FIRST RESTATED
REVOLVING CREDIT AGREEMENT
by and among
X. XXXXXXXXX MORTGAGE, INC.,
X. XXXXXXXXX AMERICAN MORTGAGE, L.L.C.,
THE LENDERS PARTY HERETO,
and
GUARANTY BANK,
As Agent
dated as of March 7, 2003
FIRST RESTATED REVOLVING CREDIT AGREEMENT
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS.....................1
ARTICLE II THE CREDITS...................26
2.1 Commitment, Sublimits and Types of Advances .26
2.2 Primary Advances.............................28
2.3 Buy Down Loans...............................28
2.4 Swingline Loans................................28
2.5 Fees....................................................30
2.6 Method of Selecting Types and Interest Periods for New Advances .30
2.7 Conversion and Continuation of Outstanding
Advances..........................................31
2.8 Reductions to Aggregate Commitment ...........31
2.9 Principal Payments............................32
2.10 Changes in Interest Rate, etc.............33
2.11 Rates Applicable After Default.........33
2.12 Method of Payment............................34
2.13 Noteless Agreement; Evidence of
Indebtedness.......................................................34
2.14 Telephonic Notices............................35
2.15 Interest Payment Dates; Interest and Fee Basis .............35
2.16 Notification by the Agent..................35
2.17 Lending Installations.........................35
2.18 Non-Receipt of Funds by the Agent..35
ARTICLE III CHANGE IN CIRCUMSTANCES .........................36
3.1 Yield
Protection......................................................36
3.2 Changes in Capital Adequacy
Regulations.......................................37
3.3 Availability of Types of Advances....37
3.4 Funding Indemnification...................37
3.5 Taxes.................................................38
3.6 Lender Statements; Survival of
Indemnity....................................................39
ARTICLE IV CONDITIONS PRECEDENT; WITHHOLDING TAX
EXEMPTION....................................40
4.1 Effectiveness......................................40
4.2 Each Advance....................................41
ARTICLE V REPRESENTATIONS AND WARRANTIES
..........................................42
5.1 Existence and Standing..........................................42
5.2 Authorization and Validity................42
5.3 No Conflict; Government Consent....42
5.4 Financial Statements..........................43
TABLE OF CONTENTS
Page
FIRST RESTATED REVOLVING CREDIT AGREEMENT
5.5 Material Adverse Change..................43
5.6 Taxes.............................................43
5.7 Litigation and Contingent Obligations .............43
5.8 Subsidiaries........................................43
5.9 ERISA..........................................................44
5.10 Accuracy of Information........................................44
5.11 Regulation U................................................44
5.12 Material Agreements.........................44
5.13 Compliance With Laws.....................44
5.14 Ownership of Properties....................44
5.15 Plan Assets; Prohibited Transactions.44
5.16 Investment Company Act..................45
5.17 Public Utility Holding Company Act 45
5.18 GNMA, FHA, VA, FNMA, and FHLMC
Eligibility...............................................45
5.19 Approved Investor Commitments...................................45
5.20 Solvency............................................45
ARTICLE VI COVENANTS....................45
6.1 Financial Reporting...........................45
6.2 Use of Proceeds.................................48
6.3 Notice of Default...............................48
6.4 Conduct of Business..........................48
6.5 Taxes...............................................48
6.6 Insurance............................................49
6.7 Compliance with Laws......................49
6.8 Maintenance of Properties.................49
6.9 Inspection......................................49
6.10 Dividends...........................................49
6.11 Indebtedness......................................50
6.12 Merge.................................................50
6.13 Sale of Assets.................................................50
6.14 Investments and Acquisitions ...........................50
6.15 Liens..................................................51
6.16 Affiliates............................................51
6.17 Financial
Covenants..............................................51
6.18 Compliance with Security Agreement ........................52
6.19 Servicing
Release....................................................52
6.20 Federal Agency Approvals................52
6.21 Approved Investor
Commitments.............................................53
6.22 Negative Pledges...............................53
6.23 MERS................................................53
ARTICLE VII DEFAULTS........................53
ARTICLE VIII COLLATERAL, ACCELERATION AND OTHER REMEDIES ...........56
8.1 Security and Collateral Agency Agreement .................56
8.2 AP Mortgages....................................56
8.3 Release of Collateral........................................56
8.4 Settlement and Funding Accounts.....57
8.5 Termination...............................................57
8.6 Acceleration..............................................57
8.7 Other Remedies.................................57
8.8 Application of
Proceeds..................................................59
8.9 Preservation of
Rights.....................................................59
ARTICLE IX AMENDMENTS; WAIVERS; GENERAL PROVISIONS ........60
9.1 Amendments and
Waivers..................................................60
9.2 Survival of Representations...............61
9.3 Governmental Regulation..........................................61
9.4 Headings............................................61
9.5 Entire Agreement...............................61
9.6 Several Obligations; Benefits of this Agreement ...........61
9.7 Expenses;
Indemnification.............................................61
9.8 Nonliability of Lenders......................62
9.9 Severability of Provisions..................62
9.10 Numbers of Documents.....................63
9.11 Accounting.............................................63
9.12 Confidentiality..............................................63
9.13 Nonreliance........................................63
9.14 Disclosure..........................................63
9.15 Joint and Several
Liability................................................63
9.16 No Release of Joint and Several Liability.
................................................................63
ARTICLE X THE AGENT AND THE COLLATERAL
AGENT.................................66
10.1 Appointment; Nature of
Relationship.......................................66
10.2 Powers...........................................66
10.3 General Immunity.......................................67
10.4 No Responsibility for Loans, Recitals, etc. ......67
10.5 Action on Instructions of Lenders ................67
10.6 Employment of Agents and
Counsel..............................................67
10.7 Reliance on Documents;
Counsel..............................................67
10.8 Agent's Reimbursement and
Indemnification......................................68
10.9 Notice of Default...............................68
10.10 Rights as a Lender.............................68
10.11 Lender Credit
Decision.............................................69
10.12 Successor Agent................................69
10.13 Delegation to Affiliates.......................69
10.14 Collateral Releases............................69
ARTICLE XI SETOFF; RATABLE PAYMENTS .............70
11.1 Setoff......................................70
11.2 70
11.3 Ratable Payments.............................70
11.4 Custodial Accounts
...................................................70
ARTICLE XII ASSIGNMENTS; PARTICIPATIONS; COMMITMENT
INCREASES.....................................70
12.1 Successors and Assigns.....................70
12.2 Participations.....................................71
12.3 Assignments........................................72
12.4 Commitment Increases......................73
12.5 Dissemination of Information..............73
12.6 Tax Treatment.............................73
ARTICLE XIII NOTICES...........................74
13.1 Notices...................................74
13.2 Change of Address.........................74
ARTICLE XIV COUNTERPARTS.............74
ARTICLE XV CHOICE OF LAW, CONSENT TO JURISDICTION, WAIVER
OF JURY TRIAL..............................74
15.1 CHOICE OF LAW............................74
15.2 CONSENT TO JURISDICTION......74
15.3 WAIVER OF JURY TRIAL.............75
15.4 No Tri-Party Accounts.............75
15.5 Limitation on Interest........................75
15.6 NO ORAL AGREEMENTS..............76
15.7 Original Credit Agreement................76
FIRST RESTATED
REVOLVING CREDIT AGREEMENT
This FIRST RESTATED REVOLVING CREDIT AGREEMENT dated as of March 7,
2003 is among X. XXXXXXXXX MORTGAGE, INC., a New Jersey corporation,
and X. XXXXXXXXX AMERICAN MORTGAGE, L.L.C., a New Jersey limited
liability company (collectively, the "Borrowers"), the banks identified
on the signature pages hereof (together with any successors and assigns
thereof, hereinafter referred to individually as a "Lender" and
collectively as the "Lenders") and GUARANTY BANK, a federal savings
bank, as Agent for the Lenders. In consideration of the Advances to be
made hereunder by the Lenders and for other good and valuable
consideration, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement:
"Acquisition" means any transaction, or any series of related
transactions, consummated on or after the date of this Agreement, by
which a Borrower or any of its Subsidiaries (i) acquires
any going business or all or substantially all of the assets of any
firm, corporation or limited liability company, or division thereof,
whether through purchase of assets, merger or otherwise
or (ii) directly or indirectly acquires (in one transaction or as the
most recent transaction in a series of transactions) at least a
majority (in number of votes) of the securities of a corporation
which have ordinary voting power for the election of directors (other
than securities having such power only by reason of the happening of a
contingency) or a majority (by percentage or voting power) of the
outstanding ownership interests of a partnership or limited liability
company.
"Additional Required Mortgage Documents" means the instruments and
documents described in Schedule "B" to the Security Agreement.
"Advance" means a borrowing hereunder (or conversion or continuation
thereof) consisting of the aggregate amount of the several Loans (other
than Swingline Loans) made on the same Borrowing Date (or date of
conversion or continuation) by some or all of the Lenders to
a Borrower of the same Type and, in the case of Eurodollar Advances,
for the same Interest Period.
"Affiliate" of any Person means any other Person directly or indirectly
controlling, controlled by or under common control with such Person. A
Person shall be deemed to control another Person if the controlling
Person owns 10% or more of any class of voting securities (or
other ownership interests) of the controlled Person or possesses,
directly or indirectly, the power to direct or cause the direction of
the management or policies of the controlled Person, whether
through ownership of stock, by contract or otherwise.
"Agent" means Guaranty Bank, with its main office in Dallas, Texas, in
its capacity as contractual representative of the Lenders pursuant to
Article X, and not in its individual capacity as a Lender, and any
successor Agent appointed pursuant to Article X.
"Aggregate Commitment" means, as of any date, the aggregate of the
Lenders' then-current Commitments under this Agreement, as reduced or
increased from time to time, but in no event shall the Aggregate
Commitment exceed $142,000,000 without the approval of the
Borrowers, the Agent and all of the Lenders.
"Agreement" means this First Restated Revolving Credit Agreement, as it
may be amended or modified and in effect from time to time.
"Agreement to Pledge" means a written pledge substantially in the form
of Exhibit "E" to this Agreement executed by the Borrowers and
delivered by facsimile to the Collateral Agent, specifically
identifying all Mortgage Loans with respect to which the Required
Mortgage Documents are not being delivered on or before the Pledge Date
of such Mortgage Loan.
"Alternate Base Rate" means, for any day, a rate of interest per annum
equal to the higher of (i) the Prime Rate for such day and (ii) the sum
of Federal Funds Effective Rate for such day plus 1/2% per annum.
"Alternate Base Rate Advance" means an Advance which bears interest at
the Alternate Base Rate.'
"Alternate Base Rate Loan" means a Primary Loan (or any portion
thereof) which bears interest at the Alternate Base Rate.
"AP Mortgage" means, on any date, any Mortgage Loan which has been
identified in an Agreement to Pledge and for which the Collateral Agent
has not received the Required Mortgage Documents for such Mortgage Loan
by such date.
"Applicable Fee Rate" means, at any time, the percentage rate per annum
at which "Facility Fees are accruing on the Aggregate Commitment
(without regard to usage) at such time as set forth in the Pricing
Schedule.
"Applicable Margin" means, with respect to Advances of any Type at any
time, the percentage rate per annum which is applicable at such time
with respect to Advances of such Type as set forth in the Pricing
Schedule.
"Approved Investor" means, as of any time, any of the institutions
listed on Schedule "3" attached hereto and any other institution
approved in writing by the Agent (with prompt notice to
the Lenders), such approval not to be unreasonably withheld, which
Approved Investor shall be approved for the purchase of Non-Conforming
Mortgage Loans if, and only if, it has a "1" following its name and
which Approved Investor shall be approved for the purchase of
Securities if, and only if, it has a "2" following its name; provided
that any such institutions listed on Schedule "3" or previously
approved by the Agent may be eliminated as an Approved Investor
(or as an Approved Investor of a specific type) by written notice to
the Borrowers from the Agent, which elimination notice shall be given
only for reasonable cause or at the election of the
Required Lenders, and in either case any commitments issued by any such
formerly-Approved Investor after such elimination shall not constitute
Approved Investor Commitments, but commitments of such formerly-
Approved Investor existing at the time of such elimination shall
continue to be Approved Investor Commitments.
"Approved Investor Commitment " means a commitment, issued by an
Approved Investor of the required type, to purchase Mortgage Loans, to
exchange Securities for Mortgage Loans or
to purchase Securities.
"Approved MBS Custodian" is defined in Paragraph 7(b) of the Security
Agreement.
"ARM Mortgage Loan" means a Mortgage Loan which bears interest at a
rate that may be adjusted at one or more times during the term of such
Mortgage Loan.
"Assignment" means a duly executed assignment for the benefit of the
Lenders of a Mortgage, of the indebtedness secured thereby, and of all
documents and rights related to the Mortgage Loan secured by such
Mortgage in accordance with the requirements of the Security
Agreement.
"Authorized Officer" means any of the Vice President, Senior Vice
President, Executive Vice President, President, or Chief Executive
Officer of a Borrower, acting singly.
"Available Deposits" means those free collected balances maintained in
accounts in the name of the Borrowers (or held by the Borrowers in
trust for third parties) with a Lender (after deducting float and
balances required by such Lender under its normal practices to
compensate such Lender for the maintenance of such accounts and taking
into consideration reserve requirements applicable to such accounts)
and which balances are not included in determining "Available Deposits"
under any other arrangements between such Lender and the Borrowers.
"Basic Eligibility Requirements" means a Pledged Item with respect to
which each of the following statements is accurate and complete:
(i) A Borrower is the legal and equitable owner and holder of such
Pledged Item and has full power and authority to pledge such Pledged
Item. Such Pledged Item and each commitment of a Person to purchase
Mortgage Loans and Securities from such Borrower (including Approved
Investor Commitments) has been duly and validly issued
to such Borrower, and each Pledged Item constitutes Eligible
Collateral, has been duly and validly pledged to the Collateral Agent
for the benefit of the Secured Parties and is subject to no Lien other
than the lien of the Security Agreement in favor of the Agent for
the benefit of the Lenders.
(ii) Each requirement 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 such Pledged Item has been complied with.
(iii) With respect to each Pledged Item which is a Pledged Mortgage:
(1) it has been duly executed and delivered by the parties thereto at a
closing, (2) it is valid and enforceable in accordance with its terms,
without defense or offset, subject to bankruptcy and similar laws and
other general restrictions on creditors' rights and equitable
principles (whether raised in an equity proceeding or an action at
law), (3) the property covered by said Mortgage Loan is free and clear
of all Liens except in favor of a Borrower subject only to (a) the Lien
of current real property taxes and assessments not yet due and payable;
(b) covenants, conditions and restrictions, rights of way, easements
and other matters of the public record, as of the date of recording, as
are acceptable to mortgage lending institutions generally and
specifically referred to in a lender's title insurance policy delivered
to the originator of said Mortgage Loan and (i) referred to or
otherwise considered in the appraisal made for the originator of said
Mortgage Loan or (ii) which do not materially adversely affect the
appraised value of such property as set forth in such appraisal; (c)
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 said Mortgage Loan or the use, enjoyment,
value or marketability of the related property; and (d) a first Lien to
the extent permitted under the Borrowing Base Sublimits,
(4) it has been correctly described in the Collateral Transmittal
submitted to the Collateral Agent in respect of such Pledged Mortgage,
(5) it has been fully funded to the mortgagor or to an escrow or
closing agent by wire transfer, transmittal through the "Automated
Clearing House" or any similar private clearing house for interbank
transfers of fund s, cashier's check or a check written against the
Borrowers' controlled disbursement account with the Agent, which has
been identified as a check in the related Collateral Transmittal and
for which the Agent has notified the Collateral Agent that such
check has been presented for payment and that good funds are available
to fund the controlled disbursement account to cover such check,
(6) the Collateral Agent has in its possession (other than with respect
to Pledged Mortgages which are then the subject of an Agreement to
Pledge) all Required Mortgage Documents other than those documents and
instruments which are in the possession of a Borrower pursuant to a
Trust Receipt or in the possession of a Person to whom delivery was
made pursuant to an Investor Transmittal Letter,
(7) it has been or will be promptly duly recorded where necessary and
complies with all applicable state or local recording, registration and
filing laws and regulations, (8) there are no defenses, counterclaims
or offsets of any nature whatsoever with respect to such Pledged
Mortgage or the indebtedness evidenced and secured thereby or with
respect to any Required Mortgage Document and, other than the related
Required Mortgage Documents and Additional Required
Mortgage Documents, there are no instruments or documents evidencing,
securing or guaranteeing payment of the indebtedness constituting such
Pledged Mortgage,
(9) (a) with respect to Mortgage Loans other than MERS Mortgages,
each Assignment (i) has been duly authorized by all necessary corporate
action by a Borrower, duly executed and delivered by the such Borrower
and is the legal, valid and binding obligation of such Borrower
enforceable in accordance with its terms, subject to bankruptcy and
similar laws and other general restrictions on creditors' rights and
equitable principles, and (ii) complies with all applicable laws
including all applicable recording, filing and registration laws and
regulations and is adequate and legally sufficient for the purpose
intended to be accomplished thereby, including, without limitation, the
assignment of the rights, powers and benefits of such Borrower as
mortgagee, and (b) with respect to MERS Mortgages, the interest of the
Collateral Agent and the Lenders in such Mortgages has been registered
on the MERS System (10) upon the recordation of each Assignment and
assuming the possession of the Required Mortgage Documents by the
Collateral Agent and filing of Uniform Commercial Code financing
statements in proper form in the applicable filing offices, the
Collateral Agent, for the benefit of the Lenders, will
have a valid and perfected first priority security interest in such
Pledged Item and all proceeds, products and profits derived therefrom,
including, without limitation, all moneys, goods, insurance proceeds
and other tangible or intangible property received upon liquidation
thereof, subject to applicable bankruptcy, insolvency, reorganization,
moratorium and other laws affecting the enforcement of creditors'
rights generally and to general principles of equity, (11) the
Borrowers have complied with all laws, rules and regulations
in respect of such Pledged Mortgage if it is insured by FHA or
guaranteed by VA and the related insurance or guarantee is in full
force and effect. Such Mortgage Loan complies in all respects with all
applicable requirements for purchase under the GNMA standard form of
selling contract for FHA insured and VA guaranteed loans and any
supplement thereto then in effect, (12) a Borrower has received an
appraisal on the property underlying such Pledged Mortgage, which
appraisal shall be in conformity with the applicable requirements of
any law or any governmental rule, regulation, policy,
guideline or directive (whether or not having the force of law), or any
interpretation thereof, including, without limitation, the provisions
of Title XI of the Financial Institutions Reform, Recovery and
Enforcement Act of 1989, as amended, reformed or otherwise modified
from time to time, and any rules promulgated to implement such
provisions, (13) all fire and casualty policies covering the premises
encumbered by each Pledged Mortgage (a) name a Borrower as the insured
under a standard mortgagee clause not less favorable in coverage to the
mortgagee than is customarily used in the state where suc h premises is
located, (b) are in full force and effect, and (c) afford insurance
against fire and such other risks as are usually insured against in the
broad form of extended coverage insurance from time to time available,
as well as insurance against flood hazards as required by FHA or
VA, (14) it is not a revolving credit facility, and (15) with respect
to MERS Loans, (i) the Borrowers are in full compliance with all terms
and conditions of membership in MERS, including the MERSCORP, Inc.
"Rules of Membership" most recently promulgated by MERSCORP, Inc., the
"MERS Procedures Manual" most recently promulgated by MERS, and any and
all other guidelines or requirements set forth by MERS or MERSCORP, as
each of the foregoing may be modified from time to time, including, but
in no way limited to compliance with guidelines and procedures set
forth with respect to technological capabilities, drafting and
recordation of Mortgages, registration of Mortgages on the MERS System,
including registration of the interest of the Collateral Agent and the
Lenders in such Mortgages and membership requirements and (ii) the
Borrowers employ officers who have the authority, pursuant to a
corporate resolution from MERS, to execute assignments
of mortgage in the name of MERS in the event deregistration from the
MERS System is necessary or desirable.
(iv) There shall be no breach of the covenants contained in Paragraph
12 of the Security Agreement and there shall be no breach of any of the
following covenants (the sole remedy for which shall be the removal of
such Pledged Item as Eligible Collateral):
(1) The Borrowers shall not (a) amend or modify, or waive any of the
terms and conditions of, or settle or compromise any claim in respect
of, any Pledged Item or any rights related to any of the foregoing, if
such amendment, modification or waiver materially and adversely affects
the Collateral Value of such Pledged Item, or impairs the marketability
of such Pledged Item or (b) release any security or obligor, or,
through any other activity or inactivity, cause any Pledged Mortgage
which shall have been eligible for purchase to become ineligible for
purchase in accordance with the Approved Investor Commitment
related to such Pledged Mortgage.
(2) The Borrowers shall not sell, assign, transfer or otherwise
dispose of, or grant any option with respect to, or pledge or otherwise
encumber (except pursuant to the Security Agreement), any of the
Collateral or any interest therein, except as provided in Section 8.3
with respect to releases of Pledged Items.
(3) A Borrower is the servicer for and shall service all Pledged
Mortgages in accordance with the requirements of the Approved Investor
Commitments. A Borrower shall service all Mortgage Loans which are the
subject of Pledged Securities in accordance with the standard
requirements of the Federal Agency issuing or guaranteeing such
Securities and all applicable FHA and VA requirements.
(4) A Borrower shall hold all escrow funds collected in respect of
Pledged Items in trust, without commingling the same with any other
fund, and apply the same for the purposes for which such funds were
collected provided that such obligation with respect to Pledged
Mortgages shall not arise until 30 days after the origination or
acquisition of the applicable Mortgage Loan.
(5) The Borrowers shall observe and perform all of its obligations in
connection with each Approved Investor Commitment related to any
Pledged Mortgage or Pledged Security. Within forty-eight (48) hours
after a request therefor by the Agent, a copy of each Approved Investor
Commitment certified by the Borrowers, or if requested by the Agent at
any time after a Default has occurred, the originals of such Approved
Investor Commitments shall be delivered to the Agent.
(6) The Borrowers shall promptly notify the Agent and the Collateral
Agent if and when a Borrower receives any partial or full prepayment
(which term excludes the principal portion of scheduled monthly
payments made on a Mortgage Loan) arising from or relating to any
Pledged Mortgage and hold the same in trust, as security for the
Lenders, until such Mortgage Loan is removed from the Borrowing Base in
accordance with this Agreement or, if a Default has
occurred and is continuing under this Agreement, then immediately remit
to the Agent such prepayments (and all interest and earnings thereon or
with respect thereto).
(7) The Borrowers shall do, execute, acknowledge and deliver, or
cause to be done, executed, acknowledged and delivered, all such other
acts, instruments and transfers (including, without limitation,
Assignments) as the Agent or the Collateral Agent may reasonably
request from time to time in order to create and maintain a perfected
first priority security interest in the Collateral in favor of the
Lenders and to create, maintain and preserve the security and benefits
intended to be afforded by this Agreement, subject to no prior or equal
security interest, lien, charge or encumbrance, or agreement purporting
to grant to any Person a security interest in the Collateral.
(8) The Borrowers shall promptly notify the Agent and the Collateral
Agent of the occurrence of any event which would cause any Eligible
Collateral to become Ineligible Collateral.
"Borrowers" means each of Hovnanian Mortgage and Hovnanian American and
their respective successors and assigns.
"Borrowing Base" means, as of any date, subject to the Borrowing Base
Sublimits, the sum of the amounts determined by applying the following
percentages to the Collateral Values of the following categories of
Eligible Collateral, without duplication as any asset is converted from
one category to another, as described below (and the Borrowers, by
including any Pledged Item in any computation of the Borrowing Base,
shall be deemed to represent and warrant to the Agent, the Collateral
Agent and the Lenders that such Pledged Item constitutes Eligible
Collateral):
(i) ninety-eight percent (98%) of the Collateral Value of Eligible
Conforming Mortgage Loans and Eligible Securities;
(ii) ninety-six percent (96%) of the Collateral Value of Eligible
Non-Conforming Mortgage Loans; (iii) ninety-eight percent (98%) of the
Collateral Value of Eligible Jumbo Mortgage Loans;
(iv) ninety-five percent (95%) of the Collateral Value of Eligible
Oversize Jumbo Mortgage Loans; and
(v) ninety percent (90%) of the Collateral Value of Eligible Aged
Conforming Mortgage Loans.
In connection with the Borrowing Base, the Agent is hereby authorized
by the Lenders to grant temporary waivers of strict compliance by the
Borrowers with the eligibility requirements regarding qualification of
any Collateral as Eligible Collateral or with the Lending Sublimits and
Borrowing Base Sublimits when the Agent deems it appropriate, in its
sole discretion, (i) as to all matters (other than (x) any requirement
that a Mortgage Loan be covered by an Approved Investor Commitment, (y)
those described in the definition "Basic Eligibility Requirement "
(except that temporary waivers may be granted for any of clauses
(iii)(6), (9) or (10) or (iv) of such definition) or (z) those
described in the definition of "Residential Mortgage Loan"), if the
aggregate amount of deviation from strict compliance, based on the
Collateral Value so included in the Borrowing Base and the amount of
excess permitted over the Lending Sublimits or Borrowing Base Sublimits
does not exceed $5,000,000 at any time (provided, however, that the
duration of any such temporary waiver shall not exceed twenty (20) days
with respect to any AP Mortgage unless the note related to such
mortgage has been delivered to the Collateral Agent), or
(ii) as to any matter, up to any amount for up to three (3) Business
Days, if the satisfaction of such eligibility requirements or sublimits
cannot be independently determined because of events beyond the
reasonable control of the Borrowers (i.e. natural disasters,
transmission failures etc.), provided that, if such determination
cannot be made for more than one (1) Business Day, the Borrowers
certifies in writing that all such eligibility requirements and
sublimits are in fact satisfied.
"Borrowing Base Certificate" means a system generated report, initially
in the form attached hereto as Exhibit "G," prepared by the Collateral
Agent to reflect the Collateral Value Determination at the times
required by (and as such term is defined in) the Security Agreement,
the form of which report may be modified from time to time by the
Collateral Agent.
"Borrowing Base Sublimits" is defined in Section 2.1.3.
"Borrowing Date" means a date on which an Advance is made hereunder.
"Borrowing Notice" is defined in Section 2.6.
"Business Day" means (i) with respect to any borrowing, payment or rate
selection of Eurodollar Advances, a day (other than a Saturday or
Sunday) on which banks generally are open in Dallas, Texas and New
York, New York for the conduct of substantially all of their
commercial lending activities, interbank wire transfers can be made on
the Fedwire system and dealings in United States dollars are carried on
in the London interbank market and (ii) for all other purposes, a day
(other than a Saturday or Sunday) on which banks generally are open in
Dallas, Texas for the conduct of substantially all of their commercial
lending activities and interbank wire transfers can be made on the
Fedwire system.
"Buy-Down Agreement" means a written agreement between the Borrowers
and a Lender setting forth the terms and conditions under which such
Lender has agreed to a reduced interest rate on account of Fed Funds
Loans outstanding hereunder based upon Available Deposits maintained by
the Borrowers with such Lender.
"Buy-Down Lender" is defined in Section 2.3.
"Buy-Down Rate" means 1.375%.
"Capitalized Lease" of a Person means any lease of Property by such
Person as lessee which would be capitalized on a balance sheet of such
Person prepared in accordance with GAAP.
"Capitalized Lease Obligations " of a Person means the amount of the
obligations of such Person under Capitalized Leases which would be
shown as a liability on a balance sheet of such
Person prepared in accordance with GAAP.
"Cash Equivalent Investments" means (i) short-term obligations of, or
fully guaranteed by, the United States of America, (ii) commercial
paper rated A-I or better by S&P or P-1 or better-by Moody's, (iii)
demand deposit accounts maintained in the ordinary course of business,
and (iv) certificates of deposit issued by and time deposits with
commercial banks (whether domestic or foreign) having capital and
surplus in excess of $ 100,000,000; provided in each
case that the same provides for payment of both principal and interest
(and not principal alone or interest alone) and is not subject to any
contingency regarding the payment of principal or interest.
"Change in Control" means (i) the acquisition by any Person, or two or
more Persons acting in concert, of beneficial ownership (within the
meaning of Rule 13d-3 of the Securities and Exchange Commission under
the Securities Exchange Act of 1934) of 50% or more of the
outstanding shares of voting stock of the Parent; or (ii) Parent shall
cease to own, free and clear of all Liens or other encumbrances, at
least 100% of the outstanding shares of voting stock of the
Borrowers on a fully diluted basis.
"Code" means the Internal Revenue Code of 1986, as amended, reformed or
otherwise modified from time to time.
"Collateral" means all right, title and interest of the Borrowers, of
every kind and nature, in and to all of the following property, assets
and rights of the Borrowers wherever located, whether now existing or
hereafter arising, and whether now or hereafter owned, acquired by or
accruing or owing to the Borrowers, and all proceeds and products
thereof:
(i) all Pledged Mortgages and Pledged Securities, whether Eligible
Collateral or Ineligible Collateral, including all Required Mortgage
Documents related thereto;
(ii) any commitments or other agreements issued by any private mortgage
insurer or by the FHA or VA to insure or guarantee any Pledged
Mortgage;
(iii) all Approved Investor Commitments to purchase Pledged Securities
or Pledged Mortgages (or any Securities to be issued based on such
Pledged Mortgages) from the Borrowers;
(iv) any options to sell or purchase Securities, future contracts, or
any other interest rate protection products which directly or
indirectly protect the Borrowers against reductions in value of such
Pledged Mortgages or Pledged Securities due to changes in
mortgage interest rates;
(v) the Settlement Accounts, the Funding Accounts and all uncollected
deposits into the Settlement Accounts and the Funding Accounts,
together with any Custodian Settlement Accounts then in existence with
Approved MBS Custodians, as described in Paragraph 7(c) of the Security
Agreement, and all uncollected deposits in such accounts;
(vi) all property related to the foregoing, including without
limitation, the right to service Pledged Mortgages while owned by the
Borrowers, all accounts and general intangibles of whatsoever kind so
related and all documents or instruments delivered to the Collateral
Agent in respect of any Pledged Item, including, without limitation,
the right to receive all insurance proceeds and condemnation awards
which may be payable in respect of the premises encumbered by any
Pledged Mortgage; and(vii) all proceeds and products of any of the
foregoing.
"Collateral Agent" means Guaranty Bank in its capacity as contractual
representative of the Lenders pursuant to the Security Agreement, and
any successor Collateral Agent appointed pursuant to paragraph 17 of
the Security Agreement.
"Collateral Transmittal" means a transmittal from the Borrowers to the
Collateral Agent in electronic form (or in written form delivered by
fax) or in the event that the Borrowers are unable -- due to a system
failure or other event beyond the Borrowers' control -- to transmit
such information electronically) and, if required by the Collateral
Agent, written form containing the following information for the
following submissions or special treatment of different types of
Collateral: (i) the information described on Exhibit "D" for each AP
Mortgage covered by any Agreement to Pledge, (ii) the information
described on Exhibit "D" (other than the entry thereon
for "AP Status Code") for each Pledged Mortgage not covered by an
Agreement to Pledge, (iii) change of any Pledged Mortgage from wet to
dry (open) status, open to shipped status, shipped to paid and any
cancellation of wet status, (iv) whether the Mortgage Loan is to be
funded by wire or check or (v) such information as may be required from
time to time by the Collateral Agent for any Pledged Security.
"Collateral Value " means, with respect to each asset included in
Eligible Collateral on any given day, a value determined as follows:
(i) Each Security shall be valued based upon the Collateral Value of
the underlying Pledged Mortgages as otherwise determined hereunder; and
(ii) Each Pledged Mortgage shall be valued at the lowest of (A) the
unpaid principal balance of such Mortgage Loan on its Pledge Date (or
the unpaid principal balance on its conversion date in the case of
Conversion Mortgage Loans), or (B) the net acquisition cost (including
any discounts and excluding any servicing released premium)
of such Mortgage Loan, if acquired by a Borrower, or (C) the weighted
average purchase price (expressed as a percentage of par) committed to
under those Approved Investor Commitments which could cover such
Mortgage Loan applied to the unpaid principal balance of such Mortgage
Loan on its Pledge Date (or the unpaid principal balance on its
conversion date in the case of Conversion Mortgage Loans) or (D) market
value, as determined by the Agent (in cooperation with the Collateral
Agent), based upon whole loan prices currently available, as and when
the Agent, in its sole discretion (with no requirement to do so unless
directed to do so by the Required Lenders), chooses to
calculate market value. The values described in (A), (B) and (C) of the
preceding sentence shall be as determined by the Borrowers as of the
Pledge Date of the applicable Pledged Mortgage and reported to the
Collateral Agent.
"Combined" refers to the combination of the Borrowers and their
consolidated Subsidiaries. References herein to "Combined" financial
statements, financial position, financial condition, liabilities, etc.,
refer to the financial statements, financial position, financial
condition and liabilities of the Borrowers and their consolidated
Subsidiaries prepared on a combined basis with the consolidation of
each Borrower and its Subsidiaries being determined in
accordance with GAAP.
"Commitment" shall mean, with respect to each Lender, the commitment
of such Lender to make Primary Loans in an aggregate principal amount
at any time outstanding not to exceed such Lender's Commitment Amount.
"Commitment Amount" shall mean, as of any date and with respect to each
Lender, the amount set forth opposite the name of such Lender on
Schedule "2" as its "Commitment Amount" on such date, as such Schedule
2 may be revised in accordance with Section 2.8 or
Section 12.4.
"Commitment Percentage " means, for each Lender as of any date, the
percentage of the Aggregate Commitment represented by such Lender's
Commitment, as it may be amended from time to time, which initially
shall be as set forth on Schedule "2".
"Conforming Mortgage Loan" means a first or second priority Residential
Mortgage Loan which (i) either is insured by the FHA or guaranteed by
the VA or which fully conforms to all underwriting and other
requirements for sale to FNMA, FHLMC or GNMA, and (ii) if said
Mortgage Loan is a first priority Residential Mortgage Loan and has a
loan-to-value ratio which is greater than eighty percent (80%), said
Mortgage Loan is covered by a policy of private mortgage insurance
acceptable to FNMA and the Agent; provided that no such insurance shall
be required for second lien Residential Mortgage Loans, and (iii) if
said Mortgage Loan is a second priority Residential Mortgage Loan, (A)
said Mortgage Loan was made contemporaneously with a first priority
Residential Mortgage Loan to the same mortgagee and for the same real
estate and improvements, and (B) said Mortgage Loan, together with said
first Lien Mortgage Loan has a combined loan-to-value ratio which is
not greater than one hundred percent (100%).
"Contingent Obligation" of a Person means any agreement, undertaking or
arrangement by which such Person assumes, guarantees, endorses,
contingently agrees to purchase or provide funds for the payment of, or
otherwise becomes or is contingently liable upon, the obligation or
liability of any other Person, or agrees to maintain the net worth or
working capital or other financial condition of any other Person, or
otherwise assures any creditor of such other Person
against loss, including, without limitation, any comfort letter,
operating agreement, take-or-pay contract or the obligations of any
such Person as general partner of a partnership with respect to
the liabilities of the partnership.
"Controlled Group " means all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated)
under common control which, together with the Borrowers or any of their
Subsidiaries, are treated as a single employer under Section 414 of
the Code.
"Conversion/Continuation Notice" is defined in Section 2.7.
"Conversion Mortgage Loan" means a Mortgage Loan which is originated as
an ARM Mortgage Loan, sold to an Approved Investor and subsequently
repurchased by the Borrowers after an election by the obligor
thereunder to convert to a fixed rate loan.
"Coverage Requirement" means, as of any date, the aggregate unpaid
principal amount then outstanding under this Agreement.
"Cumulative Cash Flow" is defined in Section 6.17.4.
"Custodian Settlement Accounts" is defined in the Security Agreement.
"Default" means an event described in Article VII.
"Effective Date" is defined in Section 4.1.
"Electronic Tracking Agreement" shall mean the Electronic Tracking
Agreement dated as of June 7, 2002 among the Agent, MERS, MERSCORP, the
Collateral Agent and Hovnanian Mortgage, and the Electronic Tracking
Agreement of even date herewith among the Agent, MERS, MERSCORP, the
Collateral Agent and Hovnanian American.
"Eligible Aged Conforming Mortgage Loan" shall mean an Eligible
Mortgage Loan that (i) has been included in the Borrowing Base for more
than 90 days after its Pledge Date and not more than 180 days after its
Pledge Date, and (ii) would be an Eligible Conforming Mortgage
Loan if such loan had been included in the Borrowing Base for not more
than 90 days after its Pledge Date.
"Eligible Collateral" means, as of any date, all Eligible Conforming
Mortgage Loans, Eligible Jumbo Mortgage Loans, Eligible Oversize Jumbo
Mortgage Loans, Eligible Non-Conforming Mortgage Loans, Eligible Aged
Conforming Mortgage Loans and Eligible Securities.
"Eligible Conforming Mortgage Loan" means an Eligible Mortgage Loan
which: (i) is a Conforming Mortgage Loan; and (ii) is subject to an
Approved Investor Commitment.
"Eligible Jumbo Mortgage Loan" means an Eligible Mortgage Loan which:
(i) is a Jumbo Mortgage Loan; and (ii) is subject to an Approved
Investor Commitment.
"Eligible Mortgage Loan" means any Pledged Mortgage :
(i) which meets the Basic Eligibility Requirements;
(ii) which has no monthly installment of principal and/or interest
which is more than 29 days past due;
(iii) which has been included in the Borrowing Base for not more than
ninety (90) days after its Pledge Date unless it is an Eligible Aged
Mortgage Loan;
(iv) which has a note date (or, in the case of Conversion Mortgage
Loan, a conversion date) which is one hundred twenty (120) days or less
prior to its Pledge Date;
(v) for which, if it is an AP Mortgage:
(1) the Borrowers expect such AP Mortgage to close on the Pledge
Date and become a valid lien securing actual indebtedness by funding to
the order of the mortgagor thereunder, has not learned of any
information to the contrary and has not received any returned proceeds
of such AP Mortgage from the escrow or closing agent for such Pledged
Mortgage; (2) if an AP Mortgage is not closed and funded as required
pursuant to clause (v) (1) above, the Borrowers shall so notify the
Collateral Agent as soon as the Borrowers become aware of that fact but
in any event no later than 12:00 noon the next Business Day, unless the
AP Mortgage has closed and funded by that time, and the Collateral
Agent shall delete said AP Mortgage from the Borrowing
Base; (3) if an AP Mortgage was previously included in the Borrowing
Base and was subsequently deleted as required pursuant to clause (v)
(2) above, such AP Mortgage has not been submitted for inclusion in the
Borrowing Base for a total of more than three times;
(4) the Collateral Agent has received the Required Mortgage
Documents within seven (7) Business Days after the date of the related
Agreement to Pledge; (5) the Collateral Value attributable to all AP
Mortgages included in any category of the Borrowing Base does not
exceed forty percent (40%) of the Aggregate Commitment during the first
and last three Business Days in any calendar month, and
(6) the Collateral Value attributable to all AP Mortgages included in
any category of the Borrowing Base does not exceed thirty percent (30%)
of the Aggregate Commitment for any day other than the first and last
three Business Days of any calendar month;
(vi) which, if subject to an Investor Transmittal Letter or Trust
Receipt and if said Pledged Mortgage was:
(1) withdrawn by the Bo rrowers for purposes of correcting clerical or
other non-substantive documentation problems: (i) the promissory note
and other documents relating to said Pledged Mortgage were returned to
the Collateral Agent within fifteen calendar days from the date of
withdrawal, (ii) said Pledged Mortgage was released to a Borrower
pursuant to a Trust Receipt and (iii) the Collateral Value of said
Pledged Mortgage when added to the Collateral Value of
all other Pledged Mortgages which have been similarly released to the
Borrowers does not exceed $1,000,000; or
(2) shipped by the Collateral Agent directly to an Approved Investor
for purchase pursuant to an Investor Transmittal Letter which is a
"Whole Loan Sale Transmittal Letter" substantially in the form of
Exhibit "4" to the Security Agreement, the full purchase price therefor
has been received by the Collateral Agent (or said Pledged Mortgage has
been returned to the Collateral Agent) within forty- five (45) calendar
days (or sixty (60) calendar days for deliveries to such Approved
Investors as the Agent may have specifically approved for
extended Investor Transmittal Letters) from the date of shipment by the
Collateral Agent; or
(3) shipped by the Collateral Agent directly to a custodian for
purposes of formation of a pool supporting a Security, the Security is
issued and sold and the purchase price therefor has been received by
the Collateral Agent (or said Pledged Mortgage has been returned to the
Collateral Agent) within forty- five (45) days (or sixty (60) days for
deliveries to such Approved Investors as the Agent may have
specifically approved for extended Investor Transmittal
Letters) from the date of shipment by the Collateral Agent; and
(vii) which has not previously been included in the Borrowing Base,
then shipped to an investor and returned, for whatever reason, to the
Collateral Agent.
"Eligible Non-Conforming Mortgage Loan" means an Eligible Mortgage Loan
which: (i) is a Non-Conforming Mortgage Loan; (ii) is subject to an
Approved Investor Commitment issued by an Approved Investor; and (iii)
has an unpaid principal balance on the applicable
Pledge Date less than or equal to $350,000.
"Eligible Oversize Jumbo Mortgage Loan" means an Eligible Mortgage Loan
which: (i) is an Oversize Jumbo Mortgage Loan; and (ii) is subject to
an Approved Investor Commitment specifically identified as covering
such Mortgage Loan.
"Eligible Security" means any Pledged Security: (i) which is covered by
an Approved Investor Commitment; and (ii) for which the Collateral
Agent shall ha ve received such evidence as may be required under the
Security Agreement to confirm the existence of the security interest
in favor of the Collateral Agent for the benefit of the Lenders in such
Pledged Security.
"Environmental Laws" means any and all federal, state, local and
foreign statutes, laws, judicial decisions, regulations, ordinances,
rules, judgments, orders, decrees, plans, injunctions,
permits, concessions, grants, franchises, licenses, agreements and
other governmental restrictions relating to (i) the protection of the
environment, (ii) the effect of the environment on human
health, (iii) emissions, discharges or releases of pollutants,
contaminants, hazardous substances or wastes into surface water, ground
water or land, or (iv) the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling
of pollutants, contaminants, hazardous substances or wastes or the
clean-up or other remediation thereof "ERISA" means the Employee
Retirement Income Security Act of 1974, as amended from time to time,
and any rule or regulation issued thereunder.
"Eurodollar Advance" means an Advance which bears interest at a
Eurodollar Rate.
"Eurodollar Base Rate" means with respect to a Eurodollar Advance for
the relevant Interest Period, the rate appearing on Bloomberg
Professional (or, if not available, any other nationally recognized
trading screen reporting on- line trading in eurodollars) as the
eurodollar rate for deposits in dollars at 10:00 a.m. (Dallas time) two
Business Days prior to the first day of such Interest Period, having a
maturity equal to such Interest Period. In the event that such rate
ceases to be published, Eurodollar Base Rate shall mean a comparable
rate of interest reasonably selected by Agent.
"Eurodollar Loan" means a Loan which bears interest at a Eurodollar
Rate.
"Eurodollar Rate" means, with respect to a Eurodollar Advance for the
relevant Interest Period, the sum of (i) the quotient of (a) the
Eurodollar Base Rate applicable to such Interest
Period, divided by (b) one minus the Reserve Requirement (expressed as
a decimal) applicable to such Interest Period, plus (ii) the Applicable
Margin.
"Excluded Taxes" means, in the case of each Lender or applicable
Lending Installation and the Agent, taxes imposed on its overall net
income, and franchise taxes imposed on it, by (i) the jurisdiction
under the laws of which such Lender or the Agent is incorporated or
organized or (ii) the jurisdiction in which the Agent's or such
Lender's principal executive office or such Lender's applicable Lending
Installation is located.
"Exhibit" refers to an exhibit to this Agreement, unless another
document is specifically referenced. "Federal Agency" means FHLMC,
FNMA, GNMA, FHA or VA.
"Federal Funds Effective Rate" means, for any day, an interest rate per
annum equal to the `Fed funds (effective rate)' as reported on such day
for the immediately preceding Business Day by the Federal Reserve Board
in its H.15 statistical release or any successor publication (or,
if such day is not a Business Day, on the immediately preceding
Business Day) or, if such rate isnot so published on any day which is a
Business Day, `Federal Funds Effective Rate' shall mean
a comparable rate of interest reasonably selected by Agent.
"Federal Funds Funding Rate" means, with respect to any Fed Funds Loan
for any day, the Federal Funds Effective Rate for such day.
"Federal Funds Rate" means, for any day, an interest rate per annum
equal to the Federal Funds Funding Rate for such day plus the
Applicable Margin.
"Fed Funds Advance" means an Advance which bears interest at the
Federal Funds Rate.
"Fed Funds Loan" means any Loan made as a part of a Fed Funds Advance.
"Fees" is defined in Section 2.5.
"FHA" means the Federal Housing Administration or other agency,
corporation or instrumentality of the United States to which the powers
and duties of the Federal Housing Administration have been transferred.
"FHA-Approved Mortgagee" means an institution that is approved by the
FHA to act as a servicer and mortgagee of record with respect to a
Mortgage Loan insured by the FHA.
"FHLMC" means the Federal Home Loan Mortgage Corporation or other
agency, corporation or instrumentality of the United States to which
the powers and duties of the Federal Home Loan Mortgage Corporation
have been transferred.
"FHLMC-Approved Lender" means an institution that is approved by the
FHLMC to act as a lender in connection with the origination of any
Mortgage Loan purchased by the FHLMC.
"FHLMC Security" means a security representing an undivided fractional
interest in a pool of Mortgage Loans, which security is issued and
guaranteed as to full and timely payment of interest and full
collection of principal by FHLMC.
"FNMA" means the Federal National Mortgage Association or other agency,
corporation or instrumentality of the United States to which the powers
and duties of the Federal National Mortgage Association have been
transferred.
"FNMA-Approved Lender" means an institution that is approved by the
FNMA to act as a lender in connection with the origination of any
Mortgage Loan purchased by the FNMA.
"FNMA Security" means a security representing an undivided fractional
interest in a pool of Mortgage Loans, which security is issued and
guaranteed as to full and timely payment of principal and interest by
FNMA.
"Funding Accounts" is defined in Section 8.4.
"GAAP" means generally accepted accounting principles as in effect from
time to time, consistently applied.
"GAAP Carrying Value" means, with respect to any asset of the
Borrowers, the value at which such asset is carried on the books of the
Borrowers in accordance with GAAP after excluding capitalized items.
Any changes in the methodology used for adjusting such book
value shall be subject to the prior approval of the Agent.
"GNMA" means the Government National Mortgage Association or other
agency, corporation or instrumentality of the United States as to which
the powers and duties of the Governmental National Mortgage Association
have been transfer-red.
"GNMA Security" means a security representing an undivided fractional
interest in a pool of Mortgage Loans, which security is issued by a
Borrower and guaranteed as to full and timely payment of principal and
interest by GNMA without regard as to whether such Borrower
collects any payments on such Mortgage Loans.
"Hovnanian American" means X. Xxxxxxxxx American Mortgage, L.L.C., a
New Jersey limited liability company.
"Hovnanian Mortgage" means X. Xxxxxxxxx Mortgage, Inc., a New Jersey
corporation.
"Ineligible Collateral" means any Pledged Item that does not at the
time constitute Eligible Collateral.
"Indebtedness" of a Person means such Person's (i) obligations for
borrowed money, (ii) obligations representing the deferred purchase
price of Property or services (other than accounts payable arising in
the ordinary course of such Person's business payable on terms
customary in the trade), (iii) obligations, whether or not assumed,
secured by Liens or payable out of the proceeds or production from
Property now or hereafter owned or acquired by such
Person, (iv) obligations which are evidenced by notes, acceptances, or
other instruments, (v) Capitalized Lease Obligations, (vi) Contingent
Obligations, (vii) Letters of Credit, (viii) obligations of such Person
to purchase securities or other Property arising out of or in
connection with the sale of the same or substantially similar
securities or Property, (ix) NetMark-to-Market Exposure under Rate
Management Transactions and (x) any other obligation for
borrowed money which in accordance with GAAP would be shown as a
liability on the consolidated balance sheet of such Person.
"Interest Period" means, with respect to a Eurodollar Advance, a period
of one, two or three-months commencing on a Business Day, all as
selected by the Borrowers pursuant to this Agreement. An Interest
Period of one, two or three months shall end on the day which
corresponds numerically to such date one, two or three months
thereafter, provided, however, that if there is no such numerically
corresponding day in such next, second or third succeeding
month, such Interest Period shall end on the last Business Day of such
next, second or third succeeding month. If an Interest Period would
otherwise end on a day which is not a Business Day, such Interest
Period shall end on the next succeeding Business Day, provided,
however, that if with respect to a one, two or three month Interest
Period said next succeeding Business Day falls in a new calendar month,
such Interest Period shall end on the immediately preceding
Business Day.
"Interim Funder Category" shall mean the category of the same name on
the MERS System that reflects the security interest of inter alia,
mortgage warehouse lenders, in the Mortgage Loans that have been
pledged by borrowers of such mortgage warehouse lender.
"Investment" of a Person means any loan, advance (other than
commission, travel and similar advances to officers and employees made
in the ordinary course of business), extension of credit (other than
accounts receivable arising in the ordinary course of business on terms
customary in the trade) or contribution of capital by such Person;
stocks, bonds, mutual funds, partnership interests, notes, debentures
or other securities owned by such Person; any deposit accounts and
certificate of deposit owned by such Person; and structured notes,
derivative financial instruments and other similar instruments or
contracts owned by such Person.
"Investor Transmittal Letter" means either a "Whole Loan Sale
Transmittal Letter" or a "Warehouse-Related MBS Transmittal Letter"
substantially in the form of Exhibits "4" and "5" to the Security
Agreement.
"Jumbo Mortgage Loan" means a Conforming Mortgage Loan except for size,
but which has an original principal balance of less than or equal to
$650,000.
"Keep-Well" means that certain First Restated Keep-Well Agreement of
even date herewith executed by the Parent in favor of the Agent, for
the ratable benefit of the Lenders, as it may be amended or modified
and in effect from time to time.
"Lenders" means the lending institutions listed on the signature pages
of this Agreement and their respective successors and assigns.
"Lending Installation" means, with respect to a Lender or the Agent,
the office, branch, subsidiary or affiliate of such Lender or the Agent
listed on the signature pages hereof or on a Schedule or otherwise
selected by such Lender or the Agent pursuant to Section 2.17.
"Lending Sublimits" is defined in Section 2.1.1.
"Letter of Credit" of a Person means a letter of credit or similar
instrument which is issued upon the application of such Person or upon
which such Person is an account party or for which such Person is in
any way liable.
"Leverage Ratio" is defined in Section 6.17.2.
"Lien" means any lien (statutory or other), mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance or
preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including, without
limitation, the interest of a vendor or lessor under any conditional
sale, Capitalized Lease or other title retention agreement).
"Loan" means a Primary Loan or a Swingline Loan and "Loans" means all
Primary Loans and all Swingline Loans (or any conversion or
continuation thereof).
"Loan Documents" means this Agreement, any Notes issued pursuant to
Section 2.15, the Security Agreement, the Buy-Down Agreements, the
Keep-Well, the Subordination Agreement and the other documents and
agreements contemplated hereby and executed by the Borrowers or
another Person in favor of the Agent or any Lender.
"Material Adverse Effect" means a material adverse effect on (i) the
business, Property, condition (financial or otherwise), results of
operations, or prospects of a Borrower and its Subsidiaries taken as a
whole or of the Parent, (ii) the ability of the Parent or a Borrower to
perform its obligations under the Loan Documents to which it is a
party, or (iii) the validity or enforceability of any of the Loan
Documents or the rights or remedies of the Agent or the
Lenders thereunder.
"Material Indebtedness" is defined in Section 7.5.
"MERS" shall mean the Mortgage Electronic Registration System, Inc.
"MERSCORP" shall mean MERSCORP, Inc.
"MERS Loan" shall mean any Mortgage Loan made by a Borrower which is
secured by a MERS Mortgage.
"MERS Member" shall mean any entity which is a member of MERS, in good
standing and in compliance with all rules, regulations, procedures and
requirements set forth by MERS, including, but not limited to the
payment of membership dues.
"MERS Mortgage" shall mean any Mortgage registered to a Borrower on the
MERS System.
"MERS System" shall mean the Mortgage Electronic Registration System
established by MERS.
"Moody's" means Xxxxx'x Investors Service, Inc. or any successor to its
business.
"Mortgage" means a mortgage, deed of trust, security deed or similar
instrument purporting to create a first or second lien or similar
interest in real estate and improvements thereon.
"Mortgage Loan" means a loan of money evidenced by a Mortgage Note and
secured by a Mortgage.
"Mortgage Note" means a note evidencing the indebtedness secured by a
Mortgage.
"Multi-employer Plan" means a Plan maintained pursuant to a collective
bargaining agreement or any other arrangement to which the Borrowers or
any member of the Controlled Group is a party to which more than one
employer is obligated to make contributions.
"Net Income" means, as of any date of determination thereof, the
Combined net income of the Borrowers and the ir consolidated
Subsidiaries as determined in accordance with GAAP.
"Net Xxxx-to-Market Exposure" of a Person means, as of any date of
determination, the excess (if any) of all unrealized losses over all
unrealized profits of such Person arising from Rate Management
Transactions. "Unrealized losses" means the fair market value of the
cost to such Person of replacing such Rate Management Transactions as
of the date of determination (assuming the Rate Management Transactions
were to be terminated as of that date), and "unrealized profits" means
the fair market value of the gain to such Person of replacing such
Rate Management Transactions as of the date of determination (assuming
such Rate Management Transactions were to be terminated as of that
date).
"Net Worth" means as of any date of determination thereof, the Combined
net worth of the Borrowers and their consolidated Subsidiaries as
determined in accordance with GAAP.
"Non-Conforming Mortgage Loan" means a first priority Residential
Mortgage Loan that (i) does not fully conform to the underwriting
criteria for sale to FNMA or FHLMC with respect to credit quality, (ii)
meets the general underwriting guidelines established in Exhibit "H"
hereto, and (iii) does not have a loan-to-value ratio which is greater
than one hundred percent (100%).
"Non-U.S. Lender" is defined in Section 3.5(iv).
"Note" means any promissory note issued at the request of a Lender
pursuant to Section 2.13 substantially the form of Exhibit "A" attached
hereto, including any amendment, modification, renewal or replacement
of any such promissory note.
"Notice of Assignment" is defined in Section 12.3.2.
"Obligations " means all unpaid principal of and accrued and unpaid
interest on the Loans, all accrued and unpaid fees and all expenses,
reimbursements, indemnities and other obligations of the Borrowers to
the Lenders or to any Lender, the Agent, the Collateral Agent or
any indemnified party arising under the Loan Documents.
"Operating Cash Flow" means, for any period, (i) the sum of the
following items for the Borrowers their consolidated Subsidiaries for
such period prepared on a Combined basis (with terms in quotes having
the meanings given such terms in the Borrowers' consolidated financial
statements): "net income", "net losses on interest rate contracts" and
other similar hedging instruments, "provision for loan losses",
"depreciation and amortization of good will", the increase in deferred
(but not current) taxes, and other non-cash losses or deductions
included in the computation of net income; minus (ii) the sum of the
following items for the Borrowers and their consolidated Subsidiaries
for such period prepared on a Combined basis (with terms in
quotes having the meanings given such terms in the Borrowers'
consolidated financial statements): the decrease in deferred (but not
current) taxes and other non-cash gains included in the computation of
"net income".)
"Original Credit Agreement" means the Revolving Credit Agreement dated
as of June 7, 2002 among the parties hereto.
"Other Taxes" is defined in Section 3.5(ii).
"Overnight Transaction Loan Effective Rate" means, as of any day, a
fluctuating rate of interest per annum determined by the Agent as its
overnight transaction loan rate for such day.
"Overnight Transaction Loan Rate" means, with respect to a Swingline
Loan, a rate equal to the sum of (i) the Overnight Transaction Loan
Effective Rate plus (ii) the Applicable Margin.
"Oversize Jumbo Loans" means a Conforming Mortgage Loan except for
size, but which has an original principal balance in excess of
$650,000, but less than or equal $1,250,000.
"Parent " means Hovnanian Enterprises, Inc., and its successors and
assigns.
"Participants" is defined in Section 12.2.1.
"Payment Date" means the last day of each calendar month.
"PBGC" means the Pension Benefit Guaranty Corporation, or any successor
thereto.
"Person" means any natural person, corporation, firm, joint venture,
partnership, association, limited liability company, enterprise, trust
or other entity or organization, or any government or political
subdivision or any agency, department or instrumentality thereof
"Plan" means an employee pension benefit plan which is covered by Title
IV of ERISA or subject to the minimum funding standards under Section
412 of the Code as to which the Borrowers or any member of the
Controlled Group may have any liability.
"Pledge Date" means the date on which a Mortgage Loan or Security is
first delivered in pledge to the Collateral Agent or is otherwise made
subject to a security interest in favor of the Agent or Collateral
Agent for the benefit of the Lenders, provided that (i) the date of
delivery of a Mortgage Loan covered by an Agreement to Pledge shall be
deemed to be the date of delivery of such Agreement to Pledge even
after subsequent delivery of the related Required Mortgage Documents,
(ii) the "Pledge Date" for all Collateral previously held by the
Collateral Agent under the Prior Facilities shall be deemed to be the
date on which such Collateral was first delivered to the Collateral
Agent under the Prior Facilities even though such date is prior to the
date of this Agreement and (iii) any AP Mortgage which has been deleted
and resubmitted as permitted pursuant to clause (v)(3) of the
definition of Eligible Mortgage Loan, shall have a Pledge Date which is
the date of the original Agreement to Pledge first submitted.
"Pledged Item" means any Pledged Mortgage or Pledged Security.
"Pledged Mortgage " all Mortgage Loans that are from time to time
delivered (or, in the case of AP Mortgages, are committed to be
delivered) to the Collateral Agent pursuant to this Agreement and the
Security Agreement.
"Pledged Security" all Securities that are from time to time delivered
to the Collateral Agent pursuant to this Agreement and the Security
Agreement.
"Pricing Schedule" means the Schedule attached hereto identified as
Schedule "1".
"Primary Advance" means a Eurodollar Advance, a Fed Funds Advance or an
Alternate Base Rate Advance.
"Primary Loan" means a Loan (other than a Swingline Loan) consisting of
a portion of a Primary Advance.
"Prime Rate" means a rate per annum equal to the prime rate of interest
announced from time to time by Guaranty Bank or by its parent (which is
not necessarily the lowest rate charged
to any customer), changing when and as said prime rate changes.
"Property" of a Person means any and all property, whether real,
personal, tangible, intangible, or mixed, of such Person, or other
assets owned, leased or operated by such Person.
"Purchasers" is defined in Section 12.3.1.
"Rate Management Transaction" means any transaction (including an
agreement with respect thereto) now existing or hereafter entered into
between a Borrower and any Person which
is a rate swap, basis swap, forward rate transaction, commodity swap,
commodity option, equity or equity index swap, equity or equity index
option, bond option, interest rate option, foreign
exchange transaction, cap transaction, floor transaction, collar
transaction, forward transaction, currency swap transaction, cross-
currency rate swap transaction, currency option or any other
similar transaction (including any option with respect to any of these
transactions) or any combination thereof, whether linked to one or more
interest rates, foreign currencies, commodity prices, equity prices or
other financial measures.
"Rate Management Obligations " of a Person means any and all
obligations of such Person, whether absolute or contingent and
howsoever and whensoever created, arising, evidenced or acquired
(including all renewals, extensions and modifications thereof and
substitutions therefor), under (i) any and all Rate Management
Transactions, and (ii) any and all cancellations, buy backs, reversals,
terminations or assignments of any Rate Management Transactions.
"Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor
thereto or other regulation or official interpretation of said Board of
Governors relating to reserve requirements applicable to member
banks of the Federal Reserve System.
"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor
or other regulation or official interpretation of said Board of
Governors relating to the extension of credit by banks for the
purpose of purchasing or carrying margin stocks applicable to member
banks of the Federal Reserve System.
"Reportable Event " means a reportable event as defined in Section 4043
of ERISA and the regulations issued under such section, with respect to
a Plan, excluding, however, such events as to which the PBGC has by
regulation waived the requirement of Section 4043(a) of ERISA that it
be notified within 30 days of the occurrence of such event, provided,
however, that a failure to meet the minimum funding standard of Section
412 of the Code and of Section 302 of ERISA shall be a Reportable Event
regardless of the issuance of any such waiver of the notice
requirement in accordance with either Section 4043(a) of ERISA or
Section 412(d) of the Code.
"Reports" is defined in Section 9.7.
"Required Lenders" means Lenders in the aggregate having at least 66
2/3% of the Aggregate Commitment or, if the Aggregate Commitment has
been terminated, Lenders in the aggregate holding at least 66 2/3% of
the aggregate unpaid principal amount of the outstanding Advances.
"Required Mortgage Do cuments" means the instruments and documents
described in Schedule "A" to the Security Agreement, as applicable to a
particular Mortgage Loan, which are required to be delivered to the
Collateral Agent.
"Reserve Requirement " means, with respect to the Eurodollar Rate
applicable to an Interest Period, the maximum aggregate reserve
requirement (including all basic, supplemental,
marginal and other reserves) which is imposed under Regulation D on
eurocurrency liabilities.
"Residential Mortgage Loan" means a Mortgage Loan secured by a Mortgage
on a Single Family Residence.
"S&P" means Standard & Poor's Ratings Services, a division of The
XxXxxx-Xxxx Companies, Inc. or any successor to its business.
"Schedule" refers to a specific schedule to this Agreement, unless
another document is specifically referenced.
"Section" means a numbered section of this Agreement, unless another
document is specifically referenced.
"Secured Obligations " means, collectively, (i) the Obligations and
(ii) all Rate Management Obligatio ns owing to one or more Lenders.
"Secured Parties" is defined in Paragraph 1 of the Security Agreement.
"Security or Securities" means any FHLMC Security, FNMA Security or
GNMA Security.
"Security Agreement " means the First Restated Security and Collateral
Agency Agreement as of even date herewith, substantially in the form of
Exhibit "I" attached hereto, by and among the Borrowers, the Agent, and
the Collateral Agent, pursuant to which a security interest is created
in favor of the Collateral Agent for the Lenders under this Agreement
in certain Collateral to be pledged pursuant to this Agreement, as the
same may, from time to time, be further supplemented, modified or
amended.
"Settlement Accounts" is defined in Section 8.4.
"Single Employer Plan" means a Plan maintained by a Borrower or any
member of the Controlled Group for employees of such Borrower or any
member of the Controlled Group.
"Single Family Residence" means a one to four family dwelling unit,
which may be a condominium unit but which shall not be a mobile home,
manufactured housing or a dwelling unit in a cooperative apartment
building.
"Subordination Agreement" means that certain First Restated
Subordination Agreement of even date herewith made by Parent in favor
of the Agent for the benefit of the Lenders.
"Subsidiary" of a Person means (i) any corporation more than 50% of
the outstanding securities having ordinary voting power of which shall
at the time be owned or controlled, directly or indirectly, by such
Person or by one or more of its Subsidiaries or by such Person and
one or more of its Subsidiaries, or (ii) any partnership, limited
liability company, association, joint venture or similar business
organization more than 50% of the ownership interests having
ordinary voting power of whic h shall at the time be so owned or
controlled. Unless otherwise expressly provided, all references herein
to a "Subsidiary" shall mean each Subsidiary of each Borrower.
"Substantial Portion" means, with respect to the Property of the
Borrowers and their Subsidiaries, Property which (i) represents more
than 10% of the Combined assets of the Borrowers and their Subsidiaries
as would be shown in the Combined financial statements of the
Borrowers as at the beginning of the twelve-month period ending with
the month in which such determination is made, or (ii) is responsible
for more than 10% of the Combined net sales or of the Combined net
income of the Borrowers and their Subsidiaries as reflected in the
financial statements referred to in clause (i) above.
"Swingline Amount" means $3,000,000.
"Swingline Commitment " means the obligation of the Swingline Lender
under Section 2.4 to make Swingline Loans.
"Swingline Lender" means Guaranty Bank in its capacity as Swingline
Lender under this Agreement.
"Swingline Loan" has the meaning ascribed to such term in Section
2.4.1.
"Swingline Obligations" has the meaning ascribed to such term in
Section 2.4.2.
"Swingline Rate" means for any day, the Overnight Transaction Loan
Rate.
"Tangible Net Worth" means, as of any date of determination thereof,
the Net Worth less the Combined book value of any assets of the
Borrowers and their consolidated Subsidiaries which would be treated as
intangibles under GAAP including, without limitation, good-will,
research and development costs, trade-marks, trade names, copyrights,
patents and unamortized debt discount and expenses.
"Taxes" means any and all present or future taxes, duties, levies,
imposts, deductions, charges or withholdings, and any and all
liabilities with respect to the foregoing, but excluding
Excluded Taxes.
"Termination Date" means July 31, 2003 or any earlier date on which the
Aggregate Commitment is reduced to zero or otherwise terminated
pursuant to the terms hereof.
"Total Liabilities" means as of any date of determination thereof, the
Combined liabilities (as such term is used under GAAP) of the Borrowers
and the ir consolidated Subsidiaries.
"Transferee" is defined in Section 12.5.
"Trust Receipt" means a trust receipt substantially in the form of
Exhibit "T' to the Security Agreement.
"Type" means, with respect to any Advance, its nature as an Alternate
Base Rate Advance, Eurodollar Advance or Fed Funds Advance.
"Unfunded Liabilities" means the amount (if any) by which the present
value of all vested and unvested accrued benefits under all Single
Employer Plans exceeds the fair market value of all such Plan assets
allocable to such benefits, all determined as of the then most recent
valuation date for such Plans using PBGC actuarial assumptions for
single employer plan terminations.
"Unmatured Default" means an event which but for the lapse of time or
the giving of notice, or both, would constitute a Default.
"VA" means the Veterans Administration or other agency, corporation or
instrumentality of the United States as to which the powers and duties
of the Veterans Administration have been transferred.
"VA-Approved Lender" means an institution that is approved by the VA to
act as a lender in connection with the origination of any Mortgage Loan
guaranteed by the VA.
"Wholly-Owned Subsidiary" of a Person means (i) any Subsidiary all of
the outstanding voting securities of which shall at the time be owned
or controlled, directly or indirectly, by such Person or one or more
Wholly-Owned Subsidiaries of such Person, or by such Person and one or
more Wholly-Owned Subsidiaries of such Person, or (ii) any partnership,
limited liability company, association, joint venture or similar
business organization 100% of the ownership interests having ordinary
voting power of which shall at the time be so owned or controlled.
The foregoing definitions shall be equally applicable to both the
singular and plural forms of the defined terms.
ARTICLE II
THE CREDITS
2.1 Commitment, Sublimits and Types of Advances
2.1.1 Commitment and Lending Sublimits. From and including the date of
this Agreement and prior to the Termination Date, each Lender severally
agrees, on the terms and conditions set forth in this Agreement
(including the lending sublimits (the "Lending Sublimits")
set forth below), to make Primary Loans to the Borrowers from time to
time; provided that, on any date, after giving effect to such Primary
Loans and all other Loans that the Borrowers have requested be made on
such date under this Agreement:
(1) the sum of (i) the aggregate principal balance then outstanding of
all Loans then held by such Lender plus (ii) such Lender's Commitment
Percentage of the then-outstanding Swingline Loans shall not exceed the
amount of such Lender's then-current Commitment Amount; (2) the
aggregate principal balance of all outstanding Swingline Loans
held by the Swingline Lender on the date shall not exceed the Swingline
Amount; and
(3) the Coverage Requirement, on such date, shall not exceed the
lesser of the Aggregate Commitment or the then-current Borrowing Base.
Subject to the terms of this Agreement, the Borrowers may borrow, repay
and reborrow Primary Loans at any time prior to the Termination Date.
The Commitments of the Lenders and the Swingline Commitment of the
Swingline Lender to lend hereunder shall expire on the
Termination Date.
2.1.2 Borrowing Base Sublimits by Category. The maximum amount that can
be credited toward the Borrowing Base from certain categories of
Eligible Collateral shall be limited so that the Borrowing Base value
determined under:
(1) clause (iii) of the definition thereof (Eligible Non-Conforming
Mortgage Loans) shall not exceed five percent (5%) of the Aggregate
Commitment; (2) clause (iv) of the definition thereof (Eligible Jumbo
Mortgage Loans) shall not exceed thirty percent (30%) of the Aggregate
Commitment; and (3) clause (v) of the definition thereof (Eligible
Oversize Jumbo Mortgage Loans) shall not exceed five percent (5%) of
the Aggregate Commitment.
2.1.3 Borrowing Base Sublimits by Asset Type. The maximum amount that
can be credited toward the Borrowing Base from certain types of
Collateral, regardless of category, shall be limited (collectively with
the limits set forth in Section 2.1.2, the "Borrowing Base Sublimits")
so that the Borrowing Base value attributable to:
(1) Eligible Conforming Aged Mortgage Loans shall not exceed one
and one half percent (1.5%) of the Aggregate Commitment; and
(2) Pledged Mortgages having a second lien priority shall not exceed
five percent (5%) of the Aggregate Commitment.
2.1.4 Types of Advances. Each Advance hereunder shall consist of one or
more Primary Advances requested by the Borrowers in accordance with
Sections 2.6. Primary Advances shall be available as provided in
Section 2.1 and Swingline Loans shall be available as provided in
Section 2.4.
2.2 Primary Advances. Subject to the terms and conditions herein
(including the Lending Sublimits) the Borrowers may request Primary
Advances from the Lenders on a pro rata basis in accordance with each
such Lender's Commitment Percentage. Primary Advances shall accrue
interest at the Eurodollar Rate, the Federal Funds Rate or the
Alternate Base Rate, as selected by the Borrowers in accordance with
Sections 2.6 and 2.7.
2.3 Buy Down Loans. Notwithstanding anything contained in this
Agreement, the Borrowers and any individual Lender (a "Buy-Down
Lender") may notify the Agent in writing (which notice shall be given
at least five (5) Business Days prior to the end of any calendar
month) that the Borrowers and such Buy-Down Lender have entered into a
Buy-Down Agreement with respect to all Fed Funds Loans from time to
time outstanding and held by such Buy-Down Lender, and, that, pursuant
to said Buy-Down Agreement, the interest rate applicable to such Fed
Funds Loans during any interest calculation period shall be the Buy-
Down Rate and shall be based on the assumption that the Borrowers shall
maintain sufficient Available Deposits with such Buy-Down Lender. The
Agent shall (until otherwise notified by the Borrowers and Buy-Down
Lender to the contrary) accrue interest on such Fed Funds Loans at the
Buy-Down Rate and the Borrowers shall pay such interest in accordance
with Section 2.18. The Agent shall have no obligation to verify the
amount of any Available Deposits supporting the pricing of such
Fed Funds Loans held by any Buy-Down Lender, including without
limitation, any deficiency fees or other amounts payable to such Lender
by the Borrowers under the applicable Buy-Down Agreement. The Borrowers
shall pay all deficiency fees or other amounts payable under its
Buy-Down Agreement with each Buy-Down Lender directly to such Buy-Down
Lender within ten (10) calendar days of receipt of a billing statement
from such Buy-Down Lender. Any Buy-Down Lender may elect not to make
demand for the payment of deficiency fees accruing in respect of any
shortage of Available Deposits from time to time and it is expressly
agreed and understood that: (1) any such deficiency fee shall not, by
reason of such failure of such Buy- Down Lender or otherwise, be deemed
to have been waived by such Buy-Down Lender (except as such waiver is
expressly acknowledged in writing by such Buy-Down Lender from time to
time), and (2) all deficiency fees accrued and unpaid hereunder and not
so expressly waived, whether or not previously declared due and owing
by any such Buy-Down Lender, shall automatically be due and payable in
full upon the Termination Date.
2.4 Swingline Loans.
2.4.1 Swingline Loans. Subject to the terms and conditions hereof, the
Swingline Lender, in its sole discretion, may make loans (each a
"Swingline Loan" and collectively, the "Swingline Loans ") to the
Borrowers from time to time during the period from and including the
date of this Agreement and prior to the Termination Date,
provided, however, that at no time shall the Swingline Lender make a
Swingline Loan if, immediately after giving effect thereto, (i) the
aggregate outstanding principal amount of all Swingline Loans would
exceed the Swingline Amount, or (ii) the aggregate outstanding
principal amount of all Swingline Loans and the aggregate outstanding
principal amount of all Primary Loans would exceed either (A) the
Aggregate Commitment, or (B) the Borrowing Base. All Swingline Loans
shall bear interest at the Swingline Rate.
2.4.2 Swingline Take-Out. By no later than 11:00 a.m. (Dallas time), on
(i) the last Business Day of each calendar week or (ii) any Business
Day immediately succeeding any day upon which the Swingline Lender
shall so demand, the Agent shall notify each Lender of the aggregate
outstanding principal balance of the Swingline Loans as of the
commencement of business of the Agent on such Bus iness Day (the "Swing
Line Obligations ") and, subject only to its receipt of such notice and
regardless of whether any Default shall have occurred and be
continuing, whether the Commitments shall have been reduced or
terminated or any other matter whatsoever, each Lender shall
(i) make a loan to the Borrowers in an amount equal to its Commitment
Percentage of such Swing Line Obligations, and (ii) make the amount of
such loan available to the Agent for the account of the Borrowers at
the Office not later tha n 1:00 p.m. (Dallas time), on such Business
Day, in funds immediately available to the Agent at such office.
The funds so made available to the Agent on such Business Day in
respect of such loans will then be disbursed by the Agent directly to
the Swingline Lender as payment in respect of the Swing Line
Obligations. Notwithstanding anything to the contrary
contained in this Agreement, to the extent that the Swingline Lender,
in its capacity as a Lender hereunder, shall be required to fund its
Commitment Percentage of any Swingline Loan take-out under this Section
2.4.2, the Swingline Lender and the Agent shall net out
the funding thereof against the payments to be received by the
Swingline Lender in respect of such take-out.
2.4.3 Swingline Loans to Pay Amounts Due to the Swingline Lender. If
any amounts are advanced by the Swingline Lender to cover checks or
wire transfers from Borrowers' accounts maintained with the Swingline
Lender when there are insufficient funds in such accounts to cover the
applicable check or wire transfer and sufficient funds are not
deposited in the applicable account before the close of business on the
day on which the applicable check or wire transfer request is honored,
then the Borrowers shall be deemed to have requested, and the Swingline
Lender may (but shall not be obligated to) elect to make, a Swingline
Loan to pay such overdraft amount; provided, however, that the
Swingline Lender shall not make any such Swingline Loan if, after
giving effect thereto, (x) the Coverage Requirement would exceed the
Borrowing Base or (y) the aggregate principal balance of all
outstanding Loans under this Agreement would exceed the Aggregate
Commitment.
2.4.4 Indemnification of Swingline Lender. The Lenders agree to
reimburse and indemnify the Swingline Lender ratably in proportion to
their respective Commitments (or, if the Commitments have been
terminated, in proportion to their Commitments immediately prior to
such termination) from and against any and all losses, liabilities
(including liabilities for penalties), actions, suits, judgments,
demands, costs and expenses (including, without limitation, reasonable
attorneys ' fees and disbursements) arising out of or in connection
with the Swingline, (including the foregoing in respect of losses,
liabilities or other obligations suffered by the Swingline Lender
resulting from its own negligence and excluding the foregoing in
respect of losses, liabilities and other obligations resulting from its
own gross negligence or willful misconduct).
If a Lender does not make available to the Swingline Lender when due
such Lender's Commitment Percentage of any such loss, liability,
judgment, cost or expense, such Lender shall be required to pay on
demand interest thereon for the account of the Swingline Lender at a
rate of interest per annum equal to the Federal Funds Funding Rate
from the date such Lender's payment is due until the date such payment
is received by the Swingline Lender.
2.5 Fees. The Borrowers shall pay the following fees (the "Fees"):
2.5.1 Facility Fees. A facility fee based on the Aggregate Commitment
from time to time from and after the date hereof, calculated at the
Applicable Fee Rate, expressed as a per diem rate on the actual
Aggregate Commitment for each day during the preceding full or partial
calendar quarter, payable in arrears, on the last day of each
calendar quarter and on the Termination Date. This fee shall be paid to
the Agent and allocated among the Lenders on a pro rata basis in
accordance with their respective Commitments during such quarter.
2.5.2 Agent Fees. Any fees payable to the Agent pursuant to the
Borrowers' letter agreement with the Agent with respect to this
Agreement.
2.5.3 Collateral Agent Fees. Any fees payable to Collateral Agent for
its services rendered pursuant to the Security Agreement as agreed to
by the Borrowers and charged by Collateral Agent from time to time.
2.5.4 Fees Payable in connection with Buy-Down Loans. The Borrowers
shall pay any fees and other charges when due to any Buy-Down Lender
under a Buy-Down Agreement as described in Section 2.3.
2.6 Method of Selecting Types and Interest Periods for New Advances.
The Borrowers shall select the Type of Advance and, in the case of each
Eurodollar Advance, the Interest Period applicable to each Advance from
time to time. The Borrowers shall give the Agent irrevocable notice (a
"Borrowing Notice") not later than (i) 10:00 a.m. (Dallas time) on the
Borrowing Date of each Alternate Base Rate Advance or Fed Funds
Advance, (ii) 3:00 p.m. (Dallas time) on the proposed Borrowing Date
for each Swingline Loan, and (iii) 2:00 p.m. (Dallas time) at least
three Business Days before the Borrowing Date for each Eurodollar
Advance, specifying: (i) the Borrowing Date, which shall be a Business
Day, of such Advance, (ii) the aggregate amount of such Advance, which
shall not be less than (1) $2,000,000 for any Eurodollar Advance,(2)
$600,000 for any Alternate Base Rate Advance or Fed Funds Advance, or
(3) $100,000 for any Swingline Loan, (iii) except in the case of a
Swingline Loan, the Type of Advance selected, and (iv) in the case of
each Eurodollar Advance, the Interest Period applicable thereto, and
Not later than noon (Dallas time) on each Borrowing Date, with respect
to all Advances other than Swingline Loans, each Lender shall make
available its Loan or Loans comprising such Advance, in funds
immediately available in Dallas to the Agent at its address specified
pursuant to Article XIII; provided that Swingline Loans may be made
available up to the close of business. The Agent will make the funds so
received from the Lenders available to the Borrowers at the Agent's
aforesaid address.
2.7 Conversion and Continuation of Outstanding Advances. An Alternate
Base Rate Advance shall continue as an Alternate Base Rate Advance
unless and until such Alternate Base Rate Advance is converted into
another Type of Advance. A Fed Funds Advance shall continue
as a Fed Funds Advance unless and until (a) such Advance is converted
into a different Type of Advance in accordance with the terms hereof or
(b) the Borrowers have paid any such Fed Funds Advance prior to 10:00
a.m. (Dallas time) on any Business Day or the Borrowers have given
notice by 10:00 a.m. (Dallas time) that it intends to pay and has paid
any such Fed Funds Advance prior to 12:00 noon (Dallas time) on any
Business Day. A Swingline Loan shall continue as a Swingline Loan
unless and until the Borrowers have paid any Swingline Loan prior
to 3:00 p.m. (Dallas time) on any Business Day. Each Eurodollar Advance
shall continue as a Eurodollar Advance until the end of the then
applicable Interest Period therefor, at which time such Eurodollar
Advance shall be automatically converted into an Alternate Base Rate
Advance unless the Borrowers shall have given the Agent a
Conversion/Continuation Notice requesting that, at the end of such
Interest Period, such Eurodollar Advance either continue as a
Eurodollar Advance for the same or another Interest Period or be
converted into an Advance of another Type. Swingline Loans may be
repaid out of new Advances hereunder but may not be converted
directly to a Type of Advance. The Borrowers may elect from time to
time to convert all or any part of an Advance of any Type into any
other Type or Types of Advances; provided that any conversion of any
Eurodollar Advance shall be made on, and only on, the last day of the
Interest Period applicable thereto. The Borrowers shall give the Agent
irrevocable notice (a "Conversion/Continuation Notice") of each
conversion of an Alternate Base Rate Advance or Fed Funds Advance or
conversion or continuation of a Eurodollar Advance not later than (i)
10:00 a.m. (Dallas time) on the date of the requested conversion, in
the case of a conversion into an Alternate Base Rate Advance or Fed
Funds Advance or (ii) 10:00 a.m. (Dallas time) at least three Business
Days prior to the date of the requested conversion into or continuation
of a Eurodollar Advance, specifying: (i) the requested date which shall
be a Business Day, of such conversion or continuation, (ii) the
aggregate amount (which meets the minimums set forth in Section 2.8(c))
and Type of the Advance which is to be converted or continued, and
(iii) the amount and Type(s) of Advance(s) into which such Advance is
to be converted or continued and, in the case of a conversion into or
continuation of a Eurodollar Advance, the duration of the Interest
Period applicable thereto.
2.8 Reductions to Aggregate Commitment. The Borrowers may from time to
time permanently reduce the Aggregate Commitment in whole, or in part
ratably among the Lenders in integral multiples of $5,000,000, upon at
least three Business Days' written notice to the Agent, which notice
shall specify the amount of any such reduction. On or before the
effective date of any such reduction, the Borrowers shall, if
necessary, repay sufficient Loans to prevent the remaining outstanding
Loans hereunder, after giving effect to such permanent reduction,
from exceeding the Lending Sublimits. Upon any reduction of the
Aggregate Commitment, upon the election of any Swingline Lender, the
reduction in such Lender's Commitment may be allocated either solely to
such Lender's Primary Commitment or in part to its Primary
Commitment and in part to its Swingline Commitment on a pro rata basis.
2.9 Principal Payments.
2.9.1 Optional Principal Payments. The Borrowers may from time to time
pay, without penalty or premium, all outstanding Alternate Base Rate
Advances or Fed Funds Advances, or, in a minimum aggregate amount of
$1,000,000, any portion of the outstanding Alternate Base Rate Advances
or Fed Funds Advances upon prior written notice to the Agent (and if a
Fed Funds Advance, within the timeframe described below).
The Borrowers may from time to time pay, subject to the payment of any
funding indemnification amounts required by Section 3.4 but without
penalty or premium, all outstanding Eurodollar Advances, or, in a
minimum aggregate amount of $1,000,000 or any integral multiple of
$500,000 in excess thereof, any portion of the outstanding
Eurodollar Advances upon three Bus iness Days' prior notice to the
Agent. Fed Funds Advances and Swingline Loans may be paid on any
Business Day provided that the Borrowers have given the Agent written
notice of such repayment on the date of such intended payment by (i)
10:00 a.m. (Dallas time) for Fed Funds Advances and (ii) noon
(Dallas time) for Swingline Loans. All optional principal payments
shall be applied to the Swingline Loans or the Type of Advance
designated by the Borrowers when making such payment, provided that any
payments received during the continuance of a Default
or Unmatured Default shall be applied first to Swingline Loans and then
on a pro rata basis to all Advances then outstanding. Payments so
allocated to an Advance shall be distributed to the Lenders holding the
Loans comprising such Advance on a pro rata basis in accordance with
the respective unpaid principal balances of such Loans, with such
payments applied first to accrued interest and thereafter to principal.
2.9.2 Required Payments Related to Borrowing Base. On any date that the
Coverage Requirement is in excess of the then-current Borrowing Base,
the Borrowers shall, prior to the close of business on such date,
either deliver sufficient Eligible Collateral to eliminate such excess
or make a mandatory payment to the Agent for the benefit of the Lenders
in the amount of such excess. Any such payment shall be allocated as
directed by the Borrowers unless a Default or Unmatured Default then
exists in which case such payment shall be allocated first to the
Swingline Loans and then to on a pro rata basis to all Advances then
outstanding. Payments so allocated to an Advance shall be distributed
to the Lenders holding the Loans comprising such Advance on a pro
rata basis in accordance with the respective unpaid principal balances
of such Loans, with such payments applied first to accrued interest and
thereafter to principal.
2.9.3 Settlement Accounts Payments. Prior to the occurrence of a
Default, to the extent the amounts in the Settlement Accounts are not
needed to keep the Borrowing Base equal to or greater than the Coverage
Requirement, the Borrowers may withdraw or otherwise direct the
application of such amounts. Upon the occurrence of a Default (and
during the continuance thereof), the Agent may declare a portion of the
principal balance of the Loans, equal to any amounts then on deposit in
the Settlement Accounts and any deposits made in the Settlement
Accounts during the continuance of such Default, to be due and payable
without demand (unless previously declared due and payable). Such
amount shall be withdrawn from the Settlement Accounts by the Agent and
shall be applied to the Obligations.
2.9.4 Final Payment on Termination Date. Any outstanding Advances and
all other unpaid Obligations, unless required to be paid earlier
pursuant to the terms hereof, shall be paid in full by the Borrowers on
the Termination Date.
2.10 Changes in Interest Rate, etc. Each Alternate Base Rate Advance
shall bear interest on the outstanding principal amount thereof, for
each day from and including the date such Advance is made or is
automatically converted from a Eurodollar Advance into an
Alternate Base Rate Advance pursuant to Section 2.7, to but excluding
the date it is paid or is converted into a Eurodollar Advance pursuant
to Section 2.7 hereof, at a rate per annum equal to the Alternate Base
Rate for such day. Changes in the rate of interest on that portion of
any Advance maintained as an Alternate Base Rate Advance will take
effect simultaneously with each change in the Alternate Base Rate. The
interest rate on each Swingline Loan or Fed Funds Advance shall be
recalculated daily for each day that such Swingline Loan or Fed Funds
Advance is continued under Section 2.7. Each Eurodollar Advance shall
bear interest on the outstanding principal amount thereof from and
including the first day of the Interest Period applicable thereto to
(but not including) the last day of such Interest Period at the
interest rate determined by the Agent as applicable to such Eurodollar
Advance based upon the Borrowers' selections under Section 2.6 and 2.7
and otherwise in accordance with the terms hereof. Not more than six
(6) different Interest Periods may be in effect at any time and no
Interest Period may end after the Termination Date.
2.11 Rates Applicable After Default. Notwithstanding anything to the
contrary contained in Section 2.8 or 2.9, during the continuance of a
Default or Unmatured Default the Required Lenders may, at their option,
by notice to the Borrowers (which notice may be revoked at the option
of the Required Lenders notwithstanding any provision of Section 9.1
requiring unanimous consent of the Lenders to reductions in interest
rates), declare that no Advance may be made as, converted into or
continued as a Eurodollar Advance. During the continuance of a
Default the Required Lenders may, at their option, by notice to the
Borrowers (which notice may be revoked at the option of the Required
Lenders notwithstanding any provision of Section 9.1 requiring
unanimous consent of the Lenders to reductions in interest rates)
declare that (i) each Eurodollar Advance shall bear interest for the
remainder of the applicable Interest Period at the rate otherwise
applicable to such Interest Period plus 2% per annum and (ii) each
Advance (other than those under clause (i) above) and each Swingline
Loan shall bear interest at a rate per annum equal to the Alternate
Base Rate plus 2% per annum; provided that, during the continuance of a
Default under Section 7.6 or 7.7, the interest rates set forth in
clauses (i) and (ii) above shall be applicable to all Advances and
Swingline Loans without any election or action on the part of the Agent
or any Lender.
2.12 Method of Payment. All payments of the Obligations hereunder shall
be made, without setoff, deduction, or counterclaim, in immediately
available funds to the Agent at the Agent's address specified pursuant
to Article XIII, or at any other Lending Installation of the
Agent specified in writing by the Agent to the Borrowers, on the date
when due by (i) noon (Dallas time) with respect to all Advances other
than Swingline Loans and (ii) 4:00 p.m. (Dallas time) with respect to
Swingline Loans and all such payments shall be applied in accordance
with Section 2.9.1. Notwithstanding the foregoing, if the Borrowers
fail to give the Agent notice of repayment of a Fed Funds Advance
before 10:00 a.m. (Dallas time) on the Business Day that the
Borrowers intend to repay such Fed Funds Advance, any payment of such
Fed Funds Advance received by the Agent on such Business Day shall be
deemed to have been received by the Agent at the opening of business on
the following Business Day. Each payment delivered to the Agent
for the account of any Lender shall be delivered promptly by the Agent
to such Lender in the same type of funds that the Agent received at its
address specified pursuant to Article XIII or at any Lending
Installation specified in a notice received by the Agent from such
Lender. The Agent is hereby authorized to charge the account of the
Borrowers maintained with Guaranty Bank for each payment of principal,
interest and fees as it becomes due hereunder.
2.13 Noteless Agreement; Evidence of Indebtedness.
(i) Each Lender shall maintain in accordance with its usual practice an
account or accounts evidencing the indebtedness of the Borrowers to
such Lender resulting from each Loan made by such Lender from time to
time, including the amounts of principal and interest payable and paid
to such Lender from time to time hereunder.
(ii) Subject to Section 2.3, the Agent shall also maintain accounts in
which it will record (a) the amount of each Loan made hereunder, the
Type thereof and the Interest Period with respect thereto, (b) the
amount of any principal or interest due and payable or to become due
and payable from the Borrowers to each Lender hereunder and
(c) the amo unt of any sum received by the Agent hereunder from the
Borrowers and each Lender's share thereof.
(iii) The entries maintained in the accounts maintained pursuant to
paragraphs (i) and (ii) above shall be prima facie evidence of the
existence and amounts of the Obligations therein recorded; provided,
however, that the failure of the Agent or any Lender to maintain such
accounts or any error therein shall not in any manner affect the
obligation of the Borrowers to repay the Obligations in accordance with
their terms.
(iv) Any Lender may request that its Loans be evidenced by a Note. In
such event, the Borrowers shall prepare, execute and deliver to such
Lender a Note payable to the order of such Lender. Thereafter, the
Loans evidenced by such Note and interest thereon shall at all times
(including after any assignment pursuant to Section 12.3) be
represented by one or more Notes payable to the order of the payee
named therein or any assignee pursuant to Section 12.3, except to the
extent that any such Lender or assignee subsequently returns any such
Note for cancellation and requests that such Loans once
again be evidenced as described in paragraphs (i) and (ii) above.
2.14 Telephonic Notices. The Borrowers hereby authorize the Lenders and
the Agent to extend, convert or continue Advances, effect selections of
Types of Advances and to transfer funds based on telephonic notices
made by any person or persons the Agent or any Lender in good faith
believes to be acting on behalf of the Borrowers, it being understood
that the foregoing authorization is specifically intended to allow
Borrowing Notices and Conversion/Continuation Notices to be given
telephonically. The Borrowers agree to deliver promptly to the Agent a
written confirmation, if such confirmation is requested by the Agent or
any Lender, of each telephonic notice signed by an Authorized Officer.
If the written confirmation differs in any material respect from the
action taken by the Agent and the Lenders, the records of the Agent and
the Lenders shall govern absent manifest error.
2.15 Interest Payment Dates; Interest and Fee Basis. Subject to Section
2.3, interest shall be payable in accordance with the following
provisions. Interest accrued on each Advance other than a Eurodollar
Advance shall be payable on each Payment Date, commencing with the
first such date to occur after the date hereof and at maturity.
Interest accrued on each Eurodollar Advance shall be payable on the
last day of its applicable Interest Period, on any date on which
the Eurodollar Advance is prepaid, whether by acceleration or
otherwise, and at maturity. Interest accrued on each Eurodollar
Advance having an Interest Period longer than three months
shall also be payable on the last day of each three- month interval
during such Interest Period Interest and Fees shall be calculated for
actual days elapsed on the basis of a 360-day year.
Interest shall be payable for the day an Advance is made but not for
the day of any payment on the amount paid if payment is received at the
place of payment prior to the time required for payment as set forth in
Section 2.14. If any payment of principal of or interest on an Advance
shall become due on a day which is not a Business Day, such payment
shall be made on the next succeeding Business Day and, in the case of a
principal payment, such extension of time shall be included in
computing interest in connection with such payment.
2.16 Notification by the Agent. Promptly after receipt thereof, the
Agent will notify each Lender of the contents of each Aggregate
Commitment reduction notice, Borrowing Notice, Conversion/Continuation
Notice, and repayment notice received by it hereunder. Promptly upon
determination thereof, the Agent will notify each Lender making a
portion of any Eurodollar Advance and the Borrowers of the interest
rate applicable to each Eurodollar Advance. When any Fed Funds Advances
or Alternate Base Rate Advances are outstanding or have been
requested, the Agent will give each Lender making or holding any such
Loans and the Borrowers prompt notice of each change in such rates.
2.17 Lending Installations. Each Lender may book its Loans at any
Lending Installation selected by such Lender and may change its Lending
Installation from time to time.
All terms of this Agreement shall apply to any such Lending
Installation and the Loans and any Notes issued hereunder shall be
deemed held by each Lender for the benefit of such Lending
Installation. Each Lender may, by written notice to the Agent and the
Borrowers in accordance with Article XIII, designate replacement or
additional Lending Installation through which Loans
will be made by it and for whose account Loan payments are to be made.
2.18 Non-Receipt of Funds by the Agent. Unless the Borrowers or a
Lender, as the case may be, notifies the Agent prior to the date on
which it is scheduled to make payment to the
Agent of (i) in the case of a Lender, the proceeds of a Loan or an
Advance or (ii) in the case of the Borrowers, a payment of principal
(including but not limited to situations in which the
Borrowers inform the Agent that the Agent will be receiving proceeds of
Collateral on a specific date and that the Borrowers intend to use such
proceeds to make a payment of principal), interest or Fees to the Agent
for the account of the Lenders, that it does not intend to make such
payment, the Agent may assume that such payment has been made. The
Agent may, but shall not be obligated to, make the amount of such
payment available to the intended recipient in reliance upon such
assumption. If such Lender or the Borrowers, as the case may be, has
not in fact made such payment to the Agent, the recipient of such
payment shall, on demand by the Agent, repay to the Agent the amount so
made available together with interest thereon in respect of each day
during the period commencing on the date such amount was so made
available by the Agent until the date the Agent recovers such amount at
a rate per annum. equal to (x) in the case of payment due from a
Lender, the Federal Funds Effective Rate for such day for the first
three days and, thereafter, the interest rate applicable to the
relevant Loan or (y) in the case of payment due from the Borrowers, the
interest rate applicable to the relevant Loan.
ARTICLE III
CHANGE IN CIRCUMSTANCES
3.1 Yield Protection. If, on or after the date of this Agreement, the
adoption of any law or any governmental or quasi-governmental rule,
regulation, policy, guideline or directive (whether or not having the
force of law), or any change in the interpretation or administration
thereof by any governmental or quasi-governmental authority, central
bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Lender or
applicable Lending Installation with any request or directive (whether
or not having the force of law) of any such authority, central bank or
comparable agency:
(i) subjects any Lender or any applicable Lending Installation to any
Taxes or changes the basis of taxation of payments (other than with
respect to Excluded Taxes) to any Lender in respect of its Eurodollar
Loans, or (ii) imposes or increases or deems applicable any reserve,
assessment, insurance charge, special deposit or similar requirement
against assets of, deposits with or for the account of, or credit
extended by, any Lender or any applicable Lending Installation (other
than reserves and assessments taken into account in determining the
interest rate applicable to Eurodollar Ad vances), or
(iii) imposes any other condition the result of which is to increase
the cost to any Lender or any applicable Lending Installation of
making, funding or maintaining its Eurodollar Loans or reduces any
amount receivable by any Lender or any applicable Lending Installation
in connection with its Eurodollar Loans, or requires any Lender or
any applicable Lending Installation to make any payment calculated by
reference to the amount of its Eurodollar Loans held or interest
received by it, by an amount deemed material by such Lender,
and the result of any of the foregoing is to increase the cost to such
Lender or applicable Lending Installation of making or maintaining its
Eurodollar Loans or Commitment or to reduce the return received by such
Lender or applicable Lending Installation in connection with such
Eurodollar Loans or Commitment, then, within 15 days of demand by such
Lender, the Borrowers shall pay such Lender such additional amount or
amounts as will compensate such Lender for such increased cost or
reduction in an amount received.
3.2 Changes in Capital Adequacy Regulations. If a Lender determines the
amount of capital required or expected to be maintained by such Lender,
any Lend ing Installation of such Lender or any corporation controlling
such Lender is increased as a result of a Change, then, within 15 days
of demand by such Lender, the Borrowers shall pay such Lender the
amount necessary to compensate for any shortfall in the rate of return
on the portion of such increased capital which such Lender determines
is attributable to this Agreement, its Loans or its Commitment to make
Loans hereunder (after taking into account such Lender's policies as to
capital adequacy). "Change" means (i) any change after the date of this
Agreement in the Risk-Based Capital Guidelines or (ii) any adoption of
or change in any other law, governmental or quasi-governmental rule,
regulation, policy, guideline, interpretation, or directive (whether or
not having the force of law) after the date of this Agreement which
affects the amount of capital required or expected to be maintained by
any Lender or any Lending Installation or any corporation controlling
any Lender. "Risk-Based Capital Guidelines" means (i) the risk-based
capital guidelines in effect in the United States on the date of this
Agreement, including transition rules, and (ii) the corresponding
capital regulations promulgated by regulatory authorities outside the
United States implementing the July 1988 report of the Basle Committee
on Banking Regulation and Supervisory Practices Entitled "International
Convergence of Capital Measurements and Capital Standards," including
transition rules, and any amendments to such regulations adopted prior
to the date of this Agreement.
3.3 Availability of Types of Advances. If any Lender determines that
maintenance of its Eurodollar Loans at a suitable Lending Installation
would violate any applicable law, rule, regulation, or directive,
whether or not having the force of law, or if the Required Lenders
determine that (i) deposits of a type and maturity appropriate to match
fund Eurodollar Advances or Fed Funds Advances are not available or
(ii) the interest rate applicable to a Type of Advance does not
accurately reflect the cost of making or maintaining such Advance, then
the Agent shall suspend the availability of the affected Type of
Advance and require any Advances of the affected Type to be repaid or
converted to Alternate Base Rate Advances, subject to the payment
of any funding indemnification amounts required by Section 3.4.
3.4 Funding Indemnification. If any payment of a Eurodollar Advance
occurs on a date which is not the last day of the applicable Interest
Period, whether because of acceleration, prepayment or otherwise, or a
Eurodollar Advance is not made, continued or converted on the
date specified by the Borrowers for any reason other than default by
the Lenders, the Borrowers will indemnify each Lender for any loss or
cost incurred by it resulting therefrom, including, without limitation,
any loss or cost in liquidating or employing deposits acquired to fund
or maintain the Eurodollar Advance.
3.5 Taxes.
(i) All payments by the Borrowers to or for the account of any Lender
or the Agent hereunder or under any Note shall be made free and clear
of and without deduction for any and all Taxes. If the Borrowers shall
be required by law to deduct any Taxes from or in respect of any sum
payable hereunder to any Lender or the Agent, (a) the sum
payable shall be increased as necessary so that after making all
required deductions (including deductions applicable to additional sums
payable under this Section 3.5) such Lender or the Agent (as the case
may be) receives an amount equal to the sum it would have received had
no such deductions been made, (b) the Borrowers shall make such
deductions, (c) the Borrowers shall pay the full amount deducted to the
relevant authority in accordance with applicable law and (d) the
Borrowers shall furnish to the Agent the original copy of a receipt
evidencing payment thereof within 30 days after such payment is made.
(ii) In addition, the Borrowers hereby agree to pay any present or
future stamp or documentary taxes and any other excise or property
taxes, charges or similar levies which arise from any payment made
hereunder or under any Note or from the execution or delivery of, or
otherwise with respect to, this Agreement or any Note ("Other Taxes").
((iii) The Borrowers hereby agree to indemnify the Agent and each
Lender for the full amount of Taxes or Other Taxes (including, without
limitation, any Taxes or Other Taxes imposed on amounts payable under
this Section 3.5) paid by the Agent or such Lender and any liability
(including penalties, interest and expenses) arising therefrom or with
respect thereto. Payments due under this indemnification shall be
made within 30 days of the date the Agent or such Lender makes demand
therefor pursuant to Section 3.6.
(iv) Each Lender that is not incorporated under the laws of the United
States of America or a state thereof (each a "Non-U.S. Lender") agrees
that it will, not less than ten Business Days after the date of this
Agreement, (i) deliver to each of the Borrowers and the Agent two duly
completed copies of United States Internal Revenue Service Form W-BEN
or W-8ECI, certifying in either case that such Lender is entitled to
receive payments under this Agreement without deduction or withholding
of any United States federal income taxes, and (ii) deliver to each of
the Borrowers and the Agent a United States Internal Revenue Form W-8
or W-9, as the case may be, and certify that it is entitled to an
exemption from United States backup withholding tax. Each Non-U.S.
Lender further undertakes to deliver to each of the Borrowers and the
Agent (x) renewals or additional copies of such form (or any successor
form) on or before the date that such form expires or becomes obsolete,
and (y) after the occurrence of any event requiring a
change in the most recent forms so delivered by it, such additional
forms or amendments thereto as may be reasonably requested by the
Borrowers or the Agent. All forms or amendments described in the
preceding sentence shall certify that such Lender is entitled
to receive payments under this Agreement without deduction or
withholding of any United States federal income taxes, unless an event
(including without limitation any change in treaty, law or regulation)
has occurred prior to the date on which any such delivery would
otherwise be required which renders all such forms inapplicable or
which would prevent such Lender from duly completing and delivering any
such form or amendment with respect to it and such Lender advises the
Borrowers and the Agent that it is not capable of receiving payments
without any deduction or withholding of United States federal income
tax.
(v) For any period during which a Non-U.S. Lender has failed to provide
the Borrowers with an appropriate form pursuant to clause (iv), above
(unless such failure is due to a change in treaty, law or regulation,
or any change in the interpretation or administration thereof by any
governmental authority, occurring subsequent to the date
on which a form originally was required to be provided), such Non-U.S.
Lender shall not be entitled to indemnification under this Section 3.5
with respect to Taxes imposed by the United States; provided that,
should a Non-U.S. Lender which is otherwise exempt from or subject to a
reduced rate of withholding tax become subject to Taxes because of its
failure to deliver a form required under clause (iv), above, the
Borrowers shall take such steps as such Non-U.S. Lender shall
reasonably request to assist such Non-U.S. Lender to recover such
Taxes. (vi) Any Lender that is entitled to an exemption from or
reduction of withholding tax with respect to payments under this
Agreement or any Note pursuant to the law of any relevant jurisdiction
or any treaty shall deliver to the Borrowers (with a copy to the
Agent), at the time or times prescribed by applicable law, such
properly completed and executed documentation prescribed by applicable
law as will permit such payments to be made without withholding or at a
reduced rate.
(vii) If the U.S. Internal Revenue Service or any other governmental
authority of the United States or any other country or any political
subdivision thereof asserts a claim that the Agent did not properly
withhold tax from amounts paid to or for the account of any Lender
(because the appropriate form was not delivered or properly
completed, because such Lender failed to notify the Agent of a change
in circumstances which rendered its exemption from withholding
ineffective, or for any other reason), such Lender shall indemnify the
Agent fully for all amounts paid, directly or indirectly, by the
Agent as tax, withholding therefor, or otherwise, including penalties
and interest, and including taxes imposed by any jurisdiction on
amounts payable to the Agent under this subsection, together with all
costs and expenses related thereto (including attorneys fees
and time charges of attorneys for the Agent, which attorneys may be
employees of the Agent). The obligations of the Lenders under this
Section 3.5(vii) shall survive the payment of the Obligations and
termination of this Agreement. 3.6 Lender Statements; Survival of
Indemnity. To the extent reasonably possible, each Lender shall
designate an alternate Lending Installation with respect to its
Eurodollar Loans to reduce any liability of the Borrowers to such
Lender under Sections 3.1, 3.2 and 3.5 or to avoid the unavailability
of a Type of Advance under Section 3.3, so long as such designation is
not, in the judgment of such Lender, disadvantageous to such Lender.
Each Lender shall deliver a written statement of such Lender to the
Borrowers (with a copy to the Agent) as to the amount due, if any,
under Section 3.1, 3.2, 3.4 or 3.5. Such written statement shall set
forth in reasonable detail the calculations upon which such Lender
determined such amount and shall be final, conclusive and binding on
the Borrowers in the absence of manifest error. Determination
of amounts payable under such Sections in connection with a Eurodollar
Loan shall be calculated as though each Lender funded its Eurodollar
Loan through the purchase of a deposit of the type and maturity
corresponding to the deposit used as a reference in determining the
Eurodollar Rate or the Purchase Price applicable to such Loan, whether
in fact that is the case or not. Unless otherwise provided herein, the
amount specified in the written statement of any Lender shall be
payable on demand after receipt by the Borrowers of such written
statement. The obligations of the Borrowers under Sections 3.1, 3.2,
3.4 and 3.5 shall survive payment of the Obligations and
termination of this Agreement.
ARTICLE IV
CONDITIONS PRECEDENT; WITHHOLDING TAX EXEMPTION
4.1 Effectiveness. This Agreement shall not be effective and no Lender
shall be required to make the initial Advance hereunder until a date
(the "Effective Date") upon which the Borrowers have furnished or
caused to be furnished to the Agent (with sufficient copies for
the Lenders) the following: (i) Copies of the organization documents of
each Borrower, together with all amendments, and a certificate of good
standing, each certified by the appropriate governmental officer in its
jurisdiction of incorporation.
(ii) Copies, certified by the Secretary or Assistant Secretary of each
Borrower, of its by- laws and of its Board of Directors' resolutions
and of resolutions or actions of any other body authorizing the
execution of the Loan Documents to which such Borrower is a party.
(iii) An incumbency certificate, executed by the Secretary or Assistant
Secretary of each Borrower, which shall identify by name and title and
bear the signatures of the Authorized Officers and any other officers
of such Borrower authorized to sign the Loan Documents to which such
Borrower is a party, upon which certificate the Agent and the Lenders
shall be entitled to rely until informed of any change in writing by
such Borrower.
(iv) A certificate, signed by the chief financial officer of each
Borrower, stating that on the initial Borrowing Date no Default or
Unmatured Default has occurred and is continuing.
(v) A written opinion of the Borrowers' and the Parent's counsel,
addressed to the Lenders in substantially the form of Exhibit "B"
hereto.
(vi) Any Notes requested by a Lender pursuant to Section 2.13 payable
to the order of each such requesting Lender.
(vii) A Security Agreement executed by the Borrowers.
(viii) Copies of the articles or certificate of incorporation of the
Parent, together with all amendments, and a certificate of good
standing, each certified by the appropriate governmental officer in its
jurisdiction of incorporation.
(ix) Copies, certified by the Secretary or Assistant Secretary of the
Parent, of its by- laws and of its Board of Directors' resolutions and
of resolutions or actions of any other body authorizing the execution
of the Loan Documents to which the Parent is a party.
(x) An incumbency certificate, executed by the Secretary or Assistant
Secretary of the Parent, which shall identify by name and title and
bear the signatures of the Authorized Officers and any other officers
of the Parent authorized to sign the Loan Documents to which the Parent
is a party, upon which certificate the Agent and the Lenders shall be
entitled to rely until informed of any change in writing by the Parent.
(xi) The Keep-Well and the Subordination Agreement executed by the
Parent.
(xii) Payment of all Fees due and payable on or before the Effective
Date.
(xiii) Establishment of the Settlement Accounts and the Funding
Accounts.
(xiv) Copy of each form of Approved Investor Commitment that the
Borrowers currently utilizes for any Mortgage Loan that is not a
Conforming Mortgage Loan.
(xv) Electronic Tracking Agreements with MERS for each Borrower.
(xvi) Such other documents as any Lender or its counsel may have
reasonably requested.
4.2 Each Advance. The Lenders shall not be required to make any Advance
(other than an Advance that, after giving effect thereto and to the
application of the proceeds thereof, does not increase the aggregate
amount of outstanding Advances), unless on the applicable Borrowing
Date:
(i) There exists no Default or Unmatured Default and the principal
amount of the loans made to Hovnanian Mortgage under the Original
Credit Agreement has been repaid in full.
(ii) The representations and warranties contained in Article V are true
and correct as of such Borrowing Date except to the extent any such
representation or warranty is stated to relate solely to an earlier
date, in which case such representation or warranty shall have been
true and correct on and as of such earlier date.
(iii) All legal matters incident to the making of such Advance shall be
satisfactory to the Lenders and their counsel.
Each Borrowing Notice with respect to each such Advance shall
constitute a representation and warranty by the Borrowers that each
Pledged Item included in the Borrowing Base constitutes Eligible
Collateral, and that after giving effect to the amount of the Advance
being requested, (a) the conditions contained in Sections 4.2(i) and
(ii) have been satisfied, (b) the Borrowers have provided the
Collateral Agent with the true and correct information
including the GAAP Carrying Values (correctly calculated in accordance
with the provisions of this Agreement) necessary to calculate the
Collateral Value for all Eligible Collateral, (c) the then current
Borrowing Base is equal to or greater than the Coverage Requirement and
(d) no Lending Sublimit has been exceeded. Any Lender may require a
duly completed compliance certificate in substantially the form of
Exhibit "F hereto as a condition to making an Advance.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Borrowers represent and warrant to the Lenders that:
5.1 Existence and Standing. Each of the Parent, the Borrowers and the
Subsidiaries is a corporation, partnership (in the case of Subsidiaries
only) or limited liability company duly and properly incorporated or
organized, as the case may be, validly existing and (to the extent such
concept applies to such entity) in good standing under the laws of its
jurisdiction of incorporation or organization and has all requisite
authority to conduct its business in each jurisdiction in
which its business is conducted.
5.2 Authorization and Validity. Each of the Borrowers and the Parent
has the power and authority and legal right to execute and deliver the
Loan Documents to which it is a party and to perform its obligations
thereunder. The execution and delivery by each of the Borrowers
and the Parent of the Loan Documents to which it is a party and the
performance of its obligations thereunder have been duly authorized by
proper corporate proceedings, and the Loan Documents to which each of
the Borrowers and the Parent is a party constitute legal, valid and
binding obligations of the Borrowers or the Parent, as applicable
enforceable against the Borrowers or the Parent, as applicable in
accordance with their terms, except as enforceability may be limited by
bankruptcy, insolvency or similar laws affecting the enforcement of
creditors' rights generally.
5.3 No Conflict; Government Consent. Neither the execution and delivery
by the Borrowers of the Loan Documents to which it is a party, nor the
consummation of the transactions therein contemplated, nor compliance
with the provisions thereof will violate (i) any law, rule, regulation,
order, writ, judgment, injunction, decree or award binding on the
Parent, the Borrowers or any of their respective Subsidiaries or (ii)
the Borrowers' or any Subsidiary's articles or certificate of
incorporation, partnership agreement, certificate of partnership,
articles or certificate of organization, by- laws, or operating or
other management agreement, as the case may be, or (iii) the provisions
of any indenture, instrument or agreement to which the Borrowers
or any of their respective Subsidiaries is a party or is subject, or by
which it, or their respective Property, is bound, or conflict with or
constitute a default thereunder, or result in, or require, the
creation or imposition of any Lien in, of or on the Property of the
Parent, Borrowers or their respective Subsidiary pursuant to the terms
of any such indenture, instrument or agreement. No order, consent,
adjudication, approval, license, authorization, or validation of, or
filing, recording or registration with, or exemption by, or other
action in respect of any governmental or public body or authority, or
any subdivision thereof, which has not been obtained by the Parent,
Borrowers or any of their respective Subsidiaries, is required to be
obtained by the Parent, Borrowers or any of their respective
Subsidiaries in connection with the execution and delivery
of the Loan Documents, the borrowings under this Agreement, the payment
and performance by the Borrowers of the Obligations or the legality,
validity, binding effect or enforceability of any of the Loan Documents
(other than filings to perfect the Liens granted pursuant to the
Security Agreement).
5.4 Financial Statements. The October 31, 2002 audited consolidated
financial statements of Hovnanian Mortgage and its Subsidiaries
heretofore delivered to the Lenders were prepared in accordance with
GAAP in effect on the date such statements were prepared and
fairly present the consolidated financial condition and operations of
Hovnanian Mortgage and its Subsidiaries at such date and the
consolidated results of their operations for the period then
ended (subject to normal year-end adjustments for the October 31, 2002
financial statements).
5.5 Material Adverse Change. Since October 31, 2002, there has been no
change in the business, Property, prospects, condition (financial or
othe rwise) or results of operations of the Borrowers and their
Subsidiaries which could reasonably be expected to have a Material
Adverse Effect.
5.6 Taxes. The Parent, Borrowers and the Subsidiaries have filed all
United States federal tax returns and all other tax returns which are
required to be filed and have paid all taxes due pursuant to said
returns or pursuant to any assessment received by the Parent, the
Borrowers or any of the Subsidiaries, except such taxes, if any, as are
being contested in good faith by appropriate proceedings and as to
which adequate reserves have been provided in accordance with GAAP and
as to which no Lien exists. The United States income tax returns of the
Parent, Hovnanian Mortgage and the Subsidiaries have been audited by
the Internal Revenue Service through the fiscal year ended December 31,
2001. No tax liens have been filed and no claims are being asserted
with respect to any such taxes. The charges, accruals and reserves on
the books of the Borrowers and the Subsidiaries in respect of any taxes
or other governmental charges are adequate.
5.7 Litigation and Contingent Obligations. There is no litigation,
arbitration, governmental investigation, proceeding or inquiry pending
or, to the knowledge of any of their officers, threatened against or
affecting the Borrowers or any of their Subsidiaries which could
reasonably be expected to have a Material Adverse Effect or which seeks
to prevent, enjoin or delay the making of any Loans. Other than any
liability incident to any litigation, arbitration or proceeding which
could not reasonably be expected to have a Material Adverse Effect, the
Borrowers have no material contingent obligations not provided for or
disclosed in the financial statements referred to in Section 5.4.
5.8 Subsidiaries. Schedule "4" hereto contains an accurate list of all
Subsidiaries of the Borrowers as of the date of this Agreement, setting
forth their respective jurisdictions of organization and the percentage
of their respective capital stock or other ownership interests
owned by the Borrowers or other Subsidiaries. All of the issued and
outstanding shares of capital stock or other ownership interests of
such Subsidiaries have been (to the extent such concepts are relevant
with respect to such ownership interests) duly authorized and issued
and are fully paid and non-assessable.
5.9 ERISA. The Unfunded Liabilities of all Single Employer Plans do not
in the aggregate exceed $250,000. Neither the Borrowers nor any other
member of the Controlled Group has incurred, or is reasonably expected
to incur, any withdrawal liability to Multiemployer Plans in excess of
$250,000 in the aggregate. Each Plan complies in all material
respects with all applicable requirements of law and regulations, no
Reportable Event has occurred with respect to any Plan, neither the
Borrowers nor any other members of the Controlled Group has withdrawn
from any Plan or initiated steps to do so, and no steps have
been taken to reorganize or terminate any Plan.
5.10 Accuracy of Information. No information, exhibit or report
furnished by the Parent, Borrowers or any of the Subsidiaries to the
Agent or to any Lender in connection with the negotiation of, or
compliance with, the Loan Documents contained any material misstatement
of fact or omitted to state a material fact or any fact necessary to
make the statements contained therein not misleading.
5.11 Regulation U. Margin stock (as defined in Regulation U)
constitutes less than 25% of the value of those assets of the Borrowers
and their Subsidiaries which are subject to any limitation on sale,
pledge, or other restriction hereunder.
5.12 Material Agreements. Neither the Borrowers nor any Subsidiary is a
party to any agreement or instrument or subject to any charter or other
corporate restriction which could reasonably be expected to have a
Material Adverse Effect. Neither the Borrowers nor any
Subsidiary is in default in the performance, observance or fulfillment
of any of the obligations, covenants or conditions contained in (i) any
agreement to which it is a party, which default could
reasonably be expected to have a Material Adverse Effect or (ii) any
agreement or instrument evidencing or governing Indebtedness.
5.13 Compliance With Laws. The Borrowers and their Subsidiaries have
complied with all applicable statutes, rules, regulations, orders and
restrictions of any domestic or foreign government or any
instrumentality or agency thereof, having jurisdiction over the conduct
of their respective businesses or the ownership of their respective
Property except for any failure to comply with any of the foregoing
which could not reasonably be expected to have a Material
Adverse Effect.
5.14 Ownership of Properties. Except as set forth on Schedule "5"
hereto, on the date of this Agreement, the Borrowers and their
Subsidiaries will have good title, free of all Liens other than those
permitted by Section 6.15, to all of the Property and assets reflected
in the financial statements provided to the Agent as owned by the
Borrowers and their Subsidiaries.
5.15 Plan Assets; Prohibited Transactions. No Borrower is an entity
deemed to hold "plan assets" within the meaning of 29 C.F.R. 2510.3-101
of an employee benefit plan (as defined in Section 3(3) of ERISA) which
is subject to Title I of ERISA or any plan (within the
meaning of Section 4975 of the Code), and neither the execution of this
Agreement nor the making of Loans hereunder gives rise to a prohibited
transaction within the meaning of Section 406 of ERISA or Section 4975
of the Code. Each Borrower is an "operating company" as defined in 29
CRR 2510-101 (c) and "benefit plan investors" (as defined in 29 C.F.R.
2510.3-101(f)) do not own 25% or more of the value of any class of
equity interests in the Borrowers.
5.16 Investment Company Act. Neither the Borrowers nor any Subsidiary
is an "investment company" or a company "controlled" by an "investment
company", within the meaning of the Investment Company Act of 1940, as
amended.
5.17 Public Utility Holding Company Act. Neither the Borrowers nor any
Subsidiary is a "holding company" or a "subsidiary company" of a
"holding company", or an "affiliate" of a "holding company" or of a
"subsidiary company" of a "holding company", within the meaning
of the Public Utility Holding Company Act of 1935, as amended.
5.18 GNMA, FHA, VA, FNMA, and FHLMC Eligibility. Each Borrower is: (i)
an FHA-Approved Mortgagee in good standing, a VA-Approved Lender, a
FHLMC-Approved Lender and a FNMA-Approved Lender and meets all eligible
requirements of law and governmental regulation so as to be eligible to
originate, purchase, hold and service Mortgage Loans insured by FHA or
supporting any Security; (ii) an approved seller and servicer in good
standing of Mortgage Loans to each Federal Agency; and (iii) an
approved issuer and servicer in good standing of Securities for FHLMC,
FNMA and GNMA and meets all FHLMC, FNMA and GNMA requirements,
requirements of law and governmental regulations so as to be able to
issue Securities and to originate and service the Mortgage Loans that
secure such Securities.
5.19 Approved Investor Commitments. The forms of Approved Investor
Commitment with respect to Mortgage Loans, other than Conforming
Mortgage Loans, which were delivered to the Agent on the Effective Date
are still valid and currently in use and, except to the extent
new forms or changes to the existing forms of Approved Investor
Commitment have been delivered to the Agent, represent the only forms
of Approved Investor Commitment used by the Borrowers for such
purposes.
5.20 Solvency. Each Borrower is solvent (as such term is used in
applicable bankruptcy, liquidation, receivership, insolvency or similar
Laws).
ARTICLE VI
COVENANTS
During the term of this Agreement, unless the Required Lenders shall
otherwise consent in writing:
6.1 Financial Reporting. Each Borrower will maintain, for itself and
each Subsidiary, a system of accounting established and administered in
accordance with generally accepted accounting principles, and furnish
to the Lenders:
(i) Within 90 days after the close of each of its fiscal years, an
unqualified audit report certified by independent certified public
accountants, acceptable to the Lenders, prepared in accordance with
GAAP on a consolidated and consolidating basis (consolidating
statements need not be certified by such accountants) for Borrowers and
the Subsidiaries, including balance sheets as of the end of such
period, related profit and loss and changes in shareholders' equity
statements, and a statement of cash flows, accompanied by (a) any
management letter prepared by said accountants and (b) a
certificate of said accountants that, in the course of their
examination necessary for their certification of the foregoing, they
have obtained no knowledge of any Default or Unmatured Default, or if,
in the opinion of such accountants, any Default or Unmatured
Default shall exist, stating the nature and status thereof. With such
financial statements, Borrowers shall furnish to Lenders unaudited
Combined financial statements of the types described above in a form
acceptable to Agent.
(ii) Within 45 days after the close of the first three quarterly
periods of each of its fiscal years, for Borrowers and the
Subsidiaries, consolidated and consolidating unaudited balance sheets
as at the close of each such period and consolidated and
consolidating profit and loss statements (showing a breakout of
servicing sales gains attributed to servicing originated in prior
periods), a statement of changes in shareholders equity and a statement
of cash flows for the period from the beginning of such fiscal year
to the end of such quarter, all certified (subject to normal year-end
adjustments) by its chief financial officer. With such financial
statements, Borrowers shall furnish to Lenders Combined financial
statements of the types described above in a form acceptable
to Agent.
(iii) Together with the financial statements required under Sections
6.1(i) and (ii), a compliance certificate in substantially the form of
Exhibit "F" hereto signed by its chief financial officer showing the
Combined calculations necessary to determine compliance with this
Agreement as currently in effect (regardless of whether this
Agreement was in effect at the date for which such financial statements
were prepared) and that no Default or Unmatured Defaults exists, or if
any Default or Unmatured Default exists, stating the nature and status
thereof.
(iv) Within thirty (30) days after the end of each month (other than a
month which is the last month of a fiscal quarter or year), (1)
consolidated unaudited balance sheets and income statements of each
Borrower and its Subsidiaries as of the end of such
month, (2) a report setting forth the Leverage Ratio (as defined in
Section 6.17.2 hereof) and Cumulative Cash Flow (as defined Section
6.17.4 hereof) as of the end of such month, each certified as to
fairness of presentation, GAAP and consistency by the chief
financial officer of such Borrower. With such financial statements,
Borrowers shall furnish to Lenders Combined financial statements and
reports of the types described above in a form acceptable to Agent.
(v) As soon as available but in any event within forty-five (45) days
after the end of each calendar quarter, a production information report
detailing geographic mix of all retail and correspondent production for
the reference quarter and year-to-day, prepared for each Borrower
separately and also on a Combined basis in a form acceptable to
Agent.
(vi) As soon as available but in any event within fifteen (15) days
after the end of each month, a secondary marketing report for such
month reasonably satisfactory to the Agent including, without
limitation, the following information (prepared for each
Borrower separately and also on a Combined basis in a form acceptable
to Agent): (1) Commitment Position - detailing investor, type, original
principal amount, rate, price/yield, and expiration date.
(2) Pipeline Position - amount and rate of price committed loans in
pipeline, future contracts, hedged positions, repurchase agreements,
and profit & loss.
(vii) As soon as available, but in any event within ninety (90) days
after the beginning of each fiscal year of Borrowers, a copy of the
plan and forecast (including a projected summary balance sheet and
income statement) of each Borrower and its consolidated Subsidiaries
and also on a Combined basis acceptable to Agent.
(viii) Within five (5) Business Days of submission thereof by a
Borrower, copies of all documents submitted in connection with any
audits by any of FNMA, FHLMC or GNMA; within ten (10) Business Days of
receipt thereof by a Borrower, copies of all compliance and audit
reports received from any of FNMA, FHLMC or GNMA; and promptly upon
receipt, a copy of any notice from (i) any Federal Agency to
the effect that it is or is contemplating withdrawing its approval of
such Borrower as a FHA-Approved Mortgagee, FHLMC-Approved Lender, FNMA-
Approved Lender or VA-Approved Lender or as an approved seller and
servicer for FNMA, FHLMC or GNMA or (ii) any private mortgage insurer
which insures any of the Collateral to the effect that it is
contemplating withdrawing its approval of a Borrower as an approved
originator of insured Mortgage Loans.
(ix) At any time that a Borrower has a Single Employer Plan, within 270
days after the close of each fiscal year, a statement of the Unfunded
Liabilities of each Single Employer Plan, certified as correct by an
actuary enrolled under ERISA.
(x) As soon as possible and in any event within 10 days after a
Borrower knows that any Reportable Event has occurred with respect to
any Plan, a statement, signed by the chief financial officer of such
Borrower, describing said Reportable Event and the action which such
Borrower proposes to take with respect thereto.
(xi) As soon as possible and in any event within 10 days after receipt
by a Borrower, a copy of (a) any notice or claim to the effect that
such Borrower or any of its Subsidiaries is or may be liable to any
Person as a result of the release by such Borrower, any of its
Subsidiaries, or any other Person of any toxic or hazardous waste or
substance into the environment, and (b) any notice alleging any
violation of any federal, state or local environmental, health or
safety law or regulation by such Borrower or any of its
Subsidiaries, which, in either case, could reasonably be expected to
have a Material Adverse Effect.
(xii) Promptly upon the furnishing thereof to the shareholders of the
Borrowers or the Parent, copies of all financial statements, reports
and proxy statements so furnished.
(xiii) Promptly upon the filing thereof, copies of all registration
statements and annual, quarterly, monthly or other regular reports
which the Parent, the Borrowers or any of their Subsidiaries files with
the Securities and Exchange Commission.
(xiv) Such other information (including non- financial information) as
the Agent or any Lender may from time to time reasonably request.
6.2 Use of Proceeds. The Borrowers will, and will cause each of the
Parent and each Subsidiary to, only use the proceeds of the Advances
for the purposes of the funding or purchasing of Mortgage Loans, of
paying interest, Fees, expenses and other Obligations and of
repaying outstanding Advances; provided. that Borrowers shall not use
proceeds of Advances to repay indebtedness owing under the Original
Credit Agreement. The Borrowers will not, nor will it permit any
Subsidiary to, use any of the proceeds of the Advances to purchase or
carry any "margin stock" (as defined in Regulation U) or to make any
Acquisition (other than those permitted by Section 6.14) or to make any
Acquisition for which the board of directors of the Person being
acquired has not consented to such Acquisition.
6.3 Notice of Default. Each Borrower will, and will cause the Parent
and each Subsidiary to, give prompt notice in writing to the Lenders of
the occurrence of any Default or Unmatured Default and of any other
development, financial or otherwise, which could reasonably be expected
to have a Material Adverse Effect.
6.4 Conduct of Business. Each Borrower will, and will cause each
Subsidiary to, carry on and conduct its business in substantially the
same manner and in substantially the same fields of enterprise as it is
presently conducted and to do all things necessary to remain duly
incorporated or organized, validly existing and (to the extent such
concept applies to such entity) in good standing as a domestic
corporation, partnership or limited liability company in its
jurisdiction of incorporation or organization, as the case may be, and
maintain all requisite authority to conduct its business in each
jurisdiction in which its business is conducted. Each
Borrower will adhere in all material respects to customary practices
and standards in the industry insofar as adherence to such practices
and standards would require such Borrower to cause obligors whose
indebtedness is secured by Pledged Mortgages to comply with their
obligations under such Pledged Mortgages with respect to the real
estate securing such indebtedness, including without limitation, the
payment of all taxes and insurance premiums related thereto and
maintenance of such real estate in compliance with all laws.
6.5 Taxes. Each Borrower will, and will cause each Subsidiary to,
timely file complete and correct United States federal and applicable
foreign, state and local tax returns required by law and pay when due
all taxes, assessments and governmental charges and levies upon it or
its income, profits or Property, except those which are being contested
in good faith by appropriate proceedings and with respect to which
adequate reserves have been set aside in accordance with GAAP.
6.6 Insurance. Each Borrower will, and will cause each Subsidiary to,
maintain with financially sound and reputable insurance companies
insurance on all their Property in such amounts and covering such risks
as is consistent with sound business practice, and such Borrower will
furnish to any Lender upon request full information as to the insurance
carried. Each Borrower will at all times, upon request of the Agent,
furnish to the Agent copies of its, and each of its Subsidiaries',
current Mortgage Bankers Blanket Bond and of its, and each of its
Subsidiaries', insurance policy containing errors and omissions
coverage or mortgage impairment coverage, and such Bonds and policies,
to the extent possible, shall each provide that it is not cancelable
without thirty (30) days prior written notice to the Agent.
6.7 Compliance with Laws. Each Borrower will, and will cause each
Subsidiary to, comply with all laws, rules, regulations, orders, writs,
judgments, injunctions, decrees or awards to which it may be subject,
including, without limitation, all Environmental Laws.
6.8 Maintenance of Properties. Each Borrower will, and will cause each
Subsidiary to, do all things necessary to maintain, preserve, protect
and keep its Property in good repair, working order and condition, and
make all necessary and proper repairs, renewals and
replacements so that its business carried on in connection therewith
may be properly conducted at all times.
6.9 Inspection. Each Borrower will, and will cause each Subsidiary to,
permit the Agent, the Collateral Agent and the Lenders, by their
respective representatives and agents, to inspect any of the Property,
books and financial records of such Borrower and each Subsidiary,
to examine and make copies of the books of accounts and other financial
records of such Borrower and each Subsidiary, and to discuss the
affairs, finances and accounts of such Borrower and each Subsidiary
with, and to be advised as to the same by, their respective officers
at such reasonable times and intervals as the Agent, the Collateral
Agent or any Lender may designate.
6.10 Dividends. No Borrower will, nor will it permit any Subsidiary to,
declare or pay any dividends or make any distributions on its capital
stock (other than dividends payable in its own capital stock) or
redeem, repurchase or otherwise acquire or retire any of its capital
stock at any time outstanding, except that (i) any Subsidiary may
declare and pay dividends or make distributions to a Borrower or to a
Wholly-Owned Subsidiary and (ii) provided that (a) no Default then
exists hereunder, (b) the applicable action would not cause a Default
to exist and (c) the applicable action is not likely to cause Leverage
Ratio as of the end of a mont h to exceed the limits specified in
Section 6.17.2 hereof regardless of the thirty (30) day period for
Parent to inject additional capital into the Borrowers to reduce the
Leverage Ratio, the Borrowers may declare and pay dividends or make
distributions.
6.11 Indebtedness. No Borrower will, nor will it permit any Subsidiary
to, create, incur or suffer to exist any Indebtedness, except:
(i) The Loans.
(ii) Indebtedness arising under Rate Management Transaction related to
the Loans having a Net Xxxx to Market Exposure not exceeding
$2,000,000. (iii) Other Indebtedness not exceeding $250,000.
6.12 Merge. No Borrower will, nor will it permit any Subsidiary to,
merge or consolidate with or into any other Person, except that a
Subsidiary may merge into a Borrower or a Wholly-Owned Subsidiary of a
Borrower.
6.13 Sale of Assets. No Borrower will, nor will it permit any
Subsidiary to, lease, sell or otherwise dispose of its Property, to any
other Person, except:
(i) Sales of Mortgage Loans and Securities in the ordinary course of
business. (ii) Leases, sales or other dispositions of its Property
that, together with all other Property of such Borrower and its
Subsidiaries previously leased, sold or disposed of (other than
Mortgage Loans and Securities in the ordinary course of business) as
permitted by this Section during the twelve-month period ending with
the month in which any such lease, sale or other disposition occurs, do
not constitute a Substantial Portion of the Property of the Borrowers
and their Subsidiaries.
6.14 Investments and Acquisitions. No Borrower will, nor will it permit
any Subsidiary to, make or suffer to exist any Investments (including
without limitation, loans and advances to, and other Investments in,
Subsidiaries), or commitments therefor, or to create any
Subsidiary or to become or remain a partner in any partnership or joint
venture, or to make any Acquisition of any Person, except:
(i) Cash Equivalent Investments.
(ii) Existing Investments in Subsidiaries and other Investments in
existence on the date hereof and described in Schedule "4" hereto.
(iii) Investments in the ordinary course of such Borrower's mortgage
banking business to purchase: (a) Mortgage Loans, collateralized
mortgage obligations and Securities (and in connection with commitments
to purchase the same); (b) servicing rights and mortgage servicing
contracts of another Person engaged in mortgage-related
businesses; and (c) real estate acquired by foreclosure.
(iv) Investments in the ordinary course of such Borrower's mortgage
banking business to enter into Rate Hedging Agreements to the extent
permitted pursuant to Section 6.11.
(v) Subject in each case to approval by Required Lenders, Acquisitions
of and Investments in Homebuyer's Mortgage, Inc. and any other company
engaged in the mortgage banking business which Borrowers wishes to
acquire.
6.15 Liens. No Borrower will, nor will it permit any Subsidiary to,
create, incur, or suffer to exist any Lien in, of or on the Property of
such Borrower or any of its Subsidiaries,
except: (i) Liens for taxes, assessments or governmental charges or
levies on its Property if the same shall not at the time be delinquent
or thereafter can be paid without penalty, or are being contested in
good faith and by appropriate proceedings and for which adequate
reserves in accordance with GAAP shall have been set aside on its
books". (ii) Liens imposed by law, such as carriers', warehousemen's
and mechanics' liens and other similar liens arising in the ordinary
course of business which secure payment of obligations not more than 60
days past due.
(iii) Liens arising out of pledges or deposits under worker's
compensation laws, unemployment insurance, old age pensions, or other
social security or retirement benefits, or similar legislation.
(iv) Utility easements, building restrictions and such other
encumbrances or charges against real property as are of a nature
generally existing with respect to properties of a similar character
and which do not in any material way affect the marketability of the
same or interfere with the use thereof in the business of such
Borrower or the Subsidiaries.
(v) Liens existing on the date hereof and described in Schedule "5"
hereto.
(vi) Liens in favor of the Agent and the Collateral Agent, for the
benefit of the Lenders, granted pursuant to the Security Agreement.
6.16 Affiliates. No Borrower will, and no Borrower will permit any
Subsidiary to, enter into any transaction (including, without
limitation, the purchase or sale of any Property or service) with, or
make any payment or transfer to, any Affiliate (other than the
occurrence of Indebtedness by such Borrower or any Subsidiary to the
Parent) except in the ordinary course of business and pursuant to the
reasonable requirements of such Borrower's or such Subsidiary's
business and upon fair and reasonable terms no less favorable to such
Borrower or such Subsidiary of such Borrower or such Subsidiary would
obtain in a comparable arms- length transaction.
6.17 Financial Covenants.
6.17.1 Current Ratio. The Borrowers will not permit, at any time, the
ratio of the Combined current assets to the Combined current
liabilities of the Borrowers and their Subsidiaries determined in
accordance with GAAP, to fall below 1.0 to 1.0. For purposes of
determining this ratio, current assets include cash (including
restricted cash), mortgage loans held for sale, accounts receivable,
investment securities, and any other assets which are expected to be
converted into cash within a twelve month period.
6.17.2 Leverage Ratio. The Borrowers will not permit, as of the end of
any calendar month, the ratio of Total Liabilities to Tangible Net
Worth to exceed 10.0 to 1.0 (the "Leverage Ratio "). If the Borrowers'
Leverage Ratio as of the end of a month exceeds the respective limits
then Parent will inject sufficient capital into the Borrowers
to reduce the Leverage Ratio to the permitted level within 30 days
after the end of such month, in which case no Default or Unmatured
Default shall be deemed to have occurred, provided that no dividends or
distributions shall be made by the Borrowers during such
thirty (30) day period as provided in Section 6.10. Such injection may
at Parent 's option be in the form of subordinated debt which shall at
all times be subject to the terms of the Subordination Agreement (which
shall not have been revoked or cancelled) or capital, and shall be
completed no later than thirty days after the end of the month. If the
injection of capital is in the form of subordinated debt such debt
shall not be counted as a liability of the Borrowers for purposes of
determining the Leverage Ratio. The Borrowers shall supply Agent no
later than 45 days after the end of each month with a
certificate certifying that the Leverage Ratio did not exceed the
specified limit for such month or that the required injection of
capital was made within thirty days after the end of such month.
6.17.3 Net Worth. At all times, the Borrowers will maintain a Tangible
Net Worth of at least Six Million Dollars ($6,000,000).
6.17.4 Minimum Cash Flow. The Borrowers will not permit, as of the end
of any calendar month ending after the date hereof, the Combined
cumulative Net Income (positive or negative) for the twelve calendar
month period ending on, and including, the last day of such calendar
month, minus the Combined non-cash revenues and plus non-cash expenses
of the Borrowers' and their consolidated Subsidiaries ("Cumulative
Cash Flow"), determined in accordance with GAAP for the twelve calendar
month period ending on, and including, the last day of such calendar
month to be less than zero.
6.18 Compliance with Security Agreement. The Borrowers will not fail to
perform in any material respect any of their obligations under the
Security Agreement or enter into similar security agreements for
Mortgage Loans not included in Collateral with any Person other than
the Collateral Agent. The Borrowers will direct the Collateral Agent to
ship Collateral only to Approved Investors or otherwise consistent with
the provisions of the Loan Documents.
6.19 Servicing Re lease. All Mortgage Loans sold by the Borrowers will
be sold on a servicing released basis, unless otherwise specifically
approved in writing by the Agent in its sole discretion.
6.20 Federal Agency Approvals. Each Borrower (i) will maintain its
status as a FHA Approved Mortgagee, remain eligible to obtain VA
guaranties of Mortgage Loans and remain approved by each Federal Agency
as a seller/servicer and (ii) will not permit any Federal Agency
to withdraw its approval of such Borrower.
6.21 Approved Investor Commitments. The Borrowers will maintain
Approved Investor Commitments which cover all Pledged Mortgages and
Pledged Securities and perform all of its obligations in connection
with such Approved Investor Commitments.
6.22 Negative Pledges. No Borrowers will enter into any agreement
pursuant to which it agrees (i) not to xxxxx x xxxx to third parties
unless such provision allows for the lien of the Agent, the Collateral
Agent and the Lenders contemplated under the Loan Documents or (ii) to
grant another creditor a pari passu security interest in and to the
Collateral when a security interest is granted to the Agent, the
Collateral Agent and the Lenders pursuant to the Loan Documents.
6.23 MERS.
(i) Each Borrower will, (a) at all times, maintain its status as a MERS
Member, (b) at all times remain in full compliance all terms and
conditions of membership in MERS, including the MERSCORP, Inc. "Rules
of Membership" most recently promulgated by MERSCORP, Inc., the "MERS
Procedures Manual" most recently promulgated by MERS, and any and all
other guidelines or requirements set forth by MERS or MERSCORP, as each
of the foregoing may be modified from time to time, including, but in
no way limited to compliance with guidelines and procedures set
forth with respect to technological capabilities, drafting and
recordation of Mortgages, registration of Mortgages on the MERS System,
including registration of the interest of the Agent and the Lenders in
such mortgages and membership requirements, (c) promptly, upon the
request of the Agent, execute and deliver to the Agent an
assignment of mortgage, in blank, with respect to any MERS Mortgage
that the Agent determines shall be removed from the MERS System and (d)
at all times maintain the Electronic Tracking Agreement in full force
and effect.
(ii) No Borrower shall de-register or attempt to de-register any
Mortgage from the MERS System unless such Borrower has complied with
the requirements set forth in the Electronic Tracking Agreement and the
requirements hereof and the Security Agreement relating to a release of
Collateral.
ARTICLE VII
DEFAULTS
The occurrence of any one or more of the following events shall
constitute a Default:
7.1 Any representation or warranty made or deemed made by or on behalf
of a Borrower or any of its Subsidiaries to the Le nders or the Agent
under or in connection with this Agreement, any Loan, or any
certificate or information delivered in connection with this
Agreement or any other Loan Document shall be materially false on the
date as of which made (it being understood that if any of the
representations and warranties made pursuant to the
definition of "Borrowing Base" are not true and correct as of any date
with respect to any Pledged Item, such Pledged Item shall be removed
from Eligible Collateral as the sole remedy for such failure).
7.2 Nonpayment of principal of any Loan when due (including but not
limited to payments required pursuant to Section 2.11.2 and Section
2.11.4), or nonpayment of interest upon any Loan or of any Fee or other
obligations under any of the Loan Documents within five days after the
same becomes due.
7.3 The breach by a Borrower of any of the terms or provisions of
Article VI Section 6.2, 6.10, 6.11, 6.12, 6.13, 6.14, 6.15, 6.17, 6.19,
6.20, 6.21 or 6.22; provided, however, that if a Borrower breaches
Section 6.21 as a result of an Approved Investor withdrawing or failing
to perform its obligations under a commitment covering a Pledged
Mortgage or Pledged Security, then Borrower shall have twenty- four
hours to cure such breach.
7.4 The breach by a Borrower (other than a breach which constitutes a
Default under another Section of this Article VII) of any of the terms
or provisions of this Agreement which is not remedied within fifteen
days after the earlier to occur of (i) receipt of written notice from
the Agent or any Lender of such breach or (ii) the date that such
Borrower obtains knowledge of such breach.
7.5 Failure of a Borrower or any of its Subsidiaries to pay when due
(beyond any applicable notice and cure period) any Indebtedness
aggregating in excess of $250,000 ("Material Indebtedness"); or the
default by a Borrower or any of its Subsidiaries in the
performance beyond the applicable grace period with respect thereto, if
any of any term, provision or condition contained in any agreement
under which any such Material Indebtedness was created or is governed,
or any other event shall occur or condition exist, the effect of which
default or event is to cause, or to permit the holder or holders of
such Material Indebtedness to cause, such Material Indebtedness to
become due prior to its stated maturity; or any Material
Indebtedness of a Borrower or any of its Subsidiaries shall be declared
to be due and payable or required to be prepaid or repurchased (other
than by a regularly scheduled payment) prior to the stated maturity
thereof, or a Borrower or any of its Subsidiaries or Parent shall not
pay, or admit in writing its inability to pay, its debts generally as
they become due.
7.6 A Borrower, Parent or any of their Subsidiaries shall (i) have an
order for relief entered with respect to it under the Federal
bankruptcy laws as now or hereafter in effect, (ii) make an assignment
for the benefit of creditors, (iii) apply for, seek, consent to, or
acquiesce in, the appointment of a receiver, custodian, trustee,
examiner, liquidator or similar official for it or any Substantial
Portion of its Property, (iv) institute any proceeding seeking an order
for relief under the Federal bankruptcy laws as now or hereafter in
effect or seeking to adjudicate it a bankrupt or insolvent, or seeking
dissolution, winding up, liquidation, reorganization,
arrangement, adjustment or composition of it or its debts under any law
relating to bankruptcy, insolvency or reorganization or relief of
debtors or fail to file an answer or other pleading denying the
material allegations of any such proceeding filed against it, (v) take
any corporate, partnership or other action to authorize or effect any
of the foregoing actions set forth in this Section 7.6 or (vi) fail to
contest in good faith any appointment or proceeding described in
Section 7.7.
7.7 Without the application, approval or consent of a Borrower or any
of its Subsidiaries, or Parent a receiver, trustee, examiner,
liquidator or similar official shall be appointed for a Borrower or any
of its Subsidiaries or Parent or any Substantial Portion of its
Property, or a proceeding described in Section 7.6(iv) shall be
instituted against a Borrower or any of its Subsidiaries or Parent and
such appointment continues undischarged or such proceeding continues
undismissed or unstayed for a period of 30 consecutive days.
7.8 Any court, government or governmental agency shall condemn, seize
or otherwise appropriate, or take custody or control of all or any
portion of the Property of a Borrower and its Subsidiaries or Parent
which, when taken together with all other Property of a Borrower and
its Subsidiaries or Parent so condemned, seized, appropriated, or taken
custody or control of, during the twelve-month period ending with the
month in which any such action occurs, constitutes a Substantial
Portion.
7.9 A Borrower or any of its Subsidiaries shall fail within 60 days to
pay, bond or otherwise discharge one or more (i) judgments or orders
for the payment of money in excess of $250,000 the aggregate, or (ii)
non-monetary judgments or orders which, individually or in the
aggregate, could reasonably be expected to have a Material Adverse
Effect, which judgments, in any case, is/are not stayed on appeal or
otherwise being appropriately contested in good faith.
7.10 Any Change in Control shall occur.
7.11 The occurrence of any "default", as defined in any Loan Document
(other than this Agreement) or the breach of any of the terms or
provisions of any Loan Document (other than this Agreement), which
default or breach continues beyond any period of grace therein
provided.
7.12 The Security Agreement shall for any reason fail to create a valid
and perfected first priority security interest in any collateral
purported to be covered thereby, except as permitted by the terms of
the Security Agreement, or the Security Agreement shall fail to remain
in full force or effect or any action shall be taken to discontinue or
to assert the invalidity or unenforceability of the Security Agreement,
or a Borrower shall fail to comply with any of the terms or provisions
of the Security Agreement.
7.13 The Unfunded Liabilities of all Single Employer Plans shall exceed
in the aggregate $250,000 or any Reportable Event shall occur in
connection with any Plan.
7.14 A Borrower or any other member of the Controlled Group shall have
been notified by the sponsor of a Multi-employer Plan that it has
incurred withdrawal liability to such Multi-employer Plan in an amount
which, when aggregated with all other amounts required to be
paid to Multi-employer Plans by such Borrower or any other member of
the Controlled Group as withdrawal liability (determined as of the date
of such notification), exceeds $250,000.
7.15 A Borrower or any of its Subsidiaries shall (i) be the subject of
any proceeding or investigation pertaining to the release by such
Borrower or any of its Subsidiaries or any other Person of any toxic or
hazardous waste or substance into the environment, or (ii) violate any
Environmental Law, which, in the case of an event described in clause
(i) and (ii), could reasonably be expected to have a Material Adverse
Effect.
7.16 The Keep-Well or the Subordination Agreement shall fail to remain
in full force or effect or any action shall be taken to discontinue or
to assert the invalidity or unenforceability of the Keep-Well or the
Subordina tion Agreement, or the Parent shall fail to comply with any
of the terms or provisions of the Keep-Well or the Subordination
Agreement, or the Parent shall deny that it has any further liability
under any the Keep-Well, or shall give notice to such effect.
7.17 The representations and warranties set forth in "Section 5.15 Plan
Assets; Prohibited Transactions " shall at any time not be true and
correct.
7.18 A Borrower and/or the Parent shall terminate its existence or
suspend or discontinue their business; or
7.19 The Parent shall be in default under any document evidencing or
relating to any Indebtedness of Parent greater than $1,000,000, beyond
any applicable notice and cure period provided in the documents
evidencing such Indebtedness; or
7.20 A change occurs, or is reasonably likely to occur, in the business
condition (financial or otherwise), operations, properties or prospects
of a Borrower or Parent, or the ability of a Borrower or Parent to
repay amounts owed to the Agent and Lenders under the Loan
Documents which could reasonably be expected to have a Material Adverse
Effect.
ARTICLE VIII
COLLATERAL, ACCELERATION AND OTHER REMEDIES
8.1 Security and Collateral Agency Agreement. Pursuant to the Security
Agreement, a security interest in and a continuing lien upon the
Collateral has been created in favor of the Collateral Agent for the
benefit of the Lenders.
8.2 AP Mortgages. Each Borrower agrees that while it is in possession
of any Required Mortgage Documents for an AP Mortgage, it will hold
same in trust and as agent and bailee for the Collateral Agent, without
authority to make any other disposition thereof, or of the proceeds
thereof, except as may be otherwise permitted in writing by the
Collateral Agent. The Borrowers assume the responsibility for loss or
destruction of any such Required Mortgage Documents until
the same are delivered to the Collateral Agent.
8.3 Release of Collateral. Upon the request of a Borrower delivered
from time to time to the Agent and the Collateral Agent in connection
with the proposed sale of any Collateral, the Agent shall authorize the
Collateral Agent to release Collateral specified in such notice from
the lien of this Agreement, if, but only if, (i) at the time of such
release no Default shall have occurred and then be continuing, (ii) the
Borrowing Base, after giving effect to such release, is at
least equal to the Coverage Requirement or any payment under Section
2.9 which may be required as a result of such release has been made and
(iii) the release of such Collateral will not create a violation of any
Lending Sublimit or Borrowing Base Sublimit.
8.4 Settlement and Funding Accounts. There is hereby established with
the Agent, for the benefit of the Lenders, a "cash collateral" account
of Hovnanian Mortgage, Account #3801990619, and a "cash collateral"
account of Hovnanian American, Account # (collectively,
"Settlement Accounts"), into which shall be deposited all cash proceeds
from the sale of any Pledged Item and which account shall be pledged as
Collateral. All such cash proceeds shall be deposited directly into the
Settlement Accounts by the applicable investor or purchaser of each
Pledged Item and the Borrowers agrees to give notice of such to each
such investor or purchaser. Only the Agent shall have access to the
Settlement Accounts. All amounts in the Settlement Accounts shall be
applied as described in Section 2.9.3. There is also hereby established
with the Agent, for the benefit of the Lenders, a second account with
Hovnanian Mortgage, Account #3801990627, and a second account with
Hovnanian American, Account # (collectively, "Funding
Accounts"), into which shall be deposited all Advances and from which
all AP Mortgages shall be funded (by wire transfer from such Funding
Accounts) and which account shall be pledged as Collateral.
8.5 Termination. If all Commitments under this Agreement shall have
expired or been terminated pursuant to the express terms hereof and no
Obligations shall be outstanding, the Agent shall promptly deliver or
cause to be delivered all cash standing to the credit of the
Settlement Accounts and Pledged Items to the Borrowers. The receipt by
the Borrowers of any cash in the Settlement Accounts and of all Pledged
Items returned or delivered to the Bo rrowers pursuant to any provision
of this Agreement, together with UCC-3 termination statements
executed by the Agent, shall be a complete and full acquittance for the
Pledged Items so delivered.
8.6 Acceleration. If any Default described in Section 7.6 or 7.7 occurs
with respect to a Borrower, the obligations of the Lenders to make
Loans hereunder shall automatically terminate and the Obligations shall
immediately become due and payable without any election or action on
the part of the Agent or any Lender. If any other Default occurs, the
Required Lenders (or the Agent with the consent of the Required
Lenders) may (i) terminate or suspend the obligations of
the Lenders to make Loans hereunder and they shall, upon notice to the
Borrowers, terminate or be suspended, and/or (ii) declare the
Obligations to be due and payable, whereupon the Obligations shall
become immediately due and payable, without presentment, demand,
protest or notice of any kind, all of which the Borrowers hereby
expressly waive.
8.7 Other Remedies.
(i) Unless a Default shall have occurred and then be continuing, the
Borrowers shall be entitled to receive and collect directly all sums
payable to the Borrowers in respect of the Collateral except proceeds
from the sale thereof.
(ii) Upon the occurrence of a Default, the Agent and the Collateral
Agent, on behalf of the Lenders, shall be entitled to all the rights
and remedies hereunder and in the Security Agreement, subject to the
limitations and requirements of Paragraph 16 thereof, and all other
rights or remedies at law or in equity existing or conferred upon the
Lenders by other jurisdictions or other applicable law.
(iii) Following the occurrence and during the continuance of a Default
or an Unmatured Default, no Lender shall be obligated to fund any Loan
hereunder.
(iv) Following the occurrence a Default, the Borrowers agree that the
Borrowers and the Agent shall, if the Agent shall request implement
certain procedures with respect to the Borrowers' funding of AP
Mortgages, all at the Borrowers' sole expense. Such procedures may
include, but are not limited to: (i) reducing the advance rate against
any Eligible Collateral for purposes of determining the Collateral
Value component of the Borrowing Base, (ii) requiring that wire
transfers from the Funding Account only be released upon the secondary
authorization of the Agent, (iii) requiring the closing agents for such
AP Mortgages to enter into escrow or other agreements regarding the
monies used to fund such AP Mortgages, and (iv) requiring the Borrowers
to provide the Agent and the Lenders with such information regarding
the funding of such AP Mortgages as the Agent may reasonably request.
The Borrowers, at their expense, shall from time to time execute and
deliver to the Agent or the Collateral Agent all such assignments,
certificates, supplemental documents, and financing statements, and
shall do all other acts or things, as the Agent may reasonably request
in order to more fully implement such procedures.
(v) Each Borrower waives, to the extent permitted by law, any right to
require the Agent or any Lender to (i) proceed against any Person
(including but not limited to either Borrower, (ii) proceed against or
exhaust any of the Collateral or pur xxx its rights
and remedies as against the Collateral in any particular order or (iii)
pursue any other remedy in its power.
(vi) The Agent on behalf of the Lenders may, but shall not be obligated
to, advance any sums or do any act or thing necessary to uphold and
enforce the lien and priority of, or the security intended to be
afforded by, any Pledged Item, including, without limitation, payment
of delinquent taxes or assessments and insurance premiums.
The Borrowers shall provide any and all information required by the
Agent to administer this Agreement or collect on the Collateral. All
advances, charges, costs and expenses, including reasonable attorneys
fees, incurred or paid by the Agent in exercising any right,
power or remedy conferred by this Agreement, or in the enforcement
hereof (or by any Lender acting on instruction of the Required Lenders
in the enforcement hereof), together with interest thereon at the rate
per annum of 2% plus the Alternate Base Rate from the time of payment
until repaid, shall become a part of the Obligations.
(vii) Following the occurrence of a Default and the acceleration of the
Obligations the Agent shall be entitled to receive and collect all sums
payable to the Borrowers in respect of the Collateral and (a) the
Agent, at the request of the Required Lenders, may in its own name or
in the name of a Borrower or otherwise, demand, xxx for, collect or
receive any money or property at any time payable or receivable on
account of or in exchange for any of the Collateral, (b) the Borrowers
shall receive and hold in trust for the Lenders any amounts thereafter
received by the Borrowers upon or in respect of any of the Collateral,
advising the Agent as to the source of such funds and, if
the Agent so requests at the direction of the Required Lenders,
forthwith paying such amounts to the Agent, and (c) any and all amounts
so received and collected by the Agent either directly or from the
Borrowers shall be deposited in the Settlement Accounts.
8.8 Application of Proceeds. After a Default and acceleration of the
Obligations, the proceeds of any sale or enforcement of all or any part
of the Collateral pursuant to the Security Agreement and the balance of
any moneys in the Settlement Accounts and the Funding Accounts
shall be applied by the Agent: FIRST, to the payment of all costs and
expenses of such sale or enforcement, including reasonable compensation
to the Agent's agents and counsel, and all expenses,
liabilities and advances made or incurred by the Agent or any Lender
acting on instructions of the Required Lenders in connection therewith;
SECOND, to the payment of all costs and expenses incurred by the
Collateral Agent under the Security Agreement;
THIRD, to the payment of the outstanding principal balance of, and all
accrued and unpaid interest on and Fees attributable to, all Loans
under this Agreement, ratably according to the amount so due to each
Lender;
FOURTH, to the extent proceeds remain after application under the
preceding subparagraphs, to the payment of all remaining Obligations,
until such amounts are paid in full; and
FIFTH, to the payment to the Borrowers, or to its successors or
assigns, or as a court of competent jurisdiction may direct, of any
surplus then remaining from such proceeds.
The Agent shall have absolute discretion as to the time of application
of any such proceeds, moneys or balances in accordance with this
Agreement. If the proceeds of any such sale are insufficient to cover
the costs and expenses of such sale, as aforesaid, and the payment in
full of the Obligations, the Borrowers shall remain liable for any
deficiency.
8.9 Preservation of Rights. No delay or omission of the Lenders or the
Agent to exercise any right under the Loan Documents shall impair such
right or be construed to be a waiver of any Default or an acquiescence
therein, and the making of a Loan notwithstanding the existence of a
Default or the inability of the Borrowers to satisfy the conditions
precedent to such Loan shall not constitute any waiver or acquiescence.
Any single or partial exercise of any such right shall not preclude
other or further exercise thereof or the exercise of any other right,
and no waiver, amendment or other variation of the terms, conditions or
provisions of the Loan Documents whatsoever shall be valid unless in
writing signed by the Lenders required pursuant to Section 9.1, and
then only to the extent in such writing specifically set forth. All
remedies contained in the Loan Documents or by law afforded shall be
cumulative and all shall be available to the Agent and the Lenders
until the Obligations have been paid in full.
ARTICLE IX
AMENDMENTS; WAIVERS; GENERAL PROVISIONS
9.1 Amendments and Waivers. Other than (a) Commitment increases
pursuant to Section 12.4 (which may be accomplished solely by the
Borrowers, the Agent and the subject Lender) and (b) temporary waivers
of Collateral eligibility permitted pursuant to the definition of
"Borrowing Base" (which may be accomplished solely by the Agent), the
Required Lenders (or the Agent with the consent in writing of the
Required Lenders) and the Borrowers may enter into agreements
supplemental hereto for the purpose of adding or modifying any
provisions to the Loan Documents or changing in any manner the rights
of the Lenders or the Borrowers hereunder or waiving any Default
hereunder; provided, however, that no such supplemental
agreement shall, without the consent of each Lender directly or
indirectly affected thereby:
(i) Extend the final maturity of any Loan or postpone any regularly
scheduled payment of principal of any Loan or forgive all or any
portion of the principal amount thereof, or reduce the rate or extend
the time of payment of interest or fees thereon.
(ii) Reduce the percentage specified in the definition of Required
Lenders.
(iii) Extend the Termination Date, or reduce the amount of or extend
the payment date for the mandatory payments required under Section 2.9,
or increase the amount of the Aggregate Commitment or of the Commitment
of any Lender hereunder (other than in accordance with Section 12.4).
(iv) Amend this Section 9.1.
(v) Release any guarantor of any Advance or, except as provided herein
or in the Security Agreement, release any Collateral.
(vi) Amend the definition of "Borrowing Base" or "Collateral Value".
(vii) Permit the Borrowers to assign their rights under this Agreement
or amend or waive any restriction on the Borrowers' ability to assign
its rights or obligations under any of the Loan Documents.
(viii) Amend or waive any Lending Sublimits or Borrowing Base
Sublimits.
(ix) Amend or waive any provision herein regarding the indemnification
of the Agent, the Collateral Agent or any Lender.
(x) Amend or waive any provision herein regarding the allocation among
the Lenders of any payments or proceeds received by the Agent
hereunder. No amendment of any provision of this Agreement relating to
the Agent or the Collateral Agent shall be effective without the
written consent of the Agent or the Collateral Agent, as the case
may be. In addition, the consent of the Collateral Agent shall be
required for the effectiveness of any amendment referred to in Section
9.1 (iv), (v), (vi), (viii) and/or (ix) above. The Agent may
waive payment of the fee required under Section 12.3.2 without
obtaining the consent of any other party to this Agreement.
9.2 Survival of Representations. All representations and warranties of
the Borrowers contained in this Agreement shall survive the making of
the Loans herein contemplated.
9.3 Governmental Regulation. Anything contained in this Agreement to
the contrary notwithstanding, no Lender shall be obligated to extend
credit to the Borrowers in violation of any limitation or prohibition
provided by any applicable statute or regulation.
9.4 Headings. Section headings in the Loan Documents are for
convenience of reference only, and shall not govern the interpretation
of any of the provisions of the Loan Documents.
9.5 Entire Agreement. The Loan Documents embody the entire agreement
and understanding among the Borrowers, the Agent, the Collateral Agent
and the Lenders and supersede all prior agreements and understandings
among the Borrowers, the Agent and the Lenders relating to the subject
matter thereof, other than the fee letter described in Section 2.5.2
and any other agreement entered into in connection with the fees
described in Section 2.5.3.
9.6 Several Obligations; Benefits of this Agreement. The respective
obligations of the Lenders hereunder are several and not joint and no
Lender shall be the partner or agent of any other (except to the extent
to which the Agent is authorized to act as such). The failure of any
Lender to perform any of its obligations hereunder shall not relieve
any other Lender from any of its obligations hereunder. This Agreement
shall not be construed so as to confer any right or benefit upon any
Person other than the parties to this Agreement and their respective
successors and assigns, provided, however, that the parties hereto
expressly, agree that the Collateral Agent shall enjoy the benefits of
the provisions of Sections 9.1, 9.7 and 9.8 to the extent specifically
set forth therein and shall have the right to enforce such provisions
on its own behalf and in its own name to the same extent as if it were
a party to this Agreement.
9.7 Expenses; Indemnification. (i) The Borrowers shall reimburse the
Agent and the Collateral Agent for any costs, internal charges and out-
of-pocket expenses (including reasonable attorneys' fees and time
charges of attorneys for the Agent and the Collateral Agent, which
attorneys may be employees of the Agent or the Collateral Agent) paid
or incurred by the Age nt or the Collateral Agent in connection with
the preparation, negotiation, execution, delivery, syndication, review,
amendment, modification, and administration of the Loan Documents. The
Borrowers also agree to reimburse the Agent, the Collateral Agent and
the Lenders for any costs, internal charges and out-of-pocket expenses
(including attorneys' fees and time charges of attorneys for the Agent,
the Collateral Agent and the Lenders, which attorneys may be
employees of the Agent, the Collateral Agent or the Lenders) paid or
incurred by the Agent, the Collateral Agent or any Lender in connection
with the collection and enforcement of the Loan
Documents. Expenses being reimbursed by the Borrowers under this
Section include, without limitation, costs and expenses incurred in
connection with the Reports described in the following sentence. The
Borrowers acknowledges that from time to time Guaranty Bank may prepare
and may distribute to the Lenders (but shall have no obligation or duty
to prepare or to distribute to the Lenders) certain audit reports (the
"Reports") pertaining to the Borrowers' assets for internal use by
Guaranty Bank from information furnished to it by or on behalf of the
Borrowers, after Guaranty Bank has exercised its rights of inspection
pursuant to this Agreement. (ii) Each Borrower hereby further agrees
to indemnify the Agent, the Collateral Agent and each Lender, their
respective affiliates, and each of their directors, officers and
employees against all losses, claims, damages, penalties, judgments,
liabilities and expenses (including, without limitation, all expenses
of litigation or preparation therefor whether or not the Agent, the
Collateral Agent, any Lender or any affiliate is a party thereto) which
any of them may pay or incur arising out of or relating to this
Agreement, the other Loan Documents, the transactions contemplated
hereby or the direct or indirect application or proposed application of
the proceeds of any Loan hereunder, including the foregoing to the
extent that they result from the negligence of the party seeking
indemnification but excluding the foregoing to the extent that they are
determined in a final and non-appealable judgment by a court of
competent jurisdiction to have resulted from the gross negligence or
willful misconduct of the party seeking indemnification. The
obligations of the Borrowers under this Section 9.7 shall survive
the termination of this Agreement.
9.8 Nonliability of Lenders. The relationship between the Borrowers on
the one hand and the Lenders, the Agent and the Collateral Agent on the
other hand shall be solely that of borrowers and lender. Neither the
Agent, the Collateral Agent nor any Lender shall have any fiduciary
responsibilities to the Borrowers. Neither the Agent, the Collateral
Agent nor any Lender undertakes any responsibility to the Borrowers to
review or inform the Borrowers of any matter in connection with any
phase of the Borrowers' business or operations or to review or
determine that payments by investors or purchasers of Pledged Items are
deposited in the Settlement Account of the Borrower that owned such
Pledged item immediately prior to the sale thereof to such investor or
purchaser. The Borrowers agree that neither the Agent, the Collateral
Agent nor any Lender shall have liability to the Borrowers (whether
sounding in tort, contract or otherwise) for losses suffered by the
Borrowers in connection with, arising out of, or in any way
related to, the transactions contemplated and the relationship
established by the Loan Documents, or any act, omission or event
occurring in connection therewith (including but not limited to any of
the foregoing resulting from the negligence of any of the Agent, the
Collateral Agent or any Lender), unless it is determined in a final and
non-appealable judgment by a court of competent jurisdiction that such
losses resulted from the gross negligence or willful misconduct of the
party from which recovery is sought. Neither the Agent, the Collateral
Agent nor any Lender shall have any liability with respect to, and each
Borrower hereby waives, releases and agrees not to xxx for, any
special, indirect or consequential damages suffered by such Borrower in
connection with, arising out of, or in any way related to the Loan
Documents or the transactions contemplated thereby.
9.9 Severability of Provisions. Any provision in any Loan Document that
is held to be inoperative, unenforceable, or invalid in any jur
isdiction shall, as to that jurisdiction, be inoperative,
unenforceable, or invalid without affecting the remaining provisions in
that jurisdiction or the operation, enforceability, or validity of that
provision in any other jurisdiction, and to this end the provisions of
all Loan Documents are declared to be severable.
9.10 Numbers of Documents. All statements, notices, closing documents,
and requests hereunder shall be furnished to the Agent with sufficient
counterparts so that the Agent may furnish one to each of the Lenders.
9.11 Accounting. Except as provided to the contrary herein, all
accounting terms used herein shall be interpreted and all accounting
determinations hereunder shall be made in accordance with GAAP, except
that any calculation or determination which is to be made on a
consolidated basis shall be made for the Borrowers and all their
Subsidiaries, including those Subsidiaries, if any, which are
unconsolidated on the Borrowers' audited financial statements.
9.12 Confidentiality. Each Lender agrees to hold any confidential
information which it may receive from the Borrowers pursuant to this
Agreement in confidence, except for disclosure (i) to its Affiliates
and to other Lenders and their respective Affiliates, (ii) to legal
counsel,accountants, and other professional advisors to such Lender or
to a Transferee, (iii) to regulatory officials, (iv) to any Person as
requested pursuant to or as required by law, regulation, or legal
process, (v) to any Person in connection with any legal proceeding to
which such Lender is a party, (vi) to such Lender's direct or indirect
contractual counterparties in swap agreements or to legal counsel,
accountants and other professional advisors to such counterparties,
(vii) permitted by Section 12.5 and (viii) to rating agencies if
requested or required by such agencies in connection with a rating of
such lender or an Affiliate of such Lender.
9.13 Nonreliance. Each Lender hereby represents that it is not relying
on or looking to any margin stock (as defined in Regulation U of the
Board of Governors of the Federal Reserve System) for the repayment of
the Loans provided for herein.
9.14 Disclosure. The Borrowers and each Lender hereby (i) acknowledge
and agree that Guaranty Bank and/or its Affiliates from time to time
may hold investments in, make other loans to or have other
relationships with the Parent, the Borrowers and their respective
Affiliates, and (ii) waive any liability of Guaranty Bank or such
Affiliate to the Parent, the Borrowers or any Lender, respectively,
arising out of or resulting from such investments, loans or
relationships other than liabilities arising out of the gross
negligence or willful misconduct of Guaranty Bank or its Affiliates.
9.15 Joint and Several Liability. All Obligations shall be joint and
several obligations and liabilities of the Borrowers. Notwithstanding
the foregoing or any other provision of this Agreement or any other
Loan Document to the contrary, Hovnanian American does not assume
or otherwise agree to be liable for, and shall have no liability under
the Loan Documents for, loans made to Hovnanian Mortgage under the
Original Credit Agreement or any refinancing of such loans.
9.16 No Release of Joint and Several Liability.
(i) No action which the Agent, the Collateral Agent or any Lender may
take or omit to take in connection with any Loan Document or any of the
Obligations, and no course of dealing of the Agent, the Collateral
Agent or any Lender with a Borrower (the "Affected Borrower") or any
other Person, shall release or diminish the joint and several
liability of the other Borrower hereunder for Advances made to the
Affected Borrower. Without limiting the foregoing, each Borrower
hereby expressly agrees that Agent, the Collateral Agent and Lenders
may, from time to time, without notice to or the consent of
the other Borrower, do any or all of the following:
(1) Give or refuse to give any waivers or other indulgences with
respect to the Loan Documents.
(2) Neglect, delay, fail, or refuse to take or prosecute any action for
the collection or enforcement of any of the Obligations, to foreclose
or take or prosecute any action in connection with the Collateral, to
bring suit against any Borrower or any other Person, or to take any
other action concerning the Obligations or the Loan Documents.
(3) Compromise or settle any unpaid or unperformed Obligations.
(4) Take, exchange, amend, eliminate, surrender, release, or
subordinate any Collateral, accept additional or substituted collateral
therefor, and perfect or fail to perfect Lender's rights in any or all
of such collateral.
(5) Except as otherwise provided in the Loan Documents, apply all
monies received from any Borrower or others, or from any Collateral, as
Agent and Collateral Agent may determine to be in the best interest of
the Lenders, without in any way being required to marshal Collateral or
assets or to apply all or any part of such monies upon any particular
part of the Obligations.
(ii) No action or inaction of Hovnanian Mortgage or any other Person,
and no change of law or circumstances, shall release or diminish the
joint and several liability of Hovnanian American hereunder for
Advances made to Hovnanian Mortgage. Without limiting the foregoing,
the joint and several liability of Hovnanian American hereunder
for Advances made to Hovnanian Mortgage shall not be released,
diminished, impaired, reduced, or affected by the occurrence of any or
all of the following from time to time, even if occurring without
notice to or without the consent of Hovnanian American:
(1) Any voluntary or involuntary liquidation, dissolution, sale of all
or substantially all assets, marshalling of assets or liabilities,
receivership, conservatorship, assignment for the benefit of creditors,
insolvency, bankruptcy, reorganization, arrangement, or composition of
Hovnanian Mortgage or any other proceedings involving Hovnanian
Mortgage or any of the assets of Hovnanian Mortgage under laws for the
protection of debtors, or any discharge, impairment, modification,
release, or limitation of the liability of, or stay of actions or lien
enforcement proceedings against, Hovnanian Mortgage, any properties of
Hovnanian Mortgage, or the estate in bankruptcy of Hovnanian Mortgage
in the course of or resulting from any such proceedings.
(2) The failure by Agent or any Lender to file or enforce a claim in
any proceeding described in the immediately preceding subsection or to
take any other action in any proceeding to which Hovnanian Mortgage is
a party.
(3) The release by operation of law of Hovnanian Mortgage from any
of the Obligations.
(4) The invalidity, deficiency, illegality, or unenforceability of any
of the Obligations or the Loan Documents against Hovnanian Mortgage, in
whole or in part, any bar by any statute of limitations or other law of
recovery on any of the Obligations, or any defense or excuse for
failure to perform on account of force majeure, act of God, casualty,
impossibility, impracticability, or other defense or
excuse whatsoever.
(5) Without limiting any of the foregoing, any fact or event (whether
or not similar to any of the foregoing) which in the absence of this
provision would or might constitute or afford a legal or equitable
discharge or release of or defense to a debtor or surety other than the
actual performance by Hovnanian Mortgage under this Agreement.
(iii) No action or inaction of Hovnanian American or any other Person,
and no change of law or circumstances, shall release or diminish the
joint and several liability of Hovnanian Mortgage hereunder for
Advances made to Hovnanian American. Without limiting the foregoing,
the joint and several liability of Hovnanian Mortgage hereunder
for Advances made to Hovnanian American shall not be released,
diminished, impaired, reduced, or affected by the occurrence of any or
all of the following from time to time, even if occurring without
notice to or without the consent of Hovnanian Mortgage:
(1) Any voluntary or involuntary liquidation, dissolution, sale of all
or substantially all assets, marshalling of assets or liabilities,
receivership, conservatorship, assignment for the benefit of creditors,
insolvency, bankruptcy, reorganization, arrangement, or composition of
Hovnanian American or any other proceedings involving Hovnanian
American or any of the assets of Hovnanian American under laws for the
protection of debtors, or any discharge, impairment,
modification, release, or limitation of the liability of, or stay of
actions or lien enforcement proceedings against, Hovnanian American,
any properties of Hovnanian American, or the estate in bankruptcy of
Hovnanian American in the course of or resulting from any such
proceedings.
(2) The failure by Agent or any Lender to file or enforce a claim in
any proceeding described in the immediately preceding subsection or to
take any other action in any proceeding to which Hovnanian American is
a party.
(3) The release by operation of law of Hovnanian American from any
of the Obligations.
(4) The invalidity, deficiency, illegality, or unenforceability of any
of the Obligations or the Loan Documents against Hovnanian American, in
whole or in part, any bar by any statute of limitations or other law of
recovery on any of the Obligations, or any defense or excuse for
failure to perform on account of force majeure, act of God, casualty,
impossibility, impracticability, or other defense or excuse whatsoever.
(5) Without limiting any of the foregoing, any fact or event (whether
or not similar to any of the foregoing) which in the absence of this
provision would or might constitute or afford a legal or equitable
discharge or release of or defense to a debtor or surety other than the
actual performance by Hovnanian American under this Agreement.
ARTICLE X
THE AGENT AND THE COLLATERAL AGENT
10.1 Appointment; Nature of Relationship. Guaranty Bank is hereby
appointed by each of the Lenders as its contractual representative
(herein referred to as the "Agent") hereunder and under each other Loan
Document, and each of the Lenders irrevocably authorizes the Agent
to act as the contractual representative of such Lender with the rights
and duties expressly set forth herein and in the other Loan Documents.
The Agent is hereby authorized to enter into the Security Agreement
thereby appointing the Collateral Agent to act on behalf of the Lenders
and all obligations of the Lenders under the Security Agreement shall
be binding upon each Lender as if such Lender had executed the Security
Agreement. The Agent agrees to act as such contractual representative
upon the express conditions contained in this Article X.
Notwithstanding the use of the defined term "Agent" throughout the
Agreement, it is expressly understood and agreed that the Agent shall
have not have any fiduciary responsibilities to any Lender by reason of
this Agreement or any other Loan Document and that the Agent is merely
acting as the representative of the Lenders with only those duties as
are expressly set forth in this Agreement and the other Loan Documents.
In its capacity as the Lenders' contractual representative, the Agent
(i) does not hereby assume any fiduciary duties to any of the Lenders,
(ii) is a "representative " of the Lenders within the meaning of the
term "secured party" as defined in the Texas Uniform Commercial Code as
in effect from time to time and (iii) is acting as an independent
contractor, the rights and duties of which are limited to those
expressly set forth in this Agreement and the other Loan Documents.
Each of the Lenders hereby agrees to assert no claim against the Agent
on any agency theory or any other theory of liability for breach
of fiduciary duty, all of which claims each Lender hereby waives.
10.2 Powers. The Agent shall have and may exercise such powers under
the Loan Documents as are specifically delegated to the Agent by the
terms of each thereof, together with such powers as are reasonably
incidental thereto. The Agent shall have no implied duties to the
Lenders, or any obligation to the Lenders to take any action thereunder
except any action specifically provided by the Loan Documents to be
taken by the Agent.
10.3 General Immunity. Neither the Agent nor any of its directors,
officers, agents or employees shall be liable to the Borrowers, the
Lenders or any Lender for any action taken or omitted to be taken by it
or them hereunder or under any other Loan Document or in connection
herewith or therewith, whether sounding in tort, contract or otherwise
except to the extent such action or inaction is determined in a final
non-appealable judgment by a court of competent jurisdiction to have
arisen from the gross negligence or willful misconduct of such Person.
10.4 No Responsibility for Loans, Recitals, etc. Neither the Agent nor
any of its directors, officers, agents or employees shall be
responsible for or have any duty to ascertain, inquire into, or verify
(i) any statement, warranty or representation made in connection with
any Loan Document or any borrowing hereunder; (ii) the performance or
observance of any of the covenants or agreements of any obligor under
any Loan Document, including, without limitation, any agreement by an
obligor to furnish information directly to each Lender; (iii) the
satisfaction of any condition specified in Article IV, except receipt
of items required to be delivered solely to the Agent; (iv) the
existence or possible existence of any Default or Unmatured Default;
(v) the validity, enforceability, effectiveness, sufficiency or
genuineness of any Loan Document or any other instrument or writing
furnished in connection therewith; (vi) the value, sufficiency,
creation, perfection or priority of any Lien in any collateral
security; or (vii) the financial condition of the Borrowers or any
guarantor of any of the Obligations or of any of the Borrowers' or any
such guarantor's respective Subsidiaries. The Agent shall have no duty
to disclose to the Lenders information that is not required to be
furnished by the Borrowers to the Agent at such time, but is
voluntarily furnished by the Borrowers to the Agent (either in its
capacity as Agent or in its individual capacity).
10.5 Action on Instructions of Lenders. The Agent shall in all cases be
fully protected in acting, or in refraining from acting, hereunder and
under any other Loan Document in accordance with written instructions
signed by the Required Lenders, and such instructions and
any action taken or failure to act pursuant thereto shall be binding on
all of the Lenders. The Lenders hereby acknowledge that the Agent shall
be under no duty to take any discretionary action permitted to be taken
by it pursuant to the provisions of this Agreement or any other Loan
Document unless it shall be requested in writing to do so by the
Required Lenders. The Agent shall be fully justified in failing or
refusing to take any action hereunder and under any other Loan Document
unless it shall first be indemnified to its satisfaction by the Lenders
pro rata against any and all liability, cost and expense that it may
incur by reason of taking or continuing to take any such action.
10.6 Employment of Agents and Counsel. The Agent may execute any of its
duties as Agent hereunder and under any other Loan Document by or
through employees, agents, and attorneys-in- fact and shall not be
answerable to the Lenders, except as to money or securities
received by it or its authorized agents, for the default or misconduct
of any such agents or attorneys-in- fact selected by it with reasonable
care. The Agent shall be entitled to advice of counsel concerning the
contractual arrangement between the Agent and the Lenders and all
matters pertaining to the Agent's duties hereunder and under any other
Loan Document.
10.7 Reliance on Documents; Counsel. The Agent sha ll be entitled to
rely upon any Note, notice, consent, certificate, affidavit, letter,
telegram, statement, paper or document believed by it to be genuine and
correct and to have been signed or sent by the proper person or
persons, and, in respect to legal matters, upon the opinion of counsel
selected by the Agent, which counsel may be employees of the Agent.
10.8 Agent's Reimbursement and Indemnification. The Lenders agree to
reimburse and indemnify the Agent ratably in proportion to their
respective Commitments (or, if the Commitments have been terminated, in
proportion to their Commitments immediately prior to such termination)
(i) for any amounts not reimbursed by the Borrowers for which the Agent
is entitled to reimbursement by the Borrowers under the Loan Documents,
(ii) for any other expenses incurred by the Agent on behalf of the
Lenders, in connection with the preparation, execution, delivery,
administration and enforcement of the Loan Documents (including,
without limitation, for any expenses incurred by the Agent in
connection with any dispute between the Agent and any Lender or between
two or more of the Lenders) and (iii) for any liabilities,
obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind and nature whatsoever
which may be imposed on, incurred by or asserted against the Agent in
any way relating to or arising out of the Loan Documents or any
other document delivered in connection therewith or the transactions
contemplated thereby (including, without limitation, for any such
amounts incurred by or asserted against the Agent in connection with
any dispute between the Agent and any Lender or between two or more of
the Lenders), or the enforcement of any of the terms of the Loan
Documents or of any such other documents, provided that (i) no Lender
shall be liable for any of the foregoing to the extent any
of the foregoing is found in, a final non-appealable judgment by a
court of competent jurisdiction to have resulted from the gross
negligence or willful misconduct of the Agent and (ii) any
indemnification required pursuant to Section 3.5(vii) shall,
notwithstanding the provisions of this Section 10.8, be paid by the
relevant Lender in accordance with the provisions thereof The
obligations of the Lenders under this Section 10.8 shall survive
payment of the Obligations and termination of this Agreement.
10.9 Notice of Default. The Agent shall not be deemed to have knowledge
or notice of the occurrence of any Default or Unmatured Default
hereunder unless the Agent has received written notice from a Lender or
the Borrowers referring to this Agreement describing such
Default or Unmatured Default and stating that such notice is a "notice
of default". In the event that the Agent receives such a notice, the
Agent shall give prompt notice thereof to the Lenders.
10.10 Rights as a Lender. In the event the Agent is a Lender, the Agent
shall have the same rights and powers hereunder and under any other
Loan Document with respect to its Commitment and its Loans as any
Lender and may exercise the same as though it were not the Agent, and
the term "Lender" or "Lenders" shall, at any time when the Agent is a
Lender, unless the context otherwise indicates, include the Agent in
its individual capacity. The Agent and its Affiliates may accept
deposits from, lend money to, and generally engage in any kind of
trust, debt, equity or other transaction, in addition to those
contemplated by this Agreement or any other Loan Document, with the
Borrowers or any of their Subsidiaries in which the Borrowers or
such Subsidiary is not restricted hereby from engaging with any other
Person. The Agent, in its individual capacity, is not obligated to be
or remain a Lender.
10.11 Lender Credit Decision. Each Lender acknowledges that it has,
independently and without reliance upon the Agent, the Arranger or any
other Lender and based on the financial statements prepared by the
Borrowers and such other documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into
this Agreement and the other Loan Documents. Each Lender also
acknowledges that it will, independently and without reliance upon the
Agent, the Arranger or any other Lender and based on such documents
and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under this
Agreement and the other Loan Documents.
10.12 Successor Agent. The Agent may resign at any time by giving
written notice thereof to the Lenders and the Borrowers, such
resignation to be effective upon the appointment of a successor Agent
or, if no successor Agent has been appointed, forty-five days after the
retiring Agent gives notice of its intention to resign. Upon any such
resignation, the Required Lenders shall have the right to appoint, on
behalf of the Borrowers and the Lenders, a successor Agent. If no
successor Agent shall have been so appointed by the Required Lenders
within thirty days after the resigning Agent 's giving notice of its
intention to resign, then the resigning Agent may appoint, on behalf of
the Borrowers and the Lenders, a successor Agent. Notwithstanding
the previous sentence, the Agent may at any time without the consent of
the Borrowers or any Lender, appoint any of its Affiliates which is a
commercial bank as a successor Agent hereunder. If the Agent has
resigned and no successor Agent has been appointed, the Lenders may
perform all the duties of the Agent hereunder and the Borrowers shall
make all payments in respect of the Obligations to the applicable
Lender and for all other purposes shall deal directly with the
Lenders. No successor Agent shall be deemed to be appointed hereunder
until such successor Agent has accepted the appointment. Any such
successor Agent shall be a commercial bank having capital and retained
earnings of at least $100,000,000. Upon the acceptance of any
appointment as Agent hereunder by a successor Agent, such successor
Agent shall thereupon succeed to and become vested with all the rights,
powers, privileges and duties of the resigning Agent. Upon the
effectiveness of the resignation of the Agent, the resigning Agent
shall be discharged from its duties and obligations hereunder and under
the Loan Documents. After the effectiveness of the resignation of an
Agent, the provisions of this Article X shall continue in effect for
the benefit of such Agent in respect of any actions taken or omitted to
be taken by it while it was acting as the Agent hereunder and under the
other Loan Documents. In the event that there is a successor to the
Agent by merger, or the Agent assigns its duties and obligations to
an Affiliate pursuant to this Section 10.12, then the term "`Prime
Rate" as used in this Agreement shall mean the prime rate, base rate or
other analogous rate of the new Agent.
10.13 Delegation to Affiliates. The Borrowers and the Lenders agree
that the Agent may delegate any of its duties under this Agreement to
any of its Affiliates. Any such Affiliate (and such Affiliate's
directors, officers, agents and employees) which performs duties in
connection with this Agreement shall be entitled to the same benefits
of the indemnification, waiver and other protective provisions to which
the Agent is entitled under Articles IX and X.
10.14 Collateral Releases. The Lenders hereby empower and authorize the
Agent to execute and deliver to the Borrowers on their behalf any
agreements, documents or instruments as shall be necessary or
appropriate to effect any releases of Collateral which shall be
permitted by the terms hereof or of any other Loan Document or which
shall otherwise have been approved by the Required Lenders (or, if
required by the terms of Section 9.1, all of the Lenders) in
writing.
ARTICLE XI
SETOFF; RATABLE PAYM ENTS
11.1 Setoff. In addition to, and without limitation of, any rights of
the Lenders under applicable law,
11.2 If a Borrower becomes insolvent, however evidenced, or any Default
occurs, any and all deposits (including all account balances, whether
provisional or final and whether or not collected or available) and any
other Indebtedness at any time held or owing by any Lender or
any Affiliate of any Lender to or for the credit or account of such
Borrower may be offset and applied toward the payment of the
Obligations owing to such Lender, whether or not the Obligations, or
any part hereof, shall then be due.
11.3 Ratable Payments. If any Lender, whether by setoff or otherwise,
has payment made to it upon its Loans (other than payments received
pursuant to Section 3.1, 3.2, 3.4 or 3.5) in a greater proportion than
that received by any other Le nder, such Lender agrees, promptly
upon demand, to purchase a portion of the Loans held by the other
Lenders so that after such purchase each Lender will hold its ratable
proportion of Loans. If any Lender, whether in connection with setoff
or amounts which might be subject to setoff or otherwise, receives
collateral or other protection for its Obligations or such amounts
which may be subject to setoff, such Lender agrees, promptly upon
demand, to take such action necessary such that all Lenders
share in the benefits of such collateral ratably in proportion to their
Loans. In case any such payment is disturbed by legal process, or
otherwise, appropriate further adjustments shall be
made.
11.4 Custodial Accounts. The Borrowers agree that funds received and
held by the Borrowers as custodian for FNMA, GNMA or other mortgage
pools which are deposited into accounts with any Lender shall be
clearly identified as custodial accounts, and each Lender
agrees that each provis ion of the foregoing subsections of this
Article XI shall not apply to such custodial accounts. The Borrowers
shall not deposit any of its general funds in any custodial
accounts or otherwise commingle funds in any custodial accounts.
ARTICLE XII
ASSIGNMENTS; PARTICIPATIONS; COMMITMENT INCREASES
12.1 Successors and Assigns. The terms and provisions of the Loan
Documents shall be binding upon and inure to the benefit of the
Borrowers and the Lenders and their respective successors and assigns,
except that (i) the Borrowers shall not have the right to assign its
rights or obligations under the Loan Documents and (ii) and assignment
by any Lender must be made in compliance with Section 12.3. The parties
to this Agreement acknowledge that clause (ii) of this Section 12.1
relates only to absolute assignments and does not prohibit assignments
creating security interests, including, without limitation, any pledge
or assignment by any Lender of all or any portion of its rights under
this Agreement and any Note to a Federal Reserve Bank; provided,
however, that no such pledge or assignment creating a security interest
shall release the transferor Lender from its obligations hereunder
unless and until the parties hereto have complied with the provisions
of Section 12.3. The Agent may treat the Person which made any
Loan or which holds any Note as the owner thereof for all purposes
hereof unless and until such Person complies with Section 12.3,
provided, however, that the Agent may in its discretion (but
shall not be required to) follow instructions from the Person which
made any Loan or which holds any Note to direct payments relating to
such Loan or Note to another Person. Any assignee of the rights to any
Loans or any Note agrees by acceptance of such transfer or
assignment to be bound by all the terms and provisions of the Loan
Documents. Any request, authority or consent of any Person, who at the
time of making such request or giving such authority or consent is the
owner of the Rights to any Loan (whether or not a Note has been
issued in evidence thereof), shall be conclusive and binding on any
subsequent holder, or assignee of the rights to such Loan.
12.2 Participations.
12.2.1 Permitted Participants; Effect. Any Lender may, in the ordinary
course of its business and in accordance with applicable law, at any
time sell to one or more banks or other entities ("Participants")
participating interests in any Loan owing to such Lender, any Note held
by such Lender, any Commitment of such Lender or any other interest of
such Lender under the Loan Documents. In the event of any such sale by
a Lender of participating interests to a Participant, such Lender's
obligations under the Loan Documents shall remain unchanged, such
Lender shall remain solely responsible to the other parties hereto for
the performance of such obligations, such Lender shall remain the
owner of its Loans and the holder of any Note issued to it in evidence
thereof for all purposes under the Loan Documents, all amounts payable
by the Borrowers under this Agreement shall be determined as if such
Lender had not sold such participating interests, and the Borrowers and
the Agent shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under
the Loan Documents.
12.2.2 Voting Rights. Each Lender shall retain the sole right to
approve, without the consent of any Participant, any amendment,
modification or waiver of any provision of the Loan Documents other
than any amendment, modification or waiver with respect to any Loan or
Commitment in which such Participant has an interest which forgives
principal, interest or fees or reduces the interest rate or fees
payable with respect to any such Loan or Commitment, extends the
Termination Date, postpones any date fixed for any regularly-scheduled
payment of principal of, or interest or fees on, any such Loan or
Commitment, releases any guarantor of any such Loan or releases all or
substantially all of the Collateral (other than as expressly permitted
pursuant to the Loan Documents).
12.2.3 Benefit of Setoff. The Borrowers agree that each Participant
shall be deemed to have the right of setoff provided in Section 11.1 in
respect of its participating interest in amounts owing under the Loan
Documents to the same extent as if the amount of its participating
interest were owing directly to it as a Lender under the Loan
Documents, provided that each Lender shall retain the right of setoff
provided in Section 11.1 with respect to the amount of participating
interests sold to each Participant. The Lenders agree to share with
each Participant, and each Participant, by exercising the right
of setoff provided in Section 11.1, agrees to share with each Lender,
any amount received pursuant to the exercise of its right of setoff,
such amounts to be shared in accordance with Section 11.2 as if each
Participant were a Lender.
12.3 Assignments.
12.3.1 Permitted Assignments. Any Lender may, in the ordinary course of
its business and in accordance with applicable law, at any time assign
to one or more banks or other entities ("Purchasers") all or any part
of its rights and obligations under the Loan Documents. Such assignment
shall be substantially in the form of Exhibit "J' hereto or in
such other form as may be agreed to by the parties thereto. The consent
of the Borrowers and the Agent shall be required prior to an assignment
becoming effective with respect to a Purchaser which is not a Lender or
an Affiliate thereof, provided, however, that if a Default has occurred
and is continuing, the consent of the Borrowers shall not be
required. Such consent shall not be unreasonably withheld or delayed.
Each such assignment shall (unless it is to a Lender or an Affiliate
thereof or each of the Borrowers and the Agent otherwise consents) be
in an amount not less than the lesser of (i) $10,000,000 or (ii) the
remaining amount of the assigning Lender's Commitment (calculated as at
the date of such assignment).
12.3.2 Effect; Effective Date. Upon (i) delivery to the Agent of a
notice of assignment, substantially in the form attached as Annex "I"
to Exhibit "J' hereto (a "Notice of Assignment "), together with any
consents required by Section 12.3.1, and (ii) payment of a $3,500 fee
to the Agent for processing such assignment, such assignment
shall become effective on the effective date specified in such Notice
of Assignment. The Notice of Assignment shall contain a representation
by the Purchaser to the effect that none of the consideration used to
make the purchase of the Commitment and Loans under the applicable
assignment agreement are "plan assets" as defined under ERISA and that
the rights and interests of the Purchaser in and under the Loan
Documents will not be "plan assets" under ERISA. On and after the
effective date of such assignment, such Purchaser shall for all
purposes be a Lender party to this Agreement and any other Loan
Document executed by or on behalf of the Lenders and shall have all the
rights and obligations of a Lender under the Loan Documents, to the
same extent as if it were an original party hereto, and no further
consent or action by the Borrowers, the Lenders or the Agent shall be
required to release the transferor Lender with respect to the
percentage of the Aggregate Commitment and Loans assigned to such
Purchaser. Upon the consummation of any assignment to a Purchaser
pursuant to this Section 12.3.2, the transferor Lender, the Agent and
the Borrowers shall, if the transferor Lender or the Purchaser desires
that its Loans be evidenced by Notes, make appropriate arrangements
so that new Notes or, as appropriate replacement Notes are issued to
such transferor Lender and new Notes or, as appropriate, replacement
Notes, are issued to such Purchaser, in each case in principal amounts
reflecting their respective Commitments, as adjusted pursuant to such
assignment. In addition, within a reasonable time after the
effective date of any assignment, the Agent shall, and is hereby
authorized and directed to, revise Schedule "2' reflecting the revised
commitments and percentages of each of the Lenders and shall distribute
such revised Schedule "2' to each of the Lenders and the
Borrowers, whereupon such revised Schedule shall replace the old
Schedule and become part of this Agreement.
12.4 Commitment Increases.
12.4.1 Increases to Aggregate Commitment. The Borrowers shall have the
right to increase the Aggregate Commitment by obtaining additional
Commitments, either from one or more of the Lenders or another lending
institution provided that (A) the Agent has approved the identity of
any such new Lender, such approval not to be unreasonably withheld, (B)
any such new Lender assumes all of the rights and obligations
of a "Lender" hereunder, and (C) the procedure described in Section
12.4.2 has been complied with, provided further that the Aggregate
Commitment shall not at any time exceed $142,000,000 without the
approval of the Agent and all of the Lenders.
12.4.2 Procedure for Increases and Addition of New Lenders. This
Agreement permits certain increases in a Lender's Commitment and the
admission of new Lenders providing new Commitments, none of which
require any consents or approvals from the other Lenders. Any amendment
hereto for such an increase or addition shall be in the form attached
hereto as Exhibit "K" and shall only require the written signatures of
the Agent, the Borrowers and the Lender(s) being added or increasing
their Commitment, subject only to the approval of all Lenders if any
such increase would cause the Aggregate Commitment to exceed
$142,000,000. In addition, within a reasonable time after the effective
date of any increase, the Agent shall, and is hereby authorized and
directed to, revise Schedule "2" reflecting such increase and shall
distribute such revised Schedule to each of the Lenders and the
Borrowers, whereupon such revised Schedule shall replace the old
Schedule and become part of this Agreement. On the Business Day
following any such increase, all outstanding Fed Funds Advances and
Alternate Base Rate Advances shall be reallocated among the Lenders
(including any newly added Lenders) in accordance with the Lenders'
respective revised Primary Commitment Percentages. Eurodollar Advances
shall not be reallocated among the Lenders prior to the expiration of
the applicable Interest Period in effect at the time of any such
increase.
12.5 Dissemination of Information. The Borrowers authorize each Lender
to disclose to any Participant or Purchaser or any other Person
acquiring an interest in the Loan Documents by operation of law (each a
"Transferee") and any prospective Transferee any and all
information in such Lender's possession concerning the creditworthiness
of the Borrowers and their Subsidiaries, including without limitation
any information contained in any Reports; provided that each Transferee
and prospective Transferee agrees to be bound by Section 9.12 of
this Agreement.
12.6 Tax Treatment. If any interest in any Loan Document is transferred
to any Transferee which is organized under the laws of any jurisdiction
other than the United States or any State thereof, the transferor
Lender shall cause such Transferee, concurrently with the
effectiveness of such transfer, to comply with the provisions of
Section 3.5(iv).
ARTICLE XIII
NOTICES
13.1 Notices. Except as otherwise permitted by Section 2.6 with respect
to borrowing notices, all notices, requests and other communications to
any party hereunder shall be in writing (including bank wire, facsimile
transmission or similar writing) and shall be given to such party:
(x) in the case of the Borrowers, the Agent or any Lender, at its
address or facsimile number set forth on the signature pages hereof,
(y) in the case of the Collateral Agent, at its address or
facsimile number set forth on the signature pages of the Security
Agreement or (z) in the case of any party, at such other address or
facsimile number as such party may hereafter specify for the
purpose by notice to the Agent and the Borrowers in accordance with the
provisions of this Section 13.1. Each such notice, request or other
communication shall be effective (i) if given by facsimile
transmission, when transmitted to the facsimile number specified in
this Section and confirmation of receipt is received, (ii) if given by
mail, 72 hours after such communication is deposited in the mails with
first class postage prepaid, addressed as aforesaid or (iii) if given
by any other means, when delivered at the address specified in this
Section; provided that notices to the Agent under Article 11 shall not
be effective until received.
13.2 Change of Address. The Borrowers, the Agent, the Collateral Agent
and any Lender may each change the address for service of notice upon
it by a notice in writing to the other parties hereto.
ARTICLE XIV
COUNTERPARTS
This Agreement may be executed in any number of counterparts, all of
which taken together shall constitute one agreement, and any of the
parties hereto may execute this Agreement by signing any such
counterpart. This Agreement shall be effective when it has been
executed by the Borrowers, the Agent and the Lenders and each party has
notified the Agent by facsimile transmission or telephone, that it has
taken such action. This Agreement may be duly executed by facsimile or
other electronic transmission.
ARTICLE XV
CHOICE OF LAW, CONSENT TO JURISDICTION, WAIVER OF JURY TRIAL
15.1 CHOICE OF LAW. THE LOAN DOCUMENTS (OTHER THAN THOSE
CONTAINING A CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (AND NOT THE LAW
OF CONFLICTS) OF THE STATE OF TEXAS, BUT GIVING EFFECT TO FEDERAL LAWS
APPLICABLE TO NATIONAL BANKS.
15.2 CONSENT TO JURISDICTION. EACH BORROWER HEREBY
IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED
STATES FEDERAL OR TEXAS STATE COURT SITTING IN DALLAS IN ANY ACTION
OR PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENTS AND
THE BORROWERS HEREBY IRREVOCABLY AGREE THAT ALL CLAIMS IN RESPECT
033544 000195 DALLAS 1532102 4.DOC 75 FIRST RESTATED REVOLVING CREDIT
AGREEMENT
OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY
SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR
HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN
INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE
AGENT OR ANY LENDER TO BRING PROCEEDINGS AGAINST THE BORROWERS IN
THE COURTS OF ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY THE
BORROWERS AGAINST THE AGENT OR ANY LENDER OR ANY AFFILIATE OF THE
AGENT OR ANY LENDER INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER
IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN
DOCUMENT SHALL BE BROUGHT ONLY IN A COURT IN DALLAS, TEXAS.
15.3 WAIVER OF JURY TRIAL. EACH BORROWER, THE AGENT AND EACH
LENDER HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING
INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN
TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO,
OR CONNECTED WITH ANY LOAN DOCUMENT OR THE RELATIONSHIP
ESTABLISHED THEREUNDER.
15.4 No Tri-Party Accounts. Section 346 of the Texas Finance Code
(which regulates certain revolving loan accounts and revolving triparty
accounts) shall not apply to this Agreement or the other loan
documents.
15.5 Limitation on Interest. The Agent, the Lenders, and the Borrowers,
and any other parties to the Loan Documents intend to contract in
strict compliance with applicable usury law from time to time in
effect. In furtherance thereof such Persons stipula te and agree that
none of the terms and provisions contained in the Loan Documents shall
ever be construed to create a contract to pay, for the use, forbearance
or detention of money, interest in excess of the maximum amount of
interest permitted to be charged by applicable law from time to time in
effect. Neither the Borrowers nor any present or future guarantors,
endorsers, or other Persons hereafter becoming liable for payment of
any Obligation shall ever be liable for unearned interest
thereon or shall ever be required to pay interest thereon in excess of
the maximum amount that may be lawfully charged under applicable law
from time to time in effect, and the provisions of this section shall
control over all other provisions of the Loan Documents which may be in
conflict or apparent conflict herewith. The Lenders expressly disavow
any intention to charge or collect excessive unearned interest or
finance charges in the event the maturity of any Obligation
is accelerated. If (a) the maturity of any Obligation is accelerated
for any reason, (b) any Obligation is prepaid and as a result any
amounts held to constitute interest are determined to be in excess of
the legal maximum, or (c) the Lenders or any other holder of any or all
of the Obligations shall otherwise collect moneys which are determined
to constitute interest which would otherwise increase the interest on
any or all of the Obligations to an amount in excess of
that permitted to be charged by applicable law then in effect, then all
such sums determined to constitute interest in excess of such legal
limit shall, without penalty, be promptly applied to reduce the then
outstanding principal of the related Obligations or, at the Lenders' or
such holder's option, promptly returned to each Borrower or the other
payor thereof upon such determination. In determining whether or not
the interest paid or payable, under any specific circumstance, exceeds
the maximum amount permitted under applicable law, the Lenders and the
Borrowers (and any other payors thereof) shall to the greatest extent
permitted under applicable law, (i) characterize any non-principal
payment as an expense, fee or premium rather than as interest, (ii)
exclude voluntary prepayments and the effects thereof, and (iii)
amortize, prorate, allocate, and spread the total amount of interest
throughout the entire contemplated term of the instruments evidencing
the Obligations in accordance with the amounts outstanding from time to
time thereunder and the maximum legal rate of interest from time to
time in effect under applicable law in order to lawfully charge the
maximum amount of interest permitted under applicable law. In the event
applicable law provides for an interest ceiling under Section 303 of
the Texas Finance Code, that ceiling shall be the weekly ceiling.
15.6 NO ORAL AGREEMENTS. THIS WRITTEN AGREEMENT AND THE
OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
15.7 Original Credit Agreement. This Agreement amends and restates in
its entirety the Original Credit Agreement.]
(THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.)
FIRST RESTATED REVOLVING CREDIT AGREEMENT
IN WITNESS WHEREOF, the Borrowers, the Lenders and the Agent have
executed this
Agreement as of the date first above written.
X. XXXXXXXXX MORTGAGE, INC.
By:
Name:
Title:
Address for Notices:
0000 X. Xxxxxxxxxx Xxxxxx
Xxxxx 000
Xxxx Xxxx Xxxxx, Xxxxxxx 00000
Telephone: (000) 000-0000
Telecopier:
X. XXXXXXXXX AMERICAN MORTGAGE,
L.L.C.
By:
Name:
Title:
Address for Notices:
0000 X. Xxxxxxxxxx Xxxxxx
Xxxxx 000
Xxxx Xxxx Xxxxx, Xxxxxxx 00000
Telephone: (000) 000-0000
Telecopier:
FIRST RESTATED REVOLVING CREDIT AGREEMENT
GUARANTY BANK, Agent and Lender
By:
Name: Xxxxxxx X. Xxxx
Title: Vice President
Address for Notices Regarding Fundings:
0000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxx 00000
Attn: Xxxxx X'Xxxx
Telephone No.: (000) 000-0000
Telephone No.: (000) 000-0000
Address for Other Notices:
0000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxx 00000
Attn: Xxxxxxx X. Xxxx
Telephone No.: (000) 000-0000
Telephone No.: (000) 000-0000
FIRST RESTATED REVOLVING CREDIT AGREEMENT
BANK ONE, NA
By:
Name: Xxxxxx X. Xxxxx
Title: Associate Director
Address for Notices Regarding Fundings:
1 Bank Xxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Attn: Xx Xxx
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000 or 000-0000
Address for Other Notices:
1 Bank Xxx Xxxxx
Xxxx Xxxxx XX0-0000
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxx Xxxx, Director
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
FIRST RESTATED REVOLVING CREDIT AGREEMENT
BANK OF AMERICA, N.A.
By:
Name: Xxxxx XxXxxxxx
Title: Principal
Address for Notices Regarding Fundings:
000 Xxxx Xxxxxx
00xx Xxxxx
Xxxxxx, Xxxxx 00000-0000
Mail Code TX1-492-66-02
Attn: Xxxxxxx Xxxxx
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
Address for Other Notices:
000 Xxxx Xxxxxx
00xx Xxxxx
Xxxxxx, Xxxxx 00000-0000
Mail Code TX1-492-66-02
Attn: Xxxx Xxxxx
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
FIRST RESTATED REVOLVING CREDIT AGREEMENT
COMERICA BANK
By:
Name: Xxxxxx X. Xxxx
Title: Assistant Vice President
Address for Notices Regarding Fundings:
000 Xxxxxxxx Xxxxxx
7th Floor, MC 3256
Xxxxxxx, XX 00000
Attn: Xxxxx Xxxxxxx
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
Address for Other Notices:
000 Xxxxxxxx Xxxxxx
7th Floor, MC 3256
Xxxxxxx, XX 00000
Attn: Xxx Xxxx
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
FIRST RESTATED REVOLVING CREDIT AGREEMENT
NATIONAL CITY BANK OF KENTUCKY
By:
Name:
Title:
Address for Notices Regarding Fundings:
000 Xxxx Xxxxxx Xx.
Xxxxxxxxxx, XX 00000
Attn: Xxxxx Xxxxxx
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
Address for Other Notices:
000 Xxxx Xxxxxx Xx.
Xxxxxxxxxx, XX 00000
Attn: Xxxx Xxxx
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
FIRST RESTATED REVOLVING CREDIT AGREEMENT
U.S. BANK NATIONAL ASSOCIATION
By:
Name: Xxxxx X. Xxxxxxx
Title: Senior Vice President
Address for Notices Regarding Fundings:
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
Attn:
Telephone No.:
Telecopier No.:
Address for Other Notices:
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxx
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
SCHEDULE "1"
PRICING SCHEDULE*
APPLICABLE MARGIN &
APPLICABLE FEE RATE
Eurodollar Advance 1.25%
Fed Funds Advance 1.375%
Swingline Loan 1.625%
Facility Fee .25%
* There shall be no Applicable Margin for Alternate Base Rate Advances.
SCHEDULE "2"
COMMITMENTS AND COMMITMENT PERCENTAGES
LENDER
(A)
COMMITMENT
(B)
COMMITMENT
PERCENTAGE
(A,Aggregate
Commitment)
(C)
SWINGLINE
AMOUNT
Guaranty Bank
$ 35,000,000
24.6479%
$3,000,000
Bank of America
$ 30,000,000 21.1268%
Bank One
$ 25,000,000 17.6056%
Comerica
$ 17,000,000 11.9718%
U.S. Bank
$ 25,000,000 17.6056%
National City Bank of
Kentucky
$ 10,000,000 7.0423%
SCHEDULE "3"
LIST OF APPROVED INVESTORS
CHASE MANHATTAN MORTGAGE CORPORATION
COUNTRYWIDE HOME LOAN, INC.
FLAGSTAR BANCORP
FEDERAL HOME LOAN MORTGAGE CORPORATION
FEDERAL NATIONAL MORTGAGE ASSOCIATION
FIRST HORIZON BANCORP
FIRST NATIONWIDE MORTGAGE
GREENPOINT MORTGAGE CORPORATION
GUARANTY RESIDENTIAL LENDING
IMPAC FUNDING CORPORATION
NATIONAL CITY BANK
OHIO SAVINGS BANK
RESIDENTIAL FUNDING CORPORATION
VALLEY NATIONAL BANK
WASHINGTON MUTUAL
XXXXX FARGO
XXXXX MANHATTAN FUNDING1
COUNTRYWIDE HOME LOAN, INC.1
IMPAC FUNDING CORPORATION1
RBNG, INC.
RESIDENTIAL FUNDING CORPORATION1
US BANK CORPORATE TRUST SERVICES
1 Approved for the purchase of Non-Conforming Mortgage Loans.
SCHEDULE "4"
SUBSIDIARIES AND OTHER INVESTMENTS
(See Sections 5.8 and 6.14)
Investment
In____
Owned
By
Amount of
Investment
Percent
Ownership
Jurisdiction of
Organization
None
SCHEDULE "5"
LIENS
(See Sections 5.14 and 6.15)
Indebtedness
Incurred By
Indebtedness
Owed To
Property
Encumbered (If Any)
Maturity and
Amount of
Indebtedness
None
EXHIBIT "A"
NOTE
March 7, 2003
X. Xxxxxxxxx Mortgage, Inc. a New Jersey corporation, and X. Xxxxxxxxx
American Mortgage, L.L.C., a New Jersey limited liability company
(collectively, the "Borrowers"), jointly and severally promise to pay
to the order of (the "Lender") the lesser of the
Lender's Commitment under the Agreement (as hereinafter defined)
or the aggregate unpaid principal amount of all Loans made by the
Lender to the Borrowers pursuant to Article II of the Agreement in
immediately available funds at the main office of Guaranty Bank, in
Dallas, Texas, as Agent, together with interest on the unpaid principal
amount hereof at the rates and on the dates set forth in the Agreement.
The Borrowers shall pay the principal of and accrued and unpaid
interest on the Loans in full on the Termination Date.
The Lender shall, and is hereby authorized to, record on the schedule
attached hereto, or to otherwise record in accordance with its usual
practice, the date and amount of each Loan and the date and amount of
each principal payment hereunder.
This Note is one of the Notes issued pursuant to, and is entitled to
the benefits of, the First Restated Revolving Credit Agreement dated as
of March 7, 2003 (which, as it may be amended or modified and in effect
from time to time, is herein called the "Agreement"), among
the Borrowers, the lenders party thereto, including the Lender, and
Guaranty Bank, as Agent, to which Agreement reference is hereby made
for a statement of the terms and conditions governing this Note,
including the terms and conditions under which this Note may be prepaid
or its maturity date accelerated. This Note is secured pursuant to the
Security Agreement, all as more specifically described in the
Agreement, and reference is made thereto for a statement of
the terms and provisions thereof Capitalized terms used herein and not
otherwise defined herein are used with the meanings attributed to them
in the Agreement.
This Note is to be governed by and construed and enforced in accordance
with the laws
of the State of Texas.
X. XXXXXXXXX MORTGAGE, INC.
By:
Name:
Title:
X. XXXXXXXXX AMERICAN MORTGAGE,
L.L.C.
By:
Name:
Title:
SCHEDULE OF LOANS AND PAYMENTS OF PRINCIPAL
TO
NOTE OF
DATED MARCH 7, 2003
Date
Principal
Amount of Loan
Maturity of Interest Period
Principal
Amount Paid
Unpaid Balance
EXHIBIT "B"
FORM OF OPINION
March 7, 2003
The Agent and the Lenders who are parties to the
First Restated Revolving Credit Agreement described below.
Gentlemen/Ladies:
We are counsel for X. Xxxxxxxxx Mortgage, Inc., a New Jersey
corporation, and X. Xxxxxxxxx American Mortgage, L.L.C., a New Jersey
limited liability company (collective, the "Borrowers"), and Hovnanian
Enterprises, Inc., a Delaware corporation (the "Parent "), and
have represented the Borrowers in connection with its execution and
delivery of a First Restated Revolving Credit Agreement dated as of
March 7, 2003 (the "Agreement") among the Borrowers, the Lenders named
therein, and Guaranty Bank, as Agent, and providing for
Advances in an aggregate principal amount not exceeding $142,000,000 at
any one time outstanding and the Parent in connection with its
execution and delivery of the First Restated Keep-Well Agreement dated
as of March 7, 2003 and the First Restated Subordination
Agreement dated as of March 7, 2003 related to the Agreement. All
capitalized terms used in this opinion and not otherwise defined herein
shall have the meanings attributed to them in the Agreement.
We have examined the Borrowers' "(describe constitutive documents of
Borrowers and appropriate evidence of authority to enter into the
transaction) ", the Parent's "(describe constitutive documents of
Borrowers and appropriate evidence of authority to enter into the
Transaction)", the Loan Documents and such other matters of fact and
law which we deem necessary in order to render this opinion. Based upon
the foregoing, it is our opinion that:
1. Each of the Parent, the Borrowers and their Subsidiaries is a
corporation, partnership or limited liability company duly and properly
incorporated or organized, as the case may be, validly existing and (to
the extent such concept applies to such entity) in good standing
under the laws of its jurisdiction of incorporation or organization and
has all requisite authority to conduct its business in each
jurisdiction in which its business is cond ucted.
2. A. The execution and delivery by each Borrower of the Loan Documents
to which it is a party and the performance by such Borrower of its
obligations thereunder have been duly authorized by proper corporate
proceedings on the part of such Borrower and will not:
(a) require any consent of such Borrower's shareholders or members
(other than any such consent as has already been given and remains in
full force and effect);
(b) violate (i) any law, rule, regulation, order, writ, judgment,
injunction, decree or award binding on such Borrower or any of its
Subsidiaries or (ii) such Borrower's or any Subsidiary's articles or
certificate of incorporation, partnership agreement, certificate of
partnership, articles or certificate of organization, by- laws, or
operating or other management agreement, as the case may be, or (iii)
the provisions of any indenture, instrument or agreement to which such
Borrower or any of its Subsidiaries is a party or is subject, or by
which it, or its Property, is bound, or conflict with or constitute a
default thereunder; or
(c) result in, or require, the creation or imposition of any Lien in,
of or on the Property of such Borrower or a Subsidiary pursuant to the
terms of any indenture, instrument or agreement binding upon such
Borrower or any of its Subsidiaries.
B. The execution and delivery by the Parent of the Loan Documents to
which it is a party and the performance by the Parent of its
obligations thereunder have been duly authorized by proper corporate
proceedings on the part of the Parent and will not:
(a) require any consent of the Parent's shareholders or members (other
than any such consent as has already been given and remains in full
force and effect);
(b) violate (i) any law, rule, regulation, order, writ, judgment,
injunction, decree or award binding on the Parent or any of its
Subsidiaries or (ii) the Parent's or any of its Subsidiary's articles
or certificate of incorporation, partnership agreement,
certificate of partnership, articles or certificate of organization, by
laws, or operating or other management agreement, as the case may be,
or (iii) the provisions of any indenture, instrument or agreement to
which the Parent or any of its Subsidiaries is a party or is
subject, or by which it, or its Property, is bound, or conflict with or
constitute a default thereunder; or
(c) result in, or require, the creation or imposition of any Lien in,
of or on the Property of the Parent or any of its Subsidiaries pursuant
to the terms of any indenture, instrument or agreement binding upon the
Parent or any of its Subsidiaries.
3. A. The Loan Documents to which each Borrower is a party have been
duly executed and delivered by such Borrower and constitute legal,
valid and binding obligations of such Borrower enforceable against suc
h Borrower in accordance with their terms except to the
extent the enforcement thereof may be limited by bankruptcy, insolvency
or similar laws affecting the enforcement of creditors' rights
generally and subject also to the availability of equitable remedies if
equitable remedies are sought.
B. The Loan Documents to which the Parent is a party have been duly
executed and delivered by the Parent and constitute legal, valid and
binding obligations of the Parent enforceable against the Parent in
accordance with their terms except to the extent the
enforcement thereof may be limited by bankruptcy, insolvency or similar
laws affecting the enforcement of creditors' rights generally and
subject also to the availability of equitable remedies if equitable
remedies are sought.
4. There is no litigation, arbitration, governmental investigation,
proceeding or inquiry pending or, to the best of our knowledge after
due inquiry, threatened against the Parent, the Borrowers or any of
their Subsidiaries which, if adversely determined, could reasonably be
expected to have a Material Adverse Effect.
5. No order, consent, adjudication, approval, license, authorization,
or validation of, or filing, recording or registration with, or
exemption by, or other action in respect of any governmental or public
body or authority, or any subdivision thereof, which has not been
obtained by the Parent, the Borrowers or any of their Subsidiaries, is
required to be obtained by the Parent, the Borrowers or any of their
Subsidiaries in connection with the execution and delivery of the Loan
Documents, the borrowings under the Agreement, the payment and
performance by the Borrowers of the Secured Obligations, or the
legality, validity, binding effect or enforceability of any of the Loan
Documents.
6. The Secured Obligations constitute senior indebtedness which is
entitled to the benefits of the subordination provisions contained in
the Subordination Agreement.
7. The provisions of the Collateral Documents are sufficient to create
in favor of the Lenders a security interest in all right, title and
interest of the Borrowers in those items and types of collateral
described in the Collateral Documents in which a security interest may
be created under Article 9 of the Uniform Commercial Code as in effect
from time to time in New Jersey and Delaware, as applicable. Financing
statements on Form UCC-l's have been duly executed by the Borrowers and
have been duly filed in each filing office indicated in Exhibit A
hereto under the Uniform Commercial Code in effect in each state in
which said filing offices are located. The description of the
collateral set forth in said financing statements is sufficient to
perfect a security interest in the items and types of collateral
described therein in which a security interest may be perfected by the
filing of a financing statement under the Uniform Commercial Code as in
effect from time to time in such states. Such filings are sufficient to
perfect the security interest created by the Collateral Documents in
all right, title and interest of the Borrowers in those items and types
of collateral described in the Collateral Documents in which a security
interest may be perfected by the filing of a financing statement under
the Uniform Commercial Code from time to time in effect in such states,
except that we express no opinion as to personal property affixed to
real property in such manner as to become a fixture under the laws of
any state in which the collateral may be located and we call your
attention tothe fact that the Lenders' security interest in certain of
such collateral may not be perfected by filing financing statements
under the Uniform Commercial Code.
This opinion may be relied upon by the Agent, the Lenders and their
participants, assignees and other transferees.
Very truly yours,
EXHIBIT "C"
EXHIBIT "D"
COLLATERAL TRANSMITTAL
1. CUSTOMER NAME
2. LOAN NUMBER
AND "MIN" (IF APPLICABLE)
3. MORTGAGOR SURNAME ONLY
4. AP STATUS CODE
5. PLEDGE DATE
6. ORIGINAL NOTE AMOUNT $
7. OUTSTANDING PRINCIPAL BALANCE $
8. ACQUISITION COST $
9. TAKE-OUT VALUE $
10. NOTE DATE OR CONVERSION DATE
11. NOTE RATE
12. LOAN TYPE
EXHIBIT "E"
AGREEMENT TO PLEDGE
SECURITY AGREEMENT AS PROVIDED FOR BY
THE UNIFORM COMMERCIAL CODE OF TEXAS
Each of X. Xxxxxxxxx Mortgage, Inc. and X. Xxxxxxxxx American Mortgage,
L.L.C. (the "Borrowers") pursuant to that certain First Restated
Revolving Credit Agreement dated as of March 7, 2003 (as amended,
extended and replaced from time to time, the "Credit Agreement")
among the Borrowers, Guaranty Bank, as Agent, and certain other
Lenders, and pursuant to that certain Security and Collateral Agency
Agreement among the Borrowers, the Agent, the Lenders and Guaranty Bank
(the "Collateral Agent ") for new value this day received, and as
security for the payment of any and all indebtedness and obligations of
the Borrowers under the Credit Agreement, hereby creates and grants to
the Collateral Agent for the bene fit of the lenders under the Credit
Agreement a security interest in and to the mortgage loans identified
as AP Mortgages by the inclusion of an "AP Status Code" on the
Borrowers' Collateral Transmittals on the date indicated below which
provide the information concerning the AP Mortgages required by the
Credit Agreement. All capitalized terms used herein shall have the
meanings given to them in the Credit Agreement.
X. XXXXXXXXX MORTGAGE, INC.
By:
Name:
Title:
X. XXXXXXXXX AMERICAN MORTGAGE,
L.L.C.
By:
Name:
Title:
Dated: , 200 .
EXHIBIT "F"
COMPLIANCE CERTIFICATE
To: The Lenders parties to the First Restated Revolving Credit
Agreement Described Below This Compliance Certificate is furnished
pursuant to that certain First Restated Revolving Credit Agreement
dated as of March 7, 2003 (as amended, modified, renewed or extended
from time to time, the "Agreement") among the X. Xxxxxxxxx Mortgage,
Inc. and X. Xxxxxxxxx American Mortgage, L.L.C. (collectively, the
"Borrowers"), the lenders party thereto and Guaranty Bank, as Agent for
the Lenders. Unless otherwise defined herein, capitalized terms
used in this Compliance Certificate have the meanings ascribed thereto
in the Agreement.
THE UNDERSIGNED HEREBY CERTIFIES THAT:
1. 1 am the duly elected of the each Borrower;
2. 1 have reviewed the terms of the Agreement and I have made, or have
caused to be made under my supervision, a detailed review of the
transactions and conditions of the Borrowers and their Subsidiaries
during the accounting period covered by the attached financial
statements;
3. The examinations described in paragraph 2 did not disclose, and I
have no knowledge of, the existence of any condition or event which
constitutes a Default or Unmatured Default during or at the end of the
accounting period covered by the attached financial statements or as of
the date of this Certificate, except as set forth below; and
4. Schedule I attached hereto sets forth Combined financial data and
computations evidencing the Borrowers' compliance with certain
covenants of the Agreement, all of which data and computations are
true, complete and correct.
Described below are the exceptions, if any, to paragraph 3 by listing,
in detail, the nature of the condition or event, the period during
which it has existed and the action which the Borrowers have taken, is
taking, or proposes to take with respect to each such condition or
event:
The foregoing certifications, together with the computations set forth
in Schedule I hereto and the financial statements delivered with this
Certificate in support hereof, are made and delivered this day
of , 20 .
SCHEDULE I TO COMPLIANCE CERTIFICATE
Compliance as of with
Provisions of and of the Agreement
EXHIBIT "G"
BORROWING BASE CERTIFICATE
EXHIBIT "H"
NON-CONFORMING UNDERWRITING GUIDELINES
SEE ATTACHED
EXHIBIT "I"
SECURITY AGREEMENT
EXHIBIT "J'
ASSIGNMENT AGREEMENT
This Assignment Agreement (this "Assignment Agreement") between
(the "Assignor") and (the "Assignee") is dated as of
, 200 . The parties hereto agree as follows:
1. PRELIMINARY STATEMENT. The Assignor is a party to the First Restated
Revolving Credit Agreement (which, as it may be amended, modified,
renewed or extended from time to time is herein called the "Credit
Agreement") described in Item 1 of Schedule 1 attached hereto
("Schedule 1). Capitalized terms used herein and not otherwise defined
herein shall have the meanings attributed to them in the Credit
Agreement.
2. ASSIGNMENT AND ASSUMPTION. The Assignor hereby sells and assigns to
the Assignee, and the Assignee hereby purchases and assumes from the
Assignor, an interest in and to the Assignor's rights and obligations
under the Credit Agreement such that after giving effect to such
assignment the Assignee shall have purchased pursuant to this
Assignment Agreement the percentage interest specified in Item 3 of
Schedule 1 of all outstanding rights and
obligations under the Credit Agreement relating to the facilities
listed in Item 3 of Schedule 1 and the other Loan Documents. The
aggregate Commitment (or Loans, if the applicable Commitment has been
terminated) purchased by the Assignee hereunder is set forth in Item 4
of Schedule 1.
3. EFFECTIVE DATE. The effective date of this Assignment Agreement (the
"Effective Date") shall be the later of the date specified in Item 5 of
Schedule 1 or two Business Days (or such shorter period agreed to by
the Agent) after a Notice of Assignment substantially in the form of
Annex "I" attached hereto has been delivered to the Agent. Such Notice
of Assignment must include any consents required to be delivered to the
Agent by Section 12.3.1 of the Credit Agreement. In no event will the
Effective Date occur if the payments required to be made by the
Assignee to the Assignor on the Effective Date under Sections 4 and 5
hereof are not made on the proposed Effective Date. The Assignor will
notify the Assignee of the proposed Effective Date no later than the
Business Day prior to the proposed Effective Date. As of the
Effective Date, (i) the Assignee shall have the rights and obligations
of a Lender under the Loan Documents with respect to the rights and
obligations assigned to the Assignee hereunder and (ii) the Assignor
shall relinquish its rights and be released from its corresponding
obligations under the Loan Documents with respect to the rights and
obligations assigned to the Assignee hereunder.
4. PAYMENT OBLIGATIONS. On and after the Effective Date, the Assignee
shall be entitled to receive from the Agent all payments of principal,
interest and fees with respect to the interest assigned hereby. The
Assignee shall advance funds directly to the Agent with respect to all
Loans and reimbursement payments made on or after the Effective Date
with respect to the interest assigned hereby. **[In consideration for
the sale and assignment of Loans hereunder, (i) the Assignee shall pay
the Assignor, on the Effective Date, an amount equal to the
principal amount of the portion of all Alternate Base Rate Loans
assigned to the Assignee hereunder and (ii) with respect to each
Eurodollar Loan made by the Assignor and assigned to the Assignee
hereunder which is outstanding on the Effective Date, (a) on the last
day of the Interest Period therefor or (b) on such earlier date agreed
to by the Assignor and the Assignee or (c) on the date on which any
such Eurodollar Loan becomes due (by acceleration or otherwise)
(the date as described in the foregoing clauses (a), (b) or (c) being
hereinafter referred to as the "Payment Date"), the Assignee shall pay
the Assignor an amount equal to the principal amount of the portion of
such Eurodollar Loan assigned to the Assignee which is outstanding on
the Payment Date. If the Assignor and the Assignee agree that the
Payment Date for such Eurodollar Loan shall be the Effective Date, they
shall agree to the interest rate applicable to the portion of such Loan
assigned hereunder for the period from the Effective Date to the end of
the existing Interest Period applicable to such Eurodollar Loan (the
"Agreed Interest Rate") and any interest received by the Assignee in
excess of the Agreed Interest Rate shall be remitted to the
Assignor. In the event interest for the period from the Effective Date
to but not including the Payment Date is not paid by the Borrowers with
respect to any Eurodollar Loan sold by the Assignor to the Assignee
hereunder, the Assignee shall pay to the Assignor interest for such
period on the portion of such Eurodollar Loan sold by the Assignor to
the Assignee hereunder at the applicable rate provided by the Credit
Agreement. In the event a prepayment of any Eurodollar Loan which is
existing on the Payment Date and assigned by the Assignor to the
Assignee hereunder occurs after the Payment Date but before the end of
the Interest Period applicable to such Eurodollar Loan, the Assignee
shall remit to the Assignor the excess of the prepayment penalty paid
with respect to the portion of such Eurodollar Loan assigned to the
Assignee hereunder over the amount which would have been paid if such
prepayment penalty was calculated based on the Agreed Interest Rate.
The Assignee will also promptly remit to the Assignor (i) any principal
payments received from the Agent with respect to Eurodollar Loans
prior to the Payment Date and (ii) any amounts of interest on Loans and
fees received from the Agent which relate to the portion of the Loans
assigned to the Assignee hereunder for periods prior to the Effective
Date, in the case of Alternate Base Rate Loans or fees, or the Payment
Date, in the case of Eurodollar Loans, and not previously paid by the
Assignee to the Assignor.]** In the event that either party hereto
receives any payment to which the other party hereto is entitled under
this Assignment Agreement, then the party receiving such amount shall
promptly remit it to the other party hereto.
**Each Assignor may insert its standard payment provisions in lieu of
the payment terms included in this Exhibit.
5. FEES PAYABLE BY THE ASSIGNEE. The Assignee shall pay to the Assignor
a fee on each day on which a payment of interest or fees is made under
the Credit Agreement with respect to the amounts assigned to the
Assignee hereunder (other than a payment of interest or commitment fees
for the period prior to the Effective Date or, in the case of
Eurodollar Loans, the Payment Date, which the Assignee is obligated to
deliver to the Assignor pursuant to Section 4 hereof). The amount of
such fee shall be the difference between (i) the interest or fee,
as applicable, paid with respect to the amounts assigned to the
Assignee hereunder and (ii) the interest or fee, as applicable, which
would have been paid with respect to the amounts assigned
to the Assignee hereunder if each interest rate was of 1% less
than the interest rate paid by the Borrowers or if the commitment fee
was of 1% less than the commitment fee paid by the
Borrowers, as applicable. In addition, the Assignee agrees to pay %
of the recordation fee required to be paid to the Agent in connection
with this Assignment Agreement.
6. REPRESENTATIONS OF THE ASSIGNOR; LIMITATIONS ON THE ASSIGNOR'S
LIABILITY. The Assignor represents and warrants that it is the legal
and beneficial owner of the interest being assigned by it hereunder and
that such interest is free and clear of any adverse claim created by
the Assignor. It is understood and agreed that the assignment and
assumption hereunder are made without recourse to the Assignor and that
the Assignor makes no other representation or warranty of any kind to
the Assignee. Neither the Assignor nor any of its officers, directors,
employees, agents or attorneys shall be responsible for
(i) the due execution, legality, validity, enforceability, genuineness,
sufficiency or collectability of any Loan Document, including without
limitation, documents granting the Assignor and the other Lenders a
security interest in assets of the Borrowers or any guarantor, (ii) any
representation, warranty or statement made in or in connection with any
of the Loan Documents,
(iii) the financial condition or creditworthiness of the Borrowers or
any guarantor, (iv) the performance of or compliance with any of the
terms or provisions of any of the Loan Documents, (v) inspecting any of
the Property, books or records of the Borrowers, (vi) the
validity, enforceability, perfection, priority, condition, value or
sufficiency of any collateral securing or purporting to secure the
Loans or (vii) any mistake, error of judgment, or action
taken or omitted to be taken in connection with the Loans or the Loan
Documents.
7. REPRESENTATIONS OF THE ASSIGNEE. The Assignee (i) confirms that it
has received a copy of the Credit Agreement, together with copies of
the financial statements requested by the Assignee and such other
documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into this Assignment
Agreement, (ii) agrees that it will, independently and without reliance
upon the Agent, the Assignor or any other Lender and based on such
documents and information at it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking
action under the Loan Documents, (iii) appoints and authorizes the
Agent to take such action as agent on its behalf and to exercise such
powers under the Loan Documents as are delegated to the Agent by the
terms thereof, together with such powers as are reasonably incidental
thereto,
(iv) agrees that it will perform in accordance with their terms all of
the obligations which by the terms of the Loan Documents are required
to be performed by it as a Lender, (v) agrees that its payment
instructions and notice instructions are as set forth in the attachment
to Schedule 1,
(vi) confirms that none of the funds, monies, assets or other
consideration being used to make the purchase and assumption hereunder
are "plan assets" as defined under ERISA and that its rights,
benefits and interests in and under the Loan Documents will not be
"plan assets" under ERISA, **[(vii) confirms that it is an Eligible
Assignee,]** **[and (viii) attaches the forms prescribed by
the Internal Revenue Service of the United States certifying that the
Assignee is entitled to receive payments under the Loan Documents
without deduction or withholding of any United States federal income
taxes].**
*(vii) to be inserted if required by the Credit Agreement.
**(viii) to be inserted if the Assignee is not incorporated under the
laws of the United States, or a state thereof.
8. INDEMNITY. The Assignee agrees to indemnify and hold the Assignor
harmless against any and all losses, costs and expenses (including,
without limitation, reasonable attorneys' fees) and liabilities
incurred by the Assignor in connection with or arising in any
manner from the Assignee's non-performance of the obligations assumed
under this Assignment Agreement.
9. SUBSEQUENT ASSIGNMENTS. After the Effective Date, the Assignee shall
have the right pursuant to Section 12.3.1 of the Credit Agreement to
assign the rights which are assigned to the Assignee hereunder to any
entity or person, provided that (i) any such subsequent
assignment does not violate any of the terms and conditions of the Loan
Documents or any law, rule, regulation, order, writ, judgment,
injunction or decree and that any consent required under
the terms of the Loan Documents has been obtained and (ii) unless the
prior written consent of the Assignor is obtained, the Assignee is not
thereby released from its obligations to the Assignor hereunder, if any
remain unsatisfied, including, without limitation, its obligations
under Sections 4, 5 and 8 hereof.
10. REDUCTIONS OF AGGREGATE COMMITMENT. If any reduction in the
Aggregate Commitment occurs between the date of this Assignment
Agreement and the Effective Date, the percentage interest specified in
Item 3 of Schedule 1 shall remain the same, but the dollar amount
purchased shall be recalculated based on the reduced Aggregate
Commitment.
11. ENTIRE AGREEMENT. This Assignment Agreement and the attached Notice
of Assignment embody the entire agreement and understanding between the
parties hereto and supersede all prior agreements and understandings
between the parties hereto relating to the subject matter hereof.
12. GOVERNING LAW. This Assignment Agreement shall be governed by the
internal law, and not the law of conflicts, of the State of Illinois.
13. NOTICES. Notices shall be given under this Assignment Agreement in
the manner set forth in the Credit Agreement. For the purpose hereof,
the addresses of the parties hereto (until notice of a change is
delivered) shall be the address set forth in the attachment to
Schedule 1.
IN WITNESS WHEREOF, the parties hereto have executed this Assignment
Agreement by their duly authorized officers as of the date first above
written.
By:
Title:
By:
Title:
SCHEDULE 1 to Assignment Agreement
1. Description and Date of Credit Agreement:
2. Date of Assignment Agreement: , 200
3. Amounts (As of Date of Item 2 above):
Primary
Commitment
Swingline
Commitment
a.
Total of Commitments
(Loans)* under
Credit Agreement $ $
b. Assignee's Percentage
of each Facility purchased
under the Assignment
Agreement** % %
c.
Amount of Assigned Share in
each Facility purchased under
the Assignment
Agreement $ $
4. Assignee's Aggregate (Loan
Amount)* Commitment Amount
Purchased Hereunder:
$ $
5. Proposed Effective Date:
Accepted and Agreed:
By: By:
Title: Title:
* If a Commitment has been terminated, insert outstanding Loans in
place of Commitment
** Percentage taken to 10 decimal places
Attachment to SCHEDULE 1 to ASSIGNMENT AGREEMENT
ADMINISTRATIVE INFORMATION SHEET
Attach Assignor's Administrative Information Sheet, which must
include notice addresses for the Assignor and the Assignee
(Sample form shown below)
ASSIGNOR INFORMATION
Contact:
Name: Telephone No.:
Fax No.: Telex No.:
Answerback:
Payment Information:
Name & ABA # of Destination Bank:
Account Name & Number for Wire Transfer:
Other Instructions:
Address for Notices for Assignor:
ASSIGNEE INFORMATION
Credit Contact:
Name: Telephone No.:
Fax No.: Telex No.:
Answerback:
Key Operations Contacts:
Booking Installation: Booking Installation:
Name: Name:
Telephone No.: Telephone No.:
Fax No.: Fax No.:
Telex No.: Telex No.:
Answerback: Answerback:
Payment Information:
Name & ABA # of Destination Bank:
Account Name & Number for Wire Transfer:
Other Instructions:
Address for Notices for Assignee:
GUARANTY BANK INFORMATION
Assignee will be called promptly upon receipt of the signed agreement.
Initial Funding Contact: Subsequent Operations Contact:
Name: Name:
Telephone No.: (214) Telephone No.: (214)
Fax No.: (214) Fax No.: (214)
Initial Funding Standards :
Libor - Fund 2 days after rates are set.
GUARANTY BANK Wire Instructions : Guaranty Bank ABA #
Account No.:
Account Name:
Ref: X. Xxxxxxxxx
Address for Notices for GUARANTY BANK:
ANNEX "I"
to Assignment Agreement
NOTICE
OF ASSIGNMENT
, 200
To: X. XXXXXXXXX MORTGAGE, INC.
X. XXXXXXXXX AMERICAN MORTGAGE, L.L.C.
(NAME OF AGENT)
From: (NAME OF ASSIGNOR) (the "Assignor")
(NAME OF ASSIGNEE) (the "Assignee")
1. We refer to that First Restated Revolving Credit Agreement (the
"Credit Agreement") described in Item 1 of Schedule 1 attached hereto
("Schedule 1"). Capitalized terms used herein and not otherwise defined
herein shall have the meanings attributed to them in the Credit
Agreement.
2. This Notice of Assignment (this "Notice") is given and delivered to
**(the Borrowers and)** the Agent pursuant to Section 12.3.2 of the
Credit Agreement.
3. The Assignor and the Assignee have entered into an Assignment
Agreement, dated as of , 200 (the "Assignment"), pursuant to
which, among other things, the Assignor has sold, assigned, delegated
and transferred to the Assignee, and the Assignee has purchased,
accepted and assumed from the Assignor the percentage interest
specified in Item 3 of Schedule 1 of all outstandings, rights and
obligations under the Credit Agreement relating to the facilities
listed in Item 3 of Schedule 1. The Effective Date of the
Assignment shall be the later of the date specified in Item 5 of
Schedule 1 or two Business Days (or such shorter period as agreed to by
the Agent) after this Notice of Assignment and any
consents and fees required by Sections **(12.3.1 and 12.3.2)** of the
Credit Agreement have been delivered to the Agent, provided that the
Effective Date shall not occur if any condition
precedent agreed to by the Assignor and the Assignee has not been
satisfied.
*To be included only if consent must be obtained from the Borrowers
pursuant to Section 12.3.1 of the Credit Agreement.
4. The Assignor and the Assignee hereby give to the Borrowers and the
Agent notice of the assignment and delegation referred to herein. The
Assignor will confer with the Agent before the date specified in Item 5
of Schedule 1 to determine if the Assignment Agreement will become
effective on such date pursuant to Section 3 hereof, and will confer
with the Agent to determine the Effective Date pursuant to Section 3
hereof if it occurs thereafter. The Assignor shall notify the Agent if
the Assignment Agreement does not become effective on any proposed
Effective Date as a result of the failure to satisfy the conditions
precedent agreed to by the Assignor and the Assignee. At the request of
the Agent, the Assignor will give the Agent written confirmation of the
satisfaction of the conditions precedent.
5. The Assignor or the Assignee shall pay to the Agent on or before the
Effective Date the processing fee of $3,500 required by Section 12.3.2
of the Credit Agreement.
6. If Notes are outstanding on the Effective Date, the Assignor and the
Assignee request and direct that the Agent prepare and cause the
Borrowers to execute and deliver new Notes or, as appropriate,
replacement notes, to the Assignor and the Assignee. The Assignor and,
if applicable, the Assignee each agree to deliver to the Agent the
original Note received by it from the Borrowers upon their receipt of a
new Note in the appropriate amount.
7. The Assignee advises the Agent that notice and payment instructions
are set forth in the attachment to Schedule 1.
8. The Assignee hereby represents and warrants that none of the funds,
monies, assets or other consideration being used to make the purchase
pursuant to the Assignment are "plan assets" as defined under ERISA and
that its rights, benefits, and interests in and under the Loan
Documents will not be "plan assets" under ERISA.
9. The Assignee authorizes the Agent to act as its agent under the Loan
Documents in accordance with the terms thereof. The Assignee
acknowledges that the Agent has no duty to supply information with
respect to the Borrowers or the Loan Documents to the Assignee until
the Assignee becomes a party to the Credit Agreement.*
*May be eliminated if Assignee is a party to the Credit Agreement prior
to the Effective Date.
NAME OF ASSIGNOR
By:
NAME OF ASSIGNEE
By:
Title:
Title:
ACKNOWLEDGED [AND CONSENTED TO] ACKNOWLEDGED [AND CONSENTED TO]
BY BY:
By:
Title:
X. XXXXXXXXX MORTGAGE, INC.
By:
Name:
Title:
X. XXXXXXXXX AMERICAN MORTGAGE,
L.L.C.
By:
Name:
Title:
(Attach photocopy of Schedule 1 to Assignment
EXHIBIT "K"
FORM OF AMENDMENT FOR AN INCREASED OR NEW COMMITMENT
This AMENDMENT is made as of the day of , 200 by and
among X. Xxxxxxxxx Mortgage, Inc. and X. Xxxxxxxxx American Mortgage,
L.L.C. (collectively, the "Borrowers"), Guaranty Bank, as Agent under
the "Credit Agreement " (as defined below) (the "Agent") and
(the "Supplemental Lender").
The Borrowers, the Agent and certain other Lenders, as described
therein, are parties to the First Restated Revolving Credit Agreement
dated as of March 7, 2003 (as amended to the date hereof, the "Credit
Agreement"). All terms used herein and not otherwise defined shall
have the same meaning given to them in the Credit Agreement.
Pursuant to Section 12.4.1 of the Credit Agreement, the Borrowers have
the right to increase the Aggregate Commitment by obtaining additional
Commitments upon satisfaction of certain conditions. This Amendment
requires only the signature of the Borrowers, the Agent and
the Supplemental Lender so long as the Aggregate Commitment is not
increased above $142,000,000.
The Supplemental Lender is either (a) an existing Lender which is
increasing its Commitment or (b) a new Lender which is a lending
institution whose identity the Agent will approve by its signature
below.
In consideration of the foregoing, such Supplemental Lender, from and
after the date hereof shall have a Commitment of $ , resulting in a
new Aggregate Commitment of $ as of the date hereof, and if it is
a new Lender, the Supplemental Lender hereby assumes all of the rights
and obligations of a Lender under the Credit Agreement.
The Borrowers have executed and delivered to the Supplemental Lender as
of the date hereof, if requested by the Supplemental Lender, a new or
amended and restated Note in the form attached to the Credit Agreement
as Exhibit A to evidence the new or increased Commitment of the
Supplemental Lender.
IN WITNESS WHEREOF, the Agent, the Borrowers and the Supplemental
Lender have
executed this Amendment as of the date shown above.
X. XXXXXXXXX MORTGAGE, INC.
By:
Name:
Title:
X. XXXXXXXXX AMERICAN MORTGAGE,
L.L.C.
By:
Name:
Title:
By:
Its:
Guaranty Bank, as Agent
By:
Its:
