether such disposition is voluntary or involuntary, and includes, without
limitation, all rights to payment, including return premiums, with respect to
any insurance relating thereto.
"Property" shall mean the real property, including the improvements
thereon, and the personal property (tangible and intangible) which are
encumbered pursuant to a Mortgage Loan.
"Regular Loan" and "Regular Loans" shall have the meanings given such
terms in Paragraph 1(a) above.
"Regular Repayment Share" shall mean with respect to each Lender, as of
the date of determination thereof, the ratio expressed as a percentage that (i)
the aggregate outstanding principal balance of all Regular Loans held by each
Lender bears to
49
(ii) the aggregate outstanding principal balance of the Regular
Loans held by all Lenders.
"Repayment Share" shall mean with respect to each Lender, as of the
date of determination thereof, the ratio expressed as a percentage that (i) the
aggregate outstanding principal balance of the Loans held by each Lender bears
to (ii) the aggregate outstanding principal balance of the Loans held by all
Lenders.
"Reportable Event" shall mean a reportable event as defined in Title IV
of ERISA, except actions of general applicability by the Secretary of Labor
under Section 110 of ERISA.
"Required Documents" shall mean for any Mortgage Loan those items
described on Exhibit J attached hereto.
"Requirements of Law" shall mean, as to any Person, the Articles or
Certificate of Incorporation and Bylaws or other organizational or governing
documents of such Person, and any law, treaty, rule or regulation, or a final
and binding determination of an arbitrator or a determination of a court or
other Governmental Authority, in each case applicable to or binding upon such
Person or any of its property or to which such Person or any of its property is
subject.
"Security Agreement" shall have the meaning given such term in
Paragraph 3(a) above, as the same may be amended, extended or replaced from time
to time.
"Settlement Account" shall mean Account No. 2000000849298
maintained in the name of the Administrative Agent at the Contact
Office.
"Single Employer Plan" shall mean, as to the Company or any of its
ERISA Affiliates, any Plan of such Person which is not a Multiemployer Plan.
"SPE" shall mean a corporation, grantor trust or other single purpose
entity organized by the Company for the sole purpose of acquiring Mortgage Loans
from the Company and issuing mortgage-backed securities supported by such
Mortgage Loans, the structure of which is consistent with the structure of
similar entities utilized for the issuance of mortgage-backed securities.
"Statement Date" shall mean December 31, 1994.
"Subordination Agreement" shall mean that certain Subordination of Debt
Agreement of even date herewith made by CII for the benefit of the
Administrative Agent and the Lenders.
"Subsidiary" shall mean any corporation, partnership or joint venture
more than fifty percent (50%) of the stock or other ownership interest of which
having by the terms thereof ordinary
50
voting power to elect the board of directors, managers or trustees of such
corporation, partnership or joint venture (irrespective of whether or not at the
time stock of any other class or classes of such corporation, partnership or
joint venture shall have or might have voting power by reason of the happening
of any contingency) shall, at the time as of which any determination is being
made, be owned, either directly or through Subsidiaries.
"Swing Line Loan" and "Swing Line Loans" shall have the meanings given
such terms in Paragraph 1(b) above.
"Tangible Net Worth" shall mean at any date: (1) Book Net Worth, minus
(b) all assets which would be classified as intangible assets under GAAP (except
for purchased and capitalized value of servicing rights and excess servicing
fees), including, without limitation, goodwill (whether representing the excess
cost over book value of assets acquired or otherwise), patents, trademarks,
trade names, copyrights, franchises and deferred charges (including, without
limitation, unamortized debt discount and expense, organization costs and
research and product development costs).
"Total Liabilities" shall mean total liabilities of the Company and its
Subsidiaries determined in accordance with GAAP.
"Unit Collateral Value" shall mean at any time, with respect to each
Eligible Mortgage Loan included in the Borrowing Base, ninety percent (90%) of
the lesser of (i) the unpaid principal balance thereof at such time, and (ii)
the Fair Market Value thereof at such time.
"Wet Advances" shall mean at any time, Loans which at the time of the
funding thereof, the principal balance thereof when added to the principal
balance of all other Loans then outstanding would have exceeded the Unit
Collateral Value of Eligible Mortgage Loans included in the Borrowing Base for
which Required Documents had been received by the Collateral Agent. Wet Advances
shall cease being considered as such when the Required Documents for the
Eligible Mortgage Loans included in the Borrowing Base with respect to such Wet
Advance are received by the Collateral Agent.
51
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and sealed as of the day and year first above written.
EMERGENT MORTGAGE CORP.,
a South Carolina corporation
By_________________________________
Name_______________________________
Title______________________________
FIRST UNION NATIONAL BANK OF
NORTH CAROLINA, a national
banking association, as Lender,
Administrative Agent and
Collateral Agent
By_________________________________
Name_______________________________
Title______________________________
52
LIST OF SCHEDULES AND EXHIBITS
Schedule I Schedule of Addresses
Schedule II Shareholders of Company
Schedule III Commitment Schedule
Schedule IV Schedule of Approved Investors
Exhibit A-1 Form of Promissory Note (Regular Loans)
Exhibit A-2 Form of Promissory Note (Swing Line Loans)
Exhibit B Form of Security and Collateral Agency Agreement
Exhibit C-1 Form of Parent Guaranty
Exhibit C-2 Form of Affiliate Guaranty
Exhibit D Form of Legal Opinion of Counsel for the Company
and the Guarantors
Exhibit E Litigation Schedule
Exhibit F Schedule of Additional Required Documents
Exhibit G Form of Borrowing Base Schedule
Exhibit H Form of Covenant Compliance Certificate
Exhibit I Schedule of Mortgage Warehousing Indebtedness
Exhibit J Schedule of Required Documents
Exhibit K Form of Monthly Operating Report
Exhibit L Form of Loan Request
Exhibit M CII Management Agreement
Exhibit N Underwriting Standards
53
SCHEDULE I
TO
MORTGAGE LOAN WAREHOUSING AGREEMENT
DATED AS OF MARCH 6, 1996
BY AND BETWEEN EMERGENT MORTGAGE CORP.,
FIRST UNION NATIONAL BANK OF NORTH CAROLINA,
AS ADMINISTRATIVE AGENT AND THE LENDERS PARTY THERETO
SCHEDULE OF ADDRESSES
BORROWER:
Emergent Mortgage Corp.
000 Xxxxxx Xxxxxx
Xxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx
BANK:
First Union National Bank of North Carolina
Xxx Xxxxx Xxxxx Xxxxxx, XXXX-0, XX-0
000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Mr. R. Xxxxxx Xxxx
GUARANTORS:
Emergent Financial Corporation
P. O. Xxx 00000
Xxxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxx
Emergent Group, Inc.
Xxxxxxxx Xxxxxxxx, Xxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxx
Carolina Investors, Inc.
000 Xxxxxx Xxxxxx
Xxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx
54
SCHEDULE II
TO
MORTGAGE LOAN WAREHOUSING AGREEMENT
DATED AS OF MARCH 6, 1996
BY AND BETWEEN EMERGENT MORTGAGE CORP.,
FIRST UNION NATIONAL BANK OF NORTH CAROLINA,
AS ADMINISTRATIVE AGENT AND THE LENDERS PARTY THERETO
SHAREHOLDERS OF COMPANY
COMMON VOTING STOCK
Shareholder Number of Shares
Emergent Financial Corporation 1000
TOTAL NUMBER OF SHARES 1000
PREFERRED STOCK
Shareholder Number of Shares
None N/A
TOTAL NUMBER OF SHARES N/A
55
SCHEDULE III
TO
MORTGAGE LOAN WAREHOUSING AGREEMENT
DATED AS OF MARCH 6, 1996
BY AND BETWEEN EMERGENT MORTGAGE CORP.,
FIRST UNION NATIONAL BANK OF NORTH CAROLINA,
AS ADMINISTRATIVE AGENT AND THE LENDERS PARTY THERETO
COMMITMENT SCHEDULE
Lender Maximum Commitment Percentage Share
First Union National $16,000,000 100.00%
Bank of North Carolina
AGGREGATE FACILITY
COMMITMENT $16,000,000 100.00%
56
SCHEDULE IV
TO
MORTGAGE LOAN WAREHOUSING AGREEMENT
DATED AS OF MARCH 6, 1996
BY AND BETWEEN EMERGENT MORTGAGE CORP.,
FIRST UNION NATIONAL BANK OF NORTH CAROLINA,
AS ADMINISTRATIVE AGENT AND THE LENDERS PARTY THERETO
SCHEDULE OF APPROVED INVESTORS
57
EXHIBIT A-1
TO
MORTGAGE LOAN WAREHOUSING AGREEMENT
DATED AS OF MARCH 6, 1996
BY AND BETWEEN EMERGENT MORTGAGE CORP.,
FIRST UNION NATIONAL BANK OF NORTH CAROLINA,
AS ADMINISTRATIVE AGENT AND THE LENDERS PARTY THERETO
FORM OF PROMISSORY NOTE
(REGULAR LOAN)
58
PROMISSORY NOTE
(Regular Loans)
___________, 1996
FOR VALUE RECEIVED, EMERGENT MORTGAGE CORP., a South Carolina
corporation (the "Company"), hereby unconditionally promises to pay to the order
of FIRST UNION NATIONAL BANK OF NORTH CAROLINA ("Lender"), at the office of
FIRST UNION NATIONAL BANK OF NORTH CAROLINA, a national banking association (the
"Administrative Agent"), located at Xxx Xxxxx Xxxxx Xxxxxx, XXXX-0, XX-0, 000
Xxxxx Xxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxx Xxxxxxxx 00000, in lawful money of the
United States and in immediately available funds, on the dates required under
that certain Mortgage Loan Warehousing Agreement dated as of ___________, 1996,
among the Company and the lenders signatory from time to time a party thereto,
including Lender, the Administrative Agent and the Collateral Agent (as the same
may be amended, extended or replaced from time to time, the "Agreement" and with
the capitalized terms not otherwise defined herein used with the meanings given
such terms in the Agreement), the principal amount of Lender's Regular Repayment
Share of each Regular made under the Agreement.
The Company further agrees to pay interest in like money and funds at
the office of the Administrative Agent referred to above, on the unpaid
principal balance hereof from the date advanced until paid in full on the dates
and at the applicable rates set forth in the Agreement. The holder of this Note
is hereby authorized to record the date and amount of Lender's Percentage Share
and Regular Repayment Share of each Regular Loan, the date and amount of each
payment of principal and interest, and applicable interest rates and other
information with respect thereto, on the schedules annexed to and constituting a
part of this Note (or by any analogous method the holder hereof may elect
consistent with its customary practices) and any such recordation shall, absent
manifest error, constitute prima facie evidence of the accuracy of the
information so recorded; provided, however, that the failure to make a notation
of the inaccuracy of any notation shall not limit or otherwise affect the
obligations of the Company under the Credit Documents.
This Note is one of the Notes referred to in, and is entitled to all
the benefits of, the Agreement. Reference is hereby made to the Agreement and to
the Security Agreement for rights and obligations of payment and prepayment,
collateral security, Events of Default and the rights of acceleration of the
maturity hereof upon the occurrence of an Event of Default.
This Note shall be governed by, and construed in accordance with, the
laws of the State of North Carolina, and is being executed and sealed by the
duly authorized officers of the Company as of the day and year first above
written.
EMERGENT MORTGAGE CORP., a South
Carolina corporation
[CORPORATE SEAL]
ATTEST: By:__________________________
Name:________________________
By: ______________________ Title:_______________________
Name:_____________________
Title:____________________
2
EXHIBIT A-2
TO
MORTGAGE LOAN WAREHOUSING AGREEMENT
DATED AS OF MARCH 6, 1996
BY AND BETWEEN EMERGENT MORTGAGE CORP.,
FIRST UNION NATIONAL BANK OF NORTH CAROLINA,
AS ADMINISTRATIVE AGENT AND THE LENDERS PARTY THERETO
FORM OF PROMISSORY NOTE
(SWING LINE LOAN)
59
PROMISSORY NOTE
(Swing Line Loans)
___________, 1996
FOR VALUE RECEIVED, EMERGENT MORTGAGE CORP., a South Carolina
corporation (the "Company"), hereby unconditionally promises to pay to the order
of FIRST UNION NATIONAL BANK OF NORTH CAROLINA ("Lender"), at the office of
FIRST UNION NATIONAL BANK OF NORTH CAROLINA, a national banking association (the
"Administrative Agent"), located at Xxx Xxxxx Xxxxx Xxxxxx, XXXX-0, XX-0, 000
Xxxxx Xxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxx Xxxxxxxx 00000, in lawful money of the
United States and in immediately available funds, on the dates required under
that certain Mortgage Loan Warehousing Agreement dated as of ___________, 1996,
among the Company and the lenders signatory from time to time a party thereto,
including Lender, the Administrative Agent and the Collateral Agent (as the same
may be amended, extended or replaced from time to time, the "Agreement" and with
the capitalized terms not otherwise defined herein used with the meanings given
such terms in the Agreement), the principal amount of each Swing Line Loan made
under the Agreement.
The Company further agrees to pay interest in like money and funds at
the office of the Administrative Agent referred to above, on the unpaid
principal balance hereof from the date advanced until paid in full on the dates
and at the applicable rates set forth in the Agreement. The holder of this Note
is hereby authorized to record the date and amount of each Swing Line Loan, the
date and amount of each payment of principal and interest, and applicable
interest rates and other information with respect thereto, on the schedules
annexed to and constituting a part of this Note (or by any analogous method the
holder hereof may elect consistent with its customary practices) and any such
recordation shall, absent manifest error, constitute prima facie evidence of the
accuracy of the information so recorded; provided, however, that the failure to
make a notation of the inaccuracy of any notation shall not limit or otherwise
affect the obligations of the Company under the Credit Documents.
This Note is one of the Notes referred to in, and is entitled to all
the benefits of, the Agreement. Reference is hereby made to the Agreement and to
the Security Agreement for rights and obligations of payment and prepayment,
collateral security, Events of Default and the rights of acceleration of the
maturity hereof upon the occurrence of an Event of Default.
This Note shall be governed by, and construed in accordance with, the
laws of the State of North Carolina, and is being executed and sealed by the
duly authorized officers of the Company as of the day and year first above
written.
EMERGENT MORTGAGE CORP., a South
Carolina corporation
[CORPORATE SEAL]
ATTEST: By:__________________________
Name:________________________
By: ______________________ Title:_______________________
Name:_____________________
Title:____________________
2
EXHIBIT B
TO
MORTGAGE LOAN WAREHOUSING AGREEMENT
DATED AS OF MARCH 6, 1996
BY AND BETWEEN EMERGENT MORTGAGE CORP.,
FIRST UNION NATIONAL BANK OF NORTH CAROLINA,
AS ADMINISTRATIVE AGENT AND THE LENDERS PARTY THERETO
FORM OF SECURITY AGREEMENT
60
SECURITY AND COLLATERAL AGENCY AGREEMENT
THIS SECURITY AND COLLATERAL AGENCY AGREEMENT (this "Security
Agreement") is made and dated as of the ___ day of ______________, 1996 by and
among EMERGENT MORTGAGE CORP., a South Carolina corporation (the "Company"),
FIRST UNION NATIONAL BANK OF NORTH CAROLINA, a national banking association
("FUNB"), acting in its capacity as administrative agent for the lenders from
time to time participating in the Warehousing Agreement (as defined below) (in
such capacity, the "Administrative Agent"), and FUNB, as collateral agent for
such Lenders (as defined below) (in such capacity, the "Collateral Agent").
RECITALS
A. Pursuant to that certain Mortgage Loan Warehousing Agreement of even
date herewith among the Company, the lenders named therein (the "Lenders"), the
Administrative Agent and the Collateral Agent (as the same may be amended,
extended or replaced from time to time, the "Warehousing Agreement," and with
capitalized terms not otherwise defined herein used with the same meanings as in
the Warehousing Agreement), the Lenders have agreed to extend credit to the
Company on the terms and subject to the conditions set forth therein.
B. As a condition precedent to the effectiveness of the
Warehousing Agreement, the Company is required to execute and
deliver to the Collateral Agent this Security Agreement.
NOW, THEREFORE, in consideration of the above Recitals and for other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto hereby agree as follows:
AGREEMENT
1. Appointment of Collateral Agent. By executing and delivering the
Warehousing Agreement or otherwise becoming a "Lender," the Administrative Agent
and the Lenders hereby appoint the Collateral Agent to act as secured party,
agent, bailee and custodian for the benefit of the Lenders, with respect to the
Collateral (as defined below). The Collateral Agent hereby accepts such
appointment and agrees to maintain and hold all Collateral at any time delivered
to it as secured party, agent, bailee and custodian for the benefit of the
Lenders. The Collateral Agent is acting and will act with respect to the
Collateral for the benefit of the Lenders and is not, and shall not at any time
in the future be, subject with respect to the Collateral, in any manner or to
any extent, to the direction or control of the Company except as expressly
permitted hereunder and under the other Credit Documents. The Collateral Agent
agrees to act in accordance with this Security
Agreement and in accordance with any written instructions properly delivered
pursuant hereto. Under no circumstances shall the Collateral Agent deliver
possession of Collateral to the Company except in accordance with the express
terms of this Security Agreement.
2. Delivery of Collateral. The Company shall deliver to the Collateral
Agent, or cause to be delivered to the Collateral Agent, that portion of the
Collateral consisting of Mortgage Loans to be included in the computation of the
Collateral Value of the Borrowing Base. Delivery of Collateral consisting of
Mortgage Loans shall be effected by delivery of the Required Documents therefor.
The Collateral Agent's responsibility to review such Collateral is limited to
the review steps described on Exhibit 1 hereto, said review of Collateral
delivered on any Business Day to be completed before the opening of business of
the Collateral Agent on the next succeeding Business Day; provided, however,
that in the event the Company delivers Collateral to the Lender on any Business
Day in an amount which exceeds the Collateral Agent's reasonable capacity to
review such Collateral before the opening of business of the Collateral Agent on
the next succeeding Business Day, the Collateral Agent shall not be obligated to
review such Collateral before the opening of business of the Collateral Agent on
the next succeeding Business Day but shall use its best efforts to do so. No
Collateral will be included in the computation of the Collateral Value of the
Borrowing Base until the Collateral Agent's review thereof has been completed.
All Mortgage Loans at any time delivered to the Collateral Agent hereunder shall
be held by the Collateral Agent in a fire resistant vault, drawer or other
suitable depositary maintained and controlled solely by the Collateral Agent,
conspicuously marked to show the respective interests of the Lenders therein and
not commingled with any other assets or property of, or held by, the Collateral
Agent.
3. Grant of Security Interest. The Company hereby pledges, assigns and
grants to the Collateral Agent for the benefit of the Lenders, a first perfected
security interest in the property described in Paragraph 4 below (collectively
and severally, the "Collateral"), to secure payment and performance of the
Obligations.
4. Collateral. The Collateral shall consist of all now
existing and hereafter arising right, title and interest of the
Company in, under and to each of the following:
(a) All Mortgage Loans now owned or hereafter acquired or
originated by the Company and identified as collateral under the Warehousing
Agreement or otherwise intended by the Company to serve as collateral under the
Warehousing Agreement, including, without limitation, the promissory notes or
other instruments or agreements evidencing the indebtedness of Obligors thereon,
all mortgages, deeds to secure debt, trust deeds and security agreements related
2
thereto, all rights to payment thereunder, all rights in the Properties securing
payment of the indebtedness of the Obligors thereon, all rights under documents
related thereto, such as guaranties and insurance policies (issued by
governmental agencies or otherwise), including, without limitation, mortgage and
title insurance policies, fire and extended coverage insurance policies
(including the right to any return premiums) and all rights in cash deposits
consisting of impounds, insurance premiums or other funds held on account
thereof;
(b) All rights of the Company (but not its obligations) under
any agreements to sell such Collateral, now existing or hereafter arising,
covering any part of the foregoing Collateral, all rights to deliver Mortgage
Loans to investors and other purchasers pursuant thereto and all proceeds
resulting from the disposition of such Collateral pursuant thereto;
(c) All now existing and hereafter arising rights to service,
administer and collect Mortgage Loans included in the computation of the
Collateral Value of the Borrowing Base at any date (it being acknowledged and
agreed that prior to the occurrence of an Event of Default and acceleration of
the Obligations, the security interest in such servicing rights granted
hereunder shall be automatically terminated without need for further action upon
the sale, transfer or other disposition of the related Mortgage Loan in
accordance with the provisions of the Credit Documents), and all rights to the
payment of money on account of such servicing, administration and collection
activities;
(d) All now existing and hereafter arising accounts,
contract rights and general intangibles constituting or relating to
any of the foregoing Collateral;
(e) All now existing and hereafter acquired files, documents,
instruments, surveys, certificates, correspondence, appraisals, computer
programs, tapes, discs, cards, accounting records and other books, records,
information and data of the Company relating to the foregoing Collateral
(including all information, records, data, programs, tapes, discs, and cards
necessary or helpful in the administration or servicing of the foregoing
Collateral);
(f) The Funding Account, the Settlement Account and any
and all funds at any time held in any such accounts; and
(g) All products and Proceeds of the foregoing Collater-
al.
5. Collateral Agent's Review of Collateral. Each delivery
of Mortgage Loans to the Collateral Agent shall be accompanied by
a certificate substantially in the form attached as Exhibit 6
hereto (the "Delivery Certificate"). Upon any receipt of Required
3
Documents for any Mortgage Loan, the Collateral Agent shall review the same and
verify that:
(a) All Required Documents relating to such item of
Collateral appear regular on their face and are in the Collateral
Agent's possession; and
(b) The statements set forth on Exhibit 1 hereto are
accurate and complete in all respects.
Such verification for Collateral delivered shall be set forth in the schedule
referred to in Paragraph 6(b) below. If the Collateral Agent notes any exception
in the review described in sub- paragraph (a) or (b) above or questions, in its
reasonable discretion, the genuineness, regularity, propriety, or accuracy of
any item of Collateral, the Collateral Agent shall so note in the next such
schedule delivered to the Lenders. In the event that the Company had been
requested to deliver the Additional Required Documents with respect to any
Mortgage Loan, the Collateral Agent shall review and verify such Additional
Required Documents consistent with the obligations of the Collateral Agent
above.
6. Collateral Value Determination.
(a) No later than 1:00 p.m. (Charlotte, North Carolina time)
on each Business Day (i) on which any Collateral is delivered to the Collateral
Agent by the Company, or (ii) on which any Collateral is released by the
Collateral Agent pursuant to Paragraph 6 below, the Collateral Agent shall
compute the Collateral Value of the Borrowing Base (a "Collateral Value
Determination") as of 1:00 p.m. on such Business Day and notify the
Administrative Agent thereof.
(b) No later than 1:00 p.m. (Charlotte, North Carolina time)
on each Business Day, the Collateral Agent shall prepare and deliver to the
Company via facsimile a schedule showing the composition of the Borrowing Base
as of such time. The Company shall certify as to the accuracy of such schedule
and shall return such schedule, with such certification attached, to the
Collateral Agent via facsimile no later than 1:30 p.m. (Charlotte, North
Carolina time) on each such Business Day.
7. Handling of Collateral; Settlement Account.
(a) Prior to the occurrence of an Event of Default, from time
to time until otherwise notified by the Majority Lenders (by telephone,
telegraph or otherwise), the Collateral Agent is hereby authorized to release
documentation relating to Mortgage Loans to the Company against a trust receipt
executed by the Company in the form of Exhibit 2 hereto. The Company and the
Collateral Agent will comply with the trust receipt procedures specified on
Exhibit 3 hereto. The Company hereby represents and warrants that any request by
the Company for release of Collateral under this
4
subparagraph (a) shall be solely for the purposes of correcting clerical or
other non-substantial documentation problems in preparation of returning such
Collateral to the Collateral Agent for ultimate sale or exchange and that the
Company has requested such release in compliance with all terms and conditions
of such release set forth herein and in the Warehousing Agreement, including,
without limitation, subparagraph (k)(1) of the definition of Eligible Mortgage
Loan.
(b) Prior to the occurrence of an Event of Default, upon
delivery by the Company to the Collateral Agent of a shipping request in the
form of that attached hereto as Exhibit 4, the Collateral Agent will transmit
Mortgage Loans held by it as directed by the Company to an investor in
connection with the sale thereof, or to a custodian or trustee in connection
with the formation of a mortgage pool supporting a mortgage-backed security,
such transmittal to be under cover of a transmittal letter in the form of that
attached hereto as Exhibit 5 (or such other form as may be required under any
government program pursuant to which the relevant Mortgage Loans are being
shipped or such mortgage-backed security is being issued).
In no event shall the Collateral Agent have any obligation to obtain written
acknowledgement of receipt from the addressee of any transmittal letter or other
communication sent by the Collateral Agent hereunder.
(c) All amounts payable on account of the sale of Mortgage
Loans (including, but not limited to a sale pursuant to a repurchase agreement)
will be instructed to be paid directly by the purchaser to the Settlement
Account. Pursuant to Paragraph 3 above the Company has granted a security
interest in and lien upon the Settlement Account and in any and all amounts at
any time held therein to the Collateral Agent as collateral security for the
Obligations. The Collateral Agent shall hold such security interest in and lien
upon the accounts referred to in Paragraph 4(f) above and all funds at any time
held therein for the benefit of the Lenders with all rights of a secured party
under the Uniform Commercial Code of all relevant jurisdictions.
(d) Prior to the occurrence of an Event of Default, the
Collateral Agent shall take such steps as it may be reasonably directed from
time to time by the Company in writing which are not inconsistent with the
provisions of this Security Agreement and the other Credit Documents and which
the Company deems necessary to enable the Company to perform and comply with
agreements for the sale or other disposition in whole or in part of Mortgage
Loans.
(e) Prior to the occurrence of an Event of Default and
acceleration of the Obligations and if, but only if, such action is not
inconsistent with the express provisions of this Security Agreement and the
other Credit Documents and would not create an Event of Default or Potential
Default, the Company may, in
5
connection with its residential mortgage banking business: originate, acquire
and service Mortgage Loans; receive payments on Mortgage Loans from the Obligors
thereon and impounds and fees in connection therewith; retain, use and apply
fees and payments made on account of the Mortgage Loans by the Obligors
thereunder; disburse from impound accounts; in the ordinary course of the
Company's business, create, use, destroy and transfer records, files and other
items described in Paragraph 4(f) above; sell or otherwise dispose of Mortgage
Loans not included in the computation of the Collateral Value of the Borrowing
Base, with or without servicing rights; pledge Mortgage Loans to the extent
permitted under the Credit Documents; sell servicing rights; and enter into,
exercise rights under, perform, modify, waive and cancel any agreements for the
sale or other disposition of Mortgage Loans.
(f) Following the occurrence of an Event of Default, the
Collateral Agent shall not, and shall incur no liability to the Company or any
other Person for refusing to, deliver any item of Collateral to the Company or
any other Person (other than under existing agreements for sale of such
Collateral) without the express prior written consent and at the direction of
the Majority Lenders.
8. Report. The Collateral Agent shall deliver to the Company and the
Lenders: (a) on or before the tenth day of each month, a copy of the most recent
Borrowing Base Schedule certified by the Company pursuant to Paragraph 6(b)
hereof, and (b) from time to time, such other reports and information as the
Majority Lenders may from time to time reasonably request. In preparing any such
reports the Collateral Agent shall be entitled to rely, without independent
investigation (other than the review steps described on Exhibit 1 hereto), on
information supplied to the Collateral Agent by the Company.
9. No Reliance. The Collateral Agent shall not be responsible to any
Lender for any recitals, statements, representations or warranties contained
herein or in any other document; or for the execution, effectiveness,
genuineness, validity, enforceability, collectability, accuracy, completeness or
sufficiency of this Security Agreement or any other documents or instruments
executed and delivered, or which could have been executed or delivered, in
connection with this Security Agreement including, without limitation, the
attachment, creation, effectiveness or perfection of the security interests
granted or purported to be granted hereunder in and to the Collateral. The
Collateral Agent shall be entitled to refrain from exercising any discretionary
powers or actions under this Security Agreement or any other related document
until the Collateral Agent shall have received the prior written consent of one
hundred percent (100%) of the Lenders.
10. Costs and Expenses. The Collateral Agent shall notify
the Company of all extraordinary costs and expenses (including,
without limitation, expenses of legal counsel to the Collateral
6
Agent) of the Collateral Agent directly relating to the Collateral Agent's
performance of this Security Agreement, and such extraordinary costs and
expenses shall be paid promptly by the Company or, if already paid by the
Collateral Agent, the Company promptly shall reimburse the Collateral Agent
therefor.
11. Availability of Documents. The Lenders and their agents,
accountants, attorneys and auditors will be permitted during normal business
hours at any time and from time to time upon reasonable notice to examine (to
the extent permitted by applicable law) the files, documents, records and other
papers in the possession or under the control of the Collateral Agent relating
to any or all Collateral and to make copies thereof. Prior to the occurrence of
an Event of Default, any such activity will be at the cost and expense of the
Lender conducting such activity; following the occurrence of an Event of
Default, all costs and expenses associated with the exercise by the Lenders of
their rights under this Paragraph 11 shall be promptly paid by the Company upon
demand of any Lender made through the Administrative Agent.
12. Representations and Warranties. The Company hereby represents and
warrants that: (a) the Company is the sole owner of the Collateral (or, in the
case of after-acquired Collateral, at the time the Company acquires rights in
the Collateral, will be the sole owner thereof); (b) except for security
interests in favor of the Collateral Agent for the benefit of the Lenders
hereunder, no Person has (or, in the case of after-acquired Collateral, at the
time the Company acquires rights therein, will have) any right, title, claim or
interest (by way of Lien or otherwise) in, against or to the Collateral and, in
any event, the Collateral Agent has a perfected, first priority security
interest thereon for the benefit of the Lenders; (c) all information heretofore,
herein or hereafter supplied to the Collateral Agent or to any Lender by or on
behalf of the Company with respect to the Collateral is or will be accurate and
complete; and (d) each Mortgage Loan is, at all dates when it is submitted by
Company for inclusion in the computation of the Collateral Value of the
Borrowing Base, an Eligible Mortgage Loan.
13. Covenants of the Company. The Company hereby agrees: (a) to
procure, execute and deliver from time to time any endorsements, assignments,
financing statements and other writings deemed necessary or appropriate by the
Collateral Agent to perfect, maintain and protect its security interest
hereunder and the priority thereof and to deliver promptly to the Collateral
Agent all originals of Collateral or Proceeds consisting of chattel paper or
instruments; (b) not to surrender or lose possession of (other than to the
Collateral Agent), sell, encumber, or otherwise dispose of or transfer, any
Collateral or right or interest therein other than shipment of Mortgage Loans
under agreements for the sale thereof and as otherwise permitted under Paragraph
6 above; (c) at all times to account fully for and promptly to deliver to the
Collateral Agent, in the form received, all Collateral or Proceeds
7
received, endorsed to the Collateral Agent as appropriate and accompanied by
such assignments and powers, duly executed, as the Collateral Agent shall
request, and until so delivered all Collateral and Proceeds shall be held in
trust for the Collateral Agent, separate from all other property of the Company
and identified as the property of the Collateral Agent; (d) at any reasonable
time, upon demand by the Collateral Agent, to exhibit to and allow inspection by
the Collateral Agent (or Persons designated by the Collateral Agent) of the
Collateral and the records concerning the Collateral; (e) to keep the records
concerning the Collateral at the location(s) set forth in Paragraph 20 below and
not to remove the records from such location(s) without the prior written
consent of the Collateral Agent; (f) at the request of the Collateral Agent, to
place on each of its records pertaining to the Collateral a legend, in form and
content satisfactory to the Collateral Agent, indicating that such Collateral
has been assigned to the Collateral Agent; (g) not to modify, compromise,
extend, rescind or cancel any deed of trust, mortgage, note or other document,
instrument or agreement connected with any Mortgage Loan pledged under this
Security Agreement or any document relating thereto or connected therewith or
consent to a postponement of strict compliance on the part of any party thereto
with any term or provision thereof; (h) to keep the Collateral insured against
loss, damage, theft, and other risks customarily covered by insurance, and such
other risks as the Collateral Agent may request; (i) to do all acts that a
prudent investor would deem necessary or desirable to maintain, preserve and
protect the Collateral; (j) not knowingly to use or permit any Collateral to be
used unlawfully or in violation of any provision of this Security Agreement or
any applicable statute, regulation or ordinance or any policy of insurance
covering the Collateral; (k) to pay (or require to be paid) prior to their
becoming delinquent all taxes, assessments, insurance premiums, charges,
encumbrances, and liens now or hereafter imposed upon or affecting any
Collateral; (l) to notify the Collateral Agent before any such change shall
occur of any change in the Company's name, identity or structure through merger,
consolidation or otherwise; (m) to appear in and defend, at the Company's cost
and expense, any action or proceeding which may affect its title to or the
Collateral Agent's interest for the benefit of the Lenders in the Collateral;
(n) to keep accurate and complete records of the Collateral and to provide the
Collateral Agent with such records and such reports and information relating to
the Collateral as the Collateral Agent may request from time to time; and (o) to
comply with all laws, regulations and ordinances relating to the possession,
operation, maintenance and control of the Collateral.
14. Collection of Collateral Payments.
(a) The Company shall, at its sole cost and expense, endeavor
to obtain payment, when due and payable, of all sums due or to become due with
respect to any Collateral (each such payment being referred to as a "Collateral
Payment"), including, without
8
limitation, the taking of such action with respect thereto as the Collateral
Agent may request, or, in the absence of such request, as the Company may
reasonably deem advisable; provided, however, that the Company shall not,
without the prior written consent of the Collateral Agent, grant or agree to any
rebate, refund, compromise or extension with respect to any Collateral Payment
or accept any prepayment on account thereof. Upon the request of the Collateral
Agent following the occurrence of an Event of Default (and subject to the
requirements of applicable law), the Company will notify and direct any party
who is or might become obligated to make any Collateral Payment, to make payment
thereof to the Collateral Agent (or to the Company in care of the Collateral
Agent) at such address as the Collateral Agent may designate. The Company will
reimburse the Collateral Agent promptly upon demand for all out-of-pocket costs
and expenses, including reasonable attorneys' fees and litigation expenses,
incurred by the Collateral Agent in seeking to collect any Collateral Payment.
(b) If there shall occur an Event of Default, upon the request
of the Collateral Agent the Company will transmit and deliver to the Collateral
Agent, forthwith upon receipt and in the form received, all cash, checks, drafts
and other instruments for the payment of money (properly endorsed where required
so that such items may be collected by the Collateral Agent) which may be
received by the Company at any time as payment on account of any Collateral
Payment and if such request shall be made, until delivery to the Collateral
Agent, such items will be held in trust for the Collateral Agent and will not be
commingled by the Company with any of its other funds or property. Thereafter,
the Collateral Agent is hereby authorized and empowered to endorse the name of
the Company on any check, draft or other instrument for the payment of money
received by the Collateral Agent on account of any Collateral Payment if the
Collateral Agent believes such endorsement is necessary or desirable for
purposes of collection.
(c) The Company hereby agrees to indemnify, defend and save
harmless the Collateral Agent and its agents, officers, employees and
representatives from and against all reasonable liabilities and expenses on
account of any adverse claim asserted against the Collateral Agent relating to
any moneys received by the Collateral Agent on account of any Collateral Payment
(other than as a direct result of the negligence, gross negligence or willful
misconduct of the Collateral Agent or its employees) and such obligation of the
Company shall continue in effect after and notwithstanding the discharge of the
Obligations and the release of the security interest granted in Paragraph 3
above.
15. Authorized Action by Collateral Agent. The Company
hereby irrevocably appoints the Collateral Agent as its attorney-
in-fact to do (but the Collateral Agent shall not be obligated to
and shall incur no liability to the Company or any third party for
failure so to do) at any time and from time to time following the
occurrence of an Event of Default at the request and direction,
9
given after the occurrence of an Event of Default, of the Majority Lenders
(which request and direction must be in writing if so requested by the
Collateral Agent), any act which the Company is obligated by this Security
Agreement to do, and to exercise such rights and powers as the Company might
exercise with respect to the Collateral, including, without limitation, the
right to (a) collect by legal proceedings or otherwise and endorse, receive and
receipt for all dividends, interest, payments, proceeds and other sums and
property now or hereafter payable on or on account of the Collateral; (b) enter
into any extension, reorganization, deposit, merger, consolidation or other
agreement pertaining to, or deposit, surrender, accept, hold or apply other
property in exchange for the Collateral; (c) insure, process and preserve the
Collateral; (d) transfer the Collateral to the Collateral Agent's own or its
nominee's name; and (e) make any compromise or settlement, and take any other
action it deems advisable with respect to the Collateral. Notwithstanding
anything contained herein, in no event shall the Collateral Agent be required to
make any presentment, demand or protest, or give any notice and the Collateral
Agent need not take any action to preserve any rights against any prior party or
any other person in connection with the Obligations or with respect to the
Collateral.
16. Default and Remedies. Upon the occurrence of an Event of Default
and following the acceleration of the Obligations, the Collateral Agent shall at
the request and direction of the Majority Lenders (which request and direction
must be in writing if so requested by the Collateral Agent), without notice to
or demand upon the Company: (a) foreclose or otherwise enforce the Collateral
Agent's security interest for the benefit of the Lenders in the Collateral in
any manner permitted by law or provided for hereunder; (b) sell or otherwise
dispose 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 and without assumption of any credit risk, on such
terms and in such manner as the Collateral Agent may determine; (c) require the
Company to assemble the Collateral or books and records relating thereto and
make such available to the Collateral Agent at a place to be designated by the
Collateral Agent; (d) enter onto property where any Collateral or books and
records relating thereto are located and take possession thereof with or without
judicial process; and (e) prior to the disposition of the Collateral, prepare it
for disposition in any manner and to the extent the Collateral Agent deems
appropriate. Upon any sale or other disposition pursuant to this Security
Agreement, the Collateral Agent shall have the right to deliver, assign and
transfer to the purchaser thereof the Collateral or portion thereof so sold or
disposed of and all proceeds thereof shall be promptly transmitted to the
Administrative Agent for distribution to the Lenders. Each purchaser at any such
sale or other disposition shall hold the Collateral free from any claim or right
of whatever kind, including any equity or right of redemption of the Company,
and the Company specifically waives (to the extent permitted by law) all rights
of
10
redemption, stay or appraisal which it has or may have under any rule of law or
statute now existing or hereafter adopted.
17. Binding Upon Successors. All rights of the Administrative Agent,
the Collateral Agent and the Lenders under this Security Agreement shall inure
to the benefit of the Administrative Agent, the Collateral Agent and the Lenders
and their successors and assigns, and all obligations of the Company shall bind
its successors and assigns.
18. Entire Agreement; Severability. This Security Agreement contains
the entire security agreement and collateral agency agreement with respect to
the Collateral among the Administrative Agent, the Collateral Agent and the
Company. All waivers by the Company provided for in this Security Agreement have
been specifically negotiated by the parties with full cognizance and
understanding of their rights. If any of the provisions of this Security
Agreement shall be held invalid or unenforceable, this Security Agreement shall
be construed as if not containing such provisions, and the rights and
obligations of the parties hereto shall be construed and enforced accordingly.
19. Choice of Law: Waiver of Jury Trial.
(a) This Security Agreement shall be construed in accordance
with and governed by the laws of the State of North Carolina and, where
applicable and except as otherwise defined herein, terms used herein shall have
the meanings given them in the Uniform Commercial Code as in effect from time to
time in the State of North Carolina.
(b) TO THE EXTENT PERMITTED BY LAW, THE PARTIES HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT ANY OF THEM MAY HAVE TO
A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREIN, OR ARISING OUT OF,
UNDER, OR IN CONNECTION WITH THIS AGREEMENT AND ANY AGREEMENT CONTEMPLATED TO BE
EXECUTED IN CONJUNCTION HEREWITH, OR ANY COURSE OF CONDUCT COURSE OF DEALING,
STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY RELATING HERETO
OR THERETO. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE AGENTS TO ENTER INTO
THIS AGREEMENT ON BEHALF OF THE LENDERS.
20. Place of Business; Records. The Company represents and
warrants that its chief place of business is at 000 Xxxxxx Xxxxxx,
Xxxxxxx, Xxxxx Xxxxxxxx 00000, and that its books and records
concerning the Collateral are kept at its chief place of business.
21. Notice. Any written notice, consent or other communica-
tion provided for in this Security Agreement shall be delivered or
sent as provided in the Warehousing Agreement.
11
EXECUTED and sealed the day and year first above written.
EMERGENT MORTGAGE CORP., a South
Carolina corporation
By:_____________________________
Name:___________________________
Title:__________________________
FIRST UNION NATIONAL BANK
OF NORTH CAROLINA, a
national banking
association, as
Administrative Agent
By:_____________________________
Name:___________________________
Title:__________________________
FIRST UNION NATIONAL BANK
OF NORTH CAROLINA, a
national banking
association, as Collateral
Agent
By:_____________________________
Name:___________________________
Title:__________________________
12
SCHEDULE OF EXHIBITS
TO
SECURITY AGREEMENT
EXHIBIT DOCUMENT
1 Required Review Steps
2 Form of Trust Receipt
3 Trust Receipt Procedures
4 Form of Shipping Request
5 Form of Whole Loan Transmittal Letter
6 Form of Delivery Certificate
EXHIBIT 1
TO SECURITY
AGREEMENT
REQUIRED REVIEW STEPS
1. All submitted documents, including the report attached to the Delivery
Certificate, are consistent as to borrower name, loan face amount, loan
type and the Company's loan number.
2. The note and mortgage/deed of trust each bears an original signature or
signatures which appear to be those of the person or persons named as
the maker and mortgagor/trustor, or, in the case of a certified copy of
the mortgage/deed of trust, such copy bears what appears to be a
reproduction of such signature or signatures.
3. Except for (a) the endorsement to the Company of the note in
the event such loan was purchased by the Company and (b) the
endorsement in blank of the note by the Company, neither the
note, the mortgage/deed of trust, nor the assignment(s) of the
mortgage/deed of trust contain any irregular writings which
appear on their face to affect the validity of any such
endorsement or to restrict the enforceability of the document
on which they appear.
4. The note is endorsed in blank and such endorsement bears an original
signature of an authorized officer of the Company, based on the current
list of such officers supplied by the Company.
5. The assignment of the mortgage/deed of trust bears an original
signature of an authorized officer of the Company, based on the current
list of such officers supplied by the Company.
EXHIBIT 2
TO SECURITY AGREEMENT
FORM OF TRUST RECEIPT
Date: ___________, 19__
The undersigned, EMERGENT MORTGAGE CORP., a South Carolina corporation
(the "Company"), acknowledges receipt from FIRST UNION NATIONAL BANK OF NORTH
CAROLINA, acting as agent, bailee and custodian (in such capacity "Collateral
Agent") for the exclusive benefit of the Lenders pursuant to the Security
Agreement (as those terms and capitalized terms not otherwise defined herein are
defined in that certain Mortgage Loan Warehousing Agreement dated as of
___________, 1996, among the lenders party thereto from time to time, the
Company, the Administrative Agent and the Collateral Agent), or from its duly
appointed sub-agent, of the following described documentation for the identified
Mortgage Loans (the "Collateral Documents"), possession of which is herewith
entrusted to the Company solely for the purpose of correcting documentary
defects relating thereto:
Loan Document
Borrower Name Loan Number Note Amount Delivered
It is hereby acknowledged that a security interest pursuant to the
Uniform Commercial Code as in effect in the State of North Carolina in the
Collateral hereinabove described and in the Proceeds of said Collateral has been
granted to Collateral Agent for the benefit of the Lenders pursuant to the
Security Agreement.
The Company hereby represents and warrants that the Unit Collateral
Value of the Mortgage Loans for which the Collateral Documents are requested to
be released hereunder when added to the Unit Collateral Value of all other
Mortgage Loans included in the computation of the Collateral Value of the
Borrowing Base the Collateral Documents for which have been similarly released
does not exceed $3,000,000.
In consideration of the aforesaid delivery by Collateral Agent (or by
its duly appointed sub-agent), the Company hereby agrees to hold said Collateral
Documents in trust for Collateral Agent on behalf of the Lenders as provided
under and in accordance with all provisions of the Security Agreement and to
return said Collateral Documents to Collateral Agent no later than the close of
business
on the tenth calendar day following the date hereof or, if such day is not a
Business Day, on the immediately succeeding Business Day.
EMERGENT MORTGAGE CORP., a South
Carolina corporation
By:
Name:
Title:
EXHIBIT 3
TO SECURITY AGREEMENT
TRUST RECEIPT PROCEDURES
The Company and Collateral Agent will adhere to the following procedures with
respect to trust receipts:
Collateral Agent will maintain all original trust receipts in a vault,
drawer or other suitable depositary with a one hour fire rating
maintained and controlled solely by Collateral Agent.
EXHIBIT 4
TO SECURITY AGREEMENT
FORM OF SHIPPING REQUEST
(For Whole Loan Deliveries)
Date: ________________
FIRST UNION NATIONAL BANK OF NORTH CAROLINA,
as Collateral Agent
One First Union Center
000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: ____________________
____________________
This letter is to serve as authorization for you to endorse and ship the
following loans:
Loan Number Borrower Name Note Amount
to the following address under a commitment or agreement of sale (the
"Commitment") from an investor or a custodian/trustee as follows:
NAME:
ADDRESS:
ATTENTION:
Please endorse the notes as follows:
Please ship the loan documents either by ___________________ or by such other
courier service as we have designated to you as "approved." The courier shall
act as an independent contractor bailee acting solely on your behalf as
Collateral Agent for the Lenders (as defined in) that certain Security and
Collateral Agency Agreement dated as of ___________, 1996, as the same may be
amended, extended or replaced from time to time, but we acknowledge and agree
that you are not responsible for any delays in shipment or any other actions or
inactions of the courier; however, because the Commitment expires on
______________, 199_, we ask that you deliver the loan documents to the courier
no later than _________________, 199_.
Please have the courier xxxx us by using our acct #____________. If you should
have any questions, or should feel the need for additional documentation, please
do not hesitate to call
____________________
EMERGENT MORTGAGE CORP., a South
Carolina corporation
By:
Name:
Title:
EXHIBIT 5
TO SECURITY AGREEMENT
(Investor/Custodian-Trustee)
FORM OF WHOLE LOAN SALE TRANSMITTAL LETTER
(LETTERHEAD OF COLLATERAL AGENT]
Date:________________
Dear [Investor/Custodian-Trustee]
Re: Emergent Mortgage Corp.:
Sale of Mortgage Loans
Attached please find those Mortgage Loans listed separately on the
attached schedule, which Mortgage Loans are owned by EMERGENT MORTGAGE CORP., a
South Carolina corporation (the "Company") and are being delivered to you for
purchase or for whole loan purchase and certification in connection with the
formation of a mortgage pool supporting the issuance of a mortgage-backed
security.
The Mortgage Loans comprise a portion of the Collateral under (and as
the term "Collateral" and capitalized terms not otherwise defined herein are
defined in) that certain Mortgage Loan Warehousing Agreement dated as of
___________, 1996 by and among the Company, the Collateral Agent, the
Administrative Agent and the lenders party thereto from time to time, as amended
or modified from time to time. Each of the Mortgage Loans is subject to a
security interest in favor of the undersigned on behalf of the "Lenders", as
defined in that certain Security and Collateral Agency Agreement dated as of
____________, 1996 by and among the Company, the Administrative Agent and the
Collateral Agent, as amended or modified from time to time, which security
interest shall be automatically released upon your remittance of the full amount
of the purchase price of such Mortgage Loan (as set forth on the schedule
attached hereto) by wire transfer to the following account of the Company:
WIRE INSTRUCTIONS TO SETTLEMENT ACCOUNT:
Pending your purchase of each Mortgage Loan and until payment therefor
is received, the aforesaid security interest therein will remain in full force
and effect, and you shall hold possession of such Collateral and the
documentation evidencing same as custodian, agent and bailee for and on behalf
of the Lenders. In the event any Mortgage Loan is unacceptable for purchase or
pool formation, return the rejected item directly to the Collateral Agent at the
address set forth below. In no event shall any Mortgage Loan be
returned, or sales proceeds remitted, to the Company. The Mortgage Loan must be
so returned or sales proceeds remitted in full no later than forty-five (45)
days from the date hereof. In no event shall any Mortgage Loans be returned or
proceeds relating thereto be remitted to the Company. If you are unable to
comply with the above instructions, please so advise the undersigned
immediately.
NOTE: BY ACCEPTING THE MORTGAGE LOANS DELIVERED TO YOU WITH THIS
LETTER, YOU CONSENT TO BE THE CUSTODIAN, AGENT AND BAILEE FOR THE LENDERS ON THE
TERMS DESCRIBED IN THIS LETTER. THE UNDERSIGNED, AS COLLATERAL AGENT, REQUESTS
THAT YOU ACKNOWLEDGE RECEIPT OF THE ENCLOSED MORTGAGE LOANS AND THIS LETTER BY
SIGNING AND RETURNING THE ENCLOSED COPY OF THIS LETTER TO THE UNDERSIGNED;
HOWEVER, YOUR FAILURE TO DO SO DOES NOT NULLIFY SUCH CONSENT.
Sincerely,
FIRST UNION NATIONAL BANK OF NORTH CAROLINA,
as Collateral Agent
By:
Title:
Address: One First Union Center
000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attn: _______________________
_______________________
ACKNOWLEDGEMENT OF RECEIPT
[Investor/Custodian-Trustee]
By:_____________________________
Name:___________________________
Title:__________________________
Date: ____________________________
EXHIBIT 6
TO SECURITY
AGREEMENT
FORM OF DELIVERY CERTIFICATE
[To be supplied by Collateral Agent)
EXHIBIT C-1
TO
MORTGAGE LOAN WAREHOUSING AGREEMENT
DATED AS OF MARCH 6, 1996
BY AND BETWEEN EMERGENT MORTGAGE CORP.,
FIRST UNION NATIONAL BANK OF NORTH CAROLINA,
AS ADMINISTRATIVE AGENT AND THE LENDERS PARTY THERETO
FORM OF PARENT GUARANTY
61
GUARANTY
THIS GUARANTY (this "Guaranty") is made and dated as of the ______ day
of _____________, 1996 by EMERGENT GROUP, INC., a South Carolina corporation
(the "Parent Guarantor").
RECITALS
A. Pursuant to that certain Mortgage Loan Warehousing Agreement dated
as of ________________, 1996 among the Company, the lenders named therein (the
"Lenders"), the Administrative Agent and the Collateral Agent, (as amended,
extended and replaced from time to time, the "Warehousing Agreement," and with
capitalized terms not otherwise defined herein used with the same meanings as in
the Warehousing Agreement) the Lenders have agreed to extend credit to EMERGENT
MORTGAGE CORP., a South Carolina corporation ("Company"), on the terms and
subject to the conditions set forth therein.
B. As a condition precedent to the effectiveness of the
Credit Documents, the Parent Guarantor is required to execute and
deliver to the Collateral Agent for the benefit of the Lenders this
Guaranty.
C. The Parent Guarantor is the owner of one hundred percent (100%) of
the outstanding capital voting stock of Emergent Financial Corporation, a South
Carolina corporation ("EFI"), which in turn is the owner of one hundred percent
(100%) of the Company, and thus the Parent Guarantor will derive material
benefit from the extension of credit by the Lenders to the Company pursuant to
the Warehousing Agreement.
NOW, THEREFORE, in consideration of the above Recitals and for other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the Parent Guarantor hereby agrees as follows:
AGREEMENT
1. The Parent Guarantor hereby irrevocably and unconditionally
guarantees, jointly and severally, the payment when due, upon maturity,
acceleration or otherwise, of the Obligations, whether heretofore, now, or
hereafter made, incurred or created, whether voluntary or involuntary and
however arising, absolute or contingent, liquidated or unliquidated, determined
or undetermined, whether or not such Obligations are from time to time reduced,
or extinguished and thereafter increased or incurred, whether or not the Company
may be liable individually or jointly with others, whether or not recovery upon
such Obligations may be or hereafter become barred by any statute of
limitations, and whether or not such Obligations may be or hereafter become
otherwise invalid or
unenforceable. This Guaranty is a guaranty of payment and not of collection.
2. The Parent Guarantor irrevocably and unconditionally guarantees,
jointly and severally, the payment of the Obligations whether or not due or
payable by Company upon: (a) the dissolution, insolvency or business failure of,
or any assignment for benefit of creditors by, or commencement of any
bankruptcy, reorganization, arrangement, moratorium or other debtor relief
proceedings by or against, the Company or the Parent Guarantor, or (b) the
appointment of a receiver for, or the attachment, restraint of or making or
levying of any order of court or legal process affecting, the property of the
Company or the Parent Guarantor, and unconditionally promises to pay such
Obligations to the Collateral Agent for the benefit of the Lenders, or order, on
demand, in lawful money of the United States.
3. The liability of the Parent Guarantor hereunder is exclusive and
independent of any security for or other guaranty of the Obligations, whether
executed by the Parent Guarantor or by any other party, and the liability of the
Parent Guarantor hereunder is not affected or impaired by (a) any direction of
application of payment by the Company or by any other party, or (b) any other
guaranty, undertaking or maximum liability of the Parent Guarantor or of any
other party as to the Obligations, or (c) any payment on or in reduction of any
such other guaranty or undertaking, or (d) any revocation or release of any
obligations of any other guarantor of the Obligations, or (e) any dissolution
of, termination of or increase, decrease or change in the personnel of the
Parent Guarantor, or (f) any payment made to the Lenders, Administrative Agent
or Collateral Agent on the Obligations which any of such Persons repay to the
Company pursuant to court order in any bankruptcy, reorganization, arrangement,
moratorium or other debtor relief proceeding, and the Parent Guarantor waives
any right to the deferral or modification of the Parent Guarantor's obligations
hereunder by reason of any such proceeding.
4. The obligations of the Parent Guarantor hereunder are independent of
the Obligations of Company, and a separate action or actions may be brought and
prosecuted against the Parent Guarantor whether or not action is brought against
the Company and whether or not the Company be joined in any such action or
actions. Any payment by the Company or other circumstance which operates to toll
any statute of limitations as to the Company shall operate to toll the statute
of limitations as to the Parent Guarantor.
5. The Parent Guarantor authorizes the Lenders, Administrative Agent
and Collateral Agent (whether or not after termination of this Guaranty),
without notice or demand (except as shall be required by applicable statute and
cannot be waived), and without affecting or impairing its liability hereunder,
from time to time to (a) renew, compromise, extend, increase, accelerate or
otherwise
2
change the time for payment of, or otherwise change the terms of, the
Obligations or any part thereof, including increase or decrease of the rate of
interest thereon; (b) take and hold security for the payment of this Guaranty or
the Obligations and exchange, enforce, waive and release any such security; (c)
apply such security and direct the order or manner of sale thereof as Lenders,
Administrative Agent and Collateral Agent in their discretion may determine; and
(d) release or substitute any one or more endorsers, guarantors, Company or
other obligors. The Lenders, Administrative Agent and Collateral Agent may
without notice to or the further consent of the Company or the Parent Guarantor
assign this Guaranty in whole or in part to any person acquiring an interest in
the Obligations.
6. It is not necessary for Lenders, Administrative Agent or Collateral
Agent to inquire into the capacity or power of the Company or the officers
acting or purporting to act on its behalf, and the Obligations made or created
in reliance upon the professed exercise of such powers shall be guaranteed
hereunder.
7. The Parent Guarantor waives any right to require the Lenders,
Administrative Agent or Collateral Agent to (a) proceed against the Company or
any other party; (b) proceed against or exhaust any security held from the
Company; or (c) pursue any other remedy in the Lenders', Administrative Agent's
or Collateral Agent's power whatsoever. To this end, and without limiting the
generality of the foregoing, the Parent Guarantor expressly waives any rights
the Parent Guarantor might otherwise have had under the provisions of North
Carolina General Statutes xx.xx. 26-7 et seq.. The Lenders, Administrative Agent
and Collateral Agent may, at their election, foreclose on any security held for
the Obligations by one or more judicial or nonjudicial sales, or exercise any
other right or remedy the Lenders, Administrative Agent and Collateral Agent may
have against the Company, or any security, without affecting or impairing in any
way the liability of the Parent Guarantor hereunder except to the extent the
Obligations have been paid. The Parent Guarantor waives any defense arising out
of any such election, even though such election operates to impair or extinguish
any right of reimbursement or subrogation or other right or remedy of the Parent
Guarantor against Company or any security. The Parent Guarantor hereby waives
any claim or other rights which the Parent Guarantor may now have or may
hereafter acquire against the Company or any other guarantor of all or any of
the Obligations that arise from the existence or performance of the Parent
Guarantor's obligations under this Guaranty or any other of the Credit Documents
(as such claims and rights being referred to as the "Parent Guarantor's
Conditional Rights"), including, without limitation, any right of subrogation,
reimbursement, exoneration, contribution, or indemnification, or any right to
participate in any claim or remedy which the Lenders, Administrative Agent or
Collateral Agent have against the Company or any collateral which the Lenders,
Administrative Agent and Collateral Agent now have or
3
hereafter acquire for the Obligations, whether or not such claim, remedy or
right arises in equity or under contract, statute or common law, by any payment
made hereunder or otherwise, including, without limitation, the right to take or
receive from the Company, directly or indirectly, in cash or other property or
setoff or in any other manner, payment or security on account of such claim or
other rights. If, notwithstanding the foregoing provisions, any amount shall be
paid to the Parent Guarantor on account of the Parent Guarantor's Conditional
Rights and either (a) such amount is paid to the Parent Guarantor at any time
when the Obligations shall not have been paid or performed in full, or (b)
regardless of when such amount is paid to the Parent Guarantor any payment made
by the Company to the Lenders, Administrative Agent or Collateral Agent is at
any time determined to be a preferential payment, then such amount paid to the
Parent Guarantor shall be deemed to be held in trust for the benefit of the
Lenders, Administrative Agent or Collateral Agent and shall forthwith be paid to
the Lenders, Administrative Agent or Collateral Agent to be credited and applied
upon the Obligations, whether matured or unmatured, in such order and manner as
the Lenders, Administrative Agent or Collateral Agent shall determine. To the
extent that any of the provisions of this Paragraph shall not be enforceable,
the Parent Guarantor agrees that until such time as the Obligations have been
paid and performed in full and the period of time has expired during which any
payment made by the Company or the Parent Guarantor to the Lenders,
Administrative Agent or Collateral Agent may be determined to be a preferential
payment, the Parent Guarantor's Conditional Rights to the extent not validly
waived shall be subordinate to the Lenders', Administrative Agent's or
Collateral Agent's right to full payment and performance of the Obligations and
the Parent Guarantor shall not seek to enforce the Parent Guarantor's
Conditional Rights during such period. The Parent Guarantor waives all
presentments, demands for performance, protests and notices, including, without
limitation, notices of nonperformance, notices of protest, notices of dishonor,
notices of acceptance of this Guaranty, and notices of the existence, creation
or incurring of new or additional Obligations. The Parent Guarantor assumes all
responsibility for being and keeping itself informed of Company's financial
condition and assets, and of all other circumstances bearing upon the risk of
nonpayment of the Obligations and the nature, scope and extent of the risks
which the Parent Guarantor assumes and incurs hereunder, and agrees that neither
the Lenders, Administrative Agent nor Collateral Agent shall have any duty to
advise the Parent Guarantor of information known to any of them regarding such
circumstances or risks.
8. In addition to the Obligations, the Parent Guarantor agrees to pay
reasonable attorneys' fees and all other costs and expenses incurred by the
Lenders, Administrative Agent and Collateral Agent in enforcing this Guaranty in
any action or proceeding arising out of, or relating to, this Guaranty. This
Guaranty and the liability and obligations of the Parent Guarantor
4
hereunder are binding upon the Parent Guarantor and its successors and assigns,
and this Guaranty inures to the benefit of and is enforceable by the Lenders,
Administrative Agent and Collateral Agent and their successors, transferees, and
assigns.
9. No right or power of the Lenders, Administrative Agent or Collateral
Agent hereunder shall be deemed to have been waived by any act or conduct on the
part of such Persons, or by any neglect to exercise such right or power, or by
any delay in so doing; and every right or power shall continue in full force and
effect until specifically waived or released by an instrument in writing
executed by the Lenders, Administrative Agent and Collateral Agent.
10. The Parent Guarantor agrees to execute any and all further
documents, instruments and agreements as Administrative Agent from time to time
reasonably requests to evidence the Parent Guarantor's obligations hereunder.
11. The Parent Guarantor hereby represents and warrants and
agrees that:
(a) The Parent Guarantor: (1) is duly organized, validly
existing and in good standing as a corporation under the laws of the
State of South Carolina and is in good standing as a foreign
corporation in each jurisdiction where its ownership of property or
conduct of business requires such qualification and where failure to so
be in good standing could have a material adverse effect on the
property or business of the Parent Guarantor or on the Parent
Guarantor's ability to pay or perform the Obligations or its
obligations hereunder, (2) has the corporate power and authority and
the legal right to own and operate its property and to conduct business
in the manner in which it does and proposes to do so, (3) is in
compliance with all Requirements of Law and Contractual Obligations to
the extent that failure to so comply could have a material adverse
effect on the Parent Guarantor or the Company or either of their
property or business or on the ability of the Company to pay or perform
the Obligations or the ability of the Parent Guarantor to pay or
perform the Parent Guarantor's obligations hereunder, and (4) has
reviewed and approved the Credit Documents.
(b) The Parent Guarantor has the corporate power and authority
and the legal right to execute, deliver and perform the Credit
Documents to which it is a party and has taken all necessary corporate
action to authorize the execution, delivery and performance of this
Guaranty. The Credit Documents to which the Parent Guarantor is a party
have been duly executed and delivered on behalf of the Parent Guarantor
and constitute legal, valid and
5
binding obligations of the Parent Guarantor enforceable against the
Parent Guarantor in accordance with their respective terms, subject to
the effect of applicable bankruptcy and other similar laws affecting
the rights of creditors generally and the effect of equitable
principles whether applied in an action at law or a suit in equity.
(c) The execution, delivery and performance by the Parent
Guarantor of any Credit Documents to which the Parent Guarantor is a
party will not violate any Requirement of Law or any Contractual
Obligation of the Parent Guarantor to the extent that failure to comply
could have a material adverse effect on the Parent Guarantor or its
property or business or on the ability to pay or perform the
Obligations or its obligations hereunder.
(d) Except as disclosed on Exhibit 1 hereto, no litigation,
investigation or proceeding of or before any court, arbitrator or
Governmental Authority is pending or, to the knowledge of the Parent
Guarantor, threatened by or against the Parent Guarantor or any of its
Subsidiaries or against any of such Person's properties or revenues
which is likely to be adversely determined and which, if adversely
determined, is likely to have a material adverse effect on the
business, operations, property or financial or other condition of the
Parent Guarantor or the Company, or the Parent Guarantor and its
consolidated Subsidiaries taken as a whole, or on the Collateral, or
the Collateral Value of the Borrowing Base.
(e) Each of the Parent Guarantor and the Company and each of
the Parent Guarantor's consolidated Subsidiaries has filed or caused to
be filed all tax returns that are required to be filed and have paid
all taxes shown to be due and payable on said returns or on any
assessments made against any of them or any of the property of any of
them other than taxes which are being contested in good faith by
appropriate proceedings and as to which the Parent Guarantor, the
Company or such Subsidiary has established adequate reserves in
conformity with GAAP.
(f) The Parent Guarantor is not an "investment company" or a
company "controlled" by an "investment company" within the meaning of
the Investment Company Act of 1940, as amended.
(g) As of the date hereof, the Parent Guarantor
owns one hundred percent (100%) of the issued and
outstanding capital voting stock of the EFI. At all
6
times hereafter, the Parent Guarantor will own at least eighty percent
(80%) of the issued and outstanding capital voting stock of EFI. The
Parent Guarantor will not pledge, assign, hypothecate, encumber or
otherwise grant a security interest in any of the capital voting stock
of EFI which it owns or in which it has a beneficial interest. All of
the issued and outstanding shares of capital voting stock of EFI have
been duly authorized and issued and are fully paid and non-assessable.
(h) Neither the Parent Guarantor nor the Company, nor any of
the Subsidiaries of either the Parent Guarantor or the Company, is
engaged or will engage, principally or as one of its important
activities, in the business of extending credit for the purpose of
"purchasing" or "carrying" any "margin stock" within the respective
meanings of such terms under Regulation U. No part of the proceeds of
any Loan made under the Warehousing Agreement will be used, directly or
indirectly, for "purchasing" or "carrying" "margin stock" as so defined
or for any purpose which violates, or which would be inconsistent with,
the applicable provisions of the Regulations of the Board of Governors
of the Federal Reserve System.
(i) The Parent Guarantor and each of its ERISA Affiliates, if
any, are in compliance in all respects with the requirements of ERISA
and no Reportable Event has occurred under any Plan maintained by the
Company or any of its ERISA Affiliates which is likely to result in the
termination of such Plan for purposes of Title IV of ERISA.
(j) The Parent Guarantor has not issued any unregistered
securities in violation of the registration requirements of Section 5
of the Securities Act of 1933, as amended, or any other existing
applicable law, and is in compliance, in all material respects, with
all existing applicable rules, regulations and requirements under the
Securities Act of 1933, as amended, or the Securities and Exchange Act
of 1934, as amended.
(k) No consent, approval, authorization of, or registration,
declaration or filing with, any Governmental Authority is required on
the part of the Parent Guarantor in connection with the execution and
delivery of the Credit Documents to which the Parent Guarantor is a
party or the performance of or compliance with the terms, provisions
and conditions hereof or thereof.
7
(l) The Parent Guarantor shall not permit: (1) its
Book Net Worth at any date to be less than the sum of (A)
$9,000,000 plus (B) one hundred percent (100%) of the net
proceeds received as a result of any sale of stock or other
ownership interest in the Parent Guarantor; (2) its Tangible
Net Worth any date to be less than the sum of (A) $5,500,000
plus (B) one hundred percent (100%) of the net proceeds
received as a result of any sale of stock or other ownership
interest in the Parent Guarantor; (3) its ratio at any date of
Adjusted Total Liabilities to Book Net Worth, to be greater
than 12.0:1.0; or (4) its Fixed Charge Ratio, as determined on
the last day of each fiscal quarter, to be less than 1.15:1.0.
(m) The Parent Guarantor shall not, during any period
comprising four (4) fiscal quarters of the Parent Guarantor, declare
and pay any dividends, or return any capital, to its shareholders or
authorize or make any other distribution, payment or delivery of
property or cash to its shareholders as such, or redeem, retire,
purchase or otherwise acquire, directly or indirectly, for a
consideration, any shares of any class of its capital stock now or
hereafter outstanding (or any option or warrants issued by it for or
with respect to its capital stock), or set aside any funds for any of
the foregoing purposes, in an aggregate amount in excess of fifty
percent (50%) of the net income of the Parent Guarantor for such four
(4) fiscal quarters as determined in accordance with GAAP.
(n) The Parent Guarantor shall furnish or cause to be
furnished to the Administrative Agent:
(1) Within ninety (90) days after the last day of
each fiscal year of the Parent Guarantor, the consolidated and
consolidating statements of income and cash flows for the
Parent Guarantor, for such year and consolidated and
consolidating balance sheets for the Parent Guarantor as of
the end of such year (with the foregoing consolidated
statements to separately display the income, cash flow and
balance sheet of the Company in a format reasonably acceptable
to the Administrative Agent), presented fairly in all material
respects in accordance with GAAP and accompanied by an
unqualified report of a firm of independent certified public
accountants of nationally recognized standing and including
therewith a copy of any management letter from such certified
public accountants;
(2) Within thirty (30) days after the last day of
each month, (i) unaudited consolidated and consolidating
statements of income and cash flows for the Parent Guarantor
for such month and unaudited consolidated and consolidating
balance sheets for the Parent Guarantor as
8
of the end of such month (with the foregoing consolidating
statements to separately display the income, cash flow and
balance sheet of the Company in a format reasonably acceptable
to the Administrative Agent), and (ii) a Covenant Compliance
Certificate of an Authorized Officer of the Parent Guarantor,
whose position is executive vice president or higher, stating
that such financial statements are presented fairly in all
material respects and in accordance with GAAP, subject to
year-end audit adjustments, and demonstrating in detail
reasonably satisfactory to the Administrative Agent the
compliance of the Parent Guarantor with the financial
covenants set forth in Paragraphs 11(l) and 11(m) hereof as of
and at the end of such month and further certifying that
neither the Parent Guarantor, nor any Affiliate thereof is in
default under the terms and conditions of any agreement
evidencing, securing or guaranteeing any Indebtedness of such
entity;
(3) Promptly, and in any event within five (5)
business days after sent or filed by the Parent Guarantor,
copies of any and all forms, reports, supplements or other
documents of any kind filed by the Parent Guarantor with the
Securities and Exchange Commission; and
(4) Promptly, and in any event within five (5)
business days after received, copies of any and all
correspondence between the Parent Guarantor and either the
Securities Commission of the State of South Carolina or the
Securities and Exchange Commission, and all notices to the
Parent Guarantor from either the Securities Commission of the
State of South Carolina or the Securities and Exchange
Commission, relating to any actual, potential or alleged
violation of any Requirement of Law.
(o) The Parent Guarantor shall comply with all Requirements of
Law relating to securities, including without limitation all laws,
statutes, regulations, orders or rules promulgated by the Securities
and Exchange Commission or the Securities Commission of the State of
South Carolina.
(p) The Parent Guarantor shall not pledge, hypothecate,
encumber or otherwise grant a security interest in any of the capital
stock of any Subsidiary of the Parent Guarantor, or sell, lease,
assign, transfer or otherwise dispose of the assets of any such
Subsidiary, without the prior consent of Majority Lenders.
(q) The Parent Guarantor shall not sell, transfer,
convey or otherwise assign any of the capital stock of any
Subsidiary of the Parent Guarantor if, as a result of such
9
sale, transfer, conveyance or assignments, Parent Guarantor will no
longer own, directly or indirectly 100% of the capital stock of the
Company.
12. This Guaranty shall be deemed to be made under and shall
be governed by the laws of the State of North Carolina.
13. If any of the provisions of this Guaranty shall contravene or be
held invalid under the laws of any jurisdiction, this Guaranty shall be
construed as if not containing those provisions and the rights and obligations
of the parties hereto shall be construed and enforced accordingly.
Executed and sealed as of the day and year first above written.
EMERGENT GROUP, INC., a South
Carolina Corporation
[CORPORATE SEAL]
By: _____________________________
Attest: Name: ____________________________
Title:____________________________
By: _____________________
Name: ____________________
Title:____________________
10
GUARANTY
THIS GUARANTY (this "Guaranty") is made and dated as of the ______ day
of ____________, 1996 by EMERGENT FINANCIAL CORPORATION, a South Carolina
corporation (the "Parent Guarantor").
RECITALS
A. Pursuant to that certain Mortgage Loan Warehousing Agreement dated
as of ____________, 1996 among the Company, the lenders named therein (the
"Lenders"), the Administrative Agent and the Collateral Agent, (as amended,
extended and replaced from time to time, the "Warehousing Agreement," and with
capitalized terms not otherwise defined herein used with the same meanings as in
the Warehousing Agreement) the Lenders have agreed to extend credit to EMERGENT
MORTGAGE CORP., a South Carolina corporation (the "Company"), on the terms and
subject to the conditions set forth therein.
B. As a condition precedent to the effectiveness of the
Credit Documents, the Parent Guarantor is required to execute and
deliver to the Collateral Agent for the benefit of the Lenders this
Guaranty.
C. The Parent Guarantor is the owner of one hundred percent (100%) of
the outstanding capital voting stock of the Company and thus will derive
material benefit from the extension of credit by the Lenders to the Company
pursuant to the Warehousing Agreement.
NOW, THEREFORE, in consideration of the above Recitals and for other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Corporate Guarantor hereby agrees as follows:
AGREEMENT
1. The Parent Guarantor hereby irrevocably and unconditionally
guarantees, jointly and severally, the payment when due, upon maturity,
acceleration or otherwise, of the Obligations, whether heretofore, now, or
hereafter made, incurred or created, whether voluntary or involuntary and
however arising, absolute or contingent, liquidated or unliquidated, determined
or undetermined, whether or not such Obligations are from time to time reduced,
or extinguished and thereafter increased or incurred, whether or not the Company
may be liable individually or jointly with others, whether or not recovery upon
such Obligations may be or hereafter become barred by any statute of
limitations, and whether or not such Obligations may be or hereafter become
otherwise invalid or unenforceable. This Guaranty is a guaranty of payment and
not of collection.
2. The Parent Guarantor irrevocably and unconditionally guarantees,
jointly and severally, the payment of the Obligations whether or not due or
payable by the Company upon: (a) the dissolution, insolvency or business failure
of, or any assignment for benefit of creditors by, or commencement of any
bankruptcy, reorganization, arrangement, moratorium or other debtor relief
proceedings by or against, the Company or the Parent Guarantor, or (b) the
appointment of a receiver for, or the attachment, restraint of or making or
levying of any order of court or legal process affecting, the property of the
Company or the Parent Guarantor, and unconditionally promises to pay such
Obligations to the Collateral Agent for the benefit of the Lenders, or order, on
demand, in lawful money of the United States.
3. The liability of the Parent Guarantor hereunder is exclusive and
independent of any security for or other guaranty of the Obligations, whether
executed by the Parent Guarantor or by any other party, and the liability of the
Parent Guarantor hereunder is not affected or impaired by (a) any direction of
application of payment by the Company or by any other party, or (b) any other
guaranty, undertaking or maximum liability of the Parent Guarantor or of any
other party as to the Obligations, or (c) any payment on or in reduction of any
such other guaranty or undertaking, or (d) any revocation or release of any
obligations of any other guarantor of the Obligations, or (e) any dissolution
of, termination of or increase, decrease or change in the personnel of the
Parent Guarantor, or (f) any payment made to the Lenders, Administrative Agent
or Collateral Agent on the Obligations which any of such Persons repay to the
Company pursuant to court order in any bankruptcy, reorganization, arrangement,
moratorium or other debtor relief proceeding, and the Parent Guarantor waives
any right to the deferral or modification of the Parent Guarantor's obligations
hereunder by reason of any such proceeding.
4. The obligations of the Parent Guarantor hereunder are independent of
the Obligations of the Company, and a separate action or actions may be brought
and prosecuted against the Parent Guarantor whether or not action is brought
against the Company and whether or not the Company be joined in any such action
or actions. Any payment by the Company or other circumstance which operates to
toll any statute of limitations as to the Company shall operate to toll the
statute of limitations as to the Parent Guarantor.
5. The Parent Guarantor authorizes the Lenders, Administrative Agent
and Collateral Agent (whether or not after termination of this Guaranty),
without notice or demand (except as shall be required by applicable statute and
cannot be waived), and without affecting or impairing its liability hereunder,
from time to time to (a) renew, compromise, extend, increase, accelerate or
otherwise change the time for payment of, or otherwise change the terms of, the
Obligations or any part thereof, including increase or decrease of the rate of
interest thereon; (b) take and hold security for the
2
payment of this Guaranty or the Obligations and exchange, enforce, waive and
release any such security; (c) apply such security and direct the order or
manner of sale thereof as Lenders, Administrative Agent and Collateral Agent in
their discretion may determine; and (d) release or substitute any one or more
endorsers, guarantors, the Company or other obligors. The Lenders,
Administrative Agent and Collateral Agent may without notice to or the further
consent of the Company or the Parent Guarantor assign this Guaranty in whole or
in part to any person acquiring an interest in the Obligations.
6. It is not necessary for the Lenders, Administrative Agent or
Collateral Agent to inquire into the capacity or power of the Company or the
officers acting or purporting to act on its behalf, and the Obligations made or
created in reliance upon the professed exercise of such powers shall be
guaranteed hereunder.
7. The Parent Guarantor waives any right to require the Lenders,
Administrative Agent or Collateral Agent to (a) proceed against the Company or
any other party; (b) proceed against or exhaust any security held from the
Company; or (c) pursue any other remedy in the Lenders', Administrative Agent's
or Collateral Agent's power whatsoever. To this end, and without limiting the
generality of the foregoing, the Parent Guarantor expressly waives any rights
the Parent Guarantor might otherwise have had under the provisions of North
Carolina General Statutes xx.xx. 26-7 et seq.. The Lenders, Administrative Agent
and Collateral Agent may, at their election, foreclose on any security held for
the Obligations by one or more judicial or nonjudicial sales, or exercise any
other right or remedy the Lenders, Administrative Agent and Collateral Agent may
have against the Company, or any security, without affecting or impairing in any
way the liability of the Parent Guarantor hereunder except to the extent the
Obligations have been paid. The Parent Guarantor waives any defense arising out
of any such election, even though such election operates to impair or extinguish
any right of reimbursement or subrogation or other right or remedy of the Parent
Guarantor against the Company or any security. The Parent Guarantor hereby
waives any claim or other rights which the Parent Guarantor may now have or may
hereafter acquire against the Company or any other guarantor of all or any of
the Obligations that arise from the existence or performance of the Parent
Guarantor's obligations under this Guaranty or any other of the Credit Documents
(as such claims and rights being referred to as the "Parent Guarantor's
Conditional Rights"), including, without limitation, any right of subrogation,
reimbursement, exoneration, contribution, or indemnification, or any right to
participate in any claim or remedy which the Lenders, Administrative Agent or
Collateral Agent have against the Company or any collateral which the Lenders,
Administrative Agent and Collateral Agent now have or hereafter acquire for the
Obligations, whether or not such claim, remedy or right arises in equity or
under contract, statute or common law, by any payment made hereunder or
otherwise, including,
3
without limitation, the right to take or receive from the Company, directly or
indirectly, in cash or other property or setoff or in any other manner, payment
or security on account of such claim or other rights. If, notwithstanding the
foregoing provisions, any amount shall be paid to the Parent Guarantor on
account of the Parent Guarantor's Conditional Rights and either (a) such amount
is paid to the Parent Guarantor at any time when the Obligations shall not have
been paid or performed in full, or (b) regardless of when such amount is paid to
the Parent Guarantor any payment made by the Company to the Lenders,
Administrative Agent or Collateral Agent is at any time determined to be a
preferential payment, then such amount paid to the Parent Guarantor shall be
deemed to be held in trust for the benefit of the Lenders, Administrative Agent
or Collateral Agent and shall forthwith be paid to the Lenders, Administrative
Agent or Collateral Agent to be credited and applied upon the Obligations,
whether matured or unmatured, in such order and manner as the Lenders,
Administrative Agent or Collateral Agent shall determine. To the extent that any
of the provisions of this Paragraph shall not be enforceable, the Parent
Guarantor agrees that until such time as the Obligations have been paid and
performed in full and the period of time has expired during which any payment
made by the Company or the Parent Guarantor to the Lenders, Administrative Agent
or Collateral Agent may be determined to be a preferential payment, the Parent
Guarantor's Conditional Rights to the extent not validly waived shall be
subordinate to the Lenders', Administrative Agent's or Collateral Agent's right
to full payment and performance of the Obligations and the Parent Guarantor
shall not seek to enforce the Parent Guarantor's Conditional Rights during such
period. The Parent Guarantor waives all presentments, demands for performance,
protests and notices, including, without limitation, notices of nonperformance,
notices of protest, notices of dishonor, notices of acceptance of this Guaranty,
and notices of the existence, creation or incurring of new or additional
Obligations. The Parent Guarantor assumes all responsibility for being and
keeping itself informed of the Company's financial condition and assets, and of
all other circumstances bearing upon the risk of nonpayment of the Obligations
and the nature, scope and extent of the risks which the Parent Guarantor assumes
and incurs hereunder, and agrees that neither the Lenders, Administrative Agent
nor Collateral Agent shall have any duty to advise the Parent Guarantor of
information known to any of them regarding such circumstances or risks.
8. In addition to the Obligations, the Parent Guarantor agrees to pay
reasonable attorneys' fees and all other costs and expenses incurred by the
Lenders, Administrative Agent and Collateral Agent in enforcing this Guaranty in
any action or proceeding arising out of, or relating to, this Guaranty. This
Guaranty and the liability and obligations of the Parent Guarantor hereunder are
binding upon the Parent Guarantor and its successors and assigns, and this
Guaranty inures to the benefit of and is
4
enforceable by the Lenders, Administrative Agent and Collateral Agent and their
successors, transferees, and assigns.
9. No right or power of the Lenders, Administrative Agent or Collateral
Agent hereunder shall be deemed to have been waived by any act or conduct on the
part of such Persons, or by any neglect to exercise such right or power, or by
any delay in so doing; and every right or power shall continue in full force and
effect until specifically waived or released by an instrument in writing
executed by the Lenders, Administrative Agent and Collateral Agent.
10. The Parent Guarantor agrees to execute any and all further
documents, instruments and agreements as Administrative Agent from time to time
reasonably requests to evidence the Parent Guarantor's obligations hereunder.
11. The Parent Guarantor hereby represents and warrants and
agrees that:
(a) The Parent Guarantor: (1) is duly organized, validly
existing and in good standing as a corporation under the laws of the
State of South Carolina and is in good standing as a foreign
corporation in each jurisdiction where its ownership of property or
conduct of business requires such qualification and where failure to so
be in good standing could have a material adverse effect on the
property or business of the Parent Guarantor or on the Parent
Guarantor's ability to pay or perform the Obligations or its
obligations hereunder, (2) has the corporate power and authority and
the legal right to own and operate its property and to conduct business
in the manner in which it does and proposes to do so, (3) is in
compliance with all Requirements of Law and Contractual Obligations to
the extent that failure to so comply could have a material adverse
effect on the Parent Guarantor or the Company or either of their
property or business or on the ability of the Company to pay or perform
the Obligations or the ability of the Parent Guarantor to pay or
perform the Parent Guarantor's obligations hereunder, and (4) has
reviewed and approved the Credit Documents.
(b) The Parent Guarantor has the corporate power and authority
and the legal right to execute, deliver and perform the Credit
Documents to which it is a party and has taken all necessary corporate
action to authorize the execution, delivery and performance of this
Guaranty. The Credit Documents to which the Parent Guarantor is a party
have been duly executed and delivered on behalf of the Parent Guarantor
and constitute legal, valid and binding obligations of the Parent
Guarantor enforceable against the Parent Guarantor in accordance with
their
5
respective terms, subject to the effect of applicable bankruptcy and
other similar laws affecting the rights of creditors generally and the
effect of equitable principles whether applied in an action at law or a
suit in equity.
(c) The execution, delivery and performance by the Parent
Guarantor of the Credit Documents to which the Parent Guarantor is a
party will not violate any Requirement of Law or any Contractual
Obligation of the Parent Guarantor to the extent that failure to comply
could have a material adverse effect on the Parent Guarantor or its
property or business or on the ability to pay or perform the
Obligations or its obligations hereunder.
(d) Except as disclosed on Exhibit 1 hereto, no litigation,
investigation or proceeding of or before any court, arbitrator or
Governmental Authority is pending or, to the knowledge of the Parent
Guarantor, threatened by or against the Parent Guarantor or any of its
Subsidiaries or against any of such Person's properties or revenues
which is likely to be adversely determined and which, if adversely
determined, is likely to have a material adverse effect on the
business, operations, property or financial or other condition of the
Parent Guarantor or the Company, or the Parent Guarantor and its
consolidated Subsidiaries taken as a whole, or on the Collateral, or
the Collateral Value of the Borrowing Base.
(e) Each of the Parent Guarantor and the Company and each of
the Parent Guarantor's consolidated Subsidiaries has filed or caused to
be filed all tax returns that are required to be filed and have paid
all taxes shown to be due and payable on said returns or on any
assessments made against any of them or any of the property of any of
them other than taxes which are being contested in good faith by
appropriate proceedings and as to which the Parent Guarantor, the
Company or such Subsidiary has established adequate reserves in
conformity with GAAP.
(f) The Parent Guarantor is not an "investment company" or a
company "controlled" by an "investment company" within the meaning of
the Investment the Company Act of 1940, as amended.
(g) The Parent Guarantor owns, and at all times hereafter will
own, one hundred percent (100%) of the issued and outstanding capital
voting stock of the Company. The Parent Guarantor will not pledge,
assign, hypothecate, encumber or otherwise grant a security
6
interest in any of the capital voting stock of the Company. All of the
issued and outstanding shares of capital voting stock of the Company
have been duly authorized and issued and are fully paid and
non-assessable.
(h) Neither the Parent Guarantor nor the Company, nor any of
the Subsidiaries of either the Parent Guarantor or the Company, is
engaged or will engage, principally or as one of its important
activities, in the business of extending credit for the purpose of
"purchasing" or "carrying" any "margin stock" within the respective
meanings of such terms under Regulation U. No part of the proceeds of
any Loan made under the Warehousing Agreement will be used, directly or
indirectly, for "purchasing" or "carrying" "margin stock" as so defined
or for any purpose which violates, or which would be inconsistent with,
the applicable provisions of the Regulations of the Board of Governors
of the Federal Reserve System.
(i) The Parent Guarantor and each of its ERISA Affiliates, if
any, are in compliance in all respects with the requirements of ERISA
and no Reportable Event has occurred under any Plan maintained by the
Company or any of its ERISA Affiliates which is likely to result in the
termination of such Plan for purposes of Title IV of ERISA.
(j) The Parent Guarantor has not issued any unregistered
securities in violation of the registration requirements of Section 5
of the Securities Act of 1933, as amended, or any other existing
applicable law, and is in compliance, in all material respects, with
all existing applicable rules, regulations and requirements under the
Securities Act of 1933, as amended, or the Securities and Exchange Act
of 1934, as amended.
(k) No consent, approval, authorization of, or registration,
declaration or filing with, any Governmental Authority is required on
the part of the Parent Guarantor in connection with the execution and
delivery of the Credit Documents to which the Parent Guarantor is a
party or the performance of or compliance with the terms, provisions
and conditions hereof or thereof.
12. This Guaranty shall be deemed to be made under and shall
be governed by the laws of the State of North Carolina.
13. If any of the provisions of this Guaranty shall contra-
vene or be held invalid under the laws of any jurisdiction, this
Guaranty shall be construed as if not containing those provisions
7
and the rights and obligations of the parties hereto shall be
construed and enforced accordingly.
Executed and sealed as of the day and year first above written.
EMERGENT FINANCIAL CORPORATION,
a South Carolina corporation
[CORPORATE SEAL]
By: _____________________________
Attest: Name: ____________________________
Title:____________________________
By: _____________________
Name: ____________________
Title:____________________
8
EXHIBIT C-2
TO
MORTGAGE LOAN WAREHOUSING AGREEMENT
DATED AS OF MARCH 6, 1996
BY AND BETWEEN EMERGENT MORTGAGE CORP.,
FIRST UNION NATIONAL BANK OF NORTH CAROLINA,
AS ADMINISTRATIVE AGENT AND THE LENDERS PARTY THERETO
FORM OF AFFILIATE GUARANTY
62
GUARANTY
THIS GUARANTY (this "Guaranty") is made and dated as of the ______ day
of ____________, 1996 by CAROLINA INVESTORS, INC., a South Carolina corporation
(the "Affiliate Guarantor").
RECITALS
A. Pursuant to that certain Mortgage Loan Warehousing Agreement dated
as of ____________, 1996 among the Company, the lenders named therein (the
"Lenders"), the Administrative Agent and the Collateral Agent, (as amended,
extended and replaced from time to time, the "Warehousing Agreement," and with
capitalized terms not otherwise defined herein used with the same meanings as in
the Warehousing Agreement) the Lenders agreed to extend credit to EMERGENT
MORTGAGE CORP., a South Carolina corporation ("Company"), on the terms and
subject to the conditions set forth therein.
B. As a condition precedent to the effectiveness of the
Credit Documents, the Affiliate Guarantor is required to execute
and deliver to the Collateral Agent for the benefit of the Lenders
this Guaranty.
C. Both one hundred (100%) percent of the outstanding capital voting
stock of the Company and one hundred (100%) percent of the outstanding capital
voting stock of the Affiliate Guarantor are owned by Emergent Financial
Corporation, and Affiliate Guarantor is providing management resources to, and
receiving management fees from, the Company, and thus the Affiliate Guarantor
will derive material benefit from the extension of credit by the Lenders to the
Company pursuant to the Warehousing Agreement.
NOW, THEREFORE, in consideration of the above Recitals and for other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the Affiliate Guarantor hereby agrees as follows:
AGREEMENT
1. The Affiliate Guarantor hereby irrevocably and unconditionally
guarantees, jointly and severally, the payment when due, upon maturity,
acceleration or otherwise, of the Obligations whether heretofore, now, or
hereafter made, incurred or created, whether voluntary or involuntary and
however arising, absolute or contingent, liquidated or unliquidated, determined
or undetermined, whether or not such Obligations are from time to time reduced,
or extinguished and thereafter increased or incurred, whether or not the Company
may be liable individually or jointly with others, whether or not recovery upon
such Obligations may be or hereafter become barred by any statute of
limitations, and whether or not such Obligations may be or hereafter become
otherwise invalid or
unenforceable. This Guaranty is a guaranty of payment and not of collection.
2. The Affiliate Guarantor irrevocably and unconditionally guarantees,
jointly and severally, the payment of the Obligations whether or not due or
payable by the Company upon: (a) the dissolution, insolvency or business failure
of, or any assignment for benefit of creditors by, or commencement of any
bankruptcy, reorganization, arrangement, moratorium or other debtor relief
proceedings by or against, the Company or the Affiliate Guarantor, or (b) the
appointment of a receiver for, or the attachment, restraint of or making or
levying of any order of court or legal process affecting, the property of the
Company or the Affiliate Guarantor, and unconditionally promises to pay such
Obligations to Collateral Agent for the benefit of the Lenders, or order, on
demand, in lawful money of the United States.
3. The liability of the Affiliate Guarantor hereunder is exclusive and
independent of any security for or other guaranty of the Obligations, whether
executed by the Affiliate Guarantor or by any other party, and the liability of
the Affiliate Guarantor hereunder is not affected or impaired by (a) any
direction of application of payment by the Company or by any other party, or (b)
any other guaranty, undertaking or maximum liability of the Affiliate Guarantor
or of any other party as to the Obligations, or (c) any payment on or in
reduction of any such other guaranty or undertaking, or (d) any revocation or
release of any obligations of any other guarantor of the Obligations, or (e) any
dissolution of, termination of or increase, decrease or change in the personnel
of, the Affiliate Guarantor, or (f) any payment made to the Lenders,
Administrative Agent or Collateral Agent on the Obligations which any of such
Persons repay to the Company pursuant to court order in any bankruptcy,
reorganization, arrangement, moratorium or other debtor relief proceeding, and
the Affiliate Guarantor waives any right to the deferral or modification of the
Affiliate Guarantor's obligations hereunder by reason of any such proceeding.
4. The obligations of the Affiliate Guarantor hereunder are independent
of the Obligations of the Company, and a separate action or actions may be
brought and prosecuted against the Affiliate Guarantor whether or not action is
brought against the Company and whether or not the Company be joined in any such
action or actions. Any payment by the Company or other circumstance which
operates to toll any statute of limitations as to the Company shall operate to
toll the statute of limitations as to the Affiliate Guarantor.
5. The Affiliate Guarantor authorizes the Lenders, Administrative Agent
and Collateral Agent (whether or not after termination of this Guaranty),
without notice or demand (except as shall be required by applicable statute and
cannot be waived), and without affecting or impairing its liability hereunder,
from time
2
to time to (a) renew, compromise, extend, increase, accelerate or otherwise
change the time for payment of, or otherwise change the terms of, the
Obligations or any part thereof, including increase or decrease of the rate of
interest thereon; (b) take and hold security for the payment of this Guaranty or
the Obligations and exchange, enforce, waive and release any such security; (c)
apply such security and direct the order or manner of sale thereof as the
Lenders, Administrative Agent and Collateral Agent in their discretion may
determine; and (d) release or substitute any one or more endorsers, guarantors,
the Company or other obligors. The Lenders, Administrative Agent and Collateral
Agent may without notice to or the further consent of the Company or the
Affiliate Guarantor assign this Guaranty in whole or in part to any person
acquiring an interest in the Obligations.
6. It is not necessary for the Lenders, Administrative Agent or
Collateral Agent to inquire into the capacity or power of the Company or the
officers acting or purporting to act on its behalf, and the Obligations made or
created in reliance upon the professed exercise of such powers shall be
guaranteed hereunder.
7. The Affiliate Guarantor waives any right to require the Lenders,
Administrative Agent or Collateral Agent to (a) proceed against the Company or
any other party; (b) proceed against or exhaust any security held from the
Company; or (c) pursue any other remedy in the Lenders', Administrative Agent's
or Collateral Agent's power whatsoever. To this end, and without limiting the
generality of the foregoing, the Affiliate Guarantor expressly waives any rights
the Affiliate Guarantor might otherwise have had under the provisions of North
Carolina General Statutes xx.xx. 26-7 et seq.. The Lenders, Administrative Agent
and Collateral Agent may, at their election, foreclose on any security held for
the Obligations by one or more judicial or nonjudicial sales, or exercise any
other right or remedy the Lenders, Administrative Agent and Collateral Agent may
have against the Company, or any security, without affecting or impairing in any
way the liability of the Affiliate Guarantor hereunder except to the extent the
Obligations have been paid. The Affiliate Guarantor waives any defense arising
out of any such election, even though such election operates to impair or
extinguish any right of reimbursement or subrogation or other right or remedy of
the Affiliate Guarantor against the Company or any security. The Affiliate
Guarantor hereby waives any claim or other rights which the Affiliate Guarantor
may now have or may hereafter acquire against the Company or any other guarantor
of all or any of the Obligations that arise from the existence or performance of
the Affiliate Guarantor's obligations under this Guaranty or any other of the
Credit Documents (as such claims and rights being referred to as the "the
Affiliate Guarantor's Conditional Rights"), including, without limitation, any
right of subrogation, reimbursement, exoneration, contribution, or
indemnification, or any right to participate in any claim or remedy which the
Lenders, Administrative Agent or Collateral Agent have
3
against the Company or any collateral which the Lenders, Administrative Agent
and Collateral Agent now have or hereafter acquire for the Obligations, whether
or not such claim, remedy or right arises in equity or under contract, statute
or common law, by any payment made hereunder or otherwise, including, without
limitation, the right to take or receive from the Company, directly or
indirectly, in cash or other property or setoff or in any other manner, payment
or security on account of such claim or other rights. If, notwithstanding the
foregoing provisions, any amount shall be paid to the Affiliate Guarantor on
account of the Affiliate Guarantor's Conditional Rights and either (a) such
amount is paid to the Affiliate Guarantor at any time when the Obligations shall
not have been paid or performed in full, or (b) regardless of when such amount
is paid to the Affiliate Guarantor any payment made by the Company to the
Lenders, Administrative Agent or Collateral Agent is at any time determined to
be a preferential payment, then such amount paid to the Affiliate Guarantor
shall be deemed to be held in trust for the benefit of the Lenders,
Administrative Agent or Collateral Agent and shall forthwith be paid to the
Lenders, Administrative Agent or Collateral Agent to be credited and applied
upon the Obligations, whether matured or unmatured, in such order and manner as
the Lenders, Administrative Agent or Collateral Agent shall determine. To the
extent that any of the provisions of this Paragraph shall not be enforceable,
the Affiliate Guarantor agrees that until such time as the Obligations have been
paid and performed in full and the period of time has expired during which any
payment made by the Company or the Affiliate Guarantor to the Lenders,
Administrative Agent or Collateral Agent may be determined to be a preferential
payment, the Affiliate Guarantor's Conditional Rights to the extent not validly
waived shall be subordinate to the Lenders', Administrative Agent's or
Collateral Agent's right to full payment and performance of the Obligations and
the Affiliate Guarantor shall not seek to enforce the Affiliate Guarantor's
Conditional Rights during such period. The Affiliate Guarantor waives all
presentments, demands for performance, protests and notices, including, without
limitation, notices of nonperformance, notices of protest, notices of dishonor,
notices of acceptance of this Guaranty, and notices of the existence, creation
or incurring of new or additional Obligations. The Affiliate Guarantor assumes
all responsibility for being and keeping itself informed of the Company's
financial condition and assets, and of all other circumstances bearing upon the
risk of nonpayment of the Obligations and the nature, scope and extent of the
risks which the Affiliate Guarantor assumes and incurs hereunder, and agrees
that neither the Lenders, Administrative Agent nor Collateral Agent shall have
any duty to advise the Affiliate Guarantor of information known to any of them
regarding such circumstances or risks.
8. In addition to the Obligations, the Affiliate Guarantor
agrees to pay reasonable attorneys' fees and all other costs and
expenses incurred by the Lenders, Administrative Agent and
4
Collateral Agent in enforcing this Guaranty in any action or proceeding arising
out of, or relating to, this Guaranty. This Guaranty and the liability and
obligations of the Affiliate Guarantor hereunder are binding upon the Affiliate
Guarantor and its successors and assigns, and this Guaranty inures to the
benefit of and is enforceable by the Lenders, Administrative Agent and
Collateral Agent and their successors, transferees, and assigns.
9. No right or power of the Lenders, Administrative Agent or Collateral
Agent hereunder shall be deemed to have been waived by any act or conduct on the
part of such Persons, or by any neglect to exercise such right or power, or by
any delay in so doing; and every right or power shall continue in full force and
effect until specifically waived or released by an instrument in writing
executed by the Lenders, Administrative Agent and Collateral Agent.
10. The Affiliate Guarantor agrees to execute any and all further
documents, instruments and agreements as Administrative Agent from time to time
reasonably requests to evidence the Affiliate Guarantor's obligations hereunder.
11. The Affiliate Guarantor hereby represents and warrants
and agrees that:
(a) The Affiliate Guarantor: (1) is duly organized, validly
existing and in good standing as a corporation under the laws of the
State of South Carolina and is in good standing as a foreign
corporation in each jurisdiction where its ownership of property or
conduct of business requires such qualification and where failure to so
be in good standing could have a material adverse effect on the
property or business of the Affiliate Guarantor or on the Affiliate
Guarantor's ability to pay or perform the Obligations or its
obligations hereunder, (2) has the corporate power and authority and
the legal right to own and operate its property and to conduct business
in the manner in which it does and proposes to do so, (3) is in
compliance with all Requirements of Law and Contractual Obligations to
the extent that failure to so comply could have a material adverse
effect on the Affiliate Guarantor or the Company or either of their
property or business or on the ability of the Company to pay or perform
either of the Obligations or the ability of the Affiliate Guarantor to
pay or perform the Affiliate Guarantor's obligations hereunder, and (4)
has reviewed and approved the Credit Documents.
(b) The Affiliate Guarantor has the corporate power and
authority and the legal right to execute, deliver and perform the
Credit Documents to which it is a party and has taken all necessary
corporate action to authorize the execution, delivery and performance
of this Guaranty.
5
The Credit Documents to which the Affiliate Guarantor is a party have
been duly executed and delivered on behalf of the Affiliate Guarantor
and constitute legal, valid and binding obligations of the Affiliate
Guarantor enforceable against the Affiliate Guarantor in accordance
with their respective terms, subject to the effect of applicable
bankruptcy and other similar laws affecting the rights of creditors
generally and the effect of equitable principles whether applied in an
action at law or a suit in equity.
(c) The execution, delivery and performance by the Affiliate
Guarantor of any Credit Documents to which the Affiliate Guarantor is a
party will not violate any Requirement of Law or any Contractual
Obligation of the Affiliate Guarantor to the extent that failure to
comply could have a material adverse effect on the Affiliate Guarantor
or its property or business or on the ability to pay or perform the
Obligations or its obligations hereunder.
(d) Except as disclosed on Exhibit 1 hereto, no litigation,
investigation or proceeding of or before any court, arbitrator or
Governmental Authority is pending or, to the knowledge of the Affiliate
Guarantor, threatened by or against the Affiliate Guarantor or any of
its consolidated Subsidiaries or against any of such Person's
properties or revenues which is likely to be adversely determined and
which, if adversely determined, is likely to have a material adverse
effect on the business, operations, property or financial or other
condition of the Affiliate Guarantor or the Company, or the Affiliate
Guarantor and its consolidated Subsidiaries taken as a whole, or on the
Collateral, or the Collateral Value of the Borrowing Base.
(e) Each of the Affiliate Guarantor and the Company and each
of the Affiliate Guarantor's consolidated Subsidiaries has filed or
caused to be filed all tax returns that are required to be filed and
have paid all taxes shown to be due and payable on said returns or on
any assessments made against any of them or any of the property of any
of them other than taxes which are being contested in good faith by
appropriate proceedings and as to which the Affiliate Guarantor, the
Company or such Subsidiary has established adequate reserves in
conformity with GAAP.
(f) The Affiliate Guarantor is not an "investment company" or
a company "controlled" by an "investment company" within the meaning of
the Investment the Company Act of 1940, as amended.
6
(g) Neither the Affiliate Guarantor nor the Company, nor any
of the Subsidiaries of either the Affiliate Guarantor or the Company,
is engaged or will engage, principally or as one of its important
activities, in the business of extending credit for the purpose of
"purchasing" or "carrying" any "margin stock" within the respective
meanings of such terms under Regulation U. No part of the proceeds of
any Loan made under the Warehousing Agreement will be used, directly or
indirectly, for "purchasing" or "carrying" "margin stock" as so defined
or for any purpose which violates, or which would be inconsistent with,
the applicable provisions of the Regulations of the Board of Governors
of the Federal Reserve System.
(h) The Affiliate Guarantor and each of its ERISA Affiliates,
if any, are in compliance in all respects with the requirements of
ERISA and no Reportable Event has occurred under any Plan maintained by
the Company or any of its ERISA Affiliates which is likely to result in
the termination of such Plan for purposes of Title IV of ERISA.
(i) The Affiliate Guarantor has not issued any unregistered
securities in violation of the registration requirements of Section 5
of the Securities Act of 1933, as amended, or any other existing
applicable law, and is in compliance, in all material respects, with
all existing applicable rules, regulations and requirements under the
Securities Act of 1933, as amended, or the Securities and Exchange Act
of 1934, as amended.
(j) No consent, approval, authorization of, or registration,
declaration or filing with, any Governmental Authority is required on
the part of the Affiliate Guarantor in connection with the execution
and delivery of the Credit Documents to which the Affiliate Guarantor
is a party or the performance of or compliance with the terms,
provisions and conditions hereof or thereof.
(k) The Affiliate Guarantor shall not permit the acquisition,
purchase, redemption, retirement, transfer or issuance of any shares of
its capital stock now or hereafter outstanding which would result in
Emergent Financial Corporation or Emergent Group, Inc., owning less
than one hundred percent (100%) of the Affiliate Guarantor's
outstanding capital stock.
(l) The Affiliate Guarantor shall not permit: (1)
its Book Net Worth as of the last day of any month to be
less than the sum of (A) $9,000,000 plus (B) one hundred
percent (100%) of all capital contributions made to the
7
Affiliate Guarantor made after this date hereof; (2) its Book Net
Worth, to be less than six percent (6.0%) of its total assets as
determined in accordance with GAAP; (3) its Cash and Cash Equivalents
at any date to be less than $500,000; (4) the amount of its receivables
from any Affiliate of the Affiliate Guarantor (other than the Company)
at any date to exceed $30,000,000; or (5) the principal amount of the
CII Investor Obligations to decline by more than twenty percent (20%)
during any two (2) consecutive calendar month period.
(m) The Affiliate Guarantor shall furnish or cause
to be furnished to the Administrative Agent;
(1) Within ninety (90) days after the last
day of its fiscal year, statements of income and cash flows
for the Affiliate Guarantor for such year and a balance sheet
for the Affiliate Guarantor as of the end of such year, each
in a format reasonably acceptable to the Administrative Agent,
presented fairly in all material respects in accordance with
GAAP and accompanied by an unqualified report of a firm of
independent certified public accountants of nationally
recognized standing and including therewith a copy of any
management letter from such certified public accountants;
(2) Promptly, and in any event within five
(5) business days after sent or filed by the Affiliate
Guarantor, copies of any and all forms, reports, supplements
or other documents of any kind filed by the Affiliate
Guarantor with the Securities Commission of the State of South
Carolina; and
(3) Promptly, and in any event within five
(5) business days after received, copies of any and all
correspondence between the Affiliate Guarantor and either the
Securities Commission of the State of South Carolina or the
Securities and Exchange Commission, and all notices to the
Affiliate Guarantor from either the Securities Commission of
the State of South Carolina or the Securities and Exchange
Commission, relating to any actual, potential or alleged
violation of any Requirement of Law.
(n) The Affiliate Guarantor shall comply with all Requirements
of Law relating to securities, including without limitation all laws,
statutes, regulations, orders or rules promulgated by the Securities
and Exchange Commission or the Securities Commission of the State of
South Carolina.
8
12. This Guaranty shall be deemed to be made under and shall
be governed by the laws of the State of North Carolina.
13. If any of the provisions of this Guaranty shall contravene or be
held invalid under the laws of any jurisdiction, this Guaranty shall be
construed as if not containing those provisions and the rights and obligations
of the parties hereto shall be construed and enforced accordingly.
Executed and sealed as of the day and year first above written.
CAROLINA INVESTORS, INC.
a South Carolina corporation
[CORPORATE SEAL]
By: _____________________________
Attest: Name: ____________________________
Title:____________________________
By: _____________________
Name: ____________________
Title:____________________
9
EXHIBIT D
TO
MORTGAGE LOAN WAREHOUSING AGREEMENT
DATED AS OF MARCH 6, 1996
BY AND BETWEEN EMERGENT MORTGAGE CORP.,
FIRST UNION NATIONAL BANK OF NORTH CAROLINA,
AS ADMINISTRATIVE AGENT AND THE LENDERS PARTY THERETO
FORM OF LEGAL OPINION OF COUNSEL
FOR COMPANY AND GUARANTORS
63
EXHIBIT E
TO
MORTGAGE LOAN WAREHOUSING AGREEMENT
DATED AS OF MARCH 6, 1996
BY AND BETWEEN EMERGENT MORTGAGE CORP.,
FIRST UNION NATIONAL BANK OF NORTH CAROLINA,
AS ADMINISTRATIVE AGENT AND THE LENDERS PARTY THERETO
LITIGATION SCHEDULE
None.
64
EXHIBIT F
TO
MORTGAGE LOAN WAREHOUSING AGREEMENT
DATED AS OF MARCH 6, 1996
BY AND BETWEEN EMERGENT MORTGAGE CORP. AND
FIRST UNION NATIONAL BANK OF NORTH CAROLINA
SCHEDULE OF ADDITIONAL REQUIRED DOCUMENTS
1. Original disclosure statements complying with Regulation
Z ("Truth in Lending") of the Board of Governors of the Federal
Reserve System and all agreements relating thereto;
2. Original Equal Credit Opportunity Act notice and
additional disclosure statements or agreements relating thereto;
3. Survey of the Property covered by the Mortgage Loan,
including a determination of whether or not such Property falls
into a flood zone as identified by a HUD identified flood map;
4. Written statement signed by the attorney, title company or closing
agent responsible for supervising the closing of the Mortgage Loan that such
person or entity closed the Mortgage Loan in accordance with any closing
instructions received by such person or entity;
5. A casualty insurance policy on the property subject to the Mortgage
Loan covering fire, hazard and extended coverage, and if applicable, flood and
earthquake insurance, all in amounts not less than the principal amount of the
promissory note relating to the Mortgage Loan (or the maximum amount issuable
for flood insurance) which insurance has been endorsed to provide for payment
thereof to the Company, as mortgagee, together with written notice to the
mortgagor of the fact, if true, that mortgagor's property lies within a flood
zone; and
6. Original executed application by the Obligor on such
Mortgage Loan for such Mortgage Loan;
7. Original or copy of credit bureau report on the Obligor
on such Mortgage Loan;
8. Original HUD-1 settlement statement duly executed by the
Obligor on such Mortgage Loan; and
9. Original or copy of complete appraisal obtained with
respect to the applicable Property obtained in connection with the
Mortgage Loan.
10. Original or copy of mortgagee's title insurance policy
insuring the lien of the Mortgage Loan against the applicable
Property.
65
11. Such other documents as the Administrative Agent may reasonably
request from time to time, including but not limited to verification of
employment of the Obligor on such Mortgage Loan, verification of deposit by such
Obligor (if applicable), and any inspection reports performed with respect to
such Obligor or the Property covered by such Mortgage Loan.
66
EXHIBIT G
TO
MORTGAGE LOAN WAREHOUSING AGREEMENT
DATED AS OF MARCH 6, 1996
BY AND BETWEEN EMERGENT MORTGAGE CORP.,
FIRST UNION NATIONAL BANK OF NORTH CAROLINA,
AS ADMINISTRATIVE AGENT AND THE LENDERS PARTY THERETO
FORM OF BORROWING BASE SCHEDULE
This Borrowing Base Schedule is furnished pursuant to the Mortgage Loan
Warehousing Agreement dated as of March 6, 1996, as amended from time to
time, among the Company, Administrative Agent and the Lenders party thereto (the
"Agreement"). Unless otherwise defined herein, the terms used in this Borrowing
Base Schedule have the meanings ascribed thereto in the Agreement.
A. Aggregate Unit Collateral Values of
Eligible Mortgage Loans in
Borrowing Base as of previous
Borrowing Base Schedule delivered
by the Company $_____________
B. Aggregate Unit Collateral Values of
Eligible Mortgage Loans submitted
for inclusion in Borrowing Base
since previous Borrowing Base
Schedule delivered by the Company $____________
C. Sum of (A plus B) $____________
D. Aggregate Unit Collateral Values of
Eligible Mortgage Loans previously
released by the Collateral Agent for which
the full purchase price has been
received by the Administrative Agent since
previous Borrowing Base Schedule
delivered by the Company $____________
E. Amount by which Aggregate Unit Collateral
Values of Eligible Mortgage Loans
withdrawn from the possession of the
Collateral Agent under a trust receipt
and not returned to the Collateral
Agent exceeds $3,000,000 $____________
F. Aggregate Unit Collateral Values of Eligible
Mortgage Loans withdrawn from the
possession of the Collateral Agent under a trust
receipt more than 10 days prior to the date
of this schedule and not returned to
the Collateral Agent $____________
00
X. Xxxxxxxxx Xxxx Xxxxxxxxxx Values of
Eligible Mortgage Loans withdrawn from
the possession of the Collateral Agent and
shipped to an investor for purchase more
than 21 days prior to the date of this
schedule and not returned to the Collateral
Agent or for which the full purchase
price has not been received by the
Administrative Agent $___________
H. Aggregate Unit Collateral Value of Eligible
Mortgage Loans with an outstanding principal
balance in excess of $350,000 $___________
I. Amount by which the Aggregate Unit Collateral
Value of all Eligible Mortgage Loans with an
outstanding principal balance in excess of
$200,000, but less than or equal to $350,000
exceeds 10% of the Aggregate Facility
Commitment $___________
J. Aggregate Unit Collateral Value of all
Eligible Mortgage Loans where payments
are more than 30 days delinquent $___________
K. Aggregate Unit Collateral Value of all
Eligible Mortgage Loans which have been
included in the Borrowing Base for more
than 120 days $___________
L. Aggregate Unit Collateral Value of all
Eligible Mortgage Loans for which the
Required Documents have not been received
within 7 Business Days of inclusion in
the Borrowing Base $___________
M. Amount by which the Aggregate Unit
Collateral Value of all Eligible Mortgage
Loans which have been included in the
Borrowing Base for less than 7 Business
Days and for which the Required Documents
have not been received exceeds 35% of the
Aggregate Facility Commitment during the
first 7 and last 5 days of a month and 15%
of the Aggregate Facility Commitment at
any time $___________
N. Amount by which the Aggregate Unit Collateral
Value of all Eligible Mortgage Loans
secured by second priority liens exceed
25% of the Aggregate Facility Commitment $___________
68
O. Sum of (D plus E plus F plus G plus H plus I
plus J plus K plus L plus M plus N) $___________
P. Adjusted Collateral Value of the
Borrowing Base (C minus O) $___________
Q. Aggregate principal amount of Loans
outstanding $___________
R. Borrowing Base availability (P minus Q;
must equal or exceed zero) $___________
The undersigned hereby certifies that, as of the date hereof:
(1) I am the duly elected _______________ of the Company;
(2) The above schedule accurately states the Collateral Value of
the Borrowing Base and the aggregate principal amount of Loans
outstanding;
(3) All Mortgage Loans included in the Borrowing Base as Eligible Mortgage
Loans comply in all respects with the requirements of the definition of
"Eligible Mortgage Loan"; and
(4) I have no knowledge of the existence of any condition or event which
constitutes an Event of Default under the Agreement.
Certified on behalf of the undersigned this _____ day of _________, 19___.
EMERGENT MORTGAGE CORP.
By:_______________________________________
Name:_____________________________________
Title:____________________________________
69
EXHIBIT H
TO
MORTGAGE LOAN WAREHOUSING AGREEMENT
DATED AS OF MARCH 6, 1996
BY AND BETWEEN EMERGENT MORTGAGE CORP., AND
FIRST UNION NATIONAL BANK OF NORTH CAROLINA,
AS ADMINISTRATIVE AGENT AND THE LENDERS PARTY THERETO
FORM OF COVENANT COMPLIANCE CERTIFICATE
TO: First Union National Bank of North Carolina as Administrative
Agent
This is the Covenant Compliance Certificate referred to in Section
6(a)(2) of the Mortgage Loan Warehousing Agreement dated as of ______, 1996, by
and among the Company, the Administrative Agent and the Lenders (the
"Agreement," with capitalized terms not otherwise defined herein having the same
meanings assigned such terms in the Agreement). Attached hereto are the
financial statements of the undersigned as of ______________ __, 19__ prepared
by the Company. This Covenant Compliance Certificate and the attached financial
statements are furnished for the purpose of procuring credit, and shall be
substituted therefor.
I hereby certify that (i) I have carefully read the attached financial
statements, (ii) the attached financial statements are complete, true and
correct statements to the best of my knowledge and belief, (iii) the attached
financial statements were prepared in conformity with GAAP applied on a basis
consistent with that of the preceding year, subject to year-end audit
adjustments, and (iv) the attached financial statements fairly present the
financial position of the Company and the results of its operations as of
_________________, 19___ and for the period then ended.
I also hereby certify that, as of the date hereof, (i) each and every
covenant of the Company contained in the Agreement has been performed and
observed (except for covenants made in connection with Mortgage Loans, it being
the intention of the parties to the Agreement that the violation or breach of
any such covenant in respect of any Mortgage Loan regarding the qualification of
such Mortgage Loan as an "Eligible Mortgage Loan" under the Agreement shall not
constitute an Event of Default, provided that such Mortgage Loan is excluded
from the calculation of the Borrowing Base) and (ii) no Event of Default or
Potential Default has occurred under the Agreement.
Attached are calculations of the financial ratio and net worth set
forth in Paragraphs 7(j) and 7(k) of the Agreement as of the date hereof, which
calculations are hereby certified to be complete, true and correct calculations
of the financial ratio contained in such section.
70
Certified on behalf of the undersigned this ____ day of ______________,
19__.
EMERGENT MORTGAGE CORP.
By:_________________________________
Name:_______________________________
Title:______________________________
71
EXHIBIT I
TO
MORTGAGE LOAN WAREHOUSING AGREEMENT
DATED AS OF MARCH 6, 1996
BY AND BETWEEN EMERGENT MORTGAGE CORP.,
FIRST UNION NATIONAL BANK OF NORTH CAROLINA,
AS ADMINISTRATIVE AGENT AND THE LENDERS PARTY THERETO
NONE
72
EXHIBIT J
TO
MORTGAGE LOAN WAREHOUSING AGREEMENT
DATED AS OF MARCH 6, 1996
BY AND BETWEEN EMERGENT MORTGAGE CORP., AND
FIRST UNION NATIONAL BANK OF NORTH CAROLINA,
AS ADMINISTRATIVE AGENT AND THE LENDERS PARTY THERETO
SCHEDULE OF REQUIRED DOCUMENTS
1. An original fully completed Delivery Certificate (as
defined in the Security Agreement);
2. The original executed promissory note relating to the Mortgage Loan
(properly endorsed or assigned to the Company if purchased by the Company),
which promissory note shall be duly endorsed in blank and assigned in blank
without recourse by the Company;
3. The original executed mortgage or deed of trust relating to the
Mortgage Loan duly recorded in the appropriate jurisdiction; provided, however,
that a certified copy of the executed mortgage or deed of trust relating to the
Mortgage Loan may be delivered to the Collateral Agent in lieu of the original
recorded deed of trust or mortgage until such time as the original recorded
mortgage or deed of trust is received from the recording jurisdiction and
submitted to the Collateral Agent; and
4. An original executed and recordable but unrecorded assignment of the
mortgage or deed of trust relating to the Mortgage Loan (unless the Collateral
Agent determines that under applicable State law the assignment should be
recorded in order to adequately protect its interest, in which case the
assignment shall be recorded by the Company and a certified true copy thereof
shall be provided to the Collateral Agent), together with the original or a duly
certified copy of a proper assignment or assignments of the mortgage or deed of
trust from the original holder through any subsequent transferees to the
Company, duly recorded if local requirements in the jurisdiction in which the
Property is located required the recordation of such assignment or assignments.
73
EXHIBIT K
TO
MORTGAGE LOAN WAREHOUSING AGREEMENT
DATED AS OF MARCH 6, 1996
BY AND BETWEEN EMERGENT MORTGAGE CORP.,
FIRST UNION NATIONAL BANK OF NORTH CAROLINA,
AS ADMINISTRATIVE AGENT AND THE LENDERS PARTY THERETO
MONTHLY OPERATING REPORT
In the form delivered to the Administrative Agent dated as of September
30, 1995, which form is on file with the Administrative Agent.
74
EXHIBIT L
TO
MORTGAGE LOAN WAREHOUSING AGREEMENT
DATED AS OF MARCH 6, 1996
BY AND BETWEEN EMERGENT MORTGAGE CORP.,
FIRST UNION NATIONAL BANK OF NORTH CAROLINA,
AS ADMINISTRATIVE AGENT AND THE LENDERS PARTY THERETO
LOAN REQUEST
Emergent Mortgage Corp.
000 Xxxxxx Xxxxxx
Xxxxxxx, Xxxxx Xxxxxxxx 00000
First Union National Bank
of North Carolina
000 X. Xxxxxxx Xxxxxx, XX-00
Xxxxxxxxx, XX 00000
Attn: R. Xxxxxx Xxxx
Vice President
Re: Loan Request
Pursuant to the terms of that certain Mortgage Loan Warehousing Agreement dated
as of March 6, 1996 (the "Agreement"), among Emergent Mortgage Corp. (the
"Company"), First Union National Bank of North Carolina, as Administrative
Agent, and the Lenders party thereto, please fund a Loan in the amount specified
in the attached "Annex A", on the date specified in Annex A.
The Loan will bear interest at [check one]
[ ] Applicable Eurodollar Rate, or
[ ] Alternate Base Rate
If Applicable Eurodollar Rate is checked, the Interest Period will
be [check one] [ ]one month, [ ] two months, [ ]three months.
Unless otherwise specifically defined herein, each capitalized term used herein
shall have the meaning ascribed to such term in the Agreement.
EMERGENT MORTGAGE CORP.
By:
Name:
Title:
75
EXHIBIT M
TO
MORTGAGE LOAN WAREHOUSING AGREEMENT
DATED AS OF MARCH 6, 1996
BY AND BETWEEN EMERGENT MORTGAGE CORP.,
FIRST UNION NATIONAL BANK OF NORTH CAROLINA,
AS ADMINISTRATIVE AGENT AND THE LENDERS PARTY THERETO
CII MANAGEMENT AGREEMENT
76
EXHIBIT N
TO
MORTGAGE LOAN WAREHOUSING AGREEMENT
DATED AS OF MARCH 6, 1996
BY AND BETWEEN EMERGENT MORTGAGE CORP.,
FIRST UNION NATIONAL BANK OF NORTH CAROLINA,
AS ADMINISTRATIVE AGENT AND THE LENDERS PARTY THERETO
UNDERWRITING STANDARDS
77
SUBORDINATION OF DEBT AGREEMENT
____________, 1996
To: First Union National Bank of North Carolina, as Administrative Agent
The undersigned, CAROLINA INVESTORS, INC. (hereinafter referred to as
the "Creditor"), creditor of EMERGENT MORTGAGE CORP. (hereinafter referred to as
the "Company"), desires that FIRST UNION NATIONAL BANK OF NORTH CAROLINA, in its
capacity as administrative agent (the "Administrative Agent"), and the lenders
(the "Lenders") from time to time participating in that certain Mortgage Loan
Warehousing Agreement of even date herewith by and among the Company, the
Lenders, the Administrative Agent and the Collateral Agent (as amended,
modified, renewed, replaced, restated or extended from time to time, the "Credit
Agreement," all capitalized terms used and not defined herein having the same
meanings as set forth in the Credit Agreement) extend such financial
accommodations to the Company as the Company may require and as the
Administrative Agent and the Lenders may deem proper. For the purpose of
inducing the Administrative Agent and the Lenders to grant, continue or renew
such financial accommodations, and in consideration thereof, the Creditor agrees
as follows:
1. That all claims of the Creditor against the Company now or
hereafter existing for funds lent by the Creditor to the
Company (any and all such claims, and the underlying
indebtedness of the Company to the Creditor, whether evidenced
by or relating to a promissory note or otherwise, being
collectively referred to herein as the "Creditor Debt"), and
all sums owed to Creditor by Company pursuant to that certain
Management Agreement between Creditor and Company of even date
herewith (the "Management Agreement") (such sums being
referred to herein as the "Management Fees" and together with
the "Creditor Debt", the "Company Obligations") are and shall
be at all times subject and subordinate to any and all claims
now or hereafter existing which the Administrative Agent, the
Collateral Agent or the Lenders may have against the Company
(and all extensions, renewals, modifications, replacements and
substitutions of or for the same), including any and all
claims which the Administrative Agent, the Collateral Agent or
the Lenders may have against the Company under, arising from
or relating to the Credit Agreement for so long as any such
claim or claims of the Administrative Agent, the Collateral
Agent or the Lenders shall exist.
2. That the Creditor shall not (a) except to the extent expressly
permitted in Section 3 hereof, receive payment of or collect,
in whole or in part, or xxx upon, any Company Obligation; (b)
take any lien or security interest in any property of the
Company as security for any Company Obligation; (c) sell,
assign, transfer, pledge, hypothecate or encumber any right of
the Creditor in Company Obligation or any instrument
evidencing Company Obligation except subject expressly to the
terms of this Agreement; (d) enforce any lien the Creditor may
now or in the future have on any Company Obligation; or (e)
join in any petition in bankruptcy,
assignment for the benefit of creditors or creditors'
agreement, so long as any claim of the Administrative
Agent, the Collateral Agent or the Lenders against the
Company, or any commitment of the Lenders to extend credit
to the Company, is in existence.
3. So long as no "Event of Default" (as defined in the Credit
Agreement) shall have occurred in payment or performance of
any obligation of the Company to the Administrative Agent, the
Collateral Agent or the Lenders, payments of interest and
principal on Creditor Debt and payment of Management Fees may
be made. If an Event of Default occurs under the Credit
Agreement, no interest and no principal payments on Creditor
Debt nor any payment of Management Fees shall be made without
the prior written consent of the Majority Lenders. The
subordination of the Company Obligation hereunder shall remain
in effect so long as there shall be outstanding any obligation
of the Company to the Administrative Agent, the Collateral
Agent or the Lenders (for this purpose, the Company shall be
deemed obligated to the Lenders so long as the Lenders shall
have outstanding any commitment to make any loan to the
Company, whether or not any such loan shall have been made or
advanced).
4. In the event that the Creditor receives a payment from the
Company in violation of the terms of this Agreement, the
Creditor (a) shall hold such money in trust for the benefit of
the Administrative Agent, the Collateral Agent and the
Lenders, (b) shall segregate such payment from (and shall not
commingle such payment with any of) the other funds of the
Creditor, and (c) shall forthwith remit such payment to the
Administrative Agent, in the exact form received (but with any
necessary endorsement).
5. In case of any assignment by the Company for the benefit of
creditors, or in case of any bankruptcy proceedings instituted
by or against the Company, or in case of the appointment of
any receiver for the Company's business or assets, or in case
of 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 Administrative Agent, the Collateral
Agent or the Lenders, as applicable, the full amount of such
Person's claim or claims against the Company before making any
payment of principal or interest on Creditor Debt or payment
of Management Fees. The Creditor hereby sells, transfers, sets
over and assigns to the Administrative Agent, the Collateral
Agent and the Lenders all claims the Creditor may now or
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 a claim in such
proceedings, then the Administrative Agent, the Collateral
Agent and the Lenders have the right (but no obligation) to do
so and are hereby
2
authorized to file an appropriate claim or claims for and on
behalf of the Creditor.
6. This Agreement shall be governed in all respects by the laws
of the State of North Carolina and shall be binding upon and
shall inure to the benefit of the Creditor, the Administrative
Agent, the Collateral Agent, the Lenders, and the Company, and
their respective heirs, executors, administrators, personal
representatives, successors and assigns. This Agreement and
any claim or claims of the Administrative Agent, the
Collateral Agent or the Lenders pursuant hereto may be
assigned by the Administrative Agent, the Collateral Agent or
the Lenders, in whole or in part, at any time, without notice
to the Creditor or the Company. This Agreement will terminate
upon the repayment in full of the Company Obligations so long
as such repayment is not in violation of the provisions
hereof.
IN WITNESS WHEREOF, the Creditor has executed this Agreement under seal
as of the date written hereinabove.
CREDITOR:
CAROLINA INVESTORS, INC.
By:
[CORPORATE SEAL] Name:
Title:
Attest:
By:
Name:
Title:
3
ACTION OF THE DIRECTORS OF
CAROLINA INVESTORS, INC.
BY UNANIMOUS CONSENT WITHOUT FORMAL MEETING
By unanimous consent the Carolina Investors, Inc. Board of Directors approves
the following:
1. Xxxxx X. Xxxxxxx as Chief Executive Officer to sign the fourth
amendment to the Mortgage Loan Warehousing Agreement, and any
other agreements, instruments or documents relating to the
amendment of the existing mortgage loan warehousing facility
extended to Carolina Investors, Inc..
Executed this _____ day of _______________, 1996.
BOARD OF DIRECTORS:
Xxxxx X. Xxxxxx, Xx., Chairman
Xxxxx X. Xxxxxxx
Xxxx X. Xxxxxxxx, Xx.
J. Xxxx Xxx
Xxxxx X. Xxxx
Xxxxxx X. Xxxxx
ATTEST: Xxx X. Xxxx
J. Xxxx Xxx, Secretary
4
RESOLUTION BY THE BOARD OF DIRECTORS OF
EMERGENT GROUP, INC.
The Board of Directors (the "Board") of Emergent Group, Inc., a South Carolina
corporation (the "Company"), waiving any and all requirements of notice, does
hereby adopt the following resolution of the Board by unanimous written consent:
RESOLVED, that the Board does hereby agree to reaffirm to First Union National
Bank of North Carolina (the "Bank") the guarantee of the Company on a warehouse
line of credit provided by the Bank to Carolina Investors, Inc. in an amount not
to exceed Twenty Million Dollars ($20,000,000).
Adopted as of the ____ day of ___________, 1996.
Xxxx X. Xxxxxxxx, Xx. Tecumseh Xxxxxx, Jr.
Xxxxxx X. Xxxxx Xxxxx X. Xxxxxx
Xxxxx X. Xxxxxxx Xxxx Xxxxxx
Xxxxxxxx X. Xxxxxxxxx Xxxxxx X. Xxxx
5
RESOLUTION BY THE BOARD OF DIRECTORS OF
EMERGENT FINANCIAL CORPORATION
The Board of Directors (the "Board") of Emergent Financial Corporation, a South
Carolina corporation (the "Company"), waiving any and all requirements of
notice, does hereby adopt the following resolution of the Board by unanimous
written consent:
RESOLVED, that the Board does hereby agree to reaffirm to First Union National
Bank of North Carolina (the "Bank") the guarantee of the Company on a warehouse
line of credit provided by the Bank to Carolina Investors, Inc. in an amount not
to exceed Twenty Million Dollars ($20,000,000).
Adopted as of the ____ day of ___________, 1996.
Xxxx X. Xxxxxxxx, Xx.
Xxxxxx X. Xxxxx
Xxxxx X. Xxxxxxx
6
The Company undertakes to provide to the Commission, upon request, any executed
Exhibits or Schedules provided herewith.
