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MASTER LOAN AND SECURITY AGREEMENT
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DATED AS OF MARCH 30, 1998
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HANOVER CAPITAL MORTGAGE HOLDINGS, INC.
AS BORROWER
AND
GREENWICH CAPITAL FINANCIAL PRODUCTS, INC.
AS LENDER
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TABLE OF CONTENTS
RECITALS..........................................................................................................1
SECTION 1 Definitions and Accounting Matters................................................................1
1.01 Certain Defined Terms.............................................................................1
1.02 Accounting Terms and Determinations..............................................................18
SECTION 2 Advances, Note and Prepayments...................................................................18
2.01 Advances.........................................................................................18
2.02 Notes............................................................................................18
2.03 Procedure for Borrowing..........................................................................18
2.04 Repayment of Advances; Interest..................................................................19
2.05 Limitation on Types of Advances; Illegality......................................................20
2.06 Determination of Borrowing Base; Mandatory Prepayments or Pledge.................................20
2.07 Optional Prepayments.............................................................................21
2.08 Requirements of Law..............................................................................21
2.09 Purpose of Advances..............................................................................22
2.10 Extension of Termination Date....................................................................22
2.11 Extension of Maximum Pledge Period...............................................................22
SECTION 3 Payments; Computations; Etc.; Commitment Fee.....................................................22
3.01 Payments.........................................................................................22
3.02 Computations.....................................................................................23
3.03 Commitment Fee...................................................................................23
3.04 Selection of Interest Period.....................................................................23
SECTION 4 Collateral Security..............................................................................23
4.01 Collateral; Security Interest....................................................................23
4.02 Further Documentation............................................................................25
4.03 Changes in Locations, Name, etc..................................................................25
4.04 Lender's Appointment as Attorney-in-Fact.........................................................25
4.05 Performance by Lender of Borrowers' Obligations..................................................26
4.06 Proceeds.........................................................................................26
4.07 Remedies.........................................................................................27
4.08 Limitation on Duties Regarding Presentation of Collateral........................................28
4.09 Powers Coupled with an Interest..................................................................28
4.10 Release of Security Interest.....................................................................28
4.11 Establishment of Collection Account..............................................................28
SECTION 5 Conditions Precedent.............................................................................28
5.01 Initial Advance..................................................................................28
5.02 Initial and Subsequent Advances..................................................................30
SECTION 6 Representations and Warranties...................................................................33
6.01 Financial Condition..............................................................................33
6.02 No Change........................................................................................33
6.03 Corporate Existence; Compliance with Law.........................................................34
6.04 Corporate Power; Authorization; Enforceable Obligations..........................................34
6.05 No Legal Bar.....................................................................................34
6.06 No Material Litigation...........................................................................34
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6.07 No Default.......................................................................................34
6.08 Collateral; Collateral Security..................................................................35
6.09 Chief Executive Office...........................................................................35
6.10 Location of Books and Records....................................................................35
6.11 No Burdensome Restrictions.......................................................................35
6.12 Taxes............................................................................................35
6.13 Margin Regulations...............................................................................35
6.14 Investment Company Act; Other Regulations........................................................36
6.15 Subsidiaries.....................................................................................36
6.16 Acquisition of Mortgage Loans....................................................................36
6.17 No Adverse Selection.............................................................................36
6.18 Borrowers Solvent; Fraudulent Conveyance.........................................................36
6.19 ERISA............................................................................................36
6.20 True and Complete Disclosure.....................................................................36
6.21 True Sales.......................................................................................37
6.22 Participation Certificates.......................................................................37
SECTION 7 Covenants of the Borrowers.......................................................................37
7.01 Financial Statements.............................................................................37
7.02 Existence, Etc...................................................................................38
7.03 Maintenance of Property; Insurance...............................................................38
7.04 Notices..........................................................................................38
7.05 Other Information................................................................................39
7.06 Further Identification of Collateral.............................................................39
7.07 Eligible Asset Determined to be Defective........................................................39
7.08 Monthly Reporting................................................................................39
7.09 Financial Condition Covenants....................................................................39
7.10 Borrowing Base Deficiency........................................................................40
7.11 Prohibition of Fundamental Changes...............................................................40
7.12 Limitation on Liens on Collateral................................................................40
7.13 Limitation on Transactions with Affiliates.......................................................40
7.14 Underwriting Guidelines..........................................................................40
7.15 Limitations on Modifications, Waivers and Extensions of Eligible Assets..........................40
7.16 Servicing........................................................................................40
7.17 Limitation on Distributions......................................................................40
7.18 Use of Proceeds..................................................................................40
7.19 Restricted Payments..............................................................................40
7.20 Reports..........................................................................................41
7.21 Inspection.......................................................................................41
7.22 Further Proceeds.................................................................................41
7.23 Further Documentation............................................................................41
7.24 Taxes............................................................................................41
7.25 Lost Note Affidavits.............................................................................41
SECTION 8 Events of Default................................................................................42
SECTION 9 Remedies Upon Default............................................................................44
SECTION 10 No Duty of Lender................................................................................45
SECTION 11 Miscellaneous....................................................................................45
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11.01 Waiver..........................................................................................45
11.02 Notices.........................................................................................45
11.03 Indemnification and Expenses....................................................................45
11.04 Amendments......................................................................................46
11.05 Successors and Assigns..........................................................................46
11.06 Survival........................................................................................46
11.07 Captions........................................................................................46
11.08 Counterparts....................................................................................47
11.09 Governing Law; etc..............................................................................47
11.10 Submission to Jurisdiction; Waivers.............................................................47
11.11 Waiver of Jury Trial............................................................................47
11.12 Acknowledgments.................................................................................48
11.13 Hypothecation and Pledge of Collateral..........................................................48
11.14 Assignments; Participations.....................................................................48
11.15 Servicing.......................................................................................49
11.16 Periodic Due Diligence Review...................................................................50
11.17 Set-Off.........................................................................................50
SCHEDULES
SCHEDULE 1 Representations and Warranties re: Eligible Assets
SCHEDULE 2 Filing Jurisdictions and Offices
SCHEDULE 3 Subsidiaries
SCHEDULE 4 Litigation
EXHIBITS
EXHIBIT A Form of Promissory Note
EXHIBIT B Form of Mortgage Custodial Agreement
EXHIBIT C Form of Opinion of Counsel to Borrower
EXHIBIT D Form of Notice of Borrowing and Pledge
EXHIBIT E Underwriting Guidelines
EXHIBIT F Form of Blocked Account Agreement
EXHIBIT G Form of Mortgage Loan Tape
EXHIBIT H Form of Borrowing Base Certificate
EXHIBIT I Form of Remittance Report
EXHIBIT J Form of Instruction Letter
EXHIBIT K-1 Form of Lost Instrument Affidavit
EXHIBIT K-2 Form of Lost Note Affidavit
EXHIBIT L Form of Notice of Extension of Interest Period
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MASTER LOAN AND SECURITY AGREEMENT
MASTER LOAN AND SECURITY AGREEMENT, dated as of March 30, 1998, between
HANOVER CAPITAL MORTGAGE HOLDINGS, INC., a Maryland corporation (the
"BORROWER"), and GREENWICH CAPITAL FINANCIAL PRODUCTS, INC., a Delaware
corporation (the "LENDER").
RECITALS
The Borrower wishes to obtain financing from time to time to provide
interim funding for (i) certain Eligible Bonds (as defined herein), (ii) certain
Participation Certificates (as defined herein), and (iii) the acquisition of
certain Mortgage Loans (as defined herein), which Mortgage Loans are to be sold
or contributed by the Borrower to one or more trusts or other entities to be
sponsored by the Borrower or an Affiliate (as defined herein) thereof, or to
third-parties, and which Eligible Bonds, Participation Certificates and Mortgage
Loans shall secure Advances (as defined herein) to be made by the Lender
hereunder.
The Lender has agreed, subject to the terms and conditions of this Loan
Agreement (as defined herein), to provide such financing to the Borrower, with a
portion of the proceeds of the sale of all (i) mortgage-backed securities issued
by any such trust or other entity, together with a portion of the proceeds of
any whole loan sales, (ii) such subordinated bonds, and (iii) such Participation
Certificates together with other funds of the Borrower, if necessary, being used
to repay any Advances made hereunder as more particularly described herein.
Accordingly, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
SECTION 1 DEFINITIONS AND ACCOUNTING MATTERS.
1.01 CERTAIN DEFINED TERMS. As used herein, the following terms shall have
the following meanings (all terms defined in this Section 1.01 or in other
provisions of this Loan Agreement in the singular to have the same meanings when
used in the plural and VICE VERSA):
"ACCEPTED SERVICING PRACTICES" shall have the meaning assigned thereto in
Section 11.15(a) hereof.
"ADVANCE" shall have the meaning provided in Section 2.01 hereof.
"AFFILIATE" means, with respect to any Person, any other Person which,
directly or indirectly, controls, is controlled by, or is under common control
with, such Person. For purposes of this definition, "control" (together with the
correlative meanings of "controlled by" and "under common control with") means
possession, directly or indirectly, of the power (a) to vote 10% or more of the
securities (on a fully diluted basis) having ordinary voting power for the
directors or managing general partners (or their equivalent) of such Person, or
(b) to direct or cause the direction of the management or policies of such
Person, whether through the ownership of voting securities, by contract, or
otherwise.
"APPLICABLE COLLATERAL PERCENTAGE" shall mean, with respect to all Eligible
Mortgage Loans (other than Delinquent Mortgage Loans, 97%; with respect to all
Eligible Bonds, 60%; with respect to Thirty-Day Delinquent Mortgage Loans, 90%;
with respect to Sixty-Day Delinquent
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Mortgage Loans, 85%; and with respect to Participation Certificates, 97%
multiplied by the Ownership Percentage.
"APPLICABLE MARGIN" shall mean, with respect to Advances that are Tranche A
Advances, Tranche B Advances, and Tranche C Advances, respectively, the
applicable rate per annum set forth below:
Tranche A Advances ................................... .70%
Tranche B Advances ................................... 1.00%
Tranche C Advances ................................. 1.25%
"APPLICABLE NOTICE DOCUMENTS" shall have the meaning provided in Section
2.03(a) hereof.
"APPRAISED VALUE" shall mean the value set forth in an appraisal made in
connection with the origination or acquisition of the related Mortgage Loan as
the value of the Mortgaged Property.
"ASSET DOCUMENTS" shall mean (i) with respect to each Eligible Mortgage
Loan, the documents comprising the related Mortgage File, (ii) with respect to
each Eligible Bond, the documents comprising the related Bond File, and (iii)
with respect to Participation Certificates, the documents comprising the
Participation Certificate File.
"ASSET FILE" shall mean the Bond File, the Mortgage File or the
Participation Certificate File, as applicable.
"BANKRUPTCY CODE" shall mean the United States Bankruptcy Code of 1978, as
amended from time to time.
"BLOCKED ACCOUNT AGREEMENT" shall mean an agreement between the Borrower,
the Collection Bank, and the Lender, substantially in the form of EXHIBIT F
hereto, as the same may be amended, supplemented or otherwise modified from time
to time, in which the Borrower and Collection Bank acknowledges the Lender's
lien on the Collection Account, and grants to the Lender exclusive dominion and
control over the distribution of all monies in the account.
"BOND/PC CUSTODIAL AGREEMENT" shall mean that certain agreement between the
Lender and the Bond/PC Custodian setting forth (i) the procedures for delivery
and maintenance of the Eligible Bonds, Bond Files, Participation Certificates,
and Participation Certificate Files, and (ii) governing the establishment and
maintenance of the Lender's "securities account" (as defined in Section 8-501(a)
of the UCC) and identifying the Bond/PC Custodian as "securities intermediary"
(as defined in Section 8-102(a)(14) of the UCC and 31 C.F.R. Section 357.2).
"BOND/PC CUSTODIAN" shall mean either (i) the Lender, (ii) Chase Manhattan
Bank or (iii) any other Person designated by the Lender, as custodian of the
Eligible Bonds, Bond Files, Participation Certificates, and Participation
Certificate Files.
"BOND FILE" shall have the meaning provided in Section 5.02(g)(vi) hereof.
"BOND SUMMARY" shall mean a written summary for each Eligible Bond to be
delivered by the Borrower to the Lender pursuant to Section 2.03(a) hereof,
which shall include the following
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information and documentation: (i) the name of the issuer, (ii) the original
principal amount, (iii) the current principal amount, (iv) the applicable
interest rate, (v) for each bond which is publicly offered, the cusip, (vi) the
name and class of the bond, (vii) such other information as shall be mutually
agreed upon by the Borrower and the Lender, and (viii) with respect to each
certificated bond, a copy of the related certificate attached thereto.
"BORROWER" shall have the meaning provided in the heading hereof.
"BORROWING BASE" shall mean the aggregate Collateral Value of all Eligible
Assets that have been, and remain, pledged to the Lender hereunder.
"BORROWING BASE DEFICIENCY" shall have the meaning provided in Section 2.06
hereof.
"BUSINESS DAY" shall mean any day other than (i) a Saturday or Sunday or
(ii) a day on which the New York Stock Exchange, the Federal Reserve Bank of New
York or the Mortgage Custodian is authorized or obligated by law or executive
order to be closed.
"CASH EQUIVALENTS" shall mean (a) securities with maturities of 90 days or
less from the date of acquisition issued or fully guaranteed or insured by the
United States Government or any agency thereof, (b) certificates of deposit and
eurodollar time deposits with maturities of 90 days or less from the date of
acquisition and overnight bank deposits of any commercial bank having capital
and surplus in excess of $500,000,000, (c) repurchase obligations of any
commercial bank satisfying the requirements of clause (b) of this definition,
having a term of not more than seven days with respect to securities issued or
fully guaranteed or insured by the United States Government, (d) commercial
paper of a domestic issuer rated at least A-1 or the equivalent thereof by
Standard and Poor's Ratings Group ("S&P") or P-1 or the equivalent thereof by
Xxxxx'x Investors Service, Inc. ("MOODY'S") and in either case maturing within
90 days after the day of acquisition, (e) securities with maturities of 90 days
or less from the date of acquisition issued or fully guaranteed by any state,
commonwealth or territory of the United States, by any political subdivision or
taxing authority of any such state, commonwealth or territory or by any foreign
government, the securities of which state, commonwealth, territory, political
subdivision, taxing authority or foreign government (as the case may be) are
rated at least A by S&P or A by Moody's, (f) securities with maturities of 90
days or less from the date of acquisition backed by standby letters of credit
issued by any commercial bank satisfying the requirements of clause (b) of this
definition or (g) shares of money market mutual or similar funds which invest
exclusively in assets satisfying the requirements of clauses (a) through (f) of
this definition.
"CERTIFICATE REGISTRAR" shall mean the Person who carries on its books and
records the identity of the holder of a Participation Certificate.
"CHANGE OF CONTROL" shall mean either (i) any one of the following three
individuals leaves the employ of the Borrower: Xxxx Xxxxxxxx, Xxxx Xxxxxxx, or
Xxxxx Xxxxxxx, or (ii) there occurs a change of "control" of the Borrower as
such term is defined in the Securities Exchange Act of 1934, as amended.
"CODE" shall mean the Internal Revenue Code of 1986, as amended from time
to time.
"COLLATERAL" shall have the meaning provided in Section 4.01(b) hereof.
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"COLLATERAL VALUE" shall mean, (a) with respect to each Eligible Mortgage
Loan or Eligible Bond, the Applicable Collateral Percentage of the lesser of (i)
the Market Value of such Eligible Mortgage Loan or Eligible Bond and (ii) the
Purchase Price Percentage of such Eligible Mortgage Loan or Eligible Bond
multiplied by the outstanding principal balance of such Eligible Mortgage Loan
or Eligible Bond; and (b) with respect to each Participation Certificate, the
Applicable Collateral Percentage of the lesser of (a) the Market Value of the
Underlying Mortgage Loans subject to such Participation Certificate, and (b) the
Purchase Price Percentage of such Participation Certificate multiplied by the
outstanding principal balance of the Underlying Mortgage Loans subject to such
Participation Certificate; provided that the following additional limitations on
Collateral Value shall apply:
(i) subject to (vi)(A) below, the aggregate Collateral Value of all
Thirty-Day Delinquent Mortgage Loans may not at any one time exceed the
lesser of (a) $5,000,000 or (b) 5% of the aggregate outstanding principal
balance of all Advances;
(ii) subject to (vi)(A) below, the aggregate Collateral Value of all
Sixty-Day Delinquent Mortgage Loans may not at any one time exceed the
lesser of (a) $3,000,000 or (b) 3% of the aggregate outstanding principal
balance of all Advances;
(iii) the aggregate Collateral Value of Non-Investment Grade Bonds
shall not at any one time exceed $15,000,000; and
(iv) the aggregate Collateral Value for all Document Deficient Assets
shall not at any time exceed the lesser of (a) $10,000,000 or (b) 10% of
the aggregate outstanding principal balance of all Advances; provided,
however, that in no event shall Type I Document Deficient Assets and Type
III Document Deficient Assets (taking into account Underlying Mortgage
Loans subject to Participation Certificates), taken in the aggregate, at
any time exceed the lesser of (x) $1,000,000 or (y) 1% of the aggregate
outstanding principal balance of all Advances.
(v) the Collateral Value shall be ZERO for each Eligible Asset or for
each Underlying Mortgage Loan securing such Eligible Asset, as applicable:
(A) which is thirty (30) days or more delinquent in respect of
the first Scheduled Payment;
(B) other than Thirty-Day Delinquent Mortgage Loans subject to
subsection (i) above, which is thirty (30) days or more delinquent in
respect of any Scheduled Payment as of the date of determination;
(C) other than Sixty-Day Delinquent Mortgage Loans subject to
subsection (ii) above, which is sixty (60) days or more delinquent in
respect of any Scheduled Payment;
(D) in respect of which the Maximum Pledge Period has passed;
(E) which is an Eligible Mortgage Loan and which has been
released from the possession of the Mortgage Custodian under Section
5(a) of the Mortgage Custodial Agreement to any Person other than the
Lender or its bailee for a period in excess of
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ten (10) days (or if such tenth day is not a Business Day, the next
succeeding Business Day);
(F) which is an Eligible Mortgage Loan and which has been
released from the possession of the Mortgage Custodian under Section
5(b) of the Mortgage Custodial Agreement under any Transmittal Letter
in excess of the time period stated in such Transmittal Letter for
release;
(G) which is an Eligible Mortgage Loan or Underlying Mortgage
Loan and in respect of which (1) the related Mortgaged Property is the
subject of a foreclosure proceeding or (2) the related Mortgage Note
has been extinguished under relevant state law in connection with a
judgment of foreclosure or foreclosure sale or otherwise;
(H) which is an Eligible Mortgage Loan or Underlying Mortgage
Loan and as to which (i) the related Mortgage Note or the related
Mortgage is not genuine or is not the legal, valid, binding and
enforceable obligation of the maker thereof, subject to no right of
rescission, set-off, counterclaim or defense, or (ii) such Mortgage,
is not a valid, subsisting, enforceable and perfected first lien on
the Mortgaged Property;
(I) which the Lender determines, in its reasonable discretion, is
not eligible for sale in the secondary market or for securitization
without unreasonable credit enhancement;
(J) which has a Material Exception with respect thereto;
(K) which is an Eligible Mortgage Loan or Underlying Mortgage
Loan and in respect of which the related Mortgagor is the subject of a
bankruptcy proceeding;
(L) which is an Eligible Mortgage Loan or Underlying Mortgage
Loan which is ninety (90) days or more delinquent in respect of any
Scheduled Payment;
(M) which is a Type II Document Deficient Asset for which the
Mortgage Custodian or the Bond/PC Custodian, as applicable, has failed
to receive, pursuant to Section 2(I)(e) of the Mortgage Custodial
Agreement, (a) with respect to intervening assignments, either (i) the
related intervening assignment within 120 days from the date such
Mortgage Loan was pledged to the Lender or (ii) proof that the last
intervening assignment was recorded, which such proof shall be in the
form of (A) the original title policy or a copy of the same certified
by the Borrower as a true, correct, and complete copy thereof or (B) a
certified copy of the last intervening assignment with evidence of
recording indicated thereon; or, (b) with respect to the title policy,
either (i) the original title policy or a copy of the same certified
by the Borrower as a true, correct and complete copy thereof within
120 days from the date such Mortgage Loan was pledged to the Lender,
or (ii) any other evidence of such title policy acceptable to the
Lender in its sole discretion, including, without limitation, any
preliminary title report, binder, or commitment to provide such title
policy;
(N) which is an Eligible Bond and in respect to which there is a
breach of any of the representations or warranties in Schedule 1
hereto; and
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(O) which is a Type III Document Deficient Asset for which the
Bond/PC Custodian has failed to receive, an original Participation
Certificate within 21 days from the date such Participation
Certificate was pledged to the Lender.
"COLLECTION ACCOUNT" shall mean the segregated account established by
the Borrower, maintained in the name of the Lender, controlled by the Lender and
subject to a security interest in favor of the Lender into which all Collections
received by the Master Servicer, a Subservicer, or a Trustee shall be remitted
by such Master Servicer, Subservicer or Trustee pursuant to an Instruction
Letter.
"COLLECTION BANK" shall mean Fleet Bank.
"COLLECTIONS" shall mean, collectively, (i) with respect to Mortgage
Loans, all collections and proceeds on or in respect of the Mortgage Loans,
excluding collections required to be paid to the Subservicer or a mortgagor on
the Mortgage Loans, (ii) with respect to Eligible Bonds and Participation
Certificates, all cash dividends or distributions or any monies distributed on
account of such Eligible Bonds or Participation Certificates, as applicable.
"COMMITMENT FEE" shall have the meaning assigned thereto in Section
3.03 hereof.
"COMMONLY CONTROLLED ENTITY" shall mean an entity, whether or not
incorporated, which is under common control with the Borrower within the meaning
of Section 4001 of ERISA or is part of a group which includes the Borrower and
which is treated as a single employer under Section 414 of the Code.
"CONTRACTUAL OBLIGATION" shall mean as to any Person, any provision of
any agreement, instrument or other undertaking to which such Person is a party
or by which it or any of its property is bound or any provision of any security
issued by such Person.
"DEFAULT" shall mean an Event of Default or an event that with notice
or lapse of time or both would become an Event of Default.
"DELINQUENT MORTGAGE LOAN" shall mean either a Thirty-Day Delinquent
Mortgage Loan or a Sixty-Day Delinquent Mortgage Loan; provided that in no event
shall a Mortgage Loan or Underlying Mortgage Loan that is ninety (90) days or
more delinquent have a Collateral Value in excess of zero.
"DOCUMENT DEFICIENT ASSETS" shall be the collective reference to Type
I Document Deficient Assets, Type II Document Deficient Mortgage Loans and Type
III Document Deficient Mortgage Loans.
"DOLLARS" and "$" shall mean lawful money of the United States of
America.
"DUE DILIGENCE PACKAGE" shall mean with respect to each Mortgage Loan
or Underlying Mortgage Loan to be pledged to the Lender hereunder (a) all
materials in the possession or under the control of the Borrower, which
materials shall include, without limitation, (i) the Borrower's analysis of the
seller and the Subservicer, (ii) the results of the Borrower's underwriting and
due diligence review of all documents related to such Mortgage Loan or
Underlying Mortgage Loan, and (b) any certificates, remittance reports,
Servicing Agreements, and purchase agreements governing such Mortgage Loans or
Underlying Mortgage Loan.
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"DUE DILIGENCE REVIEW" shall mean the performance by the Lender of any
or all of the reviews permitted under Section 11.16 hereof with respect to any
or all of the Eligible Assets of the Borrower or related parties, as desired by
the Lender from time to time.
"EFFECTIVE DATE" shall mean the date upon which the conditions
precedent set forth in Section 5.01 shall have been satisfied.
"ELIGIBLE ASSETS" shall mean Eligible Mortgage Loans, Eligible Bonds,
and Participation Certificates (or the Underlying Mortgage Loans related
thereto) as to which the representations and warranties set forth on Schedule 1
hereof are true and correct.
"ELIGIBLE BOND" shall mean either an Investment Grade Bond or a
Non-Investment Grade Bond for which (i) the Borrower or one of its Affiliates
was the issuer, (ii) the Borrower is the current owner, and (iii) Greenwich
Capital Markets, Inc. was the underwriter or placement agent.
"ELIGIBLE MORTGAGE LOAN" shall mean either a Prime Mortgage Loan or a
Scratch and Dent Mortgage Loan which was acquired by the Borrower and which
conforms to the Borrower's Underwriting Guidelines.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time.
"ERISA AFFILIATE" shall mean any corporation or trade or business that
is a member of any group of organizations (i) described in Section 414(b) or (c)
of the Code of which the Borrower is a member and (ii) solely for purposes of
potential liability under Section 302(c)(11) of ERISA and Section 412(c)(11) of
the Code and the lien created under Section 302(f) of ERISA and Section 412(n)
of the Code, described in Section 414(m) or (o) of the Code of which the
Borrower is a member.
"EVENT OF DEFAULT" shall have the meaning provided in Section 8
hereof.
"EXCEPTION" shall have the meaning assigned thereto in the Mortgage
Custodial Agreement.
"EXCEPTION REPORT" shall mean the exception report prepared by the
Mortgage Custodian pursuant to the Mortgage Custodial Agreement.
"FEDERAL FUNDS RATE" shall mean, for any day, the weighted average of
the rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day which is a Business Day, the average of the
quotations for the day of such transactions received by the Lender from three
federal funds brokers of recognized standing selected by it.
"FUNDING DATE" shall mean the date on which an Advance is made
hereunder.
"GAAP" shall mean generally accepted accounting principles as in
effect from time to time in the United States of America.
"GOVERNING AGREEMENTS" shall mean the agreement or agreements which
govern the issuance and the payment of the Eligible Bonds or Participation
Certificates, as applicable.
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"GOVERNMENTAL AUTHORITY" shall mean any nation or government, any
state or other political subdivision thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government and any court or arbitrator having jurisdiction over the Borrower,
any of its Subsidiaries or any of their properties.
"GUARANTEE OBLIGATION" as to any Person (the "GUARANTEEING PERSON"),
shall mean any obligation of (a) the guaranteeing person or (b) another Person
(including, without limitation, any bank under any letter of credit) with
respect to which the guaranteeing person has issued a reimbursement,
counterindemnity or similar obligation, in either case guaranteeing or in effect
guaranteeing any Indebtedness, leases, dividends or other obligations (the
"PRIMARY OBLIGATIONS") of any other third Person (the "PRIMARY OBLIGOR") in any
manner, whether directly or indirectly, including, without limitation, any
obligation of such guaranteeing person, whether or not contingent, (i) to
purchase any such primary obligation or any property constituting direct or
indirect security therefor, (ii) to advance or supply funds (1) for the purchase
or payment of any such primary obligation or (2) to maintain working capital or
equity capital of the primary obligor or otherwise to maintain the net worth or
solvency of the primary obligor, (iii) to purchase property, securities or
services primarily for the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor to make payment of such primary
obligation or (iv) otherwise to assure or hold harmless the owner of any such
primary obligation against loss in respect thereof; PROVIDED, HOWEVER, that the
term Guarantee Obligation shall not include endorsements of instruments for
deposit or collection in the ordinary course of business. The terms "GUARANTEE"
and "GUARANTEED" used as a verb shall have a correlative meaning. The amount of
any Guarantee Obligation of any guaranteeing person shall be deemed to be the
lower of (a) an amount equal to the stated or determinable amount of the primary
obligation in respect of which such Guarantee Obligation is made and (b) the
maximum amount for which such guaranteeing person may be liable pursuant to the
terms of the instrument embodying such Guarantee Obligation, unless such primary
obligation and the maximum amount for which such guaranteeing person may be
liable are not stated or determinable, in which case the amount of such
Guarantee Obligation shall be such guaranteeing person's maximum reasonably
anticipated liability in respect thereof as determined by the Borrower in good
faith.
"HEDGING AGREEMENT" shall mean, with respect to any or all of the
Eligible Assets, any interest rate swap, cap or collar agreement or similar
arrangements providing for protection against fluctuations in interest rates or
other market risks commonly hedged or the exchange of nominal interest
obligations, either generally or under specific contingencies, entered into by
the Borrower and reasonably acceptable to the Lender.
"HUD" shall mean the Department of Housing and Urban Development, or
any federal agency or official thereof which may from time to time succeed to
the functions thereof.
"INDEBTEDNESS" shall mean, of any Person at any date, without
duplication, (a) all indebtedness of such Person for borrowed money (whether by
loan or the issuance and sale of debt securities) or for the deferred purchase
price of property or services (other than current trade liabilities incurred in
the ordinary course of business and payable in accordance with customary
practices), (b) any other indebtedness of such Person which is evidenced by a
note, bond, debenture or similar instrument, (c) all obligations of such Person
under financing leases, (d) all obligations of such Person in respect of letters
of credit, acceptances or similar instruments issued or created for the account
of such Person and (e) all liabilities secured by any Lien on any property owned
by such Person even though such Person has not assumed or otherwise become
liable for the payment thereof.
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"INDEMNIFIED PARTY" shall have the meaning provided in Section 11.03
hereof.
"INSTRUCTION LETTER" shall mean a letter agreement between the
Borrower and each Trustee, Certificate Registrar and/or Subservicer, as
applicable, substantially in the form of EXHIBIT J attached hereto, in which
such Persons acknowledge the Lender's security interest in the Eligible Assets,
and agrees to remit Collections either directly into the Collection Account or
in any other way the Lender may so direct from time to time.
"INTEREST PERIOD" shall mean, with respect to any Advance, (i)
initially, the period commencing on the Funding Date with respect to such
Advance and ending on the calendar day prior to the Payment Date following one
month, two months, three months, or six months thereafter (the "RESET DATE"), as
the Borrower may select as provided in Section 3.04 hereof, and (ii) thereafter,
each period commencing on the Payment Date and ending on the applicable Reset
Date. Notwithstanding the foregoing, no Interest Period may end after the
Termination Date.
"INVESTMENT COMPANY ACT" shall mean the Investment Company Act of
1940, as amended.
"INVESTMENT GRADE" shall mean a credit rating of BBB- or better, as
determined by Standard & Poor's Ratings Group ("S&P"), or a credit rating of
Baa2 or better, as determined by Xxxxx'x Investors Service, Inc. ("XXXXX'X).
"INVESTMENT GRADE BOND" shall mean a certificated or uncertificated
subordinate bond with an Investment Grade credit rating as of any date of
determination; PROVIDED, that, in the event such bond is downgraded to below an
Investment Grade credit rating, such bond will be treated as a Non-Investment
Grade Bond hereunder and shall be included in the sublimit set forth in clause
(iii) of the definition of Collateral Value.
"LENDER" shall have the meaning provided in the heading hereof.
"LIBOR" shall mean for any Advance, with respect to each day during
each Interest Period pertaining to such Advance, the rate per annum equal to the
rate appearing on Bloomberg on the first day of such Interest Period, for the
one-month, three-month, or six-month term, as applicable, corresponding to such
Interest Period, or if such rate shall not be so quoted then the applicable rate
appearing at page 3750 of the Telerate Screen on the first day of such Interest
Period, or if neither such rate shall be so quoted, the rate per annum at which
the Lender is offered Dollar deposits at or about 11:00 a.m., New York City
time, on such date by prime banks in the interbank eurodollar market where the
eurodollar and foreign currency exchange operations in respect of its Advances
are then being conducted for delivery on the first day of such Interest Period
for the number of days comprised therein, and in an amount comparable to the
amount of the Advances to be outstanding on such day.
"LIEN" shall mean any mortgage, lien, pledge, charge, security
interest or similar encumbrance.
"LOAN AGREEMENT" shall mean this Master Loan and Security Agreement,
as the same may be amended, supplemented or otherwise modified from time to
time.
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"LOAN DOCUMENTS" shall mean, collectively, this Loan Agreement, the
Note, the Mortgage Custodial Agreement, the Bond/PC Custodial Agreement, the
Blocked Account Agreement, and the Instruction Letters.
"LOAN-TO-VALUE RATIO" or "LTV" shall mean with respect to any Mortgage
Loan, the ratio of (a) the Par Amount of the Mortgage Loan as of the date of
origination (unless otherwise indicated) to (b) the Appraised Value of the
Mortgaged Property or if the Mortgage Loan was made in connection with the
purchase of the related Mortgaged Property, the lesser of the Appraised Value
and the sales price of such property.
"LOST INSTRUMENT AFFIDAVIT" shall mean an affidavit, substantially in
the form of EXHIBIT K-1 or otherwise acceptable to the Lender in its sole
discretion, executed by the Borrower or other Person acceptable to the Lender in
its sole discretion, which Lost Instrument Affidavit shall (i) attach a copy of
the original Participation Certificate certified by the Borrower as a true,
complete, and correct copy thereof, (ii) indemnify the Lender, and (iii) remain
effective for all successors and assigns of the Borrower and the Lender.
"LOST NOTE AFFIDAVIT" shall mean an affidavit, substantially in the
form of EXHIBIT K-2 or otherwise acceptable to the Lender in its sole
discretion, executed by the the Borrower or other Person acceptable to the
Lender in its sole discretion, which states that the Mortgage Custodian is not
in possession of the original Morgage Note, which Lost Note Affidavit shall (i)
attach a copy of the original Mortgage Note certified by the Borrower as a true,
complete, and correct copy thereof, (ii) indemnify the Lender, and (iii) remain
effective for all successors and assigns of the Borrower and the Lender.
"MARKET VALUE" shall mean, with respect to any Eligible Asset, the
price at which such Eligible Asset could be sold to a third-party, as determined
by the Lender in its sole discretion (exercised in good faith), taking into
account customary factors, including, but not limited to: (a) the historical
experience for collateral with similar characteristics to the Eligible Asset,
such as prepayment speeds, expected default rates and loss severity; (b) market
factors; (c) the creditworthiness of the issuer thereof, if applicable, and (d)
appropriate discount rates; PROVIDED that in all events such Market Value may be
determined to be zero. The Lender's determination of Market Value shall be final
and binding on the parties.
"MASTER SERVICER" shall mean Hanover Capital Mortgage Holdings, Inc.
"MATERIAL ADVERSE EFFECT" shall mean a material adverse effect on (a)
the business, assets, property, business, condition (financial or otherwise) or
prospects of the Borrower, (b) the ability of the Borrower to perform its
obligations under any of the Loan Documents to which it is a party, (c) the
validity or enforceability of any of the Loan Documents, (d) the rights and
remedies of the Lender under any of the Loan Documents, (e) the timely payment
of the principal of or interest on the Advances or other amounts payable in
connection therewith or (f) the Collateral.
"MATERIAL EXCEPTION" shall mean, (a) (i) with respect to any Mortgage
Loan, any Exception listed on the Exception Report consisting of the absence
from the Mortgage File, or deficiency in respect of, any of the Mortgage Loan
Documents set forth in Section 2(I)(a), 2(I)(c), 2(I)(d), 2(I)(e), or 2(I)(g)
(other than with respect to Document Deficient Assets), or (ii) for which the
information set forth in Section I of Annex 1 to the Mortgage Custodial
Agreement is incomplete, (b) with respect to any Eligible Bond, any deviation
from the document requirements set forth in Section
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5.02(g) hereof, and (c) with respect to any Participation Certificate, any
deviation from the document requirements set forth in Section 5.02(f) or the
absence from the Participation Certificate File of any document or information
required therein.
"MAXIMUM CREDIT" shall mean $100,000,000.
"MAXIMUM PLEDGE PERIOD" shall mean the first 180 days that an Eligible
Asset has been pledged to the Lender hereunder, or such other period as
determined in accordance with Section 2.11 hereof.
"MORTGAGE" shall mean the mortgage, deed of trust or other instrument
securing a Mortgage Note, which creates a first lien on the fee simple in real
property securing the Mortgage Note.
"MORTGAGE CUSTODIAL AGREEMENT" shall mean the Mortgage Custodial
Agreement, dated as of the date hereof, among the Borrower, the Mortgage
Custodian and the Lender, substantially in the form of EXHIBIT B hereto, as the
same shall be modified and supplemented and in effect from time to time.
"MORTGAGE CUSTODIAN" shall mean First Chicago National Processing
Corporation, as custodian pursuant to the Mortgage Custodial Agreement for all
Mortgage Loans pledged hereunder, and its successors and permitted assigns
thereunder.
"MORTGAGE FILE" shall have the meaning assigned thereto in the
Mortgage Custodial Agreement.
"MORTGAGE INTEREST RATE" means the annual rate of interest borne on a
Mortgage Note, which shall be adjusted from time to time with respect to
adjustable rate Mortgage Loans.
"MORTGAGE LOAN" shall mean a Prime Mortgage Loan or Scratch and Dent
Mortgage Loan which the Mortgage Custodian has been instructed to hold for the
Lender pursuant to the Mortgage Custodial Agreement, and which mortgage loan
includes, without limitation (i) a Mortgage Note and related Mortgage and (ii)
all right, title and interest of the Borrower in and to the Mortgaged Property
covered by such Mortgage.
"MORTGAGE LOAN SCHEDULE" shall mean a schedule of Eligible
Mortgage Loans containing the following information with respect to each
Eligible Mortgage Loan to be delivered by the Borrower to the Lender pursuant to
Section 2.03(a) or 7.08 hereof, as applicable: (i) the applicable Borrower's
Mortgage Loan number; (ii) the Mortgagor's name and the street address; (iii)
the current principal balance as of the date specified therein (which date shall
be no earlier than forty-five (45) days prior to the date such Mortgage Loan
Schedule is required to be delivered to the Lender or such other date mutually
agreed upon by the Borrower and Lender), (iv) the original principal balance as
of the date of origination; (v) the LTV as of the date of origination of the
related Mortgage Loan; (vi) the LTV of the related Mortgage Loan as of the date
of acquisition by the applicable Borrower; (vii) the paid through date; (viii)
the mortgage interest rate; (ix) the final maturity date under the Mortgage
Note; (x) the Scheduled Payment; (xi) the name of the Subservicer; (xii)
delinquency status (reported as current, 30-59, 60-89, 90+, etc.), (xiii) the
current FICO score for such Mortgage Loan, (xiv) the Purchase Price Percentage,
(xv) whether such Mortgage Loan is subject to graduated payments, (xvi) whether
it is a fixed or adjustable rate Mortgage Loan, (xvii) with respect to
adjustable rate Mortgage Loans, the
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interest rate adjustment date, (xviii) with respect to adjustable rate Mortgage
Loans, the interest rate margin and (xix) such other information as shall be
mutually agreed upon by the Borrower and Lender.
"MORTGAGE LOAN TAPE" shall mean the computer-readable magnetic tape
required to be delivered by the Borrower to the Lender pursuant to Section
2.03(a) hereof (the format of which shall be substantially in the form of
EXHIBIT G attached hereto) which contains the information, with respect to each
Mortgage Loan, required to be contained in the Mortgage Loan Schedule.
"MORTGAGE NOTE" shall mean the original executed promissory note or
other evidence of the indebtedness of a mortgagor/borrower with respect to a
Mortgage Loan.
"MORTGAGED PROPERTY" shall mean the real property (including all
improvements, buildings, fixtures, building equipment and personal property
thereon and all additions, alterations and replacements made at any time with
respect to the foregoing) and all other collateral securing repayment of the
debt evidenced by a Mortgage Note.
"MORTGAGOR" shall mean the obligor on a Mortgage Note.
"MULTIEMPLOYER PLAN" shall mean a Plan which is a multiemployer plan
as defined in Section 4001(a)(3) of ERISA.
"NET WORTH" shall mean, with respect to any Person, the excess of
total assets of such Person, over total liabilities of such Person, determined
in accordance with GAAP.
"NON-INVESTMENT GRADE BOND" shall mean a certificated or
uncertificated subordinate bond which is either unrated or has a credit rating
below Investment Grade as of the date of the pledge of such bond to the Lender
hereunder or at any date thereafter.
"NOTE" shall mean the promissory note provided for by Section 2.02(a)
hereof for Advances and any promissory note delivered in substitution or
exchange therefor, in each case as the same shall be modified and supplemented
and in effect from time to time.
"NOTICE OF BORROWING AND PLEDGE" shall have the meaning provided in
Section 2.03(a) hereof.
"OWNERSHIP PERCENTAGE" shall mean the undivided ownership interest of
the holder of each Participation Certificate in each Underlying Mortgage Loan
subject to such Participation Certificate as evidenced by the related
Participation Certificate.
"PAR AMOUNT" shall mean, in respect of a Mortgage Loan at any time,
the outstanding principal balance of such Mortgage Loan at such time.
"PARTICIPANTS" shall have the meaning set forth in Section 11.14(b)
hereof.
"PARTICIPATION CERTIFICATE" shall mean a certificate, delivered to the
Lender or its designee on each Funding Date in a form suitable for registration
in the name of the Lender, representing the Borrower's Ownership Percentage in
certain Eligible Mortgage Loans, which Eligible Mortgage Loans are held by the
Participation Custodian for the benefit of the holder of such Participation
Certificate.
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"PARTICIPATION CERTIFICATE FILE" shall mean, with respect to each
Participation Certificate pledged to the Lender hereunder: (i) the original
certificate or a Lost Instrument Affidavit in lieu thereof, subject to the
sublimit in clauses (iv) and (v)(O) of the definition of Collateral Value and
Section 7.25 hereof, (ii) the related Governing Agreements, (iii) the related
Instruction Letter, (iv) an assignment executed by the registered holder in such
Participation Certificate in blank for the benefit of an assignee and acceptable
to the Lender in form and substance and sufficient to transfer the Participation
Certificates pursuant to the Governing Agreements, (v) the name of the
Certificate Registrar (if any) with contact information and (vi) any other
documents which the Lender may request.
"PARTICIPATION CERTIFICATE SCHEDULE" shall mean a schedule of
information related to each Participation Certificate and the related Underlying
Mortgage Loan required to be delivered by the Borrower to the Lender pursuant to
Section 2.03(a) hereof, which schedule shall contain the following information:
(a) with respect to each Participation Certificate, (i) the name of the issuer,
and (ii) the Ownership Percentage and, (b) with respect to each Underlying
Mortgage Loan, (i) the applicable Borrower's Mortgage Loan number; (ii) the
Underlying Mortgagor's name and the street address; (iii) the current principal
balance as of the date specified therein; (iv) the original balance as of the
date specified therein; (v) the LTV as of the date of the origination of the
related Underlying Mortgage Loan; (vi) the paid-through date; (vii) the mortgage
interest rate; (viii) the final maturity date under the Underlying Mortgage
Note; (ix) the Scheduled Payment; (x) the name of the servicer; (xi) the
delinquency status (reported as current, 30-59, 60-89, 90+, etc.); (xii) the
Purchase Price Percentage; (xiii) whether it is a fixed or adjustable rate
Underlying Mortgage Loan;; (xiv) with respect to any adjustable rate Underlying
Mortgage Loans, the interest rate adjustment date; (xv) with respect to any
adjustable rate Underlying Mortgage Loan, the interest rate margin; and (xvi)
such other information as shall be mutually agreed upon by the Borrower and
Lender.
"PARTICIPATION CERTIFICATE TAPE" shall mean the computer-readable
magnetic tape required to be delivered by the Borrower to the Lender pursuant to
Section 2.03(a) hereof (the format of which shall be substantially in the form
of the Mortgage Loan Tape with the addition of a field to set forth the
Borrower's Ownership Percentage) which contains the information, with respect to
each Participation Certificate, required to be contained in the Participation
Certificate Schedule.
"PARTICIPATION CUSTODIAN" shall mean the custodian holding the
Underlying Mortgage Loan and all documents related thereto for the holders of
the related Participation Certificate.
"PARTICIPATION SERVICER" shall mean the servicer of an Underlying
Mortgage Loan subject to a Participation Certificate.
"PAYMENT DATE" shall mean the eighth day of each calendar month, or if
such day is not a Business Day, the next succeeding Business Day.
"PAYOFF" shall mean, with respect to any Mortgage Loan, repayment by
the applicable Mortgagor of all outstanding principal thereunder together with
all interest accrued thereon to the date of such repayment and any penalty or
premium thereon.
"PAYOFF PROCEEDS" shall mean, with respect to any Mortgage Loan, all
funds received from the applicable Mortgagor in connection with a Payoff.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
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"PERMITTED EXCEPTIONS" shall mean the exceptions to lien priority
including but not limited to: (i) the lien of current real property taxes and
assessments not yet due and payable; (ii) covenants, conditions and
restrictions, rights of way, easements and other matters of the public record as
of the date of recording acceptable to mortgage lending institutions generally
and specifically referred to in the lender's title insurance policy delivered to
the originator of the Mortgage Loan and (A) referred to or to otherwise
considered in the appraisal (if any) made for the originator of the Mortgage
Loan or (B) which do not adversely affect the appraised value of the Mortgaged
Property set forth in such appraisal; and (iii) other matters to which like
properties are commonly subject which do not materially interfere with the
benefits of the security intended to be provided by the Mortgage or the use,
enjoyment, value or marketability of the related Mortgaged Property.
"PERSON" shall mean any individual, corporation, company, voluntary
association, partnership, joint venture, limited liability company, trust,
unincorporated association, government (or any agency, instrumentality or
political subdivision thereof) or any other entity of whatever nature.
"PLAN" shall mean at a particular time, any employee benefit plan
which is covered by ERISA and in respect of which the Borrower or a Commonly
Controlled Entity is (or, if such plan were terminated at such time, would under
Section 4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5)
of ERISA.
"POST-DEFAULT RATE" shall mean, in respect of any principal of any
Advance or any other amount under this Loan Agreement, the Note or any other
Loan Document that is not paid when due to the Lender (whether at stated
maturity, by acceleration, by optional or mandatory prepayment or otherwise), a
rate per annum during the period from and including the due date to but
excluding the date on which such amount is paid in full equal to 2% per annum
PLUS (a) the interest rate otherwise applicable to such Advance or other amount,
or (b) if no interest rate is otherwise applicable, then LIBOR.
"PRIME MORTGAGE LOAN" shall mean an "A" Credit Mortgage Loan (as
defined in the Underwriting Guidelines) secured by a first mortgage lien on a
one to four family residential property as to which the representations and
warranties set forth on Schedule 1 hereof are true and correct.
"PROPERTY" shall mean any right or interest in or to property of any
kind whatsoever, whether real, personal or mixed and whether tangible or
intangible.
"PURCHASE PRICE PERCENTAGE" shall mean, with respect to any Eligible
Asset, the dollar price paid by the Borrower for such Eligible Asset divided by
the outstanding principal balance of such Eligible Asset as of the cut-off date
of acquisition.
"REGULATIONS G, T, U AND X" shall mean Regulations G, T, U and X of
the Board of Governors of the Federal Reserve System (or any successor), as the
same may be modified and supplemented and in effect from time to time.
"RELEVANT SYSTEM" shall mean (i) The Depository Trust Company in New
York, New York, or (ii) such other clearing organization or book-entry system as
is designated in writing by Lender.
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"REPORTABLE EVENT" shall mean any of the events set forth in Section
4043(b) of ERISA, other than those events as to which the thirty day notice
period is waived under subsections .13, .14, .16, .18, .19 or .20 of PBGC Reg.
ss. 2615.
"REQUIREMENT OF LAW" shall mean as to any Person, the certificate of
incorporation and by-laws or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation or determination of an
arbitrator or 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.
"RESPONSIBLE OFFICER" shall mean, as to any Person, the chief
executive officer or, with respect to financial matters, the chief financial
officer of such Person; PROVIDED, that in the event any such officer is
unavailable at any time he or she is required to take any action hereunder,
Responsible Officer shall mean any officer authorized to act on such officer's
behalf as demonstrated to the Lender to its reasonable satisfaction.
"RESTRICTED PAYMENTS" shall mean with respect to any Person,
collectively, all dividends or other distributions of any nature (cash,
securities, assets or otherwise), and all payments, by virtue of redemption or
otherwise, on any class of equity securities (including, without limitation,
warrants, options or rights therefor) issued by such Person, whether such
securities are now or may hereafter be authorized or outstanding and any
distribution in respect of any of the foregoing, whether directly or indirectly.
"SCHEDULED PAYMENT" shall mean, for any Eligible Asset, the scheduled
payment of principal and/or interest due thereunder.
"SCRATCH AND DENT MORTGAGE LOAN" shall mean a Mortgage Loan secured by
a first mortgage lien on a one to four family residential property intended by
the originator to conform with FNMA, FHLMC or other conduit standards but which
was subsequently discovered did not meet the originally intended market
parameters due to errors in relevant documentation or credit deterioration of
the obligor and as to which the representations and warranties set forth on
Schedule 1 hereof are true and correct.
"SECURED OBLIGATIONS" shall mean the unpaid principal amount of, and
interest on the Advances, and all other obligations and liabilities of the
Borrower to the Lender, whether direct or indirect, absolute or contingent, due
or to become due, or now existing or hereafter incurred, which may arise under,
out of or in connection with this Loan Agreement, the Note, any other Loan
Document and any other document made, delivered or given in connection herewith
or therewith, whether on account of principal, interest, reimbursement
obligations, fees, indemnities, costs, expenses (including, without limitation,
all fees and disbursements of counsel to the Lender that are required to be paid
by the Borrower pursuant to the terms hereof or thereof) or otherwise. For
purposes hereof, "interest" shall include, without limitation, interest accruing
after the maturity of the Advances and interest accruing after the filing of any
petition in bankruptcy, or the commencement of any insolvency, reorganization or
like proceeding, relating to the Borrower, whether or not a claim for
post-filing or post-petition interest is allowed in such proceeding.
"SERVICING AGREEMENT" shall have the meaning provided in Section
11.15(c) hereof.
"SERVICING RECORDS" shall have the meaning provided in Section
11.15(b) hereof.
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"SIDE LETTER" shall mean that certain letter agreement, dated as of
the date hereof, between the Lender and Borrower.
"SINGLE EMPLOYER PLAN" shall mean any Plan which is covered by Title
IV of ERISA, but which is not a Multiemployer Plan.
"SIXTY-DAY DELINQUENT MORTGAGE LOAN" shall mean a Mortgage Loan or
Underlying Mortgage Loan as to which a Scheduled Payment is more than 59 days,
but less than or equal to 89 days delinquent.
"SUBSIDIARY" shall mean, with respect to any Person, any other Person
of which at least a majority of the securities or other ownership interests
having by the terms thereof ordinary voting power to elect a majority of the
board of directors or other persons performing similar functions of such
corporation, partnership or other entity (irrespective of whether or not at the
time securities or other ownership interests of any other class or classes of
such corporation, partnership or other entity shall have or might have voting
power by reason of the happening of any contingency) is at the time directly or
indirectly owned or controlled by such Person or one or more Subsidiaries of
such Person or by such Person and one or more Subsidiaries of such Person.
"SUBSERVICER" shall have the meaning provided in Section 11.15(c)
hereof.
"TAKE-OUT COMMITMENTS" shall be the collective reference to valid,
binding and enforceable commitments in form and substance acceptable to the
Lender to purchase one or more Eligible Assets, in each case as amended,
supplemented or otherwise modified in accordance with the terms thereof and in
effect from time to time.
"TANGIBLE NET WORTH" shall mean, with respect to any Person, as of any
date of determination, the consolidated Net Worth of such Person and its
Subsidiaries, less the consolidated net book value of all assets of such Person
and its Subsidiaries (to the extent reflected as an asset in the balance sheet
of such Person or any Subsidiary at such date) which will be treated as
intangibles under GAAP, including, without limitation, such items as deferred
financing expenses, net leasehold improvements, good will, trademarks, trade
names, service marks, copyrights, patents, licenses and unamortized debt
discount and expense.
"TERMINATION DATE" shall mean March 28, 1999 or such earlier date on
which this Loan Agreement shall terminate in accordance with the provisions
hereof or by operation of law, as same may be extended in accordance with
Section 2.10 hereof.
"THIRTY-DAY DELINQUENT MORTGAGE LOAN" shall mean a Mortgage Loan or
Underlying Mortgage Loan as to which a Scheduled Payment is more than 29 days,
but less than or equal to 59 days delinquent.
"TRANCHE A ADVANCES" shall mean Advances so long as, and to the extent
that, they are secured by Prime Mortgage Loans, Scratch and Dent Mortgage Loans,
or Participation Certificates.
"TRANCHE B ADVANCES" shall mean Advances so long as, and to the extent
that, they are secured by Investment-Grade Bonds.
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"TRANCHE C ADVANCES" shall mean Advances so long as, and to the extent
that, they are secured by Non-Investment Grade Bonds.
"TRANSFER DOCUMENTS" shall mean all documents required to re-register
the Eligible Bonds in the name of the Lender or the Bond/PC Custodian, or
otherwise to effect a delivery thereof in accordance with Section 5.02(g)(i)
through (iii) hereof, including without limitation, with respect to certificated
securities, the original certificate.
"TRANSMITTAL LETTER" shall have the meaning assigned to such term in
the Mortgage Custodial Agreement.
"TRUSTEE" shall mean, with respect to Eligible Bonds and Participation
Certificates, if applicable, the person under the applicable Governing Agreement
responsible for administering such Eligible Bonds or Participation Certificates.
"TRUST RECEIPT" shall have the meaning assigned to such term in the
Mortgage Custodial Agreement.
"TYPE I DOCUMENT DEFICIENT ASSET" shall mean an Eligible Mortgage Loan
for which the Mortgage Custodian has received a Lost Note Affidavit in lieu of
the original Mortgage Note.
"TYPE II DOCUMENT DEFICIENT ASSET" shall mean an Eligible Mortgage
Loan for which the Mortgage Custodian has failed to receive (i) any intervening
assignment, or (ii) the original title policy or a copy of the same certified by
the Borrower as a true, correct and complete copy thereof.
"TYPE III DOCUMENT DEFICIENT ASSET" shall mean a Participation
Certificate for which the Bond/PC Custodian has failed to receive an original
Participation Certificate but has received a Lost Instrument Affidavit in lieu
thereof.
"UNDERLYING MORTGAGE LOAN" shall mean a Mortgage Loan for which the
Participation Certificate evidences the Lender's ownership interest therein.
"UNDERLYING MORTGAGOR" shall mean the obligor on an Underlying
Mortgage Note.
"UNDERLYING MORTGAGE NOTE" shall mean the original executed promissory
note or other evidence of the indebtedness of a mortgagor/borrower with respect
to a Underlying Mortgage Loan.
"UNDERWRITING GUIDELINES" shall mean Hanover Capital Mortgage
Holdings, Inc.'s Credit & Risk Management Policies and Procedures Manual,
attached as EXHIBIT E hereto, as amended from time to time in accordance with
Section 7.14.
"UNIFORM COMMERCIAL CODE" shall mean the Uniform Commercial Code as in
effect on the date hereof in the State of New York; provided that if by reason
of mandatory provisions of law, the perfection or the effect of perfection or
non-perfection of the security interest in any Collateral is governed by the
Uniform Commercial Code as in effect in a jurisdiction other than New York,
"Uniform Commercial Code" shall mean the Uniform Commercial Code as in effect in
such other jurisdiction for purposes of the provisions hereof relating to such
perfection or effect of perfection or non-perfection.
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1.02 ACCOUNTING TERMS AND DETERMINATIONS. Except as otherwise
expressly provided herein, all accounting terms used herein shall be
interpreted, and all financial statements and certificates and reports as to
financial matters required to be delivered to the Lender hereunder shall be
prepared, in accordance with GAAP.
SECTION 2 ADVANCES, NOTE AND PREPAYMENTS.
2.01 ADVANCES.
Subject to the terms and conditions of this Loan Agreement, the Lender
agrees to make loans (individually, an "ADVANCE"; collectively, the "ADVANCES")
to the Borrower, from time to time on any Business Day from and including the
Effective Date to but excluding the Termination Date, in an aggregate principal
amount at any one time outstanding up to but not exceeding the lesser of (i) the
Maximum Credit, and (ii) the Borrowing Base at such time. Subject to the terms
and conditions of this Loan Agreement, the Borrower may borrow, repay and
reborrow hereunder.
2.02 NOTES.
(a) The Advances made by the Lender shall be evidenced by a single
promissory note of the Borrower substantially in the form of EXHIBIT A hereto
(the "NOTE"), dated the date hereof, payable to the Lender in a principal amount
equal to the amount of the Maximum Credit and otherwise duly completed. The
Lender shall have the right to have its Note subdivided, by exchange for
promissory notes of lesser denominations or otherwise.
(b) The date, amount and interest rate of each Advance made by the
Lender to the Borrower, and each payment made on account of the principal and
interest thereof, shall be recorded by the Lender on its books and, prior to any
transfer of the Note, endorsed by the Lender on the schedule attached to the
Note or any continuation thereof; PROVIDED that the failure of the Lender to
make any such recordation or endorsement shall not affect the obligations of the
Borrower to make a payment when due of any amount owing hereunder or under the
Note in respect of the Advances.
2.03 PROCEDURE FOR BORROWING.
(a) The Borrower may request a borrowing hereunder, on any Business
Day during the period from and including the Effective Date to and including the
Termination Date, by delivering to the Lender, with a copy to the Mortgage
Custodian, a Mortgage Loan Tape and Mortgage Loan Schedule, or to the Bond/PC
Custodian, a Participation Certificate Tape and Participation Certificate
Schedule, or a Bond Summary, as applicable (the "APPLICABLE NOTICE DOCUMENTS"),
and an irrevocable written notice of borrowing and pledge substantially in the
form of EXHIBIT X-0, XXXXXXX X-0 or EXHIBIT D-3 attached hereto, as applicable,
(each a "NOTICE OF BORROWING AND PLEDGE"), appropriately completed, which such
Notice of Borrowing and Pledge and the related Applicable Notice Documents must
be received by the Lender prior to 10:00 a.m., New York City time, at least
three (3) Business Days prior to the requested Funding Date; provided that the
Lender shall be under no obligation to make an Advance more than once daily.
Such Notice of Borrowing and Pledge shall (i) include the Applicable Notice
Documents in respect of the Eligible Assets that the Borrower proposes to pledge
to the Lender and be included in the Borrowing Base in connection with such
Advance, (ii) contain the amount of the requested Advance, which shall in all
events be at least equal to $3,000,000, to be made on such Funding Date (setting
forth the amount of the Advance allocable to each Eligible Asset set forth on
the attached Mortgage Loan Schedule, Participation Certificate Schedule or the
Bond
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Summary, as applicable), (iii) specify the requested Funding Date, which shall
be not earlier than the third Business Day following the date of such Notice of
Borrowing and Pledge, (iv) contain (by attachment) such other information
reasonably requested by the Lender from time to time and (v) the applicable
agreement evidencing the Purchase Price Percentage as reflected in the Mortgage
Loan Schedule or Participation Certificate Schedule, as applicable.
(b) (i) With respect to Mortgage Loans, the Borrower shall deliver (or
cause to be delivered) and release to the Mortgage Custodian, no later than
10:00 a.m. New York City time, three (3) Business Days prior to the requested
Funding Date, a complete Mortgage File pertaining to each Mortgage Loan to be
pledged to the Lender and included in the Borrowing Base on such requested
Funding Date, in accordance with the terms and conditions of the Mortgage
Custodial Agreement, (ii) with respect to Participation Certificates, the
Borrower shall deliver (or cause to be delivered) and release to the Lender, no
later than 10:00 a.m. New York City time, three (3) Business Days prior to the
requested Funding Date, a complete Participation Certificate File (with a copy
of the Participation Certificate in lieu of the original) pertaining to each
Participation Certificate to be pledged to the Lender and included in the
Borrowing Base on such requested Funding Date, and (iii) with respect to
Eligible Bonds, the Borrower shall deliver (or cause to be delivered) and
release to the Lender, no later than 10:00 a.m. three days prior to the
requested Funding Date, copies of all documents composing the Bond File
pertaining to each Eligible Bond to be pledged to the Lender and included in the
Borrowing Base on such requested Funding Date.
(c) In addition to the foregoing, the Borrower shall deliver (or cause
to be delivered) and release to the Lender no later than 10:00 a.m. New York
City time, three (3) Business Days prior to the requested Funding Date, a Due
Diligence Package for each Mortgage Loan and Underlying Mortgage Loan to be
pledged to the Lender and included in the Borrowing Base on such requested
Funding Date.
(d) (i) With respect to Eligible Mortgage Loans, pursuant to the
Mortgage Custodial Agreement, the Mortgage Custodian shall deliver to the Lender
and the Borrower, no later than 11:00 a.m., New York City time, on a Funding
Date, a Trust Receipt in respect of all Eligible Mortgage Loans pledged to the
Lender on such Funding Date and an Exception Report in respect of all Eligible
Mortgage Loans so pledged to the Lender, and (ii) with respect to Eligible Bonds
and Participation Certificates, the Borrower shall deliver to the Bond/PC
Custodian, with copies to the Lender, the Eligible Bonds and related Bond Files
and the original Participation Certificates and Participation Certificate Files.
The Bond/PC Custodian shall inform the Lender of its receipt of these documents
in a form and manner acceptable to the Lender in its sole discretion. Subject to
Section 5 hereof, such Advance will then be made available to the Borrower by
the Lender transferring, via wire transfer (pursuant to wire transfer
instructions provided by the Borrower on or prior to such Funding Date) the
aggregate amount of such Advance in immediately available funds.
2.04 REPAYMENT OF ADVANCES; INTEREST.
(a) The Borrower hereby promises to repay in full on the Termination
Date the then aggregate outstanding principal amount of the Advances.
(b) The Borrower hereby promises to pay to the Lender interest on the
unpaid principal amount of each Advance for the period from and including the
Funding Date of such Advance to but excluding the date such Advance shall be
paid in full, at a rate per annum equal to LIBOR PLUS the Applicable Margin.
Notwithstanding the foregoing, the Borrower hereby promises to pay to the
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Lender interest at the applicable Post-Default Rate on any principal of any
Advance and on any other amount payable by the Borrower hereunder or under the
Note that shall not be paid in full when due (whether at stated maturity, by
acceleration or by mandatory prepayment or otherwise) for the period from and
including the due date thereof to but excluding the date the same is paid in
full. Accrued interest on each Advance shall be payable at the end of each
Interest Period unless the Borrower has been otherwise notified by the Lender.
In the event the Lender requests payment of accrued interest on a day other than
on the Payment Date immediately following the applicable Reset Date, the
Borrower shall pay such accrued interest no later than one (1) Business Day
following receipt of such notice by the Lender; PROVIDED, however, that the
Borrower shall not be obligated to pay accrued interest more frequently than
once a month. Notwithstanding the foregoing, interest accruing at the
Post-Default Rate shall be payable to the Lender on demand. Promptly after the
determination of any interest rate provided for herein or any change therein,
the Lender shall give notice thereof to the Borrower.
2.05 LIMITATION ON TYPES OF ADVANCES; ILLEGALITY. Anything herein to
the contrary notwithstanding, if, on or prior to the determination of any LIBOR:
(a) the Lender determines, which determination shall be conclusive,
that quotations of interest rates for the relevant deposits referred to in the
definition of "LIBOR" in Section 1.01 hereof are not being provided in the
relevant amounts or for the relevant maturities for purposes of determining
rates of interest for Advances as provided herein; or
(b) the Lender determines, which determination shall be conclusive,
that the relevant rate of interest referred to in the definition of "LIBOR" in
Section 1.01 hereof upon the basis of which the rate of interest for Advances is
to be determined is not likely adequately to cover the cost to the Lender of
making or maintaining Advances; or
(c) it becomes unlawful for the Lender to honor its obligation to make
or maintain Advances hereunder using a LIBOR;
then the Lender shall give the Borrower prompt notice thereof and, so long as
such condition remains in effect, the Lender shall be under no obligation to
make additional Advances, and the Borrower shall, at its option, either prepay
all such Advances as may be outstanding or pay interest on such Advances at a
rate per annum equal to the Federal Funds Rate PLUS the Applicable Margin.
2.06 DETERMINATION OF BORROWING BASE; MANDATORY PREPAYMENTS OR PLEDGE.
(a) If at any time the aggregate outstanding principal amount of all
Advances exceeds the Borrowing Base of Eligible Assets pledged to secure the
Advances (a "BORROWING BASE DEFICIENCY"), as determined by the Lender and
notified to the Borrower on any Business Day, the Borrower shall no later than
one (1) Business Day after receipt of such notice, at the option of the
Borrower, either prepay the Advances in part or in whole or pledge additional
Eligible Assets to the Lender (which shall be in all respects acceptable to the
Lender), such that after giving effect to such prepayment or pledge the
aggregate outstanding principal amount of the Advances does not exceed the
Borrowing Base.
(b) On the fifth day of each month (or if such day is not a Business
Day, the next succeeding Business Day), the Lender (or the Borrower if the
Borrower and the Lender shall mutually agree) shall calculate and deliver a
Borrowing Base Certificate in the form attached hereto as EXHIBIT H, such
certificate to be based on the principal balance of the Eligible Assets as of
the last calendar day
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of the prior month or such other calendar day as applicable for the related
Subservicer or Trustee and acceptable to the Lender. In the event that such
Borrowing Base Certificate indicates that a Borrowing Base Deficiency exists,
the Borrower shall on the immediately following Payment Date either prepay the
Advances in part or in whole or pledge additional Eligible Assets to the Lender
(which shall be in all respects acceptable to the Lender), such that after
giving effect to such prepayment or pledge the aggregate outstanding principal
amount of the Advances does not exceed the Borrowing Base.
2.07 OPTIONAL PREPAYMENTS. The Advances are prepayable without premium
or penalty, in whole or in part at any time. Any amounts prepaid shall be
applied to repay the outstanding principal amount of any Advances (together with
interest thereon) until paid in full. Amounts repaid may be reborrowed in
accordance with the terms of this Loan Agreement. If the Borrower intends to
prepay a Advance in whole or in part from any source, the Borrower shall give
two (2) Business Days' prior written notice thereof to the Lender. If such
notice is given, the amount specified in such notice shall be due and payable on
the date specified therein, together with accrued interest to such date on the
amount prepaid. Partial prepayments shall be in an aggregate principal amount of
at least $100,000.
2.08 REQUIREMENTS OF LAW.
(a) If any Requirement of Law (other than with respect to any
amendment made to the Lender's certificate of incorporation and by-laws or other
organizational or governing documents) or any change in the interpretation or
application thereof or compliance by the Lender with any request or directive
(whether or not having the force of law) from any central bank or other
Governmental Authority made subsequent to the date hereof:
(i) shall subject the Lender to any tax of any kind whatsoever with
respect to this Loan Agreement, the Note or any Advance made by it
(excluding net income taxes) or change the basis of taxation of payments to
the Lender in respect thereof;
(ii) shall impose, modify or hold applicable any reserve, special
deposit, compulsory Advance or similar requirement against assets held by,
deposits or other liabilities in or for the account of, advances, Advances
or other extensions of credit by, or any other acquisition of funds by, any
office of the Lender which is not otherwise included in the determination
of the LIBOR hereunder;
(iii) shall impose on the Lender any other condition;
and the result of any of the foregoing is to increase the cost to the Lender, by
an amount which the Lender deems to be material, of making, continuing or
maintaining any Advance or to reduce any amount receivable hereunder in respect
thereof, then, in any such case, the Borrower shall (i) promptly pay the Lender
such additional amount or amounts as will compensate the Lender for such
increased cost or reduced amount receivable; provided that, notwithstanding the
foregoing, within 30 days following receipt of notice from the Lender that any
amount or amounts are due pursuant to this Section 2.08, the Borrower shall have
the option to pay in full all Secured Obligations (including, without
limitation, any additional payments required pursuant to this Section 2.08) and
terminate this Loan Agreement.
(b) If the Lender shall have determined that the adoption of or any
change in any Requirement of Law (other than with respect to any amendment made
to the Lender's certificate of
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incorporation and by-laws or other organizational or governing documents)
regarding capital adequacy or in the interpretation or application thereof or
compliance by the Lender or any corporation controlling the Lender with any
request or directive regarding capital adequacy (whether or not having the force
of law) from any Governmental Authority made subsequent to the date hereof shall
have the effect of reducing the rate of return on the Lender's or such
corporation's capital as a consequence of its obligations hereunder to a level
below that which the Lender or such corporation (taking into consideration the
Lender's or such corporation's policies with respect to capital adequacy) by an
amount deemed by the Lender to be material, then from time to time, the Borrower
shall promptly pay to the Lender such additional amount or amounts as will
compensate the Lender for such reduction.
(c) If the Lender becomes entitled to claim any additional amounts
pursuant to this subsection, it shall promptly notify the Borrower of the event
by reason of which it has become so entitled. A certificate as to any additional
amounts payable pursuant to this subsection submitted by the Lender to the
Borrower shall be conclusive in the absence of manifest error.
2.09 PURPOSE OF ADVANCES. Each Advance shall be used to finance the
acquisition of Eligible Assets identified to the Lender in writing on each
Mortgage Loan Schedule, Participation Certificate Schedule, or Bond Summary, as
applicable, as such Mortgage Loan Schedule, Participation Certificate Schedule,
or Bond Summary may be amended from time to time.
2.10 EXTENSION OF TERMINATION DATE. At the request of the Borrower,
which request must be made at least thirty (30) days prior to the then current
Termination Date, the Lender may in its sole discretion extend the Termination
Date for a period of 364 days by giving written notice of such extension to the
Borrower no later than twenty (20) days, but in no event earlier than thirty
(30) days, prior to the then current Termination Date.
2.11 EXTENSION OF MAXIMUM PLEDGE PERIOD. At the request of the
Borrower, which request must be made at least thirty (30) days prior to the
expiration of the Maximum Pledge Period, the Lender may in its sole discretion
extend such Maximum Pledge Period for any longer time period as determined by
the Lender in its sole discretion.
SECTION 3 PAYMENTS; COMPUTATIONS; ETC.; COMMITMENT FEE.
3.01 PAYMENTS.
(a) Except to the extent otherwise provided herein, all payments of
principal, interest and other amounts to be made by the Borrower under this Loan
Agreement and the Note, shall be made in Dollars, in immediately available
funds, without deduction, set-off or counterclaim, to the Lender at the
following account maintained by the Lender: Chase Manhattan Bank, N.A., Account
# 140095961, ABA # 000000000, for the A/C of Greenwich Capital Financial
Products, Inc. (Hanover), Attn: Xxx Xxxxxx, not later than 3:00 p.m., New York
City time, on the date on which such payment shall become due (and each such
payment made after such time on such due date shall be deemed to have been made
on the next succeeding Business Day). The Borrower acknowledges that it has no
rights of withdrawal from the foregoing account.
(b) Except to the extent otherwise expressly provided herein, if the
due date of any payment under this Loan Agreement or the Note would otherwise
fall on a day that is not a Business Day, such date shall be extended to the
next succeeding Business Day, and interest shall be payable for any principal so
extended for the period of such extension.
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3.02 COMPUTATIONS. Interest on the Advances shall be computed on the
basis of a 360-day year for the actual days elapsed (including the first day but
excluding the last day) occurring in the period for which payable.
3.03 COMMITMENT FEE. The Borrower agrees to pay to the Lender, on the
Payment Dates in April, July, October and January and on the Termination Date
(each a "COMMITMENT FEE PAYMENT DATE"), a commitment fee equal to (a) 12.5 basis
points (0.125%) multiplied by (b)(i) the number of days from and including the
date of the Loan Agreement or the previous Commitment Fee Payment Date up to but
not including the related Commitment Fee Payment Date or the Termination Date,
as applicable, divided by (ii) 360 multiplied by (c) the Maximum Credit (the
"COMMITMENT FEE"), such payment to be made in Dollars, in immediately available
funds, without deduction, set-off or counterclaim, to the Lender commencing on
April 8, 1998. The Lender may, in its sole discretion, net such Commitment Fee
from the proceeds of any Advance made to the Borrower.
3.04 SELECTION OF INTEREST PERIOD. The Borrower's selection of the
duration of Interest Period shall be irrevocable and shall be effective only if
noted on the applicable Notice of Borrowing and Pledge. Prior to the termination
of the Interest Period selected pursuant to this Section 3.04, the Borrower may
elect an Interest Period by delivering written notice, substantially in the form
of Annex L attached hereto, to the Lender indicating the desired Interest
Period, which such notice must be received no later than two (2) Business Day(s)
prior to the date on which the then current Interest Period is scheduled to end.
In the event no such written notice is received by the Lender, the applicable
Interest Rate shall be one month.
SECTION 4 COLLATERAL SECURITY.
4.01 COLLATERAL; SECURITY INTEREST.
With respect to Eligible Mortgage Loans, the Mortgage Custodian shall,
pursuant to the Mortgage Custodial Agreement: (i) hold the related Mortgage Loan
Documents as exclusive bailee and agent for the Lender and (ii) deliver Trust
Receipts to the Lender each to the effect that it has reviewed the related
Mortgage Loan Documents in the manner and to the extent required by the Mortgage
Custodial Agreement and identifying any Exceptions in such Mortgage Loan
Documents as so reviewed in the Exception Reports.
With respect to Eligible Bonds, the Bond/PC Custodian shall, pursuant
to the Bond/PC Custodial Agreement, hold such Eligible Bonds and the related
Bond Files, either directly or through the facilities of a Relevant System, as
"securities intermediary" (as defined in Section 8-102(a)(14) of the UCC and 31
C.F.R. Section 357.2) and credit them to the "securities account" of the Lender.
With respect to Participation Certificates, the Bond/PC Custodian
shall, pursuant to the Bond/PC Custodial Agreement, hold such Participation
Certificates and the related Participation Certificate Files as exclusive bailee
and agent for the Lender and (ii) shall review such Participation Certificate
File in the manner and to the extent required by the Bond/PC Custodial
Agreement.
(b) Each of the following items of property is hereinafter referred to
as the "COLLATERAL":
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(i) all Eligible Assets identified on a Notice of Borrowing and
Pledge delivered by the Borrower to the Lender and the Bond/PC Custodian or
the Mortgage Custodian, as applicable, from time to time;
(ii) all Asset Documents, including without limitation all
promissory notes, and all Servicing Records, Servicing Agreements,
servicing rights, all Transfer Documents, all Governing Agreements, all
original certificates related to the Eligible Bonds and Participation
Certificates and any other collateral pledged or otherwise relating to such
Eligible Assets, together with all files, documents, instruments, surveys,
certificates, correspondence, appraisals, computer storage media,
accounting records and other books and records relating thereto;
(iii) all mortgage guaranties and insurance relating to such Mortgage
Loans (issued by governmental agencies or otherwise) and any mortgage
insurance certificate or other document evidencing such mortgage guaranties
or insurance relating to such Mortgage Loans and all claims and payments
thereunder;
(iv) all other insurance policies and insurance proceeds relating to
any Mortgage Loan or the related Mortgaged Property;
(v) all purchase or Take-Out Commitments relating to or
constituting any or all of the foregoing;
(vi) all Hedging Agreements relating to such Eligible Assets;
(vii) the Collection Account and the balance from time to time
standing to the credit of the Collection Account and all rights with
respect thereto;
(viii) all "securities accounts" (as defined in Section 8-501(a) of
the UCC);
(ix) all purchase agreements relating to such Eligible Assets;
(x) all collateral, however defined, under any other agreement
between the Borrower or any of its Affiliates on the one hand and the
Lender or any of its Affiliates on the other hand;
(xi) all "accounts", "chattel paper" and "general intangibles" as
defined in the Uniform Commercial Code relating to or constituting any and
all of the foregoing; and
(xii) any and all replacements, substitutions, distributions on or
proceeds of any and all of the foregoing.
(c) The Borrower hereby pledges to the Lender, and grants a security
interest in favor of the Lender in, all of the Borrower's right, title and
interest in, to and under the Collateral, whether now owned or hereafter
acquired, now existing or hereafter created and wherever located, to secure the
Secured Obligations. The Borrower agrees to xxxx its computer records and tapes
to evidence the interests granted to the Lender hereunder.
(d) RE-REGISTRATION; RIGHTS OF LENDER. The Lender shall have the right
to register or cause to be registered in the name of the Lender or the Bond/PC
Custodian or other designee, all
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Eligible Bonds or Participation Certificates pledged to the Lender hereunder and
the Lender or its other designee shall have all rights of conversions, exchange,
subscription and any other rights, privileges and options pertaining to such
Eligible Bonds or Participation Certificates as if it were the owner thereof,
and in connection therewith, the right to deposit and deliver any and all of the
Eligible Bonds or the Participation Certificates with any committee, depositary
transfer, agent, register or other designated agency upon such terms and
conditions as the Lender may determine.
(e) CASH DIVIDENDS. The Lender, as "entitlement holder" (as defined in
Section 8-102(a) of the UCC) with respect to the Eligible Bonds, shall be
entitled to receive all cash dividends and distributions paid in resect thereof.
Any such dividends or distributions received by the Borrower shall be promptly
remitted to the Collection Account.
4.02 FURTHER DOCUMENTATION. At any time and from time to time, upon
the written request of the Lender, and at the sole expense of the Borrower, the
Borrower will promptly and duly execute and deliver, or will promptly cause to
be executed and delivered, such further instruments and documents and take such
further action as the Lender may reasonably request for the purpose of obtaining
or preserving the full benefits of this Loan Agreement and of the rights and
powers herein granted, including, without limitation, the filing of any
financing or continuation statements under the Uniform Commercial Code in effect
in any jurisdiction with respect to the Liens created hereby. The Borrower also
hereby authorizes the Lender to file any such financing or continuation
statement without the signature of the Borrower to the extent permitted by
applicable law. A carbon, photographic or other reproduction of this Loan
Agreement shall be sufficient as a financing statement for filing in any
jurisdiction.
4.03 CHANGES IN LOCATIONS, NAME, ETC. The Borrower shall not (i)
change the location of its chief executive office/chief place of business from
that specified in Section 6 hereof or (ii) change its name, identity or
corporate structure (or the equivalent) or change the location where it
maintains its records with respect to the Collateral unless it shall have given
the Lender at least 30 days prior written notice thereof and shall have
delivered to the Lender all Uniform Commercial Code financing statements and
amendments thereto as the Lender shall request and taken all other actions
deemed necessary by the Lender to continue its perfected status in the
Collateral with the same or better priority.
4.04 LENDER'S APPOINTMENT AS ATTORNEY-IN-FACT.
(a) The Borrower hereby irrevocably constitutes and appoints the
Lender and any officer or agent thereof, with full power of substitution, as its
true and lawful attorney-in-fact with full irrevocable power and authority in
the place and stead of the Borrower and in the name of the Borrower or in its
own name, from time to time in the Lender's discretion, for the purpose of
carrying out the terms of this Loan Agreement, to take any and all appropriate
action and to execute any and all documents and instruments which may be
necessary or desirable to accomplish the purposes of this Loan Agreement, and,
without limiting the generality of the foregoing, the Borrower hereby gives the
Lender the power and right, on behalf of the Borrower, without assent by, but
with notice to, the Borrower, if an Event of Default shall have occurred and be
continuing, to do the following:
(i) in the name of the Borrower or its own name, or otherwise, to take
possession of and endorse and collect any checks, drafts, notes,
acceptances or other instruments for the payment of moneys due under any
mortgage insurance or with respect to any other Collateral and to file any
claim or to take any other action or proceeding in any court of law or
equity or
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otherwise deemed appropriate by the Lender for the purpose of collecting
any and all such monies due under any such mortgage insurance or with
respect to any other Collateral whenever payable;
(ii) to pay or discharge taxes and Liens levied or placed on or
threatened against the Collateral; and
(iii) (A) to direct any party liable for any payment under any
Collateral to make payment of any and all moneys due or to become due
thereunder directly to the Lender or as the Lender shall direct; (B) to ask
or demand for, collect, receive payment of and receipt for, any and all
moneys, claims and other amounts due or to become due at any time in
respect of or arising out of any Collateral; (C) to sign and endorse any
invoices, assignments, verifications, notices and other documents in
connection with any of the Collateral; (D) to commence and prosecute any
suits, actions or proceedings at law or in equity in any court of competent
jurisdiction to collect the Collateral or any thereof and to enforce any
other right in respect of any Collateral; (E) to defend any suit, action or
proceeding brought against the Borrower with respect to any Collateral; (F)
to settle, compromise or adjust any suit, action or proceeding described in
clause (E) above and, in connection therewith, to give such discharges or
releases as the Lender may deem appropriate; and (G) generally, to sell,
transfer, pledge and make any agreement with respect to or otherwise deal
with any of the Collateral as fully and completely as though the Lender
were the absolute owner thereof for all purposes, and to do, at the
Lender's option and the Borrower's expense, at any time, and from time to
time, all acts and things which the Lender deems necessary to protect,
preserve or realize upon the Collateral and the Lender's Liens thereon and
to effect the intent of this Loan Agreement, all as fully and effectively
as the Borrower might do.
The Borrower hereby ratifies all that said attorneys shall lawfully do or cause
to be done by virtue hereof. This power of attorney is a power coupled with an
interest and shall be irrevocable.
(b) The Borrower also authorizes the Lender, at any time and from time
to time, to execute, in connection with any sale provided for in Section 4.07
hereof, any endorsements, assignments or other instruments of conveyance or
transfer with respect to the Collateral.
(c) The powers conferred on the Lender are solely to protect the
Lender's interests in the Collateral and shall not impose any duty upon the
Lender to exercise any such powers. The Lender shall be accountable only for
amounts that it actually receives as a result of the exercise of such powers,
and neither the Lender nor any of its officers, directors, or employees shall be
responsible to the Borrower for any act or failure to act hereunder, except for
its own gross negligence or willful misconduct.
4.05 PERFORMANCE BY LENDER OF BORROWER'S OBLIGATIONS. If the Borrower
fails to perform or comply with any of agreements contained in the Loan
Documents and the Lender itself performs or complies, or otherwise causes
performance or compliance, with such agreement, the expenses of the Lender
incurred in connection with such performance or compliance, together with
interest thereon at a rate per annum equal to the Post-Default Rate, shall be
payable by the Borrower to the Lender on demand and shall constitute Secured
Obligations.
4.06 PROCEEDS. If an Event of Default shall occur and be continuing,
(a) all proceeds of Collateral received by the Borrower consisting of cash,
checks and other near-cash items
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shall be held by the Borrower in trust for the Lender, segregated from other
funds of the Borrower, and shall forthwith upon receipt by the Borrower be
turned over to the Lender in the exact form received by the Borrower (duly
endorsed by the Borrower to the Lender, if required) and (b) any and all such
proceeds received by the Lender (whether from the Borrower or otherwise) may, in
the sole discretion of the Lender, be held by the Lender as collateral security
for, and/or then or at any time thereafter may be applied by the Lender against,
the Secured Obligations (whether matured or unmatured), such application to be
in such order as the Lender shall elect. Any balance of such proceeds remaining
after the Secured Obligations shall have been paid in full and this Loan
Agreement shall have been terminated shall be paid over to the Borrower or to
whomsoever may be lawfully entitled to receive the same. For purposes hereof,
proceeds shall include, but not be limited to, all principal and interest
payments, all prepayments and payoffs, insurance claims, condemnation awards,
sale proceeds, real estate owned rents and any other income and all other
amounts received with respect to the Collateral.
4.07 REMEDIES. If an Event of Default shall occur and be continuing,
the Lender may exercise, in addition to all other rights and remedies granted to
it in this Loan Agreement and in any other instrument or agreement securing,
evidencing or relating to the Secured Obligations, all rights and remedies of a
secured party under the Uniform Commercial Code. Without limiting the generality
of the foregoing, the Lender without demand of performance or other demand,
presentment, protest, advertisement or notice of any kind (except any notice
required by law referred to below) to or upon the Borrower or any other Person
(each and all of which demands, presentments, protests, advertisements and
notices are hereby waived), may in such circumstances forthwith collect,
receive, appropriate and realize upon the Collateral, or any part thereof,
and/or may forthwith sell (on a servicing released basis with respect to
Collateral serviced by the Borrower or an Affiliate of the Borrower, at the
Lender's option), lease, assign, give option or options to purchase, or
otherwise dispose of and deliver the Collateral or any part thereof (or contract
to do any of the foregoing), in one or more parcels or as an entirety at public
or private sale or sales, at any exchange, broker's board or office of the
Lender or elsewhere upon such terms and conditions as it may deem advisable and
at such prices as it may deem best, for cash or on credit or for future delivery
without assumption of any credit risk. The Lender shall have the right upon any
such public sale or sales, and, to the extent permitted by law, upon any such
private sale or sales, to purchase the whole or any part of the Collateral so
sold, free of any right or equity of redemption in the Borrower, which right or
equity is hereby waived or released. The Borrower further agrees, at the
Lender's request, to assemble the Collateral and make it available to the Lender
at places which the Lender shall reasonably select, whether at the Borrower's
premises or elsewhere. The Lender shall apply the net proceeds of any such
collection, recovery, receipt, appropriation, realization or sale, after
deducting all reasonable costs and expenses of every kind incurred therein or
incidental to the care or safekeeping of any of the Collateral or in any way
relating to the Collateral or the rights of the Lender hereunder, including
without limitation reasonable attorneys' fees and disbursements, to the payment
in whole or in part of the Secured Obligations, in such order as the Lender may
elect, and only after such application and after the payment by the Lender of
any other amount required or permitted by any provision of law, including
without limitation Section 9-504(1)(c) of the Uniform Commercial Code, need the
Lender account for the surplus, if any, to the Borrower. To the extent permitted
by applicable law, the Borrower waives all claims, damages and demands it may
acquire against the Lender arising out of the exercise by the Lender of any of
its rights hereunder, other than those claims, damages and demands arising from
the gross negligence or willful misconduct of the Lender. If any notice of a
proposed sale or other disposition of Collateral shall be required by law, such
notice shall be deemed reasonable and proper if given at least 10 days before
such sale or other disposition. The Borrower shall remain liable for any
deficiency (plus accrued interest thereon as contemplated pursuant to Section
2.04(b) hereof) if the proceeds of any sale
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or other disposition of the Collateral are insufficient to pay the Secured
Obligations and the fees and disbursements of any attorneys employed by the
Lender to collect such deficiency. Because the Borrower recognizes that it may
not be possible to purchase or sell all of the Collateral on a particular
Business Day, or in a transaction with the same purchaser, or in the same manner
because the market for such Collateral may not be liquid, the Borrower agrees
that liquidation of the Collateral does not require a public purchase or sale
and that a good faith private purchase or sale shall be deemed to have been made
in a commercially reasonable manner. Accordingly, the Lender may elect, in its
sole discretion, the time and manner of liquidating any Collateral and nothing
contained herein shall (A) obligate the Lender to liquidate any Collateral on
the occurrence of an Event of Default or to liquidate all Collateral in the same
manner or on the same Business Day or (B) constitute a waiver of any of the
Lender's rights or remedies.
4.08 LIMITATION ON DUTIES REGARDING PRESENTATION OF COLLATERAL. The
Lender's duty with respect to the custody, safekeeping and physical preservation
of the Collateral in its possession, under Section 9-207 of the Uniform
Commercial Code or otherwise, shall be to deal with it in the same manner as the
Lender deals with similar property for its own account. Neither the Lender nor
any of its directors, officers or employees shall be liable for failure to
demand, collect or realize upon all or any part of the Collateral or for any
delay in doing so or shall be under any obligation to sell or otherwise dispose
of any Collateral upon the request of the Borrower or otherwise.
4.09 POWERS COUPLED WITH AN INTEREST. All authorizations and agencies
herein contained with respect to the Collateral are irrevocable and powers
coupled with an interest.
4.10 RELEASE OF SECURITY INTEREST. Upon termination of this Loan
Agreement and repayment to the Lender of all Secured Obligations and the
performance of all obligations under the Loan Documents, the Lender shall
release its security interest in any remaining Collateral; PROVIDED that, if any
payment, or any part thereof, of any of the Secured Obligations is rescinded or
must otherwise be restored or returned by the Lender upon the insolvency,
bankruptcy, dissolution, liquidation or reorganization of the Borrower, or upon
or as a result of the appointment of a receiver, intervenor or conservator of,
or a trustee or similar officer for, the Borrower or any substantial part of its
Property, or otherwise, this Loan Agreement, all rights hereunder and the Liens
created hereby shall continue to be effective, or be reinstated, as though such
payments had not been made.
4.11 ESTABLISHMENT OF THE COLLECTION ACCOUNT.
(a) The Borrower shall establish and maintain the Collection Account
at Fleet Bank Providence, Rhode Island, which shall be entitled "Greenwich
Capital Financial Products, Inc.". The Borrower shall not change the name of the
account without the prior written consent of the Lender. Such Collection Account
shall be subject to a Blocked Account Agreement.
(b) The Borrower shall cause each Subservicer and Trustee to deposit
all Collections in the Collection Account in accordance with the applicable
Servicing Agreement or Governing Agreement and as required in the related
Instruction Letter.
SECTION 5 CONDITIONS PRECEDENT.
5.01 INITIAL ADVANCE. The agreement of the Lender to make the initial
Advance requested to be made by it hereunder is subject to the satisfaction,
immediately prior to or concurrently with the making of such Advance, of the
following conditions precedent:
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(a) LOAN AGREEMENT. The Lender shall have received this Loan
Agreement, executed and delivered by a duly authorized officer of the
Borrower.
(b) NOTE. The Lender shall have received the Note, conforming to
the requirements hereof and executed by a duly authorized officer of
the Borrower.
(c) MORTGAGE CUSTODIAL AGREEMENT. The Lender shall have received
the Mortgage Custodial Agreement, conforming to the requirements
hereof and executed by a duly authorized officer of the Borrower and
the Mortgage Custodian.
(d) BLOCKED ACCOUNT AGREEMENT. The Lender shall have received a
Blocked Account Agreement substantially in the form of EXHIBIT F
hereof executed by duly authorized officers of the Borrower and the
Collection Bank.
(e) ESTABLISHMENT OF COLLECTION ACCOUNT. The Borrower shall have
established the Collection Account as defined herein.
(f) FILINGS, REGISTRATIONS, RECORDINGS. Any documents (including,
without limitation, financing statements) required to be filed,
registered or recorded in order to create, in favor of the Lender, a
perfected, first-priority security interest in the Collateral, subject
to no Liens other than those created hereunder, shall have been
properly prepared and executed for filing (including the applicable
county(ies) if the Lender determines such filings are necessary in its
sole discretion), registration or recording in each office in each
jurisdiction in which such filings, registrations and recordations are
required to perfect such first-priority security interest.
(g) CORPORATE PROCEEDINGS. The Lender shall have received a
certificate of the Secretary or Assistant Secretary of the Borrower,
dated as of the date hereof, and certifying (A) that attached thereto
is a true, complete and correct copy of (i) the articles of
incorporation of the Borrower, (ii) the by-laws of the Borrower, and
(iii) resolutions duly adopted by the Board of Directors of the
Borrower authorizing the execution, delivery and performance of this
Loan Agreement, the Notes and the other Loan Documents to which it is
a party, and the borrowings contemplated hereunder, and that such
resolutions have not been amended, modified, revoked or rescinded, and
(B) as to the incumbency and specimen signature of each officer
executing any Loan Documents on behalf of the Borrower and authorized
to execute any Notice of Borrowing, and such certificate and the
resolutions attached thereto shall be in form and substance
satisfactory to the Lender.
(h) GOOD STANDING CERTIFICATES. The Lender shall have received
copies of certificates evidencing the good standing of the Borrower,
dated as of a recent date, from the Secretary of State (or other
appropriate authority) of the State of Maryland and of each other
jurisdiction where the ownership, lease or operation of property, or
the conduct of business, requires the Borrower to qualify as a foreign
corporation, except where the failure to qualify would not have a
Material Adverse Effect.
(i) LEGAL OPINIONS. The Lender shall have received the executed
legal opinions of Piper & Marbury and Sidley & Austin, special counsel
to the Borrower, addressing the matters set forth in the form attached
hereto as EXHIBIT C, dated the initial Funding Date and otherwise
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in form and substance acceptable to the Lender and covering such other
matters incident to the transactions contemplated by this Loan
Agreement as the Lender shall reasonably request.
(j) FEES AND EXPENSES. The Lender shall have received all fees
and expenses required to be paid by the Borrower on or prior to the
initial Funding Date pursuant to Section 11.03(b).
(k) FINANCIAL STATEMENTS. The Lender shall have received the
financial statements referenced in Section 6.01(a).
(l) UNDERWRITING GUIDELINES. The Lender and the Borrower shall
have agreed upon the Borrower's current Underwriting Guidelines for
Mortgage Loans and the Lender shall have received a certified copy
thereof.
(m) CONSENTS, LICENSES, APPROVALS, ETC. The Lender shall have
received copies certified by the Borrower of all consents, licenses
and approvals, if any, required in connection with the execution,
delivery and performance by the Borrower of, and the validity and
enforceability of, the Loan Documents, which consents, licenses and
approvals shall be in full force and effect.
(n) INSURANCE. The Lender shall have received evidence in form
and substance satisfactory to the Lender showing compliance by the
Borrower as of such initial Funding Date with Section 7.03 hereof.
(o) SIDE LETTER. The Side Letter, duly executed and delivered by
the Borrower.
(p) OTHER DOCUMENTS. The Lender shall have received such other
documents as the Lender or its counsel may reasonably request.
5.02 INITIAL AND SUBSEQUENT ADVANCES. The making of each Advance to
the Borrower (including the initial Advance) on any Business Day is subject to
the satisfaction of the following further conditions precedent, both immediately
prior to the making of such Advance and also after giving effect thereto and to
the intended use thereof:
(a) NO DEFAULT. No Default or Event of Default shall have
occurred and be continuing.
(b) REPRESENTATIONS AND WARRANTIES. Each representation and
warranty made by the Borrower in Section 6 hereof and elsewhere in
each of the Loan Documents, shall be true and correct on and as of the
date of the making of such Advance (in the case of the representations
and warranties in Schedule 1, solely with respect to Eligible Assets,
included in the Borrowing Base on such date) with the same force and
effect as if made on and as of such date (or, if any such
representation or warranty is expressly stated to have been made as of
a specific date, as of such specific date). The Borrower shall also be
in compliance with all governmental licenses and authorizations and
qualified to do business and in good standing in all required
jurisdictions where the failure to be so qualified should reasonably
be expected to have a Material Adverse Effect.
(c) BORROWING BASE. The aggregate outstanding principal amount of
the Advances shall not exceed the Borrowing Base.
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(d) NOTICE OF BORROWING AND PLEDGE. The Lender shall have
received a Notice of Borrowing and Pledge and the related Applicable
Notice Documents (with any certificates attached thereto), in
accordance with Section 2.03(a) hereof, appropriately completed.
(e) TRUST RECEIPT; EXCEPTION REPORT. The Lender shall have
received (i) from the Mortgage Custodian, with respect to Eligible
Mortgage Loans, a Trust Receipt in respect of all Mortgage Loans to be
pledged hereunder on such Business Day and a corresponding Exception
Report, with Exceptions (as defined in the Mortgage Custodial
Agreement) in respect of such Mortgage Loans and (ii) from the Bond/PC
Custodian, with respect to Participation Certificates and Eligible
Bonds, the appropriate documentation as required pursuant to Section
5.02(f) or (g), as applicable; PROVIDED, that in all cases the
documentation required pursuant to clauses (i) and (ii) above shall be
acceptable to the Lender in its sole discretion.
(f) DELIVERY OF PARTICIPATION CERTIFICATES. With respect to each
Participation Certificate being pledged to the Lender: (i) such
Participation Certificate shall have been delivered to the Lender or
its designee, shall be in suitable form for registration in the name
of the Lender, shall conform to the requirements hereof and shall
otherwise be in form and substance satisfactory to the Lender, (ii)
the Participation Servicer, and the Certificate Registrar, if any,
shall have executed and delivered an Instruction Letter as defined
herein and (iii) the Participation Custodian shall have acknowledged
the Lender's interest in the Underlying Mortgage Loans.
(g) DELIVERY OF ELIGIBLE BONDS.
(i) With respect to Eligible Bonds that shall be delivered or
held in definitive, certificated form, the Borrower shall deliver to
the Bond/PC Custodian the original of the relevant certificate in form
suitable for transfer, with accompanying, duly executed instruments of
transfer or appropriate instruments of assignment executed in blank or
in the name of the Lender or, the Bond/PC Custodian, transfer tax
stamps, and any other documents or instruments necessary in the
reasonable opinion of the Lender to effect and perfect a legally valid
delivery of such security or other item of investment property to the
Lender, the Bond/PC Custodian. Unless otherwise instructed by Lender,
any delivery of a security or other item of investment property in
definitive, certificated form shall be made to Chase Manhattan Bank,
N.A., 0 Xxx Xxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000-000, Attention:
Outsourcing Department, Xxxxxxxx Xxxx.
(ii) With respect to Eligible Bonds that shall be delivered or
held in uncertificated form and the ownership of which is registered
on books maintained by the issuer thereof or its transfer agent, the
Borrower shall cause the registration of such security or other item
of investment property in the name of Lender, the Bond/PC Custodian
and at the request of the Lender, shall take such other and further
steps, and shall execute and deliver such documents or instruments
necessary in the opinion of the Lender, to effect and perfect a
legally valid delivery of the relevant interest granted therein to
Lender hereunder.
(iii) With respect to Eligible Bonds that shall be delivered
through a Relevant System in book-entry form and credited to or
otherwise held in an account, the Borrower shall cause the giving of
written instructions to the relevant financial institution or other
entity, and shall provide a copy thereof to the Lender, sufficient if
complied with to effect and perfect a legally valid delivery of the
relevant interest granted therein to Lender hereunder. In
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connection with any account to which the Eligible Bonds are credited
or otherwise held, the Borrower shall execute and deliver such other
and further documents or instruments necessary, in the reasonable
opinion of the Lender, to effect and perfect a legally valid delivery
of the relevant interest granted therein to Lender hereunder. Any
account to which the Eligible Bonds are credited or otherwise shall be
designated "Greenwich Capital Financial Products, Inc. Account" or
such variation thereon as the Lender may direct.
(iv) Any delivery of an Eligible Bond in accordance with clauses
(i) through (iii) above, or any other method acceptable to the Lender,
shall be sufficient to cause the Lender to have a perfected, first
priority security interest in, and to be the "entitlement holder" (as
defined in Section 8-102(a)(7) of the Uniform Commercial Code of the
State of the New York (the "UCC")) with respect to the Eligible Bonds.
(v) No Eligible Bonds, whether certificated or uncertificated,
shall remain in the name, or possession, of the Borrower or any of its
agents or in any account in the name of the Borrower or any of its
agents.
(vi) In addition to the foregoing, and as a condition to the
Lender's performance on each Funding Date, the Borrower shall (a)
deliver to the Lender no later than 10:00 a.m. three (3) days prior to
the requested Funding Date, copies of the documents listed below, and
(b) deliver the originals (unless copies are specified) of such
documents no later than 11:00 a.m. on such Funding Date. The documents
to be delivered as a condition to the Lender's performance include
without limitation (collectively, the "BOND FILE"): (A) a copy of the
executed Governing Agreements governing the Eligible Bonds and/or any
supplements thereto, and the offering documents related to the
Eligible Bonds, each certified by the Borrower or the Bond/PC
Custodian as a true, correct and complete copy of the original, and
all ancillary documents required to be delivered to the
certificateholders under the Governing Agreements, (B) an officer's
certificate as may be requested by Lender, (C) opinions of counsel in
form and substance satisfactory to the Lender, (D) the Eligible Bonds
in accordance with this Section 5.02(g), (E) an Instruction Letter
executed by the Borrower and the relevant Trustee, (F) for all
Eligible Bonds in uncertificated form, evidence that such Eligible
Bonds have been registered in the name of the Bond/PC Custodian or the
Lender on the books of the issuer itself or its transfer agent, (G)
all Transfer Documents, (H) copies of distribution statements
delivered to the Bond/PC Custodian for two months prior to the month
in which the related Funding Date occurs, if any, certified by the
applicable Trustee as true and correct, (I) any other documents or
instruments necessary in the reasonable opinion of the Lender to
effect and perfect a legally valid transfer of the relevant interest
granted therein to the Lender under the Loan Documents, (J) any other
documents required under this Section 5.02(g). Nothing set forth
herein shall be deemed a waiver of any of the Borrower's obligations
hereunder.
(h) ADDITIONAL MATTERS. All corporate and other proceedings, and
all documents, instruments and other legal matters in connection with
the transactions contemplated by this Loan Agreement and the other
Loan Documents shall be reasonably satisfactory in form and substance
to the Lender, and the Lender shall have received such other documents
and legal opinions in respect of any aspect or consequence of the
transactions contemplated hereby or thereby as it shall reasonably
request.
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(i) NO MATERIAL ADVERSE EFFECT. There shall not have occurred one
or more events that, in the reasonable judgment of the Lender,
constitutes or should reasonably be expected to constitute a Material
Adverse Effect.
(j) DUE DILIGENCE PACKAGE. The Lender shall have received a Due
Diligence Package with respect to each Mortgage Loan or Underlying
Mortgage Loan at least three (3) Business Days prior to the related
Funding Date.
(k) DUE DILIGENCE REVIEW. Subject to the Lender's right to
perform one or more Due Diligence Reviews pursuant to Section 11.16
hereof, the Lender shall have completed its due diligence review of
the Asset Documents, and the Due Diligence Package for each Advance
and such other documents, records, agreements, instruments, mortgaged
properties or information relating to such Advances as the Lender in
its sole discretion deems appropriate to review and such review shall
be satisfactory to the Lender in its sole discretion.
(l) SERVICING AGREEMENT(S); INSTRUCTION LETTERS. With respect to
Mortgage Loans pledged to the Lender, the Lender shall have received,
no later than 10:00 a.m. three (3) days prior to the requested Funding
Date, an Instruction Letter acknowledged by each Subservicer or
Trustee, with the related Servicing Agreement or Governing Agreement
attached thereto, which such Servicing Agreement or Governing
Agreement shall be in form and substance acceptable to Lender. With
respect to the Master Servicer or a Subservicer of the Borrower which
is an Affiliate of the Borrower and which is servicing Mortgage Loans
or Participation Certificates, such Subservicer or Master Servicer
consents to terminate the related Servicing Agreement upon
notification by the Lender of an occurrence of an Event of Default.
SECTION 6 REPRESENTATIONS AND WARRANTIES. As of the Effective Date and
each Funding Date, Borrower represents and warrants to the Lender that:
6.01 FINANCIAL CONDITION.
(a) The unaudited consolidated balance sheet of the Borrower and its
consolidated Subsidiaries as at December 31, 1997, reported thereon by Deloitte
& Touche, a copy of which has heretofore been furnished to the Lender, is
complete and correct and presents fairly the consolidated financial condition of
the Borrower and its consolidated Subsidiaries as at such dates and the
consolidated results of their operations and their consolidated cash flows for
the fiscal year then ended.
(b) Such financial statement, including the related schedules and
notes thereto, has been prepared in accordance with GAAP applied consistently
throughout the periods involved (except as approved by such accountants or
Responsible Officer, as the case may be, and as disclosed therein).
(c) Neither the Borrower nor any of its consolidated Subsidiaries had,
at the date of the financial statement referred to above, any material Guarantee
Obligation, contingent liability or liability for taxes, or any long-term lease
or unusual forward or long-term commitment, including, without limitation, any
interest rate or foreign currency swap or exchange transaction, or other
financial derivative, which is not reflected in the foregoing statements or in
the notes thereto.
6.02 NO CHANGE. Since September 31, 1997, there has been no
development or event nor any prospective development or event which has had or
should reasonably be expected to have a Material Adverse Effect.
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6.03 CORPORATE EXISTENCE; COMPLIANCE WITH LAW. The Borrower (a) is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Maryland, (b) has the corporate power and authority, and has all
governmental licenses, authorizations, consents and approvals necessary, to own
and operate its property, to lease the property it operates as lessee and to
carry on its business as now being or as proposed to be conducted, (c) is duly
qualified to do business and is in good standing under the laws of each
jurisdiction in which the nature of the business conducted by it makes such
qualification necessary and where failure so to qualify should be reasonably
expected (either individually or in the aggregate) to have a Material Adverse
Effect, and (d) is in compliance in all material respects with all Requirements
of Law.
6.04 CORPORATE POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS.
(a) The Borrower has the corporate power and authority, and the legal
right, to make, deliver and perform this Loan Agreement, the Note, and each
other Loan Document, and to borrow and to grant Liens hereunder, and has taken
all necessary corporate action to authorize the borrowings and the granting of
Liens on the terms and conditions of this Loan Agreement, the Note, and each
other Loan Document to which it is a party, and the execution, delivery and
performance of this Loan Agreement, the Note, and each other Loan Document.
(b) No consent or authorization of, approval by, notice to, filing
with or other act by or in respect of, any Governmental Authority or any other
Person is required or necessary in connection with the borrowings hereunder or
with the execution, delivery, performance, validity or enforceability of this
Loan Agreement or the Note or any other Loan Document, except (i) for filings
and recordings in respect of the Liens created pursuant to this Loan Agreement,
and (ii) as previously obtained and currently in full force and effect.
(c) Each Loan Document has been duly and validly executed and
delivered by the Borrower and constitutes, a legal, valid and binding obligation
of the Borrower, enforceable against the Borrower in accordance with their
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).
6.05 NO LEGAL BAR. The execution, delivery and performance of this
Loan Agreement and the Note, the borrowings hereunder and the use of the
proceeds thereof will not violate any Requirement of Law or Contractual
Obligation of the Borrower or of any of its Subsidiaries and will not result in,
or require, the creation or imposition of any Lien (other than the Liens created
hereunder) on any of its or their respective properties or revenues pursuant to
any such Requirement of Law or Contractual Obligation.
6.06 NO MATERIAL LITIGATION. There are no actions, suits,
arbitrations, investigations or proceedings of or before any arbitrator or
Governmental Authority pending or, to the knowledge of the Borrower, threatened
against the Borrower or any of its Subsidiaries or against any of its or their
respective properties or revenues, other than those actions, suits,
arbitrations, investigations or proceedings described on Schedule 4 hereto, none
of which should reasonably be expected to have a Material Adverse Effect.
6.07 NO DEFAULT. Neither the Borrower nor any of its Subsidiaries is
in default under or with respect to any of its Contractual Obligations in any
respect which should reasonably be
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expected to have a Material Adverse Effect. No Default or Event of Default has
occurred and is continuing.
6.08 COLLATERAL; COLLATERAL SECURITY.
(a) No Borrower has assigned, pledged, or otherwise conveyed or
encumbered any of the Collateral to any Person other than the Lender, and
immediately prior to the pledge of such Collateral, the applicable Borrower was
the sole owner of the Collateral and had good and marketable title thereto, free
and clear of all Liens, in each case except for Liens that have been released or
are to be released simultaneously with the Liens granted in favor of the Lender
hereunder. No Eligible Asset was acquired by the Borrower from an Affiliate of
the Borrower.
(b) The provisions of this Loan Agreement are effective to create in
favor of the Lender a valid security interest in all right, title and interest
of the Borrower in, to and under the Collateral.
(c) Upon (i) receipt by the Mortgage Custodian of each Mortgage Note,
(ii) the delivery to the Bond/PC Custodian of the Eligible Bonds in accordance
with 5.02 hereof together with the Transfer Documents, (iii) receipt by the
Bond/PC Custodian of the Participation Certificates and (iv) the filing (to the
extent such interest can be perfected by filing under the Uniform Commercial
Code) of financing statements on Form UCC-1 naming the Lender as "Secured Party"
and the Borrower as a "Debtor", and describing the Collateral, in the
jurisdictions and recording offices listed on Schedule 2 attached hereto, in
both instances, the security interests granted hereunder in the Collateral will
constitute fully perfected first-priority security interests under the Uniform
Commercial Code in all right, title and interest of the Borrower in, to and
under such Collateral, and without limitation on the foregoing, the Lender, as
entitlement holder, shall have a "security entitlement" to the Eligible Bonds.
6.09 CHIEF EXECUTIVE OFFICE. The Borrower's chief executive office on
the Effective Date is located at 00 Xxxx Xxxxxx, Xxxxx 0000, Xxx Xxxx, Xxx Xxxx
00000.
6.10 LOCATION OF BOOKS AND RECORDS. The location where the Borrower
keeps its books and records, including all computer tapes and records relating
to the Collateral is its chief operating office, which, on the effective date,
is located at 000 Xxxxxxxxx Xxxxx, Xxxxx 000, Xxxxxx, Xxx Xxxxxx 00000.
6.11 NO BURDENSOME RESTRICTIONS. No Requirement of Law or Contractual
Obligation of the Borrower or any of its Subsidiaries has a Material Adverse
Effect.
6.12 TAXES. The Borrower and its Subsidiaries have filed all Federal
and state income tax returns and all other material tax returns that are
required to be filed by them and have paid all taxes due pursuant to such
returns or pursuant to any assessment received by any of them, except for any
such taxes or assessments, if any, that are being appropriately contested in
good faith by appropriate proceedings diligently conducted and with respect to
which adequate reserves in conformity with GAAP have been provided. No tax Lien
has been filed, and, to the knowledge of the Borrower, no claim is being
asserted, with respect to any such tax or assessment.
6.13 MARGIN REGULATIONS. No part of the proceeds of any Advances will
be used for "purchasing" or "carrying" any "margin stock" within the respective
meanings of each of the quoted
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terms under, or for any other purpose which violates or would be inconsistent
with the provisions of, Regulation G, T, U or X.
6.14 INVESTMENT COMPANY ACT; OTHER REGULATIONS. The Borrower 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. The
Borrower is not subject to regulation under any Federal or state statute or
regulation which limits its ability to incur Indebtedness.
6.15 SUBSIDIARIES. All of the Subsidiaries of the Borrower at the date
hereof are listed on Schedule 3 to this Loan Agreement.
6.16 ACQUISITION OF MORTGAGE LOANS. The Mortgage Loans were acquired
by the Borrower, and the origination and collection practices used by the
originator of the Mortgage Loans have been, in all respects legal, proper,
prudent and customary in the residential mortgage loan servicing business, and
in accordance with the Underwriting Guidelines. All such Mortgage Loans are in
conformity with the Underwriting Guidelines.
6.17 NO ADVERSE SELECTION. The Borrower used no selection procedures
that identified the Eligible Assets as being less desirable or valuable than
other comparable Eligible Assets owned by the Borrower.
6.18 BORROWER SOLVENT; FRAUDULENT CONVEYANCE. As of the date hereof
and immediately after giving effect to each Advance, the fair value of the
assets of the Borrower is greater than the fair value of the liabilities
(including, without limitation, contingent liabilities if and to the extent
required to be recorded as a liability on the financial statements of the
Borrower in accordance with GAAP) of the Borrower and the Borrower is and will
be solvent, is and will be able to pay its debts as they mature and does not and
will not have an unreasonably small capital to engage in the business in which
it is engaged and proposes to engage. The Borrower does not intend to incur, nor
believes that it has incurred, debts beyond its ability to pay such debts as
they mature. The Borrower is not contemplating the commencement of insolvency,
bankruptcy, liquidation or consolidation proceedings or the appointment of a
receiver, liquidator, conservator, trustee or similar official in respect of
Borrower or any of its assets. The Borrower is not transferring any Eligible
Assets with any intent to hinder, delay or defraud any of its creditors.
6.19 ERISA. Each Plan to which the Borrower or its Subsidiaries make
direct contributions, and, to the knowledge of the Borrower, each other Plan and
each Multiemployer Plan, is in compliance in all material respects with, and has
been administered in all material respects in compliance with, the applicable
provisions of ERISA, the Code and any other Federal or state law.
6.20 TRUE AND COMPLETE DISCLOSURE. The information, reports, financial
statements, exhibits and schedules furnished in writing by or on behalf of the
Borrower to the Lender in connection with the negotiation, preparation or
delivery of this Loan Agreement and the other Loan Documents or included herein
or therein or delivered pursuant hereto or thereto, do not contain any untrue
statement of material fact or omit to state any material fact necessary to make
the statements herein or therein not misleading. All written information
furnished after the date hereof by or on behalf of the Borrower to the Lender in
connection with this Loan Agreement and the other Loan Documents and the
transactions contemplated hereby and thereby will be true, correct and accurate
in every material respect, or (in the case of projections) based on reasonable
estimates, on the date as of which such information is stated or certified.
There is no fact known to a Responsible Officer of the Borrower that, after due
inquiry,
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should reasonably be expected to have a Material Adverse Effect that has not
been disclosed herein, in the other Loan Documents or in a report, financial
statement, exhibit, schedule, disclosure letter or other writing furnished to
the Lender for use in connection with the transactions contemplated hereby or
thereby.
6.21 TRUE SALES. Any Eligible Asset acquired by an Affiliate of the
Borrower has been conveyed to the Borrower pursuant to a legal sale, and if so
requested by the Lender, is covered by an opinion of counsel to that effect in
form and substance acceptable to the Lender.
6.22 PARTICIPATION CERTIFICATES. The Borrower represents and warrants
to the Lender with respect to each Participation Certificate that the
representations and warranties set forth on Schedule 1, Part IV hereof are true
and correct and that (a) such Participation Certificate is owned by the Borrower
free from all Liens, (b) such Participation Certificate shall have been
delivered to the Lender or its designee in a form suitable for registration in
the name of the Lender, (c) such Participation Certificate represents an
Ownership Percentage in the Underlying Mortgage Loans referenced therein, (d)
the Eligible Assets referenced in such Participation Certificate are being held
by a Participation Custodian for the benefit of the holder of such Participation
Certificate, and (e) the Participation Custodian is not an Affiliate of the
Borrower under the Governing Agreement for the related Participation
Certificate.
SECTION 7 COVENANTS OF THE BORROWER. The Borrower covenants and agrees
with the Lender that, so long as any Advance is outstanding and until the later
to occur of the payment in full of all Secured Obligations and the termination
of this Loan Agreement:
7.01 FINANCIAL STATEMENTS. The Borrower shall deliver to the Lender:
(a) if available, as soon as available and in any event within
forty-five (45) days after the end of each of the first three quarterly fiscal
periods of each fiscal year of the Borrower, the consolidated and consolidating
balance sheets of the Borrower and its consolidated Subsidiaries as at the end
of such period and the related unaudited consolidated and consolidating
statements of income and of cash flows for the Borrower and its consolidated
Subsidiaries for such period and the portion of the fiscal year through the end
of such period, setting forth in each case in comparative form the figures for
the previous year, accompanied by a certificate of a Responsible Officer of the
Borrower, which certificate shall state that said consolidated financial
statements fairly present the consolidated and consolidating financial condition
and results of operations of the Borrower and its Subsidiaries in accordance
with GAAP, consistently applied, as at the end of, and for, such period (subject
to normal year-end audit adjustments);
(b) as soon as available and in any event within ninety (90) days
after the end of each fiscal year of the Borrower, the audited consolidated and
consolidating balance sheets of the Borrower and its consolidated Subsidiaries
as at the end of such fiscal year and the related consolidated and consolidating
statements of income and retained earnings and of cash flows for the Borrower
and its consolidated Subsidiaries for such year, setting forth in each case in
comparative form the figures for the previous year, accompanied by an opinion
thereon of independent certified public accountants of recognized national
standing, which opinion shall not be qualified as to scope of audit or going
concern and shall state that said consolidated and consolidating financial
statements fairly present the consolidated and consolidating financial condition
and results of operations of the Borrower and its consolidated Subsidiaries as
at the end of, and for, such fiscal year in accordance with GAAP; and
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(c) from time to time such other information regarding the financial
condition, operations, or business of the Borrower and its Subsidiaries as the
Lender may reasonably request.
7.02 EXISTENCE, ETC. The Borrower and its Subsidiaries will:
(a) preserve and maintain its legal existence;
(b) preserve and maintain all of its material rights, privileges,
licenses and franchises;
(c) comply with the requirements of all applicable Requirements of Law
(including, without limitation, the Truth in Lending Act, the Real Estate
Settlement Procedures Act and all environmental laws) if failure to comply
with such requirements should reasonably be expected (either individually
or in the aggregate) to have a Material Adverse Effect; and
(d) keep adequate records and books of account, in which complete
entries will be made in accordance with GAAP consistently applied.
7.03 MAINTENANCE OF PROPERTY; INSURANCE. The Borrower shall keep all
property useful and necessary in its business in good working order and
condition. The Borrower shall maintain errors and omissions insurance and/or
mortgage impairment insurance and blanket bond coverage in such amounts as are
in effect on the Effective Date (as disclosed to Lender in writing) and shall
not reduce such coverage without the written consent of the Lender, and shall
also maintain such other insurance with financially sound and reputable
insurance companies, and with respect to property and risks of a character
usually maintained by entities engaged in the same or similar business similarly
situated, against loss, damage and liability of the kinds and in the amounts
customarily maintained by such entities.
7.04 NOTICES.
(a) The Borrower shall give notice to the Lender promptly:
(i) upon the Borrower becoming aware of, and in any event within one
(1) Business Day after, the occurrence of any Default or Event of Default
or any Event of Default or Default under any other material agreement of
the Borrower;
(ii) upon, and in any event within three (3) Business Days after,
service of process on the Borrower or any of its Subsidiaries, or any agent
thereof for service of process, in respect of any legal or arbitrable
proceedings affecting the Borrower, or any of its Subsidiaries (a) that
questions or challenges the validity or enforceability of any of the Loan
Documents or (b) in which the amount in controversy exceeds $300,000;
(iii) upon the Borrower becoming aware of any default related to any
Collateral, any Material Adverse Effect and any event or change in
circumstances which should reasonably be expected to have a Material
Adverse Effect;
(iv) upon the Borrower becoming aware that the Mortgaged Property in
respect of any Mortgage Loan has been damaged by waste, fire, earthquake or
earth movement, windstorm, flood, tornado or other casualty, or otherwise
damaged so as to materially and adversely affect the Collateral Value of
such Mortgage Loan;
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(v) upon entry of a judgment or decree in an amount in excess of
$200,000.
Each notice pursuant to this Section 7.04(a) (other than 7.04(a)(v)) shall be
accompanied by a statement of a Responsible Officer of the Borrower setting
forth details of the occurrence referred to therein and stating what action the
Borrower has taken or proposes to take with respect thereto.
7.05 OTHER INFORMATION. The Borrower shall furnish to the Lender, as
soon as available, copies of any and all proxy statements, financial statements
and reports which the Borrower sends to its stockholders, and copies of all
regular, periodic and special reports, and all registration statements filed
with the Securities and Exchange Commission, any Governmental Authority which
supervises the issuance of securities by the Borrower.
7.06 FURTHER IDENTIFICATION OF COLLATERAL. The Borrower will furnish
to the Lender from time to time statements and schedules further identifying and
describing the Collateral and such other reports in connection with the
Collateral as the Lender or any Lender may reasonably request, all in reasonable
detail.
7.07 ELIGIBLE ASSET DETERMINED TO BE DEFECTIVE. Upon discovery by the
Borrower or the Lender of any breach of any representation or warranty listed on
Schedule 1 hereto applicable to any Eligible Asset, the party discovering such
breach shall promptly give notice of such discovery to the other.
7.08 MONTHLY REPORTING.
The Borrower shall deliver or cause to be delivered to the Lender, no
later than five (5) days after the last day of each calendar month, the
following documents, as applicable: (a) with respect to Eligible Mortgage Loans,
a monthly servicing report and a Mortgage Loan Schedule and a Mortgage Loan Tape
in a computer-readable format reasonably acceptable to the Lender which shall
list and set forth such information as the Lender may reasonably request,
including, without limitation, (i) the outstanding principal balance and
delinquency status of each such Mortgage Loan as of the last day of the prior
calendar month (reported as current, 30-59, 60-89, 90+, etc., in each case as of
a date specified therein), (ii) any Mortgagor that is in bankruptcy, and (iii) a
servicer exception report as defined in the Underwriting Guidelines, (b) with
respect to Eligible Bonds, a Bond Summary which shall list and set forth such
information as the Lender may reasonably request, and (c) with respect to
Participation Certificates, a Participation Certificate Schedule and
Participation Certificate Tape in a computer-readable format reasonably
acceptable to the Lender which shall list and set forth such information as the
Lender may reasonably request, and (d) with respect to all Eligible Assets, (i)
a Remittance Report in the form attached hereto as EXHIBIT I together with a
statement of reconciliation with respect to the Collection Account, (ii) if the
Borrower and the Lender shall mutually agree (in accordance with Section 2.06
(b) hereof), a Borrowing Base Certificate in the form attached hereto as EXHIBIT
H, and (iii) any other information as the Lender shall reasonably request. Each
monthly servicing report described above shall separately identify each pool of
Eligible Assets pledged to the Lender to secure the related Advance.
7.09 FINANCIAL CONDITION COVENANTS.
(a) MAINTENANCE OF TANGIBLE NET WORTH. The Borrower shall at all times
maintain Tangible Net Worth of not less than $70,000,000.
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(b) MAINTENANCE OF RATIO OF INDEBTEDNESS TO TANGIBLE NET WORTH. With
respect to the Borrower or its Subsidiaries, the ratio of Indebtedness to
Tangible Net Worth shall not at any time be greater than 10:1.
(c) MAINTENANCE OF LIQUIDITY. The Borrower shall ensure that, as of
the end of each calendar month, it has Cash Equivalents in an amount of not less
than $2,500,000.
7.10 BORROWING BASE DEFICIENCY. If at any time there exists a
Borrowing Base Deficiency the Borrower shall cure same in accordance with
Section 2.06 hereof.
7.11 PROHIBITION OF FUNDAMENTAL CHANGES. Neither the Borrower nor any
of its Subsidiaries shall enter into any transaction of merger or consolidation
or amalgamation, or liquidate, wind up or dissolve itself (or suffer any
liquidation, winding up or dissolution) or sell all or substantially all of its
assets, without the prior written consent of the Lender.
7.12 LIMITATION ON LIENS ON COLLATERAL. The Borrower will defend the
Collateral against, and will take such other action as is necessary to remove,
any Lien, security interest or claim on or to the Collateral, other than the
security interests created under this Loan Agreement, and the Borrower will
defend the right, title and interest of the Lender in and to any of the
Collateral against the claims and demands of all persons whomsoever.
7.13 LIMITATION ON TRANSACTIONS WITH AFFILIATES. Neither the Borrower
nor any of its Subsidiaries shall enter into any transaction, including, without
limitation, any purchase, sale, lease or exchange of property or the rendering
of any service, with any Affiliate unless such transaction is (a) not otherwise
prohibited under this Loan Agreement, (b) in the ordinary course of the
Borrower's business and (c) upon fair and reasonable terms no less favorable to
the Borrower, as the case may be, than it would obtain in a comparable arm's
length transaction with a Person which is not an Affiliate.
7.14 UNDERWRITING GUIDELINES. Without prior written consent of the
Lender, the Borrower shall not amend or otherwise modify the Underwriting
Guidelines.
7.15 LIMITATIONS ON MODIFICATIONS, WAIVERS AND EXTENSIONS OF ELIGIBLE
ASSETS. The Borrower will not, nor will it permit or allow others to, amend,
modify, terminate or waive any provision of any Eligible Asset to which the
Borrower is a party in any manner which should reasonably be expected to
materially and adversely affect the value of such Eligible Asset as Collateral.
7.16 SERVICING. The Borrower shall not permit any Person other than
the Master Servicer to service Eligible Assets without the prior written consent
of the Lender.
7.17 LIMITATION ON DISTRIBUTIONS. After the occurrence and during the
continuation of any Event of Default, the Borrower shall not make any payment on
account of, or set apart assets for, a sinking or other analogous fund for the
purchase, redemption, defeasance, retirement or other acquisition of any equity
or partnership interest of the Borrower, whether now or hereafter outstanding,
or make any other distribution in respect thereof, either directly or
indirectly, whether in cash or property or in obligations of the Borrower.
7.18 USE OF PROCEEDS. The Borrower will use the proceeds of the
Advances solely to acquire, fund, manage and service the Eligible Assets.
7.19 RESTRICTED PAYMENTS. The Borrower shall not make any Restricted
Payments.
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7.20 REPORTS. With respect to Eligible Assets which are Eligible Bonds
or Participation Certificates, the Borrower shall promptly deliver to the Lender
(i) any report received by or required to be delivered (a) by any Person
pursuant to the Governing Agreements at the same time as required thereunder, or
(b) to any holder of any securities issued pursuant to the Governing Agreements;
(ii) any notice of transfer of servicing; and (iii) any other such document or
information as the Lender may reasonably request from time to time.
7.21 INSPECTION. The Borrower shall permit the Lender, during normal
business hours and upon reasonable prior notice but in any event within two (2)
Business Days, to inspect its books and records relating to the Collateral and
other matters relating to the transactions contemplated hereby; provided,
however, that in the event a Default shall have occurred the Lender shall not be
required to give any prior notice.
7.22 FURTHER PROCEEDS. If the Borrower shall become entitled to
receive or shall receive any rights, whether in addition to, in substitution of,
as a conversion of, or in exchange for the Eligible Bonds, or otherwise in
respect thereof, the Borrower shall accept the same as the Lender's agent, hold
the same in trust for the Lender and deliver the same forthwith to the Lender in
the exact form received, duly indorsed by the Borrower to the Lender, if
required, together with an undated bond power covering such certificate duly
executed in blank and with, if the Lender so requests, signature guaranteed, to
be held by the Lender hereunder as additional collateral security for the
Secured Obligations. If any sums of money or property so paid or distributed in
respect of the Eligible Bonds shall be received by the Borrower, the Borrower
shall, until such money or property is paid or delivered to the Lender as
required hereunder, hold such money or property in trust for the Lender,
segregated from other Advances of the Borrower, as additional collateral
security for the Secured Obligations.
7.23 FURTHER DOCUMENTATION. At any time and from time to time, upon
the written request of the Lender, and at the sole expense of the Borrower, the
Borrower will promptly and duly execute and deliver such further instruments and
documents and take such further actions as the Lender may reasonably request for
the purposes of obtaining or preserving the full benefits of this Loan Agreement
and of the rights and powers herein granted. If any amount payable under or in
connection with any of the Collateral shall be or become evidenced by any
instrument (including any certificated security or promissory note) or chattel
paper (in each case as defined in the UCC), such instrument or chattel paper
shall be immediately delivered to the Mortgage Custodian or the Bond/PC
Custodian, as applicable, on behalf of Lender, duly endorsed in a manner
satisfactory to Lender, to be held as Collateral pursuant to this Loan
Agreement. Prior to such delivery, the Borrower shall hold all such instruments
or chattel paper in trust of the Lender, and shall not commingle any of the
foregoing with any assets of the Borrower.
7.24 TAXES. The Borrower shall pay, and hold the Lender harmless from,
any and all liabilities with respect to, or resulting from and delay in paying,
any and all stamp, excise, sales or other similar taxes which may be payable or
determined to be payable with except to any of the Collateral or in connection
with any of the transactions contemplated by this Loan Agreement.
7.25 LOST NOTE AFFIDAVITS; LOST INSTRUMENT AFFIDAVITS . Each Lost Note
Affidavit or Lost Instrument Affidavit, as applicable, delivered to the Lender
hereunder shall (i) attach a copy of the original Mortgage Note or, if
available, a copy of the original Participation Certificate, as applicable,
certified by applicable Borrower as a true, correct, and complete copy thereof,
(ii)
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indemnify the Lender, and (iii) remain effective for all the Borrower's and
Lenders' successors and assigns.
SECTION 8 EVENTS OF DEFAULT. Each of the following events shall
constitute an event of default (an "EVENT OF DEFAULT") hereunder:
(a) BORROWER DEFAULT IN THE PAYMENT OF ANY ADVANCE. The Borrower shall
default in the payment of any principal of or interest on any Advance when due
(whether at stated maturity, upon acceleration or at mandatory payment); or
(b) BORROWER DEFAULT IN THE PAYMENT OF OTHER AMOUNT. The Borrower
shall default in the payment of any other amount payable by it hereunder or
under any other Loan Document, and such default shall have continued unremedied
for three (3) Business Days; or
(c) FAILURE OF REPRESENTATION OR WARRANTY. Any representation,
warranty or certification made or deemed made by the Borrower herein (other than
those in Schedule 1 hereto) or by the Borrower in any other Loan Document or any
certificate furnished to the Lender pursuant to the provisions thereof, shall
prove to have been false or misleading in any material respect as of the time
made or furnished; or
(d) DEFAULT OF COVENANT. The Borrower shall:
(i) fail to comply with the requirements of Section 7 hereof
(other than Sections 7.01, 7.02(b), 7.02(d), 7.03, or 7.08),
(ii) fail to comply with the requirements of Sections 7.01,
7.02(b), 7.02(d), 7.03, or 7.08 and such default shall continue
unremedied for a period of five (5) Business Days, or
(iii) fail to observe or perform any other covenant, condition or
agreement contained in this Loan Agreement or any other Loan Document
and such failure to observe or perform shall continue unremedied for a
period of seven (7) Business Days; or
(e) CROSS DEFAULT. The Borrower or any of its Subsidiaries shall:
(i) default in any payment of principal of or interest on any
Indebtedness (other than the Advances) or in the payment of any
Guarantee Obligation, beyond the period of grace (not to exceed 30
days), if any, provided in the instrument or agreement under which
such Indebtedness or Guarantee Obligation was created, if the
aggregate amount of the Indebtedness and/or Guarantee Obligations in
respect of which such default or defaults shall have occurred is
$250,000 or more; or
(ii) default in the observance or performance of any other
agreement or condition relating to any Indebtedness (other than the
Advances) or Guarantee Obligation or contained in any instrument or
agreement evidencing, securing or relating thereto, in each case
beyond the period of grace (not to exceed 30 days), if any, provided
in the instrument or agreement under which such Indebtedness or
Guarantee Obligation was created; or
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(iii) permit any other event to occur or condition exist; or
(iv) default with respect to any other agreement between the
Borrower, on the one hand, and Lender or any of its Affiliates on the
other hand, which has not been waived by the Lender,
the effect of which default or other event or condition is to cause, or give the
holder or holders of such Indebtedness or the beneficiary or beneficiaries of
such Guarantee Obligation (or a trustee or agent on behalf of such holder or
holders or beneficiary or beneficiaries) the immediate right to cause, with the
giving of notice if required, such Indebtedness to become due prior to its
stated maturity or such Guarantee Obligation to become payable; or
(f) UNSATISFIED JUDGMENT. One or more judgments or decrees shall be
entered against the Borrower or against the Borrower in the aggregate or any of
its Subsidiaries involving in the aggregate a liability (not paid or fully
covered by insurance) of $1,000,000 or more, and all such judgments or decrees
shall not have been vacated, discharged, stayed or bonded pending appeal within
60 days from the entry thereof; or
(g) INABILITY TO PAY DEBTS. The Borrower shall admit in writing its
inability to pay its debts as such debts become due; or
(h) VOLUNTARY BANKRUPTCY EVENT. The Borrower or any of its
Subsidiaries shall (i) apply for or consent to the appointment of, or the taking
of possession by, a receiver, custodian, trustee, examiner or liquidator of
itself or of all or a substantial part of its property, (ii) make a general
assignment for the benefit of its creditors, (iii) commence a voluntary case
under the Bankruptcy Code, (iv) file a petition seeking to take advantage of any
other law relating to bankruptcy, insolvency, reorganization, liquidation,
dissolution, arrangement or winding-up, or composition or readjustment of debts,
(v) fail to controvert in a timely and appropriate manner, or acquiesce in
writing to, any petition filed against it in an involuntary case under the
Bankruptcy Code or (vi) take any corporate or other action for the purpose of
effecting any of the foregoing; or
(i) INVOLUNTARY BANKRUPTCY EVENT. A proceeding or case shall be
commenced, without the application or consent of the Borrower or any of its
Subsidiaries, in any court of competent jurisdiction, seeking (i) its
reorganization, liquidation, dissolution, arrangement or winding-up, or the
composition or readjustment of its debts, (ii) the appointment of a receiver,
custodian, trustee, examiner, liquidator or the like of the Borrower or any such
Subsidiary or of all or any substantial part of its property, or (iii) similar
relief in respect of the Borrower or any such Subsidiary under any law relating
to bankruptcy, insolvency, reorganization, winding-up, or composition or
adjustment of debts, and such proceeding or case shall continue undismissed, or
an order, judgment or decree approving or ordering any of the foregoing shall be
entered and continue unstayed and in effect, for a period of 60 or more days; or
an order for relief against the Borrower or any such Subsidiary shall be entered
in an involuntary case under the Bankruptcy Code; or
(j) TERMINATION OF LOAN DOCUMENTS. The Mortgage Custodial Agreement,
the Bond/PC Custodial Agreement, or any other Loan Document, shall for whatever
reason be terminated or cease to be in full force and effect, or the
enforceability thereof shall be contested by any party thereto; or
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(k) ERISA DEFAULT. (i) any Person shall engage in any "prohibited
transaction" (as defined in Section 406 of ERISA or Section 4975 of the Code)
involving any Plan, (ii) any "accumulated funding deficiency" (as defined in
Section 302 of ERISA), whether or not waived, shall exist with respect to any
Plan or any Lien in favor of the PBGC or a Plan shall arise on the assets of the
Borrower or any Commonly Controlled Entity, (iii) 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 commencement of proceedings or appointment of a
trustee is, in the reasonable opinion of the Lender, likely to result in the
termination of such Plan for purposes of Title IV of ERISA, (iv) any Single
Employer Plan shall terminate for purposes of Title IV of ERISA, (v) the
Borrower or any Commonly Controlled Entity shall, or in the reasonable opinion
of the Lenders is likely to, incur any liability in connection with a withdrawal
from, or the insolvency or reorganization of, a Multiemployer Plan or (vi) any
other event or condition shall occur or exist with respect to a Plan; and in
each case in clauses (i) through (vi) above, such event or condition, together
with all other such events or conditions, if any, could reasonably be expected
to have a Material Adverse Effect; or
(l) MATERIAL ADVERSE EFFECT. Any other event shall occur which, in the
sole good faith discretion of the Lender, may have a Material Adverse Effect; or
(m) CHANGE OF CONTROL. Any Change of Control of the Borrower shall
have occurred; or
(n) PRE-EXISTING CONDITION. The discovery by the Lender during its
continuing due diligence of the Borrower of a condition or event and which the
Lender, in its sole reasonable discretion, determines materially and adversely
affects: (i) the condition (financial or otherwise) of the Borrower, its
Subsidiaries or Affiliates; or (ii) the ability of the Borrower or the Lender to
fulfill their respective obligations under this Agreement; or
(o) OTHER LIENS. The Borrower shall grant, or suffer to exist, any
Lien on any Collateral except the Liens contemplated hereby; or the Liens
contemplated hereby shall cease to be first priority perfected Liens on the
Collateral in favor of the Lender or shall be Liens in favor of any Person other
than the Lender; or
(p) FAILURE TO ANSWER. The Lender shall reasonably request, specifying
the reasons for such request, information, and/or written responses to such
requests, regarding the financial well-being of the Borrower and such
information and/or responses shall not have been provided within three Business
Days of such request.
SECTION 9 REMEDIES UPON DEFAULT.
(a) Upon the occurrence of one or more Events of Default other than
those referred to in Sections 8(h) or (i), and in addition to the remedies
provided in Section 4.07 hereof and otherwise provided in this Loan Agreement,
the Lender may immediately declare the principal amount of the Advances then
outstanding under the Note to be immediately due and payable, together with all
interest thereon and fees and expenses accruing under this Loan Agreement. Upon
the occurrence of an Event of Default referred to in Sections 8(h) or (i), and
in addition to the remedies provided in Section 4.07 hereof and otherwise
provided in this Loan Agreement, such amounts shall immediately and
automatically become due and payable without any further action by any Person.
Upon such declaration or such automatic acceleration, the balance then
outstanding on the Note shall become
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immediately due and payable, without presentment, demand, protest or other
formalities of any kind, all of which are hereby expressly waived by the
Borrower.
(b) Upon the occurrence of one or more Events of Default, and in
addition to the remedies provided in Section 4.07 hereof and otherwise provided
in this Loan Agreement, the Lender shall have the right to obtain physical
possession of the Servicing Records and all other files of the Borrower relating
to the Collateral and all documents relating to the Collateral which are then or
may thereafter come in to the possession of the Borrower or any third party
acting for the Borrower and the Borrower shall deliver to the Lender such
assignments as the Lender shall request. The Borrower shall be responsible for
paying any fees of any Subservicer resulting from the termination of a
Subservicer which is an Affiliate of the Borrower due to an Event of Default.
The Lender shall be entitled to specific performance of all agreements of the
Borrower contained in this Loan Agreement.
SECTION 10 NO DUTY OF LENDER. The powers conferred on the Lender
hereunder are solely to protect the Lender's interests in the Collateral and
shall not impose any duty upon it to exercise any such powers. The Lender shall
be accountable only for amounts that it actually receives as a result of the
exercise of such powers, and neither it nor any of its officers, directors,
employees or agents shall be responsible to the Borrower for any act or failure
to act hereunder, except for its or their own gross negligence or willful
misconduct.
SECTION 11 MISCELLANEOUS.
11.01 WAIVER. No failure on the part of the Lender to exercise and no
delay in exercising, and no course of dealing with respect to, any right, power
or privilege under any Loan Document shall operate as a waiver thereof, nor
shall any single or partial exercise of any right, power or privilege under any
Loan Document preclude any other or further exercise thereof or the exercise of
any other right, power or privilege. The remedies provided herein are cumulative
and not exclusive of any remedies provided by law.
11.02 NOTICES. Except as otherwise expressly permitted by this Loan
Agreement, all notices, requests and other communications provided for herein
and under the Mortgage Custodial Agreement (including without limitation any
modifications of, or waivers, requests or consents under, this Loan Agreement)
shall be given or made in writing (including without limitation by telex or
telecopy) delivered to the intended recipient at the "Address for Notices"
specified below its name on the signature pages hereof or thereof); or, as to
any party, at such other address as shall be designated by such party in a
written notice to each other party. Except as otherwise provided in this Loan
Agreement and except for notices given under Section 2 (which shall be effective
only on receipt), all such communications shall be deemed to have been duly
given when transmitted by telex or telecopy or personally delivered or, in the
case of a mailed notice, upon receipt, in each case given or addressed as
aforesaid.
11.03 INDEMNIFICATION AND EXPENSES.
(a) The Borrower agrees to hold the Lender and each of its officers,
directors, agents and employees (each, an "INDEMNIFIED PARTY") harmless from and
indemnify each Indemnified Party against all liabilities, losses, damages,
judgments, costs and expenses of any kind which may be imposed on, incurred by
or asserted against such Indemnified Party in any suit, action, claim or
proceeding relating to or arising out of this Loan Agreement, the Note, any
other Loan Document or any transaction contemplated hereby or thereby, or any
amendment, supplement or modification of, or
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any waiver or consent under or in respect of, this Loan Agreement, the Note, any
other Loan Document or any transaction contemplated hereby or thereby, except,
in each case, to the extent arising from such Indemnified Party's gross
negligence or willful misconduct. In any suit, proceeding or action brought by
the Lender in connection with any Eligible Asset for any sum owing thereunder,
or to enforce any provisions of any such Eligible Asset, the Borrower will save,
indemnify and hold the Lender harmless from and against all expense, loss or
damage suffered by reason of any defense, set-off, counterclaim, recoupment or
reduction or liability whatsoever of the account debtor or obligor thereunder,
arising out of a breach by the Borrower of any obligation thereunder or arising
out of any other agreement, indebtedness or liability at any time owing to or in
favor of such account debtor or obligor or its successors from the Borrower. The
Borrower also agrees to reimburse the Lender as and when billed by the Lender
for all the Lender's costs and expenses incurred in connection with the
enforcement or the preservation of the Lender's rights under this Loan
Agreement, the Note, any other Loan Document or any transaction contemplated
hereby or thereby, including without limitation the fees and disbursements of
its counsel (including all fees and disbursements incurred in any action or
proceeding between the Borrower and an Indemnified Party or between an
Indemnified Party and any third party relating hereto). The Borrower hereby
acknowledges that, notwithstanding the fact that the Note is secured by the
Collateral, the obligation of the Borrower under the Note is a recourse
obligation of the Borrower.
(b) The Borrower agrees to pay as and when billed by the Lender all of
the out-of-pocket costs and expenses incurred by the Lender in connection with
the development, preparation and execution of, and any amendment, supplement or
modification to, this Loan Agreement, the Note, any other Loan Document or any
other documents prepared in connection herewith or therewith, and the
consummation and administration of the transactions contemplated hereby and
thereby, including without limitation (i) all the reasonable fees, disbursements
and expenses of counsel to the Lender not to exceed $30,000, and (ii) all the
due diligence, inspection, testing and review costs and expenses incurred by the
Lender with respect to Collateral under this Loan Agreement as set forth in
Section 11.16 hereof.
11.04 AMENDMENTS. Except as otherwise expressly provided in this Loan
Agreement, any provision of this Loan Agreement may be modified or supplemented
only by an instrument in writing signed by the Borrower and the Lender and any
provision of this Loan Agreement may be waived by the Lender.
11.05 SUCCESSORS AND ASSIGNS. This Loan Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
11.06 SURVIVAL. The obligations of the Borrower under Section 11.03
hereof shall survive the repayment of the Advances and the termination of this
Loan Agreement. In addition, each representation and warranty made or deemed to
be made by a request for a borrowing herein or pursuant hereto shall survive the
making of such representation and warranty, and the Lender shall not be deemed
to have waived, by reason of making any Advance, any Default that may arise
because any such representation or warranty shall have proved to be false or
misleading, notwithstanding that the Lender may have had notice or knowledge or
reason to believe that such representation or warranty was false or misleading
at the time such Advance was made.
11.07 CAPTIONS. The table of contents and captions and section
headings appearing herein are included solely for convenience of reference and
are not intended to affect the interpretation of any provision of this Loan
Agreement.
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11.08 COUNTERPARTS. This Loan Agreement may be executed in any number
of counterparts, all of which taken together shall constitute one and the same
instrument, and any of the parties hereto may execute this Loan Agreement by
signing any such counterpart.
11.09 GOVERNING LAW; ETC. THIS LOAN AGREEMENT SHALL BE GOVERNED BY THE
LAW OF THE STATE OF NEW YORK WITHOUT REFERENCE TO CHOICE OF LAW DOCTRINE (BUT
WITH REFERENCE TO SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW, WHICH
BY ITS TERMS APPLIES TO THIS LOAN AGREEMENT), AND SHALL CONSTITUTE A SECURITY
AGREEMENT WITHIN THE MEANING OF THE UNIFORM COMMERCIAL CODE.
11.10 SUBMISSION TO JURISDICTION; WAIVERS. THE BORROWER HEREBY
IRREVOCABLY AND UNCONDITIONALLY:
(A) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS LOAN AGREEMENT, THE NOTE AND THE OTHER
LOAN DOCUMENTS, OR FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN
RESPECT THEREOF, TO THE NON-EXCLUSIVE GENERAL JURISDICTION OF THE
COURTS OF THE STATE OF NEW YORK, THE FEDERAL COURTS OF THE UNITED
STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND APPELLATE
COURTS FROM ANY THEREOF;
(B) CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT IN
SUCH COURTS AND, TO THE EXTENT PERMITTED BY LAW, WAIVES ANY OBJECTION
THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR
PROCEEDING IN ANY SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS
BROUGHT IN AN INCONVENIENT COURT AND AGREES NOT TO PLEAD OR CLAIM THE
SAME;
(C) AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR
PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR
CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE
PREPAID, TO ITS ADDRESS SET FORTH UNDER ITS SIGNATURE BELOW OR AT SUCH
OTHER ADDRESS OF WHICH THE LENDER SHALL HAVE BEEN NOTIFIED; AND
(D) AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO EFFECT
SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT
THE RIGHT TO XXX IN ANY OTHER JURISDICTION.
11.11 WAIVER OF JURY TRIAL. EACH OF THE BORROWER AND THE LENDER HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND
ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO
THIS LOAN AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY.
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11.12 ACKNOWLEDGMENTS. The Borrower hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Loan Agreement, the Note and the other Loan Documents;
(b) the Lender has no fiduciary relationship to the Borrower, and the
relationship between the Borrower and the Lender is solely that of debtor
and creditor; and
(c) no joint venture exists between the Lender and the Borrower.
11.13 HYPOTHECATION AND PLEDGE OF COLLATERAL. The Lender shall have
free and unrestricted use of all Collateral and nothing in this Loan Agreement
or in Section 9-207(2)(e) of the UCC shall preclude the Lender from engaging in
repurchase transactions with the Collateral or otherwise pledging, repledging,
transferring, hypothecating, or rehypothecating the Collateral, PROVIDED that,
the Lender shall return the Collateral in accordance with this Agreement if the
Borrower complies with the terms of this Agreement. Nothing contained in this
Loan Agreement shall obligate the Lender to segregate, or cause the Mortgage
Custodian or the Bond/PC Custodian to segregate, any Collateral delivered to the
Lender, the Bond/PC Custodian, or the Mortgage Custodian by the Borrower.
11.14 ASSIGNMENTS; PARTICIPATIONS.
(a) The Borrower may assign any of its rights or obligations hereunder
or under the Note with the prior written consent of the Lender. The Lender may
assign or transfer to any bank or other financial institution that makes or
invests in loans or any Affiliate of the Lender all or any of its rights or
obligations under this Loan Agreement and the other Loan Documents.
(b) The Lender may, in accordance with applicable law, at any time
sell to one or more lenders or other entities ("PARTICIPANTS") participating
interests in any Advance, the Note, its commitment to make Advances, or any
other interest of the Lender hereunder and under the other Loan Documents. In
the event of any such sale by the Lender of participating interests to a
Participant, the Lender's obligations under this Loan Agreement to the Borrower
shall remain unchanged, the Lender shall remain solely responsible for the
performance thereof, the Lender shall remain the holder of the Note for all
purposes under this Loan Agreement and the other Loan Documents, and the
Borrower and the Lender shall continue to deal solely and directly with the
Lender in connection with the Lender's rights and obligations under this Loan
Agreement and the other Loan Documents. The Borrower agrees that if amounts
outstanding under this Loan Agreement and the Note are due or unpaid, or shall
have been declared or shall have become due and payable upon the occurrence of
an Event of Default, each Participant shall be deemed to have the right of
set-off in respect of its participating interest in amounts owing under this
Loan Agreement and the Note to the same extent as if the amount of its
participating interest were owing directly to it as a Lender under this Loan
Agreement or the Note; PROVIDED, that such Participant shall only be entitled to
such right of set-off if it shall have agreed in the agreement pursuant to which
it shall have acquired its participating interest to share with the Lender the
proceeds thereof. The Lender also agrees that each Participant shall be entitled
to the benefits of Sections 2.08 and 11.03 with respect to its participation in
the Advances outstanding from time to time; PROVIDED, that the Lender and all
Participants shall be entitled to receive no greater amount in the aggregate
pursuant to such Sections than the Lender would have been entitled to receive
had no such transfer occurred.
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(c) The Lender may furnish any information concerning the Borrower or
any of its Subsidiaries in the possession of such Lender from time to time to
assignees and participants (including prospective assignees and participants).
(d) The Borrower agrees to cooperate with the Lender in connection
with any such assignment and/or participation, to execute and deliver such
replacement notes, and to enter into such restatements of, and amendments,
supplements and other modifications to, this Loan Agreement and the other Loan
Documents in order to give effect to such assignment and/or participation.
11.15 SERVICING. With respect to Eligible Assets which are Mortgage
Loans:
(a) The Borrower covenants to maintain or cause the servicing of the
Mortgage Loans to be maintained in conformity with accepted customary and
prudent servicing practices in the industry for the same type of mortgage loans
as the Mortgage Loans and in a manner at least equal in quality to the servicing
the Borrower provides for Mortgage Loans which they owns ("ACCEPTED SERVICING
PRACTICES"). In the event that the preceding language is interpreted as
constituting one or more servicing contracts, each such servicing contract shall
terminate automatically upon the earlier of (i) an Event of Default, or (ii) the
Termination Date.
(b) If the Mortgage Loans are serviced by the Borrower, the Borrower
agrees that the Lender is the collateral assignee of all servicing records,
including but not limited to any and all servicing agreements, files, documents,
records, data bases, computer tapes, copies of computer tapes, proof of
insurance coverage, insurance policies, appraisals, other closing documentation,
payment history records, and any other records relating to or evidencing the
servicing of Mortgage Loans (the "SERVICING RECORDS"), and (ii) the Borrower
grants the Lender a security interest in all of the Borrower's rights relating
to the Mortgage Loans and all Servicing Records to secure the obligation of the
Borrower or its designee to service in conformity with this Section and any
other obligation of the Borrower to the Lender. The Borrower covenants to
safeguard such Servicing Records and to deliver them promptly to the Lender or
its designee (including the Mortgage Custodian) at the Lender's request.
(c) If the Mortgage Loans or Underlying Mortgage Loans are serviced by
a third party servicer, (such third party servicer, the "SUBSERVICER"), the
Borrower shall provide a copy of the servicing agreement to the Lender at least
three (3) Business Days prior to the applicable Funding Date, which shall be in
form and substance acceptable to the Lender (the "SERVICING AGREEMENT").
(d) The Borrower shall provide to the Lender a letter from the
Borrower or any Subservicer which is an Affiliate of the Borrower (which may be
part of the Instruction Letter), as the case may be, to the effect that upon the
occurrence of an Event of Default, the Lender may terminate any Servicing
Agreement and transfer servicing to its designee, at no cost or expense to the
Lender, it being agreed that the Borrower will pay any and all fees required to
terminate the Servicing Agreement and to effectuate the transfer of servicing to
the designee of the Lender.]
(e) After the Funding Date, until the pledge of any Mortgage Loan is
relinquished by the Mortgage Custodian, the Borrower will have no right to
modify or alter the terms of such Mortgage Loan except with the prior written
consent of the Lender, and the Borrower will have no obligation or right to
repossess such Mortgage Loan or substitute another Mortgage Loan, except as
provided in the Mortgage Custodial Agreement; PROVIDED, that the Borrower may
enter into
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forbearance agreements or plans with Mortgagors consistent with its collection
activities as servicer of the Mortgage Loans and in conformity with Accepted
Servicing Practices.
(f) The Borrower shall permit the Lender to inspect the servicing
facilities of the Borrower, its Affiliates, or any Subservicer which is its
Affiliate of the Borrower as the case may be, for the purpose of satisfying the
Lender that the Borrower, an Affiliate, or such Subservicer, as the case may be,
has the ability to service the Mortgage Loans as provided in this Loan
Agreement. With respect to any Subservicer which is not an Affiliate, the
Borrower shall use its best efforts to enable the Lender to inspect the
servicing facilities of such Subservicer.
11.16 PERIODIC DUE DILIGENCE REVIEW. The Borrower acknowledges that
the Lender has the right to perform continuing due diligence reviews with
respect to the Eligible Assets, for purposes of verifying compliance with the
representations, warranties and specifications made hereunder, or otherwise, and
the Borrower agrees that upon reasonable (but no less than one (1) Business
Day's) prior notice to the Borrower (which prior notice shall not be required
after the occurrence and during the continuation of a Default), the Lender or
its authorized representatives will be permitted during normal business hours to
examine, inspect, and make copies and extracts of, the Asset Files and any and
all documents, records, agreements, instruments or information relating to such
Eligible Assets in the possession or under the control of the Borrower, the
Master Servicer, any Subservicer, and/or the Mortgage Custodian. The Borrower
also shall make available to the Lender a knowledgeable financial or accounting
officer for the purpose of answering questions respecting the Asset Files and
the Eligible Assets. Without limiting the generality of the foregoing, the
Borrower acknowledges that the Lender may make Advances to the Borrower based
solely upon the information provided by the Borrower to the Lender and the
representations, warranties and covenants contained herein, and that the Lender,
at its option, has the right at any time to conduct a partial or complete due
diligence review on some or all of the Eligible Assets securing such Advance,
including without limitation ordering new credit reports and, with respect to
Eligible Assets which are Mortgage Loans, new appraisals on the related
Mortgaged Properties and otherwise re-generating the information used to
originate such Mortgage Loan. The Lender may underwrite such Eligible Assets
itself or engage a mutually agreed upon third party underwriter to perform such
underwriting. The Borrower agrees to cooperate with the Lender and any third
party underwriter in connection with such underwriting, including, but not
limited to, providing the Lender and any third party underwriter with access to
any and all documents, records, agreements, instruments or information relating
to such Eligible Assets in the possession, or under the control, of the
Borrower, the Master Servicer, any Subservicer. In addition, the Lender has the
right to perform continuing Due Diligence Reviews of the Borrower, the Master
Servicer, any Subservicer, and its Affiliates, directors, officers, employees
and significant shareholders. The Borrower and Lender further agree that all
out-of-pocket costs and expenses incurred by the Lender in connection with the
Lender's activities pursuant to this Section 11.16 shall be paid for by the
Borrower.
11.17 SET-OFF. In addition to any rights and remedies of the Lender
provided by this Loan Agreement and by law, the Lender shall have the right,
without prior notice to the Borrower, any such notice being expressly waived by
the Borrower to the extent permitted by applicable law, upon any amount becoming
due and payable by the Borrower hereunder (whether at the stated maturity, by
acceleration or otherwise) to set-off and appropriate and apply against such
amount any and all deposits (general or special, time or demand, provisional or
final), in any currency, and any other credits, indebtedness or claims, in any
currency, in each case whether direct or indirect, absolute or contingent,
matured or unmatured, at any time held or owing by the Lender or any Affiliate
thereof to or for the credit or the account of the Borrower. The Lender agrees
promptly to notify the Borrower
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after any such set-off and application made by the Lender; PROVIDED that the
failure to give such notice shall not affect the validity of such set-off and
application.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have caused this Loan Agreement
to be duly executed and delivered as of the day and year first above written.
BORROWER
--------
HANOVER CAPITAL MORTGAGE HOLDINGS, INC.
By: /s/ Xxxxx X. Muzak
--------------------------------
Xxxxx X. Muzak
Title: MANAGING DIRECTOR
Address For Notices:
--------------------
------------------------------------
------------------------------------
------------------------------------
Attention:
-------------------------
Telecopier No.:
--------------------
Telephone No.:
---------------------
LENDER
------
GREENWICH CAPITAL FINANCIAL PRODUCTS, INC.
By:
-----------------------------------
Title: Vice President
Address For Notices:
--------------------
000 Xxxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxx Xxxxxxxx
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
With a copy to:
Attention: General Counsel
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
57
IN WITNESS WHEREOF, the parties hereto have caused this Loan Agreement
to be duly executed and delivered as of the day and year first above written.
BORROWER
--------
HANOVER CAPITAL MORTGAGE HOLDINGS, INC.
By:
--------------------------------
Title:
Address For Notices:
--------------------
------------------------------------
------------------------------------
------------------------------------
Attention:
-------------------------
Telecopier No.:
--------------------
Telephone No.:
---------------------
LENDER
------
GREENWICH CAPITAL FINANCIAL PRODUCTS, INC.
By: /s/ Xxxx Xxxxxxxx
-----------------------------------
Xxxx Xxxxxxxx
Title: Vice President
Address For Notices:
--------------------
000 Xxxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxx Xxxxxxxx
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
With a copy to:
Attention: General Counsel
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
58
SCHEDULE 1
REPRESENTATIONS AND WARRANTIES RE: ELIGIBLE ASSETS
Part I. ELIGIBLE MORTGAGE LOANS AND UNDERLYING MORTGAGE LOANS
As to each Mortgage Loan included in the Borrowing Base on a Funding
Date (and the related Mortgaged Property) and the Underlying Mortgage Loan
represented by each Participation Certificate included in the Borrowing Base on
a Funding Date, the Borrower shall be deemed to make the following
representations and warranties to the Lender on and as of such Funding Date and
at all times thereafter while such Mortgage Loan or Underlying Mortgage Loan is
included in the Borrowing Base (with respect to any representations and
warranties made to the best of the Borrower's knowledge, in the event that it is
discovered that the circumstances with respect to the related Mortgage Loan are
not accurately reflected in such representation and warranty notwithstanding the
knowledge or lack of knowledge of the Borrower, then, notwithstanding that such
representation and warranty is made to the best of the Borrower's knowledge,
such Mortgage Loan shall be assigned a Collateral Value in accordance with the
definition thereof in the Loan Agreement). For purposes of this Part I of
Schedule 1 only, all references to Mortgage Loan, Mortgage Note, Mortgagor,
Mortgaged Property, or other similar terms shall be deemed to include the
Underlying Mortgage Loan, Underlying Mortgage Note, Underlying Mortgagor, the
property securing the Underlying Mortgage Loan, or other related terms.
(a) MORTGAGE LOANS AS DESCRIBED. The information set forth in the
Mortgage Loan Schedule accompanying the related Notice of Borrowing and Pledge
is true and correct;
(b) PAYMENTS CURRENT. On the applicable Funding Date, and all other
times:
(i) such Mortgage Loan is not thirty (30) days or more past due in
respect of the first Scheduled Payment;
(ii) other than Delinquent Mortgage Loans subject to subsections (i)
and (ii) of the definition of Collateral Value herein, such Mortgage Loan
is not thirty (30) days or more past due in respect of any Scheduled
Payment;
(iii) no Delinquent Mortgage Loan is ninety (90) days or more past due
in respect of any Scheduled Payment.
(c) NO OUTSTANDING CHARGES. There are no defaults in complying with
the terms of the Mortgage, and all taxes, governmental assessments, insurance
premiums, water, sewer and municipal charges, leasehold payments or ground rents
which previously became due and owing have been paid, or an escrow of funds has
been established in an amount sufficient to pay for every such item which
remains unpaid and which has been assessed but is not yet due and payable. The
Borrower has not advanced funds, or induced, solicited or knowingly received any
advance of funds by a party other than the Mortgagor, directly or indirectly,
for the payment of any amount required under the Mortgage Loan, except for
interest accruing from the date of the Mortgage Note or date of disbursement of
the Mortgage Loan proceeds, whichever is more recent, to the day which precedes
by one month the Due Date of the first installment of principal and interest;
59
(d) ORIGINAL TERMS UNMODIFIED. The terms of the Mortgage Note and
Mortgage have not been impaired, waived, altered or modified in any respect,
except by a written instrument which has been recorded, if necessary to protect
the interests of the Lender and which has been delivered to the Mortgage
Custodian. The substance of any such waiver, alteration or modification has been
approved by the title insurer, to the extent required by the policy, and its
terms are reflected on the Mortgage Loan Schedule. No Mortgagor has been
released, in whole or in part, except in connection with an assumption agreement
approved by the title insurer, to the extent required by the policy, and which
assumption agreement is part of the Asset File delivered to the Mortgage
Custodian and the terms of which are reflected in the Mortgage Loan Schedule;
(e) NO DEFENSES. The Mortgage Loan is not subject to any right of
rescission, set-off, counterclaim or defense, including without limitation the
defense of usury, nor will the operation of any of the terms of the Mortgage
Note or the Mortgage, or the exercise of any right thereunder, render either the
Mortgage Note or the Mortgage unenforceable, in whole or in part, and no such
right of rescission, set-off, counterclaim or defense has been asserted with
respect thereto; and no Mortgagor was a debtor in any state or federal
bankruptcy or insolvency proceeding at the time the Mortgage Loan was
originated;
(f) HAZARD INSURANCE. Pursuant to the terms of the Mortgage, all
buildings or other improvements upon the Mortgaged Property are insured by an
insurer who meets Xxxxxx Xxx and/or Xxxxxxx Mac guidelines against loss by fire,
hazards of extended coverage and such other hazards as are customary in the area
where the Mortgaged Property is located pursuant to insurance policies
conforming to the requirements of the Underwriting Guidelines. If upon
origination of the Mortgage Loan, the Mortgaged Property was in an area
identified in the Federal Register by the Federal Emergency Management Agency as
having special flood hazards (and such flood insurance was required by federal
regulation and such flood insurance has been made available) a flood insurance
policy meeting the requirements of the current guidelines of the Federal
Insurance Administration is in effect. All individual insurance policies contain
a standard mortgagee clause naming the loan originator or the Borrower and its
respective successors and assigns as mortgagee, and all premiums thereon have
been paid. The Mortgage obligates the Mortgagor thereunder to maintain the
hazard insurance policy at the Mortgagor's cost and expense, and on the
Mortgagor's failure to do so, authorizes the holder of the Mortgage to obtain
and maintain such insurance at such Mortgagor's cost and expense, and to seek
reimbursement therefor from the Mortgagor. Where required by state law or
regulation, the Mortgagor has been given an opportunity to choose the carrier of
the required hazard insurance, provided the policy is not a "master" or
"blanket" hazard insurance policy covering a condominium, or any hazard
insurance policy covering the common facilities of a planned unit development.
The hazard insurance policy is the valid and binding obligation of the insurer,
is in full force and effect, and will be in full force and effect and inure to
the benefit of the Lender upon the consummation of the transactions contemplated
by this Loan Agreement. The Borrower has not engaged in, and has no knowledge of
the Mortgagor's having engaged in, any act or omission which would impair the
coverage of any such policy, the benefits of the endorsement provided for
herein, or the validity and binding effect of either including, without
limitation, no unlawful fee, commission, kickback or other unlawful compensation
or value of any kind has been or will be received, retained or realized by an
attorney, firm or other person or entity and no such unlawful items have been
received, retained or realized by the Borrower;
(g) COMPLIANCE WITH APPLICABLE LAWS. Any and all requirements of any
federal, state or local law including, without limitation, usury,
truth-in-lending, real estate settlement procedures, consumer credit protection,
equal credit opportunity or disclosure laws applicable to the
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Mortgage Loan have been complied with in all material respects, the consummation
by Borrower of the transactions contemplated hereby will not involve the
violation of any such laws or regulations, and the Borrower shall maintain in
its possession, available for the Lender's inspection, to the extent required by
law, and shall deliver to the Lender upon demand, evidence of compliance with
all such requirements;
(h) NO SATISFACTION OF MORTGAGE. The Mortgage has not been satisfied,
canceled, subordinated or rescinded, in whole or in part, and the Mortgaged
Property has not been released from the lien of the Mortgage, in whole or in
part, nor has any instrument been executed that would effect any such release,
cancellation, subordination or rescission. The Borrower has not waived the
performance by the Mortgagor of any action, if the Mortgagor's failure to
perform such action would cause the Mortgage Loan to be in default, nor has the
Borrower waived any default resulting from any acting or inaction by the
Mortgagor;
(i) LOCATION AND TYPE OF MORTGAGED PROPERTY. The Mortgaged Property is
located in the state identified in the Mortgage Loan Schedule and consists of a
parcel of real property with a detached single family residence erected thereon,
or a two- to four-family dwelling, or an individual condominium unit in a
low-rise condominium project, or an individual unit in a planned unit
development or a de minimis planned unit development, provided, however, that no
residence or dwelling is a mobile home or a manufactured dwelling. No portion of
the Mortgaged Property is used for commercial purposes;
(j) VALID FIRST LIEN. The Mortgage is a valid, subsisting,
enforceable, and perfected first lien on the Mortgaged Property, including all
buildings on the Mortgaged Property and all installations and mechanical,
electrical, plumbing, heating and air conditioning systems located in or annexed
to such buildings, and all additions, alterations and replacements made at any
time with respect to the foregoing. The lien of the Mortgage is subject only to:
(i) the lien of current real property taxes and assessments not yet due and
payable; (ii) covenants, conditions and restrictions, rights of way, easements
and other matters of the public record as of the date of recording acceptable to
mortgage lending institutions generally and specifically referred to in the
lender's title insurance policy delivered to the originator of the Mortgage Loan
and (A) referred to or to otherwise considered in the appraisal (if any) made
for the originator of the Mortgage Loan or (B) which do not adversely affect the
appraised value of the Mortgaged Property set forth in such appraisal; and (iii)
other matters to which like properties are commonly subject which do not
materially interfere with the benefits of the security intended to be provided
by the Mortgage or the use, enjoyment, value or marketability of the related
Mortgaged Property. Any security agreement, chattel mortgage or equivalent
document related to and delivered in connection with the Mortgage Loan
establishes and creates a valid, subsisting and enforceable first lien and first
priority security interest on the property described therein and the Borrower
has full right to sell and assign the same to the Lender. The Mortgaged Property
was not, as of the date of origination of the Mortgage Loan, subject to a
mortgage, deed of trust, deed to secure debt or other security instrument
creating a lien subordinate to the lien of the Mortgage;
(k) VALIDITY OF MORTGAGE DOCUMENTS. The Mortgage Note, the Mortgage
and any other agreement executed and delivered by a Mortgagor in connection with
a Mortgage Loan are genuine, and each is the legal, valid and binding obligation
of the maker thereof enforceable in accordance with its terms. All parties to
the Mortgage Note, the Mortgage and any other related agreement had legal
capacity to enter into the Mortgage Loan and to execute and deliver the Mortgage
Note, the Mortgage and any such agreement, and the Mortgage Note, the Mortgage,
and any other such related agreement have been duly and properly executed by
such parties. The Borrower has
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reviewed all of the documents constituting the Asset File and have made such
inquiries as they deem necessary to make and confirm the accuracy of the
representations set forth herein;
(l) FULL DISBURSEMENT OF PROCEEDS. The proceeds of the Mortgage Loan
have been fully disbursed and there is no requirement for future advances
thereunder (except in the case of a Mortgage Loan a portion of the proceeds of
which has been disbursed to an escrow account in connection with improvements to
be made to the related Mortgaged Property where (i) the Mortgage Loan bears
interest on the entire principal amount thereof as if it had been fully
disbursed, (ii) any proceeds of such Mortgage Loan have not been held in such an
escrow account for more than sixty (60) days, and (iii) the deposit of funds
into such an escrow account has been effected in accordance with the
Underwriting Guidelines) and any and all requirements as to completion of any
on-site or off-site improvement and as to disbursements of any escrow funds
therefor have been complied with. All costs, fees and expenses incurred in
making or closing the Mortgage Loan and the recording of the Mortgage were paid,
and the Mortgagor is not entitled to any refund of any amounts paid or due under
the Mortgage Note or Mortgage;
(m) OWNERSHIP. The Borrower is the sole owner of record and holder of
the Mortgage Loan; the Mortgage Loan is not assigned or pledged (other than as
contemplated under the Loan Agreement), and the Borrower has good indefeasible
and marketable title thereto, and has full right to transfer and pledge the
Mortgage Loan therein to the Lender free and clear of any encumbrance, equity,
participation interest, lien, pledge, charge, claim or security interest, and
has full right and authority subject to no interest or participation of, or
agreement with, any other party, to pledge and assign each Mortgage Loan
pursuant to this Loan Agreement;
(n) DOING BUSINESS. All parties which have had any interest in the
Mortgage Loan, whether as mortgagee, assignee, pledgee or otherwise, are (or,
during the period in which they held and disposed of such interest, were) (i) in
compliance with any and all applicable licensing requirements of the laws of the
state wherein the Mortgaged Property is located, and (ii) (A) organized under
the laws of such state, or (B) qualified to do business in such state, or (C) a
federal savings and loan association, savings bank or a national bank having its
principal office in such state, or (D) not doing business in such state;
(o) LTV. As of the date of origination of the Mortgage Loan, the LTV
is as identified in the applicable Mortgage Loan Schedule, and the Borrower has
no actual knowledge that such LTV has increased to higher than the level
permitted under the Underwriting Guidelines;
(p) TITLE INSURANCE. The Mortgage Loan is covered by a limited
liability lender's title insurance policy or such other form of policy of
insurance acceptable to Xxxxxx Xxx or Xxxxxxx Mac for loans similar to the
Mortgage Loans issued by a title insurer qualified to do business in the
jurisdiction where the Mortgaged Property is located, insuring the Borrower, its
successors and assigns, as to the priority of its lien of the Mortgage in the
original principal amount of the Mortgage Loan, and subject only to the
exceptions contained in clauses (1), (2), and (3) of paragraph (j) above. Where
required by state law or regulation, the Mortgagor has been given the
opportunity to choose the carrier of the required mortgage title insurance.
Immediately prior to the sale of the Mortgage Loan to the Lender under the terms
of this Loan Agreement, the Borrower, its successors and assigns were the sole
insureds of such lender's title insurance policy. Such lender's title insurance
policy is in full force and effect and will be in force and effect upon the
consummation of the transactions contemplated by this Loan Agreement. No claims
have been made under such lender's title insurance policy, and no prior holder
of the Mortgage, including the Borrower, has done, by act or omission, anything
which
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should reasonably be expected to impair the coverage of such lender's title
insurance policy. In connection with the issuance of such lender's title
insurance policy, no unlawful fee, commission, kickback or other unlawful
compensation or value of any kind has been or will be received, retained or
realized by any attorney, firm or other persons or entity, and no such unlawful
items have been received, retained or realized by the Company;
(q) NO DEFAULTS; RIGHT TO CURE; NO FAILURE TO CURE. Other than
Delinquent Mortgage Loans, there is no default, breach, violation or event of
acceleration existing under the Mortgage or the Mortgage Note and no event
which, with the passage of time or with notice and the expiration of any grace
or cure period, would constitute a default, breach, violation or event of
acceleration (other than those payment delinquencies permitted by paragraph (a)
of this Schedule 1), and neither the Borrower nor its predecessors have waived
any default, breach, violation or event of acceleration;
(r) NO MECHANICS' LIENS There are no mechanics' or similar liens or
claims which have been filed for work, labor or material (and no rights are
outstanding that under the law could give rise to such liens) affecting the
related Mortgaged Property which are or may be liens prior to, or equal or
coordinate with, the lien of the related Mortgage;
(s) LOCATION OF IMPROVEMENTS; NO ENCROACHMENTS. All improvements which
were considered in determining the Appraised Value of the Mortgaged Property lay
wholly within the boundaries and building restriction lines of the Mortgaged
Property and no improvements on adjoining properties encroach upon the Mortgaged
Property. No improvement located on or being part of the Mortgaged Property is
in violation of any applicable zoning law or regulation;
(t) ORIGINATION: PAYMENT TERMS. The Mortgage Loan was originated by or
in conjunction with a mortgagee approved by the Secretary of Housing and Urban
Development pursuant to Section 203 and 211 of the National Housing Act or a
savings and loan association, a savings bank, a commercial bank credit union,
insurance company or similar banking institution which is supervised and
examined by a federal or state authority. Principal payments on the Mortgage
Loan commenced no more than sixty (60) days after funds were disbursed in
connection with the Mortgage Loan. The documents, instruments and agreements
submitted for loan underwriting were not falsified and contain no untrue
statement of material fact or omit to state a material fact required to be
stated therein. The Mortgage Note has the terms identified in the applicable
Mortgage Loan Schedule;
(u) CUSTOMARY PROVISIONS. The Mortgage Note has a stated maturity. The
Mortgage contains customary and enforceable provisions such as to render the
rights and remedies of the holder thereof adequate for the realization against
the Mortgaged Property of the benefits of the security provided thereby,
including, (i) in the case of a Mortgage designated as a deed of trust, by
trustee's sale, and (ii) otherwise by judicial foreclosure. Upon default by a
Mortgagor on a Mortgage Loan and foreclosure on, or trustee's sale of, the
Mortgaged Property pursuant to the proper procedures, the holder of the Mortgage
Loan will be able to deliver good and marketable title to the Mortgaged
Property. There is no homestead or other exemption available to a Mortgagor
which would interfere with the right to sell the Mortgaged Property at a
trustee's sale or the right to foreclose the Mortgage;
(v) CONFORMANCE WITH UNDERWRITING GUIDELINES AND AGENCY STANDARDS. The
Mortgage Loan was underwritten in accordance with, and the Mortgage Loan and
Mortgaged Property
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conform to, the Borrower's applicable Underwriting Guidelines. The Mortgage Note
and Mortgage are on forms acceptable to FHLMC or FNMA];
(w) OCCUPANCY OF THE MORTGAGED PROPERTY. The Mortgaged Property is
lawfully occupied under applicable law. All inspections, licenses and
certificates required to be made or issued with respect to all occupied portions
of the Mortgaged Property and, with respect to the use and occupancy of the
same, including but not limited to certificates of occupancy and fire
underwriting certificates, have been made or obtained from the appropriate
authorities. The Mortgaged Property is owner occupied except as set forth on the
Mortgage Loan Tape;
(x) NO ADDITIONAL COLLATERAL. The Mortgage Note is not and has not
been secured by any collateral except the lien of the corresponding Mortgage and
the security interest of any applicable security agreement or chattel mortgage
referred to in (j) above;
(y) DEEDS OF TRUST. In the event the Mortgage constitutes a deed of
trust, a trustee, duly qualified under applicable law to serve as such, has been
properly designated and currently so serves and is named in the Mortgage, and no
fees or expenses are or will become payable by the Lender to the trustee under
the deed of trust, except in connection with a trustee's sale after default by
the Mortgagor;
(z) TAKE-OUT COMMITMENTS. To the extent that a Mortgage Loan is
covered by a Take-Out Commitment, such Take-Out Commitment is a valid, binding
and subsisting obligation enforceable in accordance with its terms.
(aa) ACCEPTABLE INVESTMENT. No specific circumstances or conditions
exist with respect to the Mortgage, the Mortgaged Property, the Mortgagor or the
Mortgagor's credit standing that should reasonably be expected to (i) cause
private institutional investors which invest in Mortgage Loans similar to the
Mortgage Loan to regard the Mortgage Loan as an unacceptable investment, (ii)
cause the Mortgage Loan to be more likely to become past due in comparison to
similar Mortgage Loans, or (iii) adversely affect the value or marketability of
the Mortgage Loan in comparison to similar Mortgage Loans;
(bb) DELIVERY OF MORTGAGE DOCUMENTS. The Mortgage Note, the Mortgage,
the Assignment of Mortgage and any other documents required to be delivered for
the Mortgage Loan by the Borrower under the Mortgage Custodial Agreement have
been delivered to the Mortgage Custodian at or prior to the time specified for
delivery in the Mortgage Custodial Agreement.
(cc) ASSIGNMENT OF MORTGAGE. The Assignment of Mortgage is in
recordable form and is acceptable for recording under the laws of the
jurisdiction in which the Mortgaged Property is located;
(dd) DUE ON SALE. The Mortgage contains an enforceable provision for
the acceleration of the payment of the unpaid principal balance of the Mortgage
Loan in the event that the Mortgaged Property is sold or transferred without the
prior written consent of the mortgagee thereunder;
(ee) NO BUYDOWN PROVISIONS: NO GRADUATED PAYMENTS OR CONTINGENT
INTERESTS. Except as noted in the Mortgage Loan Tape and Mortgage Loan Schedule
or the Participation Certificate Schedule and Participation Certificate Tape,
the Mortgage Loan does not contain provisions
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pursuant to which Scheduled Payments are paid or partially paid with funds
deposited in any separate account established by the Borrower, the Mortgagor or
anyone on behalf of the Mortgagor, or paid by any source other than the
Mortgagor nor does it contain any other similar provisions currently in effect
which may constitute a "buydown" provision. Except as noted in the Mortgage Loan
Tape and Mortgage Loan Schedule or the Participation Certificate Schedule and
Participation Certificate Tape, the Mortgage Loan is not a graduated payment
Mortgage Loan and the Mortgage Loan does not have a shared appreciation or other
contingent interest feature;
(ff) CONSOLIDATION OF FUTURE ADVANCES. Any future advances made after
origination of the Mortgage Loan have been consolidated with the outstanding
principal amount secured by the Mortgage, and the secured principal amount, as
consolidated, bears a single interest rate and single repayment term. The lien
of the Mortgage securing the consolidated principal amount is expressly insured
as having second lien priority by a title insurance policy, an endorsement to
the policy insuring the mortgagee's consolidated interest or by other title
evidence satisfying paragraph (p) above. The consolidated principal amount does
not exceed the original principal amount of the Mortgage Loan;
(gg) MORTGAGED PROPERTY UNDAMAGED: CONDEMNATION. The Mortgaged
Property is undamaged by waste, fire, earthquake or earth movement, windstorm,
flood, tornado or other casualty so as to adversely affect the value of the
Mortgaged Property as security for the Mortgage Loan or the use for which the
premises were intended and each Mortgaged Property is in good repair. There have
not been any condemnation proceedings with respect to the Mortgaged Property and
the Borrower has no knowledge of any such proceedings in the future;
(hh) COLLECTION PRACTICES; ESCROW DEPOSITS. The origination and
collection practices used with respect to the Mortgage Loan have been in all
respects in compliance with Accepted Servicing Practices, applicable laws and
regulations, and have been in all respects legal, proper, and consistent with
industry standards for mortgage loans of the same type as the Mortgage Loan.
With respect to escrow deposits and Escrow Payments, if any, all such payments
are in the possession of, or under control of, the Borrower and there exist no
deficiencies in connection therewith for which customary arrangements for
repayment thereof have not been made. All Escrow Payments, if any, have been
collected in full compliance with state and federal law. An escrow of funds is
not prohibited by applicable law and, to the extent such Escrow Payments are not
collected by the mortgagee or its designee under the First Lien, any escrow that
has been established is in an amount sufficient to pay for every item that
remains unpaid and has been assessed but is not yet due and payable. No escrow
deposits or Escrow Payments or other charges or payments due the Borrower has
been capitalized under the Mortgage or the Mortgage Note. Any interest required
to be paid pursuant to state and local law has been properly paid and credited;
(ii) APPRAISAL. The file held by the Master Servicer or the
Subservicer contains an appraisal of the related Mortgaged Property signed prior
to the approval of the Mortgage Loan application by a qualified appraiser, duly
appointed by the Borrower, who had no interest, direct or indirect in the
Mortgaged Property or in any loan made on the security thereof, and whose
compensation is not affected by the approval or disapproval of the Mortgage
Loan, and the appraisal and appraiser both satisfy the requirements of Title XI
of the Federal Institutions Reform, Recovery and Enforcement Act of 1989, as
amended, and the regulations promulgated thereunder, as such statute and
regulations were in effect on the date the Mortgage Loan was originated;
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(jj) SOLDIERS' AND SAILORS' RELIEF ACT. The Mortgagor has not notified
the Borrower, and the Borrower has no knowledge of any relief requested or
allowed to the Mortgagor under the Soldiers' and Sailors' Civil Relief Act of
1940;
(kk) ENVIRONMENTAL MATTERS. To the Borrower's actual knowledge, the
Mortgaged Property is free from any and all toxic or hazardous substances and
there exists no violation of any local, state or federal environmental law, rule
or regulation;
(ll) CONSTRUCTION OR REHABILITATION OF MORTGAGED PROPERTY. No Mortgage
Loan was made in connection with the construction or rehabilitation of a
Mortgaged Property or facilitating the trade-in or exchange of a Mortgaged
Property;
(mm) GROUND LEASES. With respect to each ground lease to which the
Mortgaged Property is subject (a "GROUND LEASE"): (i) the Mortgagor is the owner
of a valid and subsisting interest as tenant under the Ground Lease; (ii) the
Ground Lease is in full force and effect, unmodified and not supplemented by any
writing or otherwise; (iii) all rent, additional rent and other charges reserved
therein have been paid to the extent they are payable to the date hereof; (iv)
the Mortgagor enjoys the quiet and peaceful possession of the estate demised
thereby, subject to any sublease; (v) the Mortgagor is not in default under any
of the terms thereof and there are no circumstances which, with the passage of
time or the giving of notice or both, would constitute an event of default
thereunder; (vii) the lessor under the Ground Lease is not in default under any
of the terms or provisions thereof on the part of the lessor to be observed or
performed; (vii) the lessor under the Ground Lease has satisfied all of its
repair or construction obligations, if any, to date pursuant to the terms of the
Ground Lease; and (ix) the execution, delivery and performance of the Mortgage
do not require the consent (other than those consents which have been obtained
and are in full force and effect) under, and will not contravene any provision
of or cause a default under, the Ground Lease.
(nn) NO DEFENSE TO INSURANCE COVERAGE. No action has been taken or
failed to be taken, no event has occurred and no state of facts exists or has
existed (whether or not known to the Borrower on or prior to such date) which
has resulted or will result in an exclusion from, denial of, or defense to
coverage under any applicable pool policy, special hazard insurance policy, or
bankruptcy bond (including, without limitation, any exclusions, denials or
defenses which would limit or reduce the availability of the timely payment of
the full amount of the loss otherwise due thereunder to the insured), whether
arising out of actions, representations, errors, omissions, negligence, or fraud
of the Borrower, the related Mortgagor or any party involved in the application
for such insurance or coverage, including the appraisal, plans and
specifications and other exhibits or documents submitted therewith to the
insurer or under any such insurance policy, or for any other xxxxx under such
coverage, but not including the failure of the insurer to pay by reason of the
insurer's breach of the insurance policy or the insurer's financial inability to
pay. In connection with the placement of any insurance or coverage, no
commission, fee or other compensation has been or will be received by the
Borrower or by any officer, director, or employee of the Borrower or any
designee of the Borrower or any corporation in which the Borrower or any
officer, director or employee had a financial interest at the time of placement
of such insurance;
(oo) VALUE OF MORTGAGE PROPERTY. The Borrower has no knowledge of any
circumstances existing that should reasonably be expected to adversely affect
the value or the marketability of the Mortgaged Property or the Mortgage Loan or
to cause the Mortgage Loan to prepay during any period materially faster or
slower than the Mortgage Loans acquired by the Borrower generally;
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(pp) SECTION 32 MORTGAGES; OVERAGES. The Borrower has provided the
related Mortgagor with all disclosure materials required by Section 226.32 of
the Federal Reserve Board Regulation Z with respect to any Mortgage Loans
subject to such Section of the Federal Reserve Board Regulation Z. The Borrower
has not made or caused to be made any payment in the nature of an "overage" or
"yield spread premium" to a mortgage broker or like Person which has not been
fully disclosed to the Mortgagor;
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Part II ELIGIBLE BONDS
As to each Eligible Bond included in the Borrowing Base on a Funding
Date, the Borrower shall be deemed to make the following representations and
warranties to the Lender on and as of such Funding Date and at all times
thereafter while such Eligible Bond is included in the Borrowing Base:
(a) COMPLIANCE WITH APPLICABLE LAWS. All of the Eligible Bonds have
been validly issued, and are fully paid and non-assessable, and the Eligible
Bonds have been offered, issued and sold in compliance with all applicable laws;
(b) NO ENCUMBRANCES. There are (i) no outstanding rights, options,
warrants or agreements for a purchase, sale or issuance, in connection with the
Eligible Bonds, (ii) no agreements on the part of the Borrower to issue, sell or
distribute the Eligible Bonds, and (iii) no obligations on the part of the
Borrower (contingent or otherwise) to purchase, redeem or otherwise acquire any
securities or any interest therein or to pay any dividend or make any
distribution in respect of the Eligible Bonds;
(c) OWNERSHIP. A Borrower is, or will be upon issuance of the Eligible
Bonds, the record and beneficial owner of, and has, or will have upon issuance,
good title to, the Eligible Bonds, free of any and all liens or options in favor
of, or claims of, any other Person, except the security interest created by this
Loan Agreement;
(d) FIRST PRIORITY SECURITY INTEREST; SECURITY ENTITLEMENT. The
Eligible Bonds, when pledged as Collateral hereunder, shall be unencumbered, and
this Loan Agreement, together with delivery to the Lender or the Bond/PC
Custodian of the Eligible Bonds and the filing of a financing statement naming
the Borrower as "debtor" and the Lender as "secured party" and describing such
Collateral as the "collateral", will create a valid first priority perfected
security interest in such Collateral in favor of the Lender in accordance with
its terms against all credits of the Borrower and any Persons purporting to
purchase such Collateral from the Borrower, and without limitation the Lender
shall have a "security entitlement" thereto. The Borrower has obtained from any
an all concerned creditors, any waivers, amendments, releases or acknowledgments
necessary to create and perfect in favor of the Lender the first priority
security interests provided herein;
(e) PROPER FORM. The Eligible Bonds are certificated securities in
registered form, or are in uncertificated form and (i) held through the
facilities of a Relevant System, or (ii) registered on the books of the issuer
thereof; and
(f) CHIEF EXECUTIVE OFFICE. The chief executive office of the Borrower
is, and for the four months immediately preceding the date of this Loan
Agreement has been, located at the address set forth for it on the signature
page hereof.
(g) TAKE-OUT COMMITMENTS. To the extent that an Eligible Bond is
covered by a Take-Out Commitment, such Take-Out Commitment is a valid, binding
and subsisting obligation enforceable in accordance with its terms.
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Part III. PARTICIPATION CERTIFICATES
As to each Participation Certificate and the related Governing
Agreement, the following eligibility criteria shall be met as of the applicable
Funding Date and as of each date Collateral Value is determined:
(a) VALIDITY OF GOVERNING AGREEMENT. The Governing Agreement and any
other agreement executed and delivered in connection with
Participation Certificate are genuine, and each is the legal,
valid and binding obligation of the maker thereof enforceable in
accordance with its terms. The Borrower and the Trustee had legal
capacity to enter into the Governing Agreement and the Trustee
had the legal capacity to execute and deliver the Governing
Agreement and any such agreement, and the Governing Agreement and
any such other related agreement to which the Borrower or the
Trustee are parties have been duly and properly executed by the
Borrower and the Trustee, as applicable. The Governing Agreement
to which the Trustee is a party constitutes a legal, valid,
binding and enforceable obligation of the Trustee. The Governing
Agreement is in full force and effect, and the enforceability of
the Governing Agreement has not been contested by the Trustee.
(b) ORIGINAL TERMS UNMODIFIED. The terms of the Governing Agreement
and the related Participation Certificate have not been impaired,
altered or modified in any respect.
(c) NO WAIVER. The Borrower has not waived the performance by the
Trustee of any action, if the Trustee's failure to perform such
action would cause the Governing Agreement to be in default, nor
has the Borrower waived any default resulting from any action or
inaction by the Trustee.
(d) NO DEFAULTS. There is no default, breach, violation or event of
acceleration existing under the Governing Agreement and no event
has occurred which, with the passage of time or giving of notice
or both and the expiration of any grace or cure period, would
constitute a default, breach, violation or event of acceleration
thereunder, and neither the Borrower nor its predecessors in
interest have waived any such default, breach, violation or event
of acceleration.
(e) DELIVERY OF GOVERNING AGREEMENT. The Governing Agreements for the
related Participation Certificate has been or shall be delivered
three (3) days prior to each Funding Date.
(f) PARTICIPATION CERTIFICATE ASSIGNABLE. Each Participation
Certificate is assignable to the Lender. The Governing Agreement
permits the Borrower to sell, assign, pledge, transfer or
rehypothecate the Eligible Mortgage Loan related to such
Participation Certificate.
(g) TAKE-OUT COMMITMENTS. To the extent that a Participation
Certificate is covered by a Take-Out Commitment, such Take-Out
Commitment is a valid, binding and subsisting obligation
enforceable in accordance with its terms.
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(h) UNDERLYING MORTGAGE LOANS. With respect to each Underlying
Mortgage Loan, the representations and warranties set forth in
Part I of this Schedule 1 are true and correct.
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Part IV DEFINED TERMS
In addition to terms defined elsewhere in the Loan Agreement, the
following terms shall have the following meanings when used in this Schedule 1:
"APPRAISED VALUE" shall mean the value set forth in an appraisal made
in connection with the origination of the related Mortgage Loan as the value of
the Mortgaged Property.
"ASSIGNMENT OF MORTGAGE" shall mean an assignment of the Mortgage,
notice of transfer or equivalent instrument in recordable form, sufficient under
the laws of the jurisdiction wherein the related Mortgaged Property is located
to reflect the transfer of the Mortgage.
"DUE DATE" means the day of the month on which the Scheduled Payment
is due on a Mortgage Loan, exclusive of any days of grace.
"ESCROW PAYMENTS" shall mean with respect to any Mortgage Loan, the
amounts constituting ground rents, taxes, assessments, water rates, sewer rents,
municipal charges, fire and hazard insurance premiums, condominium charges, and
any other payments required to be escrowed by the Mortgagor with the mortgagee
pursuant to the Mortgage or any other related document.
"LOAN-TO-VALUE RATIO" OR "LTV" shall mean with respect to any Mortgage
Loan, the ratio of (a) the Par Amount of the Mortgage Loan as of the date of
origination (unless otherwise indicated) to (b) the Appraised Value of the
Mortgaged Property or if the Mortgage Loan was made in connection with the
purchase of the related Mortgaged Property, the lesser of the Appraised Value
and the sales price of such property.
"STATED PRINCIPAL BALANCE" shall mean as to each Mortgage Loan, the
principal balance of the Mortgage Loan at the date of determination.
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SCHEDULE 2
FILING JURISDICTIONS AND OFFICES
Secretary of State of the State of New York
Secretary of County of New York County
Secretary of State of the State of New Jersey
Secretary of State of the State of Maryland
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SCHEDULE 3
SUBSIDIARIES
[TO BE PROVIDED BY COUNSEL TO BORROWER]
73
SCHEDULE 4
LITIGATION
[TO BE PROVIDED BY COUNSEL TO BORROWER]
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EXHIBIT A
[FORM OF PROMISSORY NOTE]
$100,000,000 March 30 0000
Xxx Xxxx, Xxx Xxxx
FOR VALUE RECEIVED, HANOVER CAPITAL MORTGAGE HOLDINGS, INC., a
Maryland corporation (the "BORROWER"), hereby promises to pay to the order of
GREENWICH CAPITAL FINANCIAL PRODUCTS, INC. a Delaware corporation (the
"LENDER"), at the principal office of the Lender at 000 Xxxxxxxxx Xxxx,
Xxxxxxxxx, Xxxxxxxxxxx 00000, in lawful money of the United States, and in
immediately available funds, the principal sum of ONE HUNDRED MILLION DOLLARS
($100,000,000) (or such lesser amount as shall equal the aggregate unpaid
principal amount of the Advances made by the Lender to the Borrower under the
Loan Agreement as defined below), on the dates and in the principal amounts
provided in the Loan Agreement, and to pay interest on the unpaid principal
amount of each such Advance, at such office, in like money and funds, for the
period commencing on the date of such Advance until such Advance shall be paid
in full, at the rates per annum and on the dates provided in the Loan Agreement.
The date, amount and interest rate of each Advance made by the Lender
to the Borrower, and each payment made on account of the principal and interest
thereof, shall be recorded by the Lender on its books and, prior to any transfer
of this Note, endorsed by the Lender on the schedule attached hereto or any
continuation thereof; PROVIDED, that the failure of the Lender to make any such
recordation or endorsement shall not affect the obligations of the Borrower to
make a payment when due of any amount owing under the Loan Agreement or
hereunder in respect of the Advances made by the Lender.
This Note is the Note referred to in the Master Loan and Security
Agreement dated as of March 30, 1998 (as amended, supplemented or otherwise
modified and in effect from time to time, the "LOAN AGREEMENT") between the
Borrower and the Lender, and evidences Advances made by the Lender thereunder.
Terms used but not defined in this Note have the respective meanings assigned to
them in the Loan Agreement.
The Borrower agrees to pay all the Lender's costs of collection and
enforcement (including attorneys' fees and disbursements of Lender's counsel) in
respect of this Note when incurred, including, without limitation, attorneys'
fees through appellate proceedings.
Notwithstanding the pledge of the Collateral, the Borrower hereby
acknowledges, admits and agrees that the Borrower's obligations under this Note
are recourse obligations of the Borrower to which the Borrower pledges its full
faith and credit.
The Borrower, and any indorsers hereof, (a) severally waive diligence,
presentment, protest and demand and also notice of protest, demand, dishonor and
nonpayments of this Note, (b) expressly agree that this Note, or any payment
hereunder, may be extended from time to time, and consent to the acceptance of
further Collateral, the release of any Collateral for this Note, the release of
any party primarily or secondarily liable hereon, and (c) expressly agree that
it will not be necessary for the Lender, in order to enforce payment of this
Note, to first institute or exhaust the Lender's remedies against the Borrower
or any other party liable hereon or against any Collateral for this Note. No
extension of time for the payment of this Note, or any installment hereof, made
by agreement by the Lender with any person now or hereafter liable for the
payment of this Note, shall affect the
75
liability under this Note of the Borrower, even if the Borrower is not a party
to such agreement; PROVIDED, HOWEVER, that the Lender and the Borrower, by
written agreement between them, may affect the liability of the Borrower.
Any reference herein to the Lender shall be deemed to include and
apply to every subsequent holder of this Note. Reference is made to the Loan
Agreement for provisions concerning optional and mandatory prepayments,
Collateral, acceleration and other material terms affecting this Note.
Any enforcement action relating to this Note may be brought by motion
for summary judgment in lieu of a complaint pursuant to Section 3213 of the New
York Civil Practice Law and Rules.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED UNDER THE LAWS OF THE
STATE OF NEW YORK (WITHOUT REFERENCE TO CHOICE OF LAW DOCTRINE BUT WITH
REFERENCE TO SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW, WHICH BY
ITS TERMS APPLIES TO THIS NOTE) WHOSE LAWS THE BORROWER EXPRESSLY ELECTS TO
APPLY TO THIS NOTE. THE BORROWER AGREES THAT ANY ACTION OR PROCEEDING BROUGHT TO
ENFORCE OR ARISING OUT OF THIS NOTE MAY BE COMMENCED IN THE SUPREME COURT OF THE
STATE OF NEW YORK, BOROUGH OF MANHATTAN, OR IN XXX XXXXXXXX XXXXX XX XXX XXXXXX
XXXXXX FOR THE SOUTHERN DISTRICT OF NEW YORK. THE BORROWER HEREBY SUBMITS TO NEW
YORK JURISDICTION WITH RESPECT TO ANY ACTION BROUGHT WITH RESPECT TO THIS NOTE
AND WAIVES ANY RIGHT WITH RESPECT TO THE DOCTRINE OF FORUM NON CONVENIENS WITH
RESPECT TO SUCH TRANSACTIONS.
HANOVER CAPITAL MORTGAGE HOLDINGS, INC.
By:
------------------------------------
Name:
Title:
-2-
76
SCHEDULE OF ADVANCES
This Note evidences Advances made under the within-described Loan
Agreement to the Borrower, on the dates, in the principal amounts and bearing
interest at the rates set forth below, and subject to the payments and
prepayments of principal set forth below:
PRINCIPAL AMOUNT INTEREST AMOUNT PAID UNPAID PRINCIPAL NOTATION
DATE MADE OF ADVANCE RATE OR PREPAID AMOUNT MADE BY
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77
EXHIBIT B
[FORM OF MORTGAGE CUSTODIAL AGREEMENT]
[STORED AS A SEPARATE DOCUMENT]
78
EXHIBIT C
[FORM OF OPINION OF COUNSEL TO BORROWER]
(date)
Greenwich Capital Financial Products, Inc.
000 Xxxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Dear Sirs and Mesdames:
You have requested [our] [my] opinion, as counsel to Hanover Capital
Mortgage Holdings, Inc., a Maryland corporation (the "BORROWER"), with respect
to certain matters in connection with that certain Master Loan and Security
Agreement, dated as of March 30, 1998 (the "LOAN AND SECURITY AGREEMENT"), by
and between the Borrower and Greenwich Capital Financial Products, Inc. (the
"LENDER"), being executed contemporaneously with a Promissory Note dated March
30, 1998 from the Borrower to the Lender (the "NOTE"), a Mortgage Custodial
Agreement, dated as of March 30, 1998 (the "MORTGAGE CUSTODIAL Agreement"), by
and among the Borrower, First Chicago National Processing Corporation (the
"MORTGAGE CUSTODIAN"), and the Lender. Capitalized terms not otherwise defined
herein have the meanings set forth in the Loan and Security Agreement.
[We] [I] have examined the following documents:
1. the Loan and Security Agreement;
2. the Note;
3. Mortgage Custodial Agreement;
4. unfiled copies of the financing statements listed on SCHEDULE 1
(collectively, the "FINANCING STATEMENTS") naming the Borrower as
Debtor and the Lender as Secured Party and describing the
Collateral (as defined in the Loan and Security Agreement) as to
which security interests may be perfected by filing under the
Uniform Commercial Code of the States listed on SCHEDULE 1 (the
"FILING COLLATERAL"), which I understand will be filed in the
filing offices listed on SCHEDULE 1 (the "FILING OFFICES");
5. the reports listed on SCHEDULE 2 as to UCC financing statements
(collectively, the "UCC SEARCH REPORT"); and
6. such other documents, records and papers as we have deemed
necessary and relevant as a basis for this opinion.
To the extent [we] [I] have deemed necessary and proper, [we] [I] have
relied upon the representations and warranties of the Borrower contained in the
Loan and Security Agreement. [We] [I] have assumed the authenticity of all
documents submitted to me as originals, the genuineness of all signatures, the
legal capacity of natural persons and the conformity to the originals of all
documents.
Based upon the foregoing, it is [our] [my] opinion that:
79
1. The Borrower is a Maryland corporation duly organized, validly
existing and in good standing under the laws of Maryland and is qualified to
transact business in, and is in good standing under, the laws of the state of
Maryland.
2. The Borrower has the corporate power to engage in the transactions
contemplated by the Loan and Security Agreement, the Note, and the Mortgage
Custodial Agreement and all requisite corporate power, authority and legal right
to execute and deliver the Loan and Security Agreement, the Note, and the
Mortgage Custodial Agreement and observe the terms and conditions of such
instruments. The Borrower has all requisite corporate power to borrow under the
Loan and Security Agreement and to grant a security interest in the Collateral
pursuant to the Loan and Security Agreement.
3. The execution, delivery and performance by the Borrower of the Loan
and Security Agreement, the Note, and the Mortgage Custodial Agreement, and the
borrowings by the Borrower and the pledge of the Collateral under the Loan and
Security Agreement have been duly authorized by all necessary corporate action
on the part of the Borrower. Each of the Loan and Security Agreement, the Note
and the Mortgage Custodial Agreement have been executed and delivered by the
Borrower and are legal, valid and binding agreements enforceable in accordance
with their respective terms against the Borrower, subject to bankruptcy laws and
other similar laws of general application affecting rights of creditors and
subject to the application of the rules of equity, including those respecting
the availability of specific performance, none of which will materially
interfere with the realization of the benefits provided thereunder or with the
Lender's security interest in the Eligible Assets.
4. No consent, approval, authorization or order of, and no filing or
registration with, any court or governmental agency or regulatory body is
required on the part of the Borrower for the execution, delivery or performance
by the Borrower of the Loan and Security Agreement, the Note and the Mortgage
Custodial Agreement or for the borrowings by the Borrower under the Loan and
Security Agreement or the granting of a security interest to the Lender in the
Collateral, pursuant to the Loan and Security Agreement.
5. The execution, delivery and performance by the Borrower of, and the
consummation of the transactions contemplated by, the Loan and Security
Agreement, the Note and the Mortgage Custodial Agreement do not and will not (a)
violate any provision of the Borrower's charter or by-laws, (b) violate any
applicable law, rule or regulation, (c) violate any order, writ, injunction or
decree of any court or governmental authority or agency or any arbitral award
applicable to the Borrower of which I have knowledge (after due inquiry) or (d)
result in a breach of, constitute a default under, require any consent under, or
result in the acceleration or required prepayment of any indebtedness pursuant
to the terms of, any agreement or instrument of which I have knowledge (after
due inquiry) to which the Borrower is a party or by which it is bound or to
which it is subject, or (except for the Liens created pursuant to the Loan and
Security Agreement) result in the creation or imposition of any Lien upon any
Property of the Borrower pursuant to the terms of any such agreement or
instrument.
6. There is no action, suit, proceeding or investigation pending or,
to the best of [our] [my] knowledge, threatened against the Borrower which, in
[our] [my] judgment, either in any one instance or in the aggregate, would be
reasonably likely to result in any material adverse change in the properties,
business or financial condition, or prospects of the Borrower or in any material
impairment of the right or ability of the Borrower to carry on its business
substantially as now
-2-
80
conducted or in any material liability on the part of the Borrower or which
would draw into question the validity of the Loan and Security Agreement, the
Note, the Mortgage Custodial Agreement or the Eligible Assets or of any action
taken or to be taken in connection with the transactions contemplated thereby,
or which would be reasonably likely to impair materially the ability of the
Borrower to perform under the terms of the Loan and Security Agreement, the
Note, the Mortgage Custodial Agreement or the Eligible Assets.
7. The Loan and Security Agreement is effective to create, in favor of
the Lender, a valid security interest under the Uniform Commercial Code in all
of the right, title and interest of the Borrower in, to and under the Collateral
as collateral security for the payment of the Secured Obligations (as defined in
the Loan and Security Agreement), except that (a) such security interests will
continue in Collateral after its sale, exchange or other disposition only to the
extent provided in Section 9-306 of the Uniform Commercial Code, (b) the
security interests in Collateral in which the Borrower acquires rights after the
commencement of a case under the Bankruptcy Code in respect of the Borrower may
be limited by Section 552 of the Bankruptcy Code.
8. When the Mortgage Notes are delivered to the Mortgage Custodian,
endorsed in blank by a duly authorized officer of the Borrower, the security
interest referred to in paragraph 7 above in the Mortgage Notes will constitute
a fully perfected first priority security interest in all right, title and
interest of the Borrower therein, in the Mortgage Loan evidenced thereby and in
the Borrower's interest in the related Mortgaged Property.
9. (a) Upon the filing of financing statements on Form UCC-1 naming
the Lender as "Secured Party" and the Borrower as a "Debtor", and describing the
Collateral, in the jurisdictions and recording offices listed on SCHEDULE 1
attached hereto, the security interests referred to in paragraph 8 above will
constitute fully perfected security interests under the Uniform Commercial Code
in all right, title and interest of the Borrower in, to and under such
Collateral, which can be perfected by filing under the Uniform Commercial Code.
(b) The UCC Search Report sets forth the proper filing offices and the
proper debtors necessary to identify those Persons who have on file in the
jurisdictions listed on SCHEDULE 1 financing statements covering the Filing
Collateral as of the dates and times specified on SCHEDULE 2. Except for the
matters listed on SCHEDULE 2, the UCC Search Report identifies no Person who has
filed in any Filing Office a financing statement describing the Filing
Collateral prior to the effective dates of the UCC Search Report.
10. The Assignments of Mortgage are in recordable form, except for the
insertion of the name of the assignee, and upon the name of the assignee being
inserted, are acceptable for recording under the laws of the state where each
related Mortgaged Property is located.
11. The Borrower is duly registered as a [____________] in each state
in which Mortgage Loans were originated to the extent such registration is
required by applicable law, and has obtained all other licenses and governmental
approvals in each jurisdiction to the extent that the failure to obtain such
licenses and approvals would render any Mortgage Loan unenforceable or would
materially and adversely affect the ability of the Borrower to perform any of
its obligations under, or the enforceability of, the Loan Documents.
12. Assuming that all other elements necessary to render a Mortgage
Loan legal, valid, binding and enforceable were present in connection with the
execution, delivery and
-3-
81
performance of each Mortgage Loan (including completion of the entire Mortgage
Loan fully, accurately and in compliance with all applicable laws, rules and
regulations) and assuming further that no action was taken in connection with
the execution, delivery and performance of each Mortgage Loan (including in
connection with the sale of the related Mortgaged Property) that would give rise
to a defense to the legality, validity, binding effect and enforceability of
such Mortgage Loan, nothing in the forms of such Mortgage Loans, as attached
hereto as EXHIBIT A, would render such Mortgage Loans other than legal, valid,
binding and enforceable.
13. Assuming their validity, binding effect and enforceability in all
other respects (including completion of the entire Mortgage Loan fully,
accurately and in compliance with all applicable laws, rules and regulations),
the forms of Mortgage Loans attached hereto as EXHIBIT A are in sufficient
compliance with ________ law and Federal consumer protection laws so as not to
be rendered void or voidable at the election of the Mortgagor thereunder.
14. With respect to that portion of the Collateral consisting of
Eligible Bonds, the security interest of the Lender will be a perfected,
first-priority security interest, and a "security entitlement" (as defined in
Section 8-102(a)(17) of the UCC) with respect to the Eligible Bonds will be
created in favor of the Lender, upon (i) [the registration of the Eligible Bonds
by the issuer thereof in the name of the Lender or Bond/PC Custodian,] [the
making by the Relevant System of appropriate and accurate entries in its records
to indicate the credit of a "security entitlement" with respect to the Eligible
Bonds to the "securities account" (as defined in Section 8-501(a) of the Uniform
Commercial Code) of the Mortgage Custodian,] [delivery of the certificates
representing the Eligible Bonds to the Bond/PC Custodian, duly endorsed to the
Bond/PC Custodian or in blank,] and (ii) the making by the Bond/PC Custodian of
appropriate and accurate entries in its records to indicate the credit of a
"security entitlement" to the Eligible Bonds to the "securities account" of the
Lender. Such "security entitlement" will be subject to no prior interest.
15. With respect to that portion of the Collateral that consists of
participation interests in any Mortgage Loans ("Participations"), the steps
required to create and perfect a security interest in favor of the Lender in the
Borrower's rights under each Participation will depend upon how such rights are
classified under the UCC. We are of the opinion that a court would hold any one
or more of the following with respect to such rights: (i) that a participation
certificate evidencing such rights (a "PARTICIPATION CERTIFICATE") is itself an
"instrument" (within the meaning of Section 9-105 of the UCC); (ii) if the
related purchased debt is evidenced by an "instrument," that such rights
constitute an interest in such instrument; or (iii) that such rights constitute
a "general intangible" within the meaning of the UCC, as a (x) claim for the
payment of money against the institution selling the Participation (the "SELLING
INSTITUTION") (if a Participation Certificate does not constitute an instrument)
or (y) claim for the payment of money against the obligor in respect of such
purchased debt (if the purchased debt is not evidenced by an "instrument"). Our
research has disclosed no case on point, however, and accordingly, our opinion
addresses the steps required under the alternative treatments that could be
accorded the Borrower's rights under the Participations under the UCC.
(a) If a Participation Certificate constitutes an "instrument" physically held
by the Custodian, such instrument will be transferred to the Lender upon
the acknowledgment by the Custodian, in its capacity as bailee (as such
term is used Section 9-305 of the UCC), that it holds such instrument for
the Lender and such security interest will be a perfected first-priority
security interest therein in favor of the Lender.
-4-
82
(b) If a Borrower's rights under a Participation constitute an interest in the
purchased debt, and such purchased debt is evidenced by an "instrument,"
the Lender will have a perfected first-priority security interest in the
Borrower's rights in such instrument, upon (i)(A) physical delivery of such
instrument to the Participation Custodian and (B) the acknowledgment by the
Custodian, in its capacity as bailee (as such term is used Section 9-305 of
the UCC), that it holds such instrument for the Lender, or (ii) in the case
of instruments in the possession of a Selling Institution, the
acknowledgment by the Selling Institution that it holds such instruments
for the Lender.
(c) If a Borrower's rights under a Participation constitute a "general
intangible" within the meaning of the UCC as to which the Selling
Institution or the obligor in respect of the related purchased debt is the
"account debtor" within the meaning of the UCC, then our opinion in
paragraph 9 will apply.
Very truly yours,
-5-
83
EXHIBIT D-1
FORM OF NOTICE OF BORROWING AND PLEDGE-ELIGIBLE MORTGAGE LOANS
[insert date]
Greenwich Capital Financial Products, Inc.
000 Xxxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxx Xxxxx
Notice of Borrowing and Pledge No. : ---------------------
Name of Subservicer : ---------------------
Interest Period : ---------------------
Ladies/Gentlemen:
Reference is made to the Master Loan and Security Agreement, dated as
of March 30, 1998 (the "LOAN AGREEMENT"; capitalized terms used but not
otherwise defined herein shall have the meaning given them in the Loan
Agreement), between Hanover Capital Mortgage Holdings, Inc. (the "BORROWER") and
Greenwich Capital Financial Products, Inc. (the "LENDER").
In accordance with Section 2.03(a) of the Loan Agreement, the
undersigned Borrower hereby requests that you, the Lender, make Advances to us
in an aggregate principal amount of $ ____________ [insert requested Advance
amount] (such amount representing [insert number of Mortgage Loans] loans on
__________________ [insert requested Funding Date, which must be at least three
(3) Business Days following the date of the request], in connection with which
we shall pledge to you as Collateral the Mortgage Loans set forth on the
Mortgage Loan Schedule attached hereto.
The Borrower hereby certifies, as of such Funding Date, that:
(a) no Default or Event of Default has occurred and is continuing on
the date hereof nor will occur after giving effect to such Advance as a result
of such Advance;
(b) each of the representations and warranties made by the Borrower in
or pursuant to the Loan Documents is true and correct in all material respects
on and as of such date (in the case of the representations and warranties in
respect of Eligible Mortgage Loans, solely with respect to Eligible Mortgage
Loans being included the Borrowing Base on the Funding Date) as if made on and
as of the date hereof (or, if any such representation or warranty is expressly
stated to have been made as of a specific date, as of such specific date); and
84
(c) the Borrower is in compliance with all governmental licenses and
authorizations and is qualified to do business and is in good standing in all
required jurisdictions.
Very truly yours,
HANOVER CAPITAL MORTGAGE HOLDINGS, INC.
By:
------------------------------------
Name:
Title:
-7-
85
Schedule I
TO NOTICE OF BORROWING AND PLEDGE
ELIGIBLE MORTGAGE LOANS PROPOSED TO BE PLEDGED
TO LENDER ON FUNDING DATE
[ATTACH MORTGAGE LOAN SCHEDULE]
86
EXHIBIT D-2
FORM OF NOTICE OF BORROWING AND PLEDGE - ELIGIBLE BONDS
[INSERT DATE]
Greenwich Capital Financial Products, Inc.
000 Xxxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxx Xxxxx
Notice of Borrowing and Pledge No. : ---------------------
Name of Trustee : ---------------------
Interest Period : ---------------------
Ladies/Gentlemen:
Reference is made to the Master Loan and Security Agreement, dated as
of March 30, 1998 (the "LOAN AGREEMENT"; capitalized terms used but not
otherwise defined herein shall have the meaning given them in the Loan
Agreement), between Hanover Capital Mortgage Holdings, Inc. (the "BORROWER") and
Greenwich Capital Financial Products, Inc. (the "LENDER").
In accordance with Section 2.03(a) of the Loan Agreement, the
undersigned Borrower hereby requests that you, the Lender, make Advances to us
in an aggregate principal amount of $_____________ [insert requested Advance
amount] (such amount representing [insert number of Eligible Bonds] bonds on
____________________ [insert requested Funding Date, which must be at least
three (3) Business Days following the date of the request], in connection with
which we shall pledge to you as Collateral the Eligible Bonds set forth in the
Bond Summary attached hereto.
The Borrower hereby certifies, as of such Funding Date, that:
(a) no Default or Event of Default has occurred and is continuing on
the date hereof nor will occur after giving effect to such Advance as a
result of such Advance;
(b) each of the representations and warranties made by the Borrower
in or pursuant to the Loan Documents is true and correct in all material
respects on and as of such date (in the case of the representations and
warranties in respect of Eligible Bonds, solely with respect to Eligible
Bonds being included the Borrowing Base on the Funding Date) as if made on
and as of the date hereof (or, if any such representation or warranty is
expressly stated to have been made as of a specific date, as of such
specific date); and
87
(c) the Borrower is in compliance with all governmental licenses and
authorizations and is qualified to do business and is in good standing in
all required jurisdictions.
Very truly yours,
HANOVER CAPITAL MORTGAGE HOLDINGS, INC.
By:
------------------------------------
Name:
Title:
-2-
88
SCHEDULE I
TO NOTICE OF BORROWING AND PLEDGE
[ELIGIBLE BONDS PROPOSED TO BE PLEDGED
TO LENDER ON FUNDING DATE]
[ATTACH BOND SUMMARY]
89
EXHIBIT D-3
FORM OF NOTICE OF BORROWING AND PLEDGE - PARTICIPATION CERTIFICATES
[INSERT DATE]
Greenwich Capital Financial Products,Inc.
000 Xxxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxx Xxxxx
Notice of Borrowing and Pledge No. : ---------------------
Name of Trustee : ---------------------
Interest Period : ---------------------
Ownership Percentage : ---------------------
Ladies/Gentlemen:
Reference is made to the Master Loan and Security Agreement, dated as
of March 30, 1998 (the "LOAN AGREEMENT"; capitalized terms used but not
otherwise defined herein shall have the meaning given them in the Loan
Agreement), between Hanover Capital Mortgage Holdings, Inc. (the "BORROWER") and
Greenwich Capital Financial Products, Inc. (the "LENDER").
In accordance with Section 2.03(a) of the Loan Agreement, the
undersigned Borrower hereby requests that you, the Lender, make Advances to us
in an aggregate principal amount of $_______________ [insert requested Advance
amount] (such amount representing [insert number of Participation Certificates]
on ____________________ [insert requested Funding Date, which must be at least
three (3) Business Days following the date of the request], in connection with
which we shall pledge to you as Collateral the Participation Certificates set
forth in the Participation Certificate Summary attached hereto.
The Borrower hereby certifies, as of such Funding Date, that:
(a) no Default or Event of Default has occurred and is continuing on
the date hereof nor will occur after giving effect to such Advance as a
result of such Advance;
(b) each of the representations and warranties made by the Borrower in
or pursuant to the Loan Documents is true and correct in all material
respects on and as of such date (in the case of the representations and
warranties in respect of Participation Certificates, solely with respect to
Participation Certificates being included the Borrowing Base on the Funding
Date) as if made on and as of the date hereof (or, if any such
representation or warranty is expressly stated to have been made as of a
specific date, as of such specific date); and
90
(c) the Borrower is in compliance with all governmental licenses and
authorizations and is qualified to do business and is in good standing in
all required jurisdictions.
Very truly yours,
HANOVER CAPITAL MORTGAGE HOLDINGS, INC.
By:
-------------------------------------
Name:
Title:
-2-
91
SCHEDULE I
TO NOTICE OF BORROWING AND PLEDGE
[ELIGIBLE PARTICIPATION CERTIFICATES PROPOSED TO BE PLEDGED
TO LENDER ON FUNDING DATE]
[ATTACH PARTICIPATION CERTIFICATE TAPE]
92
EXHIBIT E
UNDERWRITING GUIDELINES
[TO BE PROVIDED BY BORROWER]
93
EXHIBIT F
FORM OF BLOCKED ACCOUNT AGREEMENT
_______________, 199_
Fleet Bank
------------------------------
------------------------------
Attn:
-------------------------
Re: Account Established by Greenwich Capital Financial Products, Inc.
("LENDER"), pursuant to that certain Master Loan and Security
Agreement (as amended, supplemented or otherwise modified from time to
time, the "LOAN AGREEMENT"), dated as of March 30, 1998, by and among
the Lender, Fleet Bank (the "COLLECTION BANK"), and Hanover Capital
Mortgage Holdings, Inc. ("BORROWER")
Ladies and Gentlemen:
We refer to the collection account established by the Borrower
pursuant to the Loan Agreement, at the Collection Bank, Providence, Rhode
Island, Account No. [ACCOUNT #], ABA# [ABA #], [sub]account identified with
respect to Eligible Assets pledged to the Lender (the "COLLECTION ACCOUNT"),
which the Borrower maintains in accordance with the Loan Agreement.
From time to time, certain third-party servicers (each a
"SUBSERVICER") and trustees (each a "TRUSTEE") will deposit funds received in
accordance with a related servicing agreement or governing agreement into the
Collection Account pursuant to an instruction letter signed by the Borrower and
acknowledged by such Subservicer or Trustee. Greenwich Capital Financial
Products, Inc. (the "LENDER") has established a secured loan arrangement with
the Borrower. By its execution of this letter, the Collection Bank and the
Borrower acknowledges that the Borrower has granted a security interest in all
of the Borrower's right, title and interest in and to the Collection Account and
any funds from time to time on deposit therein with respect to such Eligible
Assets, that such funds are received by the Collection Bank in trust for the
benefit of Lender and, except as provided below, are for application against the
Borrower's liabilities to Lender.
By the Collection Bank's and the Borrower's execution of this letter,
each party agrees: (a) that all funds from time to time hereafter in the
Collection Account are the property of the Borrower held in trust for the
benefit of, and subject to a security interest in favor of, the Lender; (b) that
neither the Collection Bank nor the Borrower will exercise any right of set-off,
banker's lien or any similar right in connection with such funds PROVIDED, that
in the event any check is returned to the Collection Bank or the Borrower
because of insufficient funds (or is otherwise unpaid) such party shall be
entitled to set off the amount of any such returned check; (c) that unless the
Lender shall have expressly consented in writing, the Borrower will not
withdraw, nor shall the Collection Bank permit the Borrower or any other person
or entity to withdraw or transfer funds from the Collection Account; and (d)
that if the Lender shall notify the Collection Bank that an event of default has
occurred and is continuing under the Lender's secured lending arrangement with
the Borrower, the Collection Bank shall cause or permit withdrawals from the
Collection Account in any other manner as the Lender may instruct.
94
All bank statements in respect to the Blocked Account shall be sent to
the Borrower with copies to:
Greenwich Capital Financial Products, Inc.
000 Xxxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxx Xxxxx
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95
Kindly acknowledge your agreement with the terms of this agreement by
signing the enclosed copy of this letter and returning it to the undersigned.
Very truly yours,
GREENWICH CAPITAL FINANCIAL PRODUCTS, INC.
By:
----------------------------------------
Name:
Title:
Agreed and acknowledged:
HANOVER CAPITAL MORTGAGE HOLDINGS, INC.
By:
------------------------------------
Name:
Title:
Agreed and acknowledged:
FLEET BANK
By:
------------------------------------
Name:
Title:
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96
EXHIBIT G
FORM OF MORTGAGE LOAN TAPE
[TO BE PROVIDED BY LENDER]
97
EXHIBIT H
FORM OF BORROWING BASE CERTIFICATE
[TO BE PROVIDED BY LENDER ]
98
EXHIBIT I
FORM OF REMITTANCE REPORT
______, 19__
Greenwich Capital Financial Products, Inc.
000 Xxxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxx Xxxxx
Ladies and Gentlemen:
The undersigned, HANOVER CAPITAL MORTGAGE HOLDINGS, INC., refers to
the Master Loan and Security Agreement, dated as of March 30, 1998 (as amended,
supplemented or otherwise modified from time to time, the "LOAN AGREEMENT")
between Hanover Capital Mortgage Holdings, Inc. and Greenwich Capital Financial
Products, Inc. Capitalized terms used herein but not defined herein shall have
the meaning assigned to such terms in the Loan Agreement.
The undersigned hereby delivers this Remittance Report to you pursuant
to Section 7.08 of the Loan Agreement and hereby certifies to you as follows as
of _______, 1998.(1)
I. Summary of Collection Account Cash Flow
(a) Total Collections remitted for the calendar month:
$________.
(b) Borrowing Base Deficiency due to you on Remittance Date:
$________.
(c) Interest due and payable to you on the Remittance Date (for
the period from and including the previous Remittance Date
to and including the day preceding the current Remittance
Date): $________.
(d) Commitment Fee due and owing (payable on Payment Dates
occurring in April, July, October, January, and on the
Termination Date.)
(e) Total cash due to you on the Remittance Date: $________.
(f) Cash flow in connection with any other act which during the
month:
(i) Principal received: $_______.
(ii) Accrued interest received: $________.
-------------------
(1) Date should be the last day of the immediately preceeding calendar month.
99
(iii) Amounts swept from the Lender's Collection Account to
the securitization or whole loan buyer: $________.
(g) Balance to the undersigned $________.
LIBOR reset for the following month as of ________, 1998 ------%.
II. Breakout of Daily Remittances to the Collection Account
Collection Dates Wire Date Cash Amount Total Amount
Totals [attach Bank Statement]
HANOVER CAPITAL MORTGAGE HOLDINGS, INC.,
By:
--------------------------------------
Name:
Title:
-2-
100
EXHIBIT J
FORM OF INSTRUCTION LETTER
__________ __, 1998
--------------------, as [Trustee] [Subservicer]
--------------------
--------------------
Attention:
---------------
Re: Loan and Security Agreement, dated as of March 30, 1998, by and
between Greenwich Capital Financial Products, Inc., ("LENDER"),
and Hanover Capital Mortgage Holdings, Inc., ("BORROWER")
Ladies and Gentlemen:
Pursuant to the Master Loan and Security Agreement, dated as of March
30, 1998 (the "LOAN AND SECURITY AGREEMENT"), between the Lender and the
Borrower, you are hereby notified that: (i) the Borrower has pledged to the
Lender the assets described on SCHEDULE 1 hereto (the "ELIGIBLE ASSETS"), (ii)
each of the Eligible Assets is subject to a security interest in favor of the
Lender, (iii) the [Trustee] [Servicer] shall promptly send to the Lender a copy
of the [GOVERNING AGREEMENT] [SERVICING AGREEMENT] related to the Eligible
Assets, (iv) unless otherwise notified by the Lender in writing, any payments or
distributions made with respect to such Eligible Assets should be remitted
immediately by the [Trustee] [Servicer] directly to the Collection Account
established at Fleet Bank (the "COLLECTION BANK"), in accordance with the
following wire instructions and (v) if notified by the Lender in writing, the
[Servicer][Trustee] shall send such payments or distributions in accordance with
the Lender's written instructions:
Account No.: [____________________]
ABA No.: [____________________]
[____________________]
Reference: [____________________]
The Subservicer also acknowledges its consent to terminate such
Servicing Agreement upon notification by the Lender of an occurrence of an Event
of Default.
Please acknowledge receipt of this instruction letter by signing in
the signature block below and forwarding an executed copy to the Lender promptly
upon receipt. Any notices to the Lender should be delivered to the following
address: 000 Xxxxxxxxx Xxxx, Xxxxxxxxx, Xxxxxxxxxxx 00000, Attention: Xxx
Xxxxxxxxxx, Telephone: (000) 000-0000, Facsimile: (000) 000-0000.
101
Very truly yours,
HANOVER CAPITAL MORTGAGE HOLDERS INC.
By:
---------------------------------
Name:
Title:
ACKNOWLEDGED:
-----------------------------------, as [Trustee] [Servicer]
By:
----------------------------------------
Name:
Title:
Telephone:
Facsimile:
-4-
102
EXHIBIT K-1
FORM OF LOST INSTRUMENT AFFIDAVIT
I, as _____________________ (title) (hereinafter called "DEPONENT") of
_______________________ (the "BOND/PC CUSTODIAN"), am authorized to make this
Lost Instrument Affidavit (this "Affidavit") on behalf of the Bond/PC Custodian.
In connection with the administration of the Participation Certificates held by
the Bond/PC Custodian on behalf of Greenwich Capital Financial Products, Inc.
(the "LENDER"), Deponent being duly sworn, deposes and says that:
1. Bond/PC Custodian's address is:
[BOND/PC CUSTODIAN'S Address]
2. Bond/PC Custodian previously delivered to the Lender a
Participation Certificate Schedule with respect to that certain Participation
Certificate made by ___ in an original principal balance of $___, which did not
indicate such Participation Certificate is missing;
3. Such Participation Certificate was assigned or sold to the Lender
by ___________ pursuant to the terms and provisions of a Master Loan and
Security Agreement dated and effective as of [______________];
5. Aforesaid Participation Certificate (hereinafter called the
"ORIGINAL") has been lost;
6. Deponent has made or has caused to be made diligent search for the
Original and has been unable to find or recover same;
7. The Bond/PC Custodian was the Bond/PC Custodian of the Original at
the time of loss; and
8. Deponent agrees that, if said Original should ever come into
Bond/PC Custodian's possession, custody or power, Bond/PC Custodian will
immediately and without consideration surrender the Original to the Lender.
9. Attached hereto is a true and correct copy of the Participation
Certificate.
10. Deponent hereby agrees that the Bond/PC Custodian (a) shall
indemnify and hold harmless the Lender, its successors, and assigns, against any
loss, liability or damage, including reasonable attorney's fees, resulting from
the unavailability of any Originals, including but not limited to any loss,
liability or damage arising from (i) any false statement contained in this
Affidavit, (ii) any claim of any party that it has already purchased a
participation certificate evidenced by the Originals or any interest in such
participation certificate, (iii) the issuance of new instrument in lieu thereof
and (iv) any claim whether or not based upon or arising from honoring or
refusing to honor the Original when presented by anyone (items (i) through (iv)
above are hereinafter referred to as the "LOSSES").
103
11. This Affidavit is intended to be relied on by the Lender, its
successors, and assigns and Greenwich Capital Financial Products, Inc.
represents and warrants that it has the authority to perform its obligations
under this Affidavit.
EXECUTED THIS ____ day of _______, 199_, on
behalf of the Bond/PC Custodian by:
------------------------------------------
Signature
------------------------------------------
Typed Name
On this _________ day of ___________________ , 199_, before me
appeared ___________________________________ , to me personally know,
who being duly sworn did say that she/he is the ____________________________
of _____________________ , and that said Lost Instrument Affidavit was signed
and sealed on behalf of such corporation and said ___________________________
acknowledged this instrument to be the free act and deed of said corporation.
Notary Public in and for the
State of _________________________ .
My Commission expires: ___________ .
-6-
104
EXHIBIT K-2
FORM OF LOST NOTE AFFIDAVIT
I, as ________________________ (title) (hereinafter called "DEPONENT")
of ______________________ (the "MORTGAGE CUSTODIAN"), am authorized to make this
Lost Note Affidavit (this "Affidavit") on behalf of the Mortgage Custodian. In
connection with the administration of the Mortgage Loans held by the Mortgage
Custodian on behalf of Greenwich Capital Financial Products, Inc. (the
"LENDER"), Deponent being duly sworn, deposes and says that:
1. Mortgage Custodian's address is:
[MORTGAGE CUSTODIAN'S Address]
2. Mortgage Custodian previously delivered to the Lender a Mortgage
Loan Schedule and an Exception Report with respect to that certain Mortgage Note
made by ___ in an original principal balance of $___, secured by a Mortgage on a
property located at ____, which did not indicate such Mortgage Note is missing;
3. Such Mortgage Note was assigned or sold to the Lender by
___________ pursuant to the terms and provisions of a Master Loan and Security
Agreement dated and effective as of [_______________ ];
4. Such Mortgage Note is not outstanding pursuant to a Request for
Release of Documents;
5. Aforesaid Mortgage Note (hereinafter called the "ORIGINAL") has
been lost;
6. Deponent has made or has caused to be made diligent search for the
Original and has been unable to find or recover same;
7. The Mortgage Custodian was the Mortgage Custodian of the Original
at the time of loss; and
8. Deponent agrees that, if said Original should ever come into
Mortgage Custodian's possession, custody or power, Mortgage Custodian will
immediately and without consideration surrender the Original to the Lender.
9. Attached hereto is a true and correct copy of (i) the Mortgage
Note, endorsed in blank by the Mortgagee, as provided by Hanover Capital
Mortgage Holdings, Inc. or its designee and (ii) the Mortgage which secures the
Mortgage Note, which Mortgage is recorded at __________________ .
10. Deponent hereby agrees that the Mortgage Custodian (a) shall
indemnify and hold harmless the Lender, its successors, and assigns, against any
loss, liability or damage, including reasonable attorney's fees, resulting from
the unavailability of any Originals, including but not limited
105
to any loss, liability or damage arising from (i) any false statement contained
in this Affidavit, (ii) any claim of any party that it has already purchased a
mortgage loan evidenced by the Originals or any interest in such mortgage loan,
(iii) any claim of any borrower with respect to the existence of terms of a
Mortgage Loan evidenced by the Originals, (iv) the issuance of new instrument in
lieu thereof and (v) any claim whether or not based upon or arising from
honoring or refusing to honor the Original when presented by anyone (items (i)
through (iv) above are hereinafter referred to as the "LOSSES").
11. This Affidavit is intended to be relied on by the Lender, its
successors, and assigns and Greenwich Capital Financial Products, Inc.
represents and warrants that it has the authority to perform its obligations
under this Affidavit.
EXECUTED THIS ____ day of _______, 199_,
on behalf of the Mortgage Custodian by:
-------------------------------------------
Signature
-------------------------------------------
Typed Name
On this _________ day of ___________________ , 199_, before me
appeared ___________________________________ , to me personally know, who being
duly sworn did say that she/he is the _______________________ of
_____________________ , and that said Lost Note Affidavit was signed and sealed
on behalf of such corporation and said ____________________ acknowledged this
instrument to be the free act and deed of said corporation.
_________________________________
Notary Public in and for the
State of ________________________ .
My Commission expires: __________ .
-8-
106
EXHIBIT L
FORM OF NOTICE OF EXTENSION OF INTEREST PERIOD
[insert date]
Greenwich Capital Financial Products, Inc.
000 Xxxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxx Xxxxx
Notice of Borrowing and Pledge No. : ___________________
Current Interest Period : [One Month][Two Month][Three Month][Six Month]
Termination Date of Current
Interest Period : ___________________
Ladies/Gentlemen:
Reference is made to the Master Loan and Security Agreement, dated as
of March 30, 1998 (the "LOAN AGREEMENT"; capitalized terms used but not
otherwise defined herein shall have the meaning given them in the Loan
Agreement), between Hanover Capital Mortgage Holdings, Inc. (the "BORROWER") and
Greenwich Capital Financial Products, Inc. (the "LENDER").
In accordance with Section 3.04 of the Loan Agreement, the undersigned
Borrower hereby requests that the Lender extend the current Interest Period of
[One Month][Two Month][Three Month][Six Month] beginning immediately following
the termination of the existing Interest Period which is scheduled to terminate
on [INSERT LAST DAY OF EXISTING INTEREST PERIOD].
Very truly yours,
HANOVER CAPITAL MORTGAGE HOLDINGS, INC.
By:
-------------------------------------
Name:
Title:
