UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
- ----- SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1994
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
- ----- SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission file number 1-6868
LOMAS FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 75-1043392
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1600 Viceroy Drive
Dallas, Texas 75235
(Address of principal executive offices) (Zip Code)
(214) 879-4000
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days. YES X NO
----- -----
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all
documents and reports required to be filed by Sections 12, 13 or
15(d) of the Securities Exchange Act of 1934 subsequent to the
distribution of securities under a plan confirmed by a court.
YES X NO
----- -----
<PAGE>
APPLICABLE ONLY TO CORPORATE ISSUERS:
The number of shares outstanding of each of the issuer's classes of
common stock as of May 10, 1994: Common Stock, $1 par value--
20,099,531 shares.
<PAGE>
FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 1994
LOMAS FINANCIAL CORPORATION AND SUBSIDIARIES
INDEX
Page No.
--------
PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (Unaudited)
Consolidated Balance Sheet --
March 31, 1994 and June 30, 1993 3
Statement of Consolidated Operations --
Quarter and Nine Months Ended
March 31, 1994 and 1993 4
Statement of Consolidated Cash Flows --
Nine Months Ended March 31, 1994 and 1993 5
Notes to Consolidated Financial Statements 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations 11
Liquidity and Capital Resources 16
PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS 18
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 19
SIGNATURES 20
INDEX TO EXHIBITS 21
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEET
LOMAS FINANCIAL CORPORATION AND SUBSIDIARIES
(in thousands)
March 31, 1994 June 30, 1993
-------------- -------------
(Unaudited) (Note)
Assets
Cash and cash equivalents $ 27,096 $ 34,369
First mortgage loans held
for sale 364,440 368,266
Investments 196,210 245,860
Receivables 89,037 87,689
Foreclosed real estate 11,394 18,550
---------- ----------
661,081 720,365
Allowance for losses (10,056) (10,895)
---------- ----------
651,025 709,470
Purchased future mortgage
servicing income rights 386,367 436,487
Fixed assets--net 86,361 70,254
Capitalized computer
software--net 58,150 62,805
Prepaid expenses and other
assets 33,862 35,115
Net assets of discontinued
operations 97,754 110,393
---------- ----------
$1,340,615 $1,458,893
========== ==========
Escrow, agency and fiduciary
funds--see contra $ 863,097 $1,082,591
========== ==========
Liabilities and Stockholders' Equity
Liabilities:
Accounts payable and
accrued expenses $ 85,383 $ 87,296
Notes payable 520,911 416,180
Repurchase agreements -- 99,140
Term notes payable 385,676 392,280
Senior convertible notes
payable 139,918 139,918
---------- ----------
1,131,888 1,134,814
---------- ----------
<PAGE>
Stockholders' Equity:
Common stock 20,100 20,097
Other paid-in capital 309,429 309,410
Retained earnings (deficit) (120,802) (5,428)
---------- ----------
208,727 324,079
---------- ----------
$1,340,615 $1,458,893
========== ==========
Liability for escrow, agency
and fiduciary funds--
see contra $ 863,097 $1,082,591
========== ==========
Note: The balance sheet at June 30, 1993 as presented is derived
from the audited financial statements at that date as
adjusted for comparative purposes.
See notes to consolidated financial statements.<PAGE>
STATEMENT OF CONSOLIDATED OPERATIONS (Unaudited)
LOMAS FINANCIAL CORPORATION AND SUBSIDIARIES
(in thousands, except per share amounts)
Quarter Ended Nine Months Ended
March 31 March 31
------------------ --------------------
1994 1993 1994 1993
-------- ------- --------- --------
Revenues
Mortgage servicing $ 35,303 $36,367 $ 110,838 $108,877
Commissions and fees 11,436 10,159 33,499 30,841
Interest 9,413 9,836 26,922 31,343
Gain on sales 7,445 3,247 19,483 9,404
Investment 4,516 9,018 17,649 23,781
Management fees--affiliates -- 2,700 2,952 8,282
Other--affiliates -- 4,750 5,028 10,287
Other 352 444 5,837 4,595
-------- ------- --------- --------
68,465 76,521 222,208 227,410
-------- ------- --------- --------
Expenses
Interest 19,463 16,976 61,048 55,654
Personnel 21,991 21,657 76,744 62,612
Depreciation and amortization 21,083 19,817 143,936 57,403
Other operating 13,459 12,434 38,386 34,309
Provision for losses 3,138 1,318 6,468 3,720
-------- ------- --------- --------
79,134 72,202 326,582 213,698
-------- ------- --------- --------
Income (loss) from continuing
operations before federal
income tax equivalent
provision (10,669) 4,319 (104,374) 13,712
Federal income tax equivalent
provision -- 800 -- 2,657
-------- ------- --------- --------
Income (loss) from continuing
operations (10,669) 3,519 (104,374) 11,055
Income (loss) from discontinued
operations net of federal
income tax equivalent
provision (7,000) (16) (11,000) 167
-------- ------- --------- --------
Net income (loss) $(17,669) $ 3,503 $(115,374) $ 11,222
======== ======= ========= ========
Earnings (loss) per share:
Income (loss) from continuing
operations $(.53) $.17 $(5.18) $.55
Net income (loss) $(.88) $.17 $(5.73) $.56
Average number of shares 20,135 20,114 20,131 20,117
<PAGE>
Note: Reclassifications have been made to March 31, 1993 financial statements
for comparative purposes.
See notes to consolidated financial statements.<PAGE>
STATEMENT OF CONSOLIDATED CASH FLOWS (Unaudited)
LOMAS FINANCIAL CORPORATION AND SUBSIDIARIES
(in thousands)
Nine Months Ended
March 31
--------------------
1994 1993
--------- --------
Operating activities:
Income (loss) from continuing operations $(104,374) $ 11,055
Noncash items included in the determination of
income (loss) from continuing operations:
Depreciation and amortization 143,936 57,403
Provision for losses 6,468 3,720
Federal income tax equivalent provision -- 2,657
--------- --------
Cash provided by operations before working
capital changes 46,030 74,835
Net change in first mortgage loans held for sale 21,107 50,837
Net change in sundry receivables, payables,
and other assets (37,274) (45,842)
Net cash used by discontinued operations (6,003) (14,262)
--------- --------
Net cash provided by operating activities 23,860 65,568
--------- --------
Investing activities:
Purchases of investments (12,692) (28,069)
Sales of investments 65,627 267,883
Expenditures on foreclosed real estate (1,685) (922)
Sales of foreclosed real estate 15,411 11,369
Net purchases of fixed assets (21,387) (6,462)
Net additions to capitalized computer software (1,738) (4,405)
Purchases of future mortgage servicing income
rights (90,962) (47,652)
Sales of future mortgage servicing income rights 11,694 6,696
Other (2,031) --
Net cash provided by discontinued operations 67,402 95,985
--------- --------
Net cash provided by investing activities 29,639 294,423
--------- --------
Financing activities:
Net borrowings of notes payable 104,730 (139,976)
Net borrowings (repayments) of repurchase
agreements (99,140) (121,116)
Term debt borrowings -- 340,000
Term debt repayments (6,603) (330,822)
Net cash used by discontinued operations (60,005) (88,006)
--------- --------
Net cash used by financing activities (61,018) (339,920)
--------- --------
<PAGE>
Net increase (decrease) in cash and cash equivalents (7,519) 20,071
Net change in cash of discontinued operations 246 907
Cash and cash equivalents at beginning of period 34,369 23,472
--------- --------
Cash and cash equivalents at end of period $ 27,096 $ 44,450
========= ========
See notes to consolidated financial statements.<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
LOMAS FINANCIAL CORPORATION AND SUBSIDIARIES
March 31, 1994
NOTE A -- BASIS OF FINANCIAL STATEMENT PRESENTATION
The accompanying unaudited consolidated financial statements of Lomas
Financial Corporation ("LFC") and its subsidiaries (collectively, the
"Company") have been prepared in accordance with generally accepted
accounting principles for interim financial information and with the
instructions to Form 10-Q and Rule 10-01 of Regulation S-X. They do not
include all of the information or footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation at March 31, 1994 have been
included. Operating results for the nine months ended March 31, 1994 are not
necessarily indicative of the results that may be expected for the fiscal
year ending June 30, 1994. For further information, refer to the
consolidated financial statements and footnotes thereto included in the
annual report on Form 10-K of the Company for the fiscal year ended June 30,
1993.
NOTE B -- EARNINGS PER SHARE
Primary earnings (loss) per share data for the quarter and nine months
ended March 31, 1994 and 1993 is computed using the weighted average number
of shares of common and, when dilutive, common stock equivalents outstanding
during the period. Common stock equivalents include units and shares granted
under the Lomas Financial Corporation 1991 Long Term Incentive Plan for
Nonemployee Directors, the 1991 Stock Incentive Program and the 1993
Intermediate and Long Term Incentive Plan. Common stock equivalents also
include the assumed exercise of dilutive stock options. Fully diluted per
share data is computed on the same basis as primary, but it also assumes (if
dilutive) the conversion of senior convertible notes with the related
adjustments for interest and federal income tax expenses. For the quarter
and nine months ended March 31, 1994 and 1993, the fully diluted per share
data is antidilutive.
NOTE C -- REVERSE INTEREST RATE SWAPS
The Company, through its wholly-owned subsidiary, Lomas Mortgage USA,
Inc. ("Lomas Mortgage"), enters into interest rate swap agreements as a means
of managing its exposure to changes in interest rates. Interest rate swaps
that reduce the exposure of the Company, as a whole, to changes in interest
rates are designated as hedges of the Company's fixed rate debt and treated
as a hedge of the debt. Swap agreements that do not reduce the Company's
exposure to changes in interest rates are not considered to be hedges. The
interest differential to be paid or received on swap agreements that are
treated as hedges is accrued over the life of the agreements as an adjustment
to the interest expense of the related debt. Gains or losses on early
termination of interest rate swap agreements designated as hedges are
recognized over the remaining term of the swap agreement. Interest rate
swaps that are not considered hedges are marked to market quarterly with the
unrealized gain or loss, together with the accrued interest differential,
treated as a gain or loss on such swaps. Under the terms of the swap
agreements in existence at March 31, 1994, the Company receives an annual
fixed rate of interest and pays a floating rate of interest based on the 30-
day average A1/P1 commercial paper rate. The swaps reduced the Company's net
interest expense during the quarter and nine months ended March 31, 1994 by
$3.6 million and $12.0 million, respectively. For the quarter and nine
months ended March 31, 1993, the swaps resulted in total interest savings of
$8.4 million and $13.5 million, respectively, including a $4.8 million gain
on the termination of a swap which was accounted for as speculative.
At March 31, 1994 interest rate swaps in the aggregate notional amount
of $800 million were outstanding, all of which were designated as hedges.
The terms of the swaps provide that the counterparty, under certain
circumstances, can demand collateral from the Company to protect against
mark-to-market exposure attributable to the agreements. In April 1994, as a
result of increases in interest rates, the Company, at the request of the
counterparty, pledged servicing rights related to approximately $2.0 billion
of mortgage loans. As a result of further increases in interest rates after
March 31, 1994, and in anticipation of the possibility of further increases,
the Company is currently negotiating with the counterparty to provide
additional servicing rights related to up to a maximum of $4.8 billion of
mortgage loans as collateral.
The swap agreements contain certain default and termination provisions
whereby the counterparty can terminate the agreements prior to their
maturity, including a provision which permits the counterparty to terminate
if, in its reasonable business judgment, there has been a material adverse
change in the business, assets, operations or financial condition of the
Company.
The Company estimates that if the swap agreements had been terminated as
of March 31, 1994, the Company would have incurred a liability, net of
related deferred income, of approximately $46 million. As a result of
increases in interest rates since that date, if it had terminated as of
May 13, 1994, the Company would have incurred a liability, net of the related
deferred income, of approximately $62 million.
Since its inception in July 1992 and through March 31, 1994, the swap
program has resulted in aggregate reductions in past and future net interest
expense of $42 million, including $12.3 million of deferred income which
currently is being amortized as an offset to future interest expense at the
rate of $821,000 per quarter. Based on interest rates at May 13, 1994, the
swap program was continuing to reduce the Company's net interest expense at
the rate of an additional $1.9 million per quarter. As short term interest
rates rise, the Company's yield on its investible fiduciary funds (which
currently exceed the aggregate notional amount of the swaps) will increase,
thereby offsetting any increase in the floating interest rate paid by the
Company under the swap agreements.
NOTE D -- PURCHASED FUTURE MORTGAGE SERVICING INCOME RIGHTS ("PMSRs")
During the nine months ended March 31, 1994, the Company established
provisions of $80.0 million related to impairment in the carrying value of
PMSRs. This provision results from the unprecedented prepayments that the
Company has experienced and the related revision of estimated future
prepayment speeds.
<PAGE>
PMSRs at March 31, 1994 consisted of the following (in thousands):
Cost of PMSRs $ 523,521
Capitalized excess servicing fees 3,140
---------
526,661
Less: Accumulated amortization (140,294)
---------
$ 386,367
=========
Changes in PMSRs were as follows (in thousands):
Beginning balance at July 1, 1993 $ 436,487
Additions 93,952
Sales and writeoffs (11,891)
Amortization (52,181)
Impairment provision (80,000)
---------
Ending balance at March 31, 1994 $ 386,367
=========
NOTE E -- REVERSE REPURCHASE AGREEMENTS
The Company enters into reverse repurchase agreements with financially
responsible parties. Mortgage assets purchased under agreements to resell are
carried at the amounts of the original purchase price which is calculated at
a percentage of the market price. The reverse repurchase agreements generally
mature within 60 days and are covered 100 percent by binding purchase
commitments issued by responsible financial institutions. The other party is
obligated to repurchase the underlying mortgage assets at the Company's
purchase price plus interest differential. The Company finances the reverse
repurchase agreements primarily through a third party based on a percentage
of the repurchase commitments. At March 31, 1994 the Company had outstanding
reverse repurchase agreements of $30.1 million which was included in first
mortgage loans held for sale and related notes payable totaling
$29.6 million.
NOTE F -- REDUCTION IN FORCE
In January 1994 the Company announced a plan to restructure its
operations, with a view to decreasing expenses and enhancing productivity.
Under the plan, the Company's workforce was reduced by approximately
10 percent. In connection with the plan, the Company's continuing operations
recorded a charge of $5.6 million effective December 31, 1993.
NOTE G -- TRANSACTION WITH AFFILIATES
Lomas Mortgage is a partner and manager of Lomas Mortgage Partnership
(the "Partnership"). The Company owns one-third of the Partnership. On
January 1, 1994 the Company sold PMSRs with a carrying value of approximately
$9.8 million to the Partnership for approximately $8.5 million. The PMSRs
sold had been recently acquired and were expected to yield the Company an
annual return of approximately 13.6%.
<PAGE>
NOTE H -- DISCONTINUED OPERATIONS
Discontinued operations include the Company's short-term lending
operations, which are conducted through a wholly-owned subsidiary, ST
Lending, Inc. ("STL"), and certain other real estate operations.
In fiscal 1992 and 1993, the Company provided $15.4 million of reserves
to cover future operating losses of STL and an additional $11.0 million
during the nine months ended March 31, 1994. For the quarters and nine
months ended March 31, 1994 and 1993, operating losses of $3.2 million, $1.8
million, $8.7 million and $7.9 million, respectively, were charged to these
reserves. The Company completed its review of the operations of STL through
December 1995, which is the projected liquidation date of its term notes. The
analysis projected operating losses on a net basis of approximately $7
million, which has been provided for in the March 1994 quarter and is carried
on the Company's corporate accounts. Operating losses for the quarters ended
March 31, 1994 and 1993 included, respectively, $1.2 million and $0.2 million
provisions for losses on loans and foreclosed real estate. For the nine
months ended March 31, 1994 and 1993, these provisions totaled $3.4 million
and $3.6 million, respectively.
Net assets of discontinued operations at March 31, 1994 were as follows
(in thousands):
Mortgage notes receivable and foreclosed real estate,
net of allowance for losses of $24,585 $154,549
Cash and cash equivalents 9,369
Other assets 2,048
--------
165,966
Less: Secured notes payable (61,987)
Accrued interest payable and other (2,390)
Reserves for estimated future operating losses (3,835)
--------
Net assets $ 97,754
========
The yield on STL's earning loans ($49.4 million) at March 31, 1994 was
approximately 7.60 percent, on its earning real estate ($36.2 million) was
approximately 11.4 percent, and on its cash (invested primarily in high-grade
commercial paper) was approximately 3.5 percent. The interest rate on STL's
debt outstanding at that date was 5.25 percent.
During the nine months ended March 31, 1994, STL made principal payments
aggregating $60.0 million on its secured notes, thereby reducing the balance
thereof to $62.0 million. The secured notes are without recourse to the
Company or any subsidiary other than STL. Subsequent to March 31, 1994, STL,
under the terms of the reinstated liquidity support agreement, advanced $6.2
million to LFC for the interest payment in the total amount of $6.3 million
due April 30, 1994 on LFC's $140 million of convertible notes due 2003.
Loan commitments are made to accommodate the financial needs of the
Company's borrowers and are subject to the Company's normal credit policies.
Guarantees and other commitments include standby letters of credit, financial
guarantees and performance guarantees made by the Company to third parties on
behalf of borrowers in connection with the Company's short term lending
operations. Even though this segment of business is discontinued, the
guarantees remain in effect. The credit risk of these arrangements
essentially is the same as that involved in extending loans. Outstanding
commitments and guarantees at March 31, 1994 were as follows (in thousands):
Loan commitments on existing short term construction,
acquisition and development loans $3,504
Guarantees and other commitments $1,196
NOTE I -- CONTINGENT LIABILITIES
On September 17, 1990 plaintiffs purporting to represent a class of
single-family mortgagors having escrow deposits computed by Lomas Mortgage
filed a class-action complaint in Illinois. The complaint alleges that Lomas
Mortgage is in breach of mortgage contracts and is assessing excessive and
unlawful escrow deposits and, in addition, the complaint asks for punitive
damages. On October 4, 1990 this lawsuit was removed to the United States
District Court for the Northern District of Illinois. Mortgagors have filed
similar class-actions in California and Minnesota and class-action
counterclaims in two pending Illinois foreclosure actions. The state court
actions were removed to federal court and transferred to the Northern
District of Illinois where they are currently pending before the same judge
as the original action. The state court counterclaims are stayed.
Management believes that the Company's calculation of escrow balances is
in accordance with mortgage contracts and Real Estate Settlement Procedures
Act ("RESPA") regulations. Similar lawsuits based on escrow balances have
also been brought against other mortgage banking companies. The ultimate
liability with respect to this contingency is not presently determinable but
an adverse settlement or judgment may require the Company to repay escrow
monies to mortgagors or otherwise reduce the Company's escrow balances which
would also result in a higher cost of funds to the Company, potentially
negatively impacting the Company's results of operations. Assessment of
punitive damages in this litigation could also potentially negatively impact
the Company's results of operations. Management does not believe that any
losses incurred as a result of this litigation will have a material adverse
effect on the financial condition of Lomas Mortgage or the Company.
The Company is also involved in a number of other lawsuits considered to
be in the normal course of business. In management's opinion, the resolution
of these other disputes will not have a material adverse effect on the
financial condition of the Company.
NOTE J -- SUPPLEMENTAL CASH FLOW INFORMATION
The following table provides certain cash and noncash information (in
thousands):
Nine Months Ended
March 31
-------------------
1994 1993
-------- --------
Interest paid:
Continuing operations $56,986 $41,466
Discontinued operations 4,189 9,343
NOTE K -- LIQUIDITY
See "Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations--Liquidity and Capital Resources" for a discussion
regarding the Company's loan covenants and liquidity.
<PAGE>
NOTE L -- SUBSEQUENT EVENT
On May 13, 1994 the Company announced that in response to indications of
interest from a number of parties it hopes to enter into an agreement related
to the sale of its information systems unit within the next 90 days. Pending
such possible sale, the Company intends to continue its review with an
investment banker of various strategic options concerning its mortgage
banking unit.
The Company had previously announced that it had retained an investment
banker to assist it in evaluating strategic alternatives to maximize
stockholder values and is considering various options including the
possibility of merging with or being acquired by another institution.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations
The Company's consolidated operations resulted in a net loss for the
quarter ended March 31, 1994 of $17.7 million compared to net income of $3.5
million for the March 31, 1993 quarter. For the nine months ended March 31,
1994, the net loss was $115.4 million compared to net income of $11.2 million
for the nine months ended March 31, 1993.
The operating results of the Company during the quarters and nine months
ended March 31, 1994 and 1993 were as follows (in thousands):
Quarter Ended Nine Months Ended
March 31 March 31
------------------ -------------------
1994 1993 1994 1993
-------- ------- --------- --------
Continuing operations:
Mortgage banking $ 209 $11,907 $ 9,431 $ 28,076
Information systems (5,923) (4,061) (17,427) (11,465)
Other 303 1,500 5,275 11,634
-------- ------- --------- --------
(5,411) 9,346 (2,721) 28,245
General and administrative (2,058) (1,729) (6,345) (5,386)
Corporate interest (3,200) (3,298) (9,738) (9,147)
-------- ------- --------- --------
Income (loss) from
continuing operations
before special
provisions (10,669) 4,319 (18,804) 13,712
Provision for reduction in
force -- -- (5,570) --
Provision related to
impairment of PMSRs -- -- (80,000) --
-------- ------- --------- --------
Income (loss) from
continuing operations
before federal income tax
equivalent provision (10,669) 4,319 (104,374) 13,712
Federal income tax equivalent
provision -- 800 -- 2,657
-------- ------- --------- --------
Income (loss) from
continuing operations (10,669) 3,519 (104,374) 11,055
Income (loss) from
discontinued operations (7,000) (16) (11,000) 167
-------- ------- --------- --------
Net income (loss) $(17,669) $ 3,503 $(115,374) $ 11,222
======== ======= ========= ========
<PAGE>
Mortgage Banking
The mortgage banking division's operations during the March 1994 quarter
generated $67.2 million in revenues, down from $74.5 million in the same
quarter last year. The Company's mortgage banking continuing operations
produced pretax income during the March 1994 quarter of $0.2 million compared
to pretax income of $11.9 million in the same quarter last year. For the nine
months ended March 31, 1994, the operating loss, after the special
provisions, was $75.7 million compared to income of $28.1 million for the
nine months ended March 31, 1993.
The mortgage banking division's revenues, expenses, and net
contributions from continuing operations for the quarters and nine months
ended March 31, 1994 and 1993 were derived from the following sources
(in millions):
<PAGE>
<TABLE>
<CAPTION>
Quarter Ended March 31 Nine Months Ended March 31
------------------------------- ---------------------------------
1994 1993 1994 1993
-------------- -------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Loan administration
Primary servicing $ 33.0 $ 33.1 $102.4 $100.9
Master servicing 2.6 3.7 9.3 9.6
Expenses (17.0) (16.6) (50.3) (48.9)
Amortization (excluding
impairment provision) (17.0) $ 1.6 (15.7) $ 4.5 (52.2) $ 9.2 (45.9) $ 15.7
------ ------- ------ ------
Insurance
Agency 2.0 2.0 6.1 5.9
Mortgage plans 1.2 1.1 3.7 3.3
Expenses (1.2) 2.0 (1.2) 1.9 (3.5) 6.3 (3.5) 5.7
------ ------- ------ ------
Banking (including
warehousing and
investment income and
interest expense)
Revenues 10.6 14.9 34.9 37.9
Expenses (16.1) (5.5) (14.3) 0.6 (51.0) (16.1) (48.0) (10.1)
------ ------- ------ ------
Portfolio production
Revenues 14.2 7.2 37.4 22.6
Expenses (7.4) 6.8 (3.9) 3.3 (20.9) 16.5 (9.3) 13.3
------ ------- ------ ------
Field services
Revenues 3.4 3.9 10.9 11.6
Expenses (3.2) 0.2 (3.5) 0.4 (10.0) 0.9 (10.6) 1.0
------ ------- ------ ------
<PAGE>
Fund and asset management
Revenues -- 7.7 8.3 19.8
Expenses -- -- (1.7) 6.0 (2.1) 6.2 (4.1) 15.7
------ ------- ------ ------
Other departments
Revenues 0.2 0.9 1.2 2.8
Expenses (0.9) (0.7) (1.8) (0.9) (2.5) (1.3) (6.2) (3.4)
------ ------- ------ ------
General and
administrative expense (4.2) (3.9) (12.3) (9.8)
----- ------ ------ -------
Operating income before
special provisions 0.2 11.9 9.4 28.1
Provision for reduction
in force -- -- (5.1) --
Provision related to PMSR
impairment -- -- (80.0) --
----- ------ ------ -------
$ 0.2 $11.9 $(75.7) $ 28.1
===== ====== ====== =======
<FN>
Note: Certain reclassifications have been made to the March 31, 1993 financial statement for
comparative purposes.
</FN>
</TABLE>
<PAGE>
Loan administration operating income at March 31, 1994 was $1.6 million,
down from $4.5 million for the same quarter last year principally because
portfolio amortization at $17.0 million in the March 1994 quarter was $1.3
million higher than in the March 1993 quarter and master servicing revenues
at $2.6 million in the March 1994 quarter were $1.1 million lower than in the
March 1993 quarter. The decrease in master servicing revenues was principally
a result of the decline in the master servicing portfolio to $8.9 billion
during the March 1994 quarter, down from $13.7 billion at March 31, 1993,
which was caused by unusually high rates of runoff (particularly of Capstead
Mortgage Corporation related mortgages) and the cessation of additions of new
Capstead related loans to the Company's master servicing portfolio. For the
nine months ended March 31, 1994 and 1993, loan administration operating
income before the $80 million provision in the 1994 period for PMSR
impairment was $9.2 million and $15.7 million, respectively. This $6.5
million decline was attributable principally to the fact that portfolio
amortization expense was $6.6 million higher in the 1994 period than in the
1993 period. Significantly, the rate of mortgage refinancings declined during
the March 1994 quarter, and, as a result, the Company's portfolio runoff rate
on an annualized basis dropped from 45.3 percent in the December 1993 quarter
to 29.3 percent during the March 1994 quarter. The Company's booked
investment in its $34.4 billion primary mortgage servicing portfolio was
$386.4 million at March 31, 1994.
The following is an analysis of servicing fee income for the quarters
and nine months ended March 31, 1994 and 1993 (in thousands).
Quarter Ended Nine Months Ended
March 31 March 31
----------------- -------------------
1994 1993 1994 1993
------- ------- -------- --------
Servicing fee income:
Primary:
Directly owned $31,308 $32,268 $ 98,093 $ 98,915
Subservicing for others 1,630 851 4,307 1,971
------- ------- -------- --------
32,938 33,119 102,400 100,886
Master servicing portfolio 2,643 3,651 9,296 9,587
------- ------- -------- --------
Total $35,581 $36,770 $111,696 $110,473
======= ======= ======== ========
<PAGE>
The following table sets forth certain information regarding the
Company's servicing portfolio (dollars in millions):
March 31, 1994 June 30, 1993
-------------- -------------
Portfolio principal balances:
Primary:
Directly owned $27,354 $27,760
Subservicing for others 7,085 4,917
------- -------
34,439 32,677
Master servicing portfolio 8,901 12,539
------- -------
$43,340 $45,216
======= =======
Portfolio loan count:
Primary:
Directly owned 486,815 530,706
Subservicing for others 93,606 74,949
------- -------
580,421 605,655
Master servicing portfolio 142,999 169,302
------- -------
723,420 774,957
======= =======
Weighted average interest rate 8.3% 8.8%
Compared to the $0.6 million of net income reported for the quarter
ended March 31, 1993, the banking unit's operations resulted in a net expense
of $5.5 million for the quarter ended March 31, 1994. Paid-in-full ("PIF")
interest, which is incurred when loans securing payment of mortgage-backed
securities in the Company's primary servicing portfolio are prepaid prior to
the end of a given month, at $4.0 million for the quarter ended March 31,
1994 was $0.7 million higher than the $3.3 million in the same quarter last
year. However, this is a $2.5 million decrease from the prior quarter ended
December 31, 1993. Net interest savings from the Company's interest rate swap
agreements was $3.6 million for the quarter ended March 31, 1994, compared to
$8.4 million for the March 31, 1993 quarter; and for the comparable nine-
month periods ended March 31, such savings decreased from $13.5 million in
1993 to $12.0 million in 1994.
Net income from portfolio production for the quarter ended March 31,
1994 was $6.8 million, a $3.5 million increase over the $3.3 million reported
for the same period last year. Revenues were $7 million higher in the 1994
quarter than in 1993. Portfolio production during the March 1994 quarter
totaled $4.4 billion, up from $2.3 billion in the March 1993 quarter, and
exceeded the quarter's portfolio runoff by $1.7 billion.
There was no income from the fund and asset management unit in the March
1994 quarter because the Company's management agreement with Capstead
Mortgage Corporation ("Capstead") terminated on September 30, 1993.
Compared to the nine-month period ended March 31, 1993, the mortgage
banking division's general and administrative costs increased during the 1994
nine-month period principally as a result of increased legal expenses and
other external professional fees.
The Company established provisions of $30.0 million and $80 million,
respectively, for the quarter and six months ended December 31, 1993 for
impairment in the carrying value of its PMSRs in response to the
unprecedented level of mortgage prepayments in such periods. In addition, the
Company's mortgage banking division also established at December 31, 1993 a
$5.1 million provision to cover the cost of the reduction-in-force that
occurred in January 1994.
Interest Rate Fluctuations and Market Factors
Lower long term interest rates normally increase new mortgage loan
production volume, which in turn increases fee income and the net interest
spread as a result of the higher average volume of mortgages held for sale.
Lower long term rates also increase prepayment speeds of mortgages on which
PMSRs are currently held, which lowers yields realized on the Company's
investment in PMSRs. Increased prepayment speeds also accelerate PIF
interest expense owed to certain investors. PIF interest is the partial
monthly interest in the month of payoff that is not payable by the mortgagor,
but is receivable by the mortgage security holder.
Higher long term interest rates normally decrease the general volume of
new mortgage originations, decreasing the volume of mortgages held for sale.
These conditions result in reduced fee income and reduced net interest
income. However, the Company's average net yield as a percentage of the
balance held may increase if short term rates do not change by a
corresponding degree. Higher long term rates also decrease the prepayment
speed of mortgages on which PMSRs are currently held, which in turn would
increase the yield on the Company's investment in PMSRs. Decreased
prepayment speeds will also decrease PIF interest expense due to loans which
payoff.
Lower short term interest rates increase the Company's net interest
spread on mortgages held for sale and higher short term interest rates
decrease the net yield on mortgages held for sale unless there is a
corresponding increase in long term interest rates.
The value of the Company's loan servicing portfolio may be adversely
affected if mortgage interest rates decline and loan prepayments increase.
Periods of accelerated prepayments may result in future declines of income
generated from the Company's loan servicing portfolio. During periods of
declining interest rates, mortgage loan prepayment speeds tend to increase,
which decreases the expected cash flow from the servicing portfolio and
reduces the yield and the value of PMSRs. Conversely, if mortgage interest
rates increase, the value of the Company's loan servicing portfolio may be
positively affected (see NOTE C -- REVERSE INTEREST RATE SWAPS regarding the
impact of changes in interest rates on the market value of the Company's
reverse interest rate swaps).
<PAGE>
Information Systems
The following table presents a summary of Lomas Information Systems
("LIS") revenues, expense and net operating results during the quarters and
nine-month periods ended March 31, 1994 and 1993 (in thousands):
Quarter Ended Nine Months Ended
March 31 March 31
------------------- ------------------
1993 1992 1993 1992
-------- -------- -------- --------
Revenues:
External $ 4,632 $ 3,030 $ 12,550 $ 9,558
Internal 5,237 5,343 15,545 15,815
-------- -------- -------- --------
9,869 8,373 28,095 25,373
-------- -------- -------- --------
Cash expenses:
Personnel and contract labor (5,166) (5,071) (15,140) (16,391)
Equipment/software rent and
maintenance (4,609) (4,445) (13,609) (13,350)
Voice communications (1,332) (854) (3,609) (2,798)
General and administrative (2,527) (2,792) (7,018) (7,876)
-------- -------- -------- --------
(13,634) (13,162) (39,376) (40,415)
-------- -------- -------- --------
Net cash requirement (3,765) (4,789) (11,281) (15,042)
Noncash items:
Depreciation and amortization (2,278) (2,194) (6,691) (6,427)
Enhancement capitalization 213 980 661 3,324
Charges to conversion
reserves -- 1,942 -- 6,596
Provision for losses (93) -- (116) 84
-------- -------- -------- --------
Net pretax loss $ (5,923) $ (4,061) $(17,427) $(11,465)
======== ======== ======== ========
LIS recorded a pretax loss in the quarter ended March 31, 1994 of $5.9
million compared to $4.1 million for the same quarter last year. During the
quarter ended March 31, 1993, $1.9 million of expenses incurred relating to
the conversion of existing customers to the MLS system were charged to
previously provided conversion reserves and costs incurred relating to
enhancement of the MLS system of $1.0 million were capitalized. On a net cash
basis, LIS' loss in the March 31, 1994 quarter was $3.8 million or $1.0
million less than the $4.8 million cash loss reported for the same quarter in
1993.
<PAGE>
Other
The other operations of the Company produced pretax income of
$0.3 million for the quarter ended March 31, 1994 compared to $1.5 million
for the quarter ended March 31, 1993. For the nine months ended March 31,
1994 and 1993, other income was $5.3 million and $11.6 million, respectively.
During the quarter and nine months ended March 31, 1994, the other operating
results included a loss of $0.9 million and $2.4 million, respectively, from
Intellifile, the Company's image-processing operations. During the nine
months ended March 31, 1994, the Company recorded a gain of $1.4 million on
the sale of a promissory note, which had been received by the Company in
connection with the sale of its life insurance operations. Amendments to
certain contractual provisions related to the Company's 1991 sale of ELLCO
Leasing Corporation added $3.9 million in other income in the nine months
ended March 31, 1994. Also, amendments to the Company's relationship with
Capstead contributed $3.0 million in other income for the nine months ended
March 31, 1993.
Discontinued Operations
In fiscal 1992 and 1993, the Company provided $15.4 million of reserves
to cover future operating losses of STL and an additional $11.0 million
during the nine months ended March 31, 1994. For the quarters and nine
months ended March 31, 1994 and 1993, operating losses of $3.2 million, $1.8
million, $8.7 million and $7.9 million, respectively, were charged to these
reserves. The Company completed its review of the operations of STL through
December 1995, which is the projected liquidation date of its term notes. The
analysis projected operating losses on a net basis of approximately
$7 million, which has been provided for in the March 1994 quarter and is
carried on the Company's corporate accounts. Operating losses for the
quarters ended March 31, 1994 and 1993 included, respectively, $1.2 million
and $0.2 million provisions for losses on loans and foreclosed real estate.
For the nine months ended March 31, 1994 and 1993, these provisions totaled
$3.4 million and $3.6 million, respectively. At March 31, 1994, STL's
allowance for losses (excluding the $7 million corporate provision) totalled
$21.4 million.
Liquidity and Capital Resources
The capital and credit resources of the Company at March 31, 1994
included (in millions):
Short term debt of Lomas Mortgage:
--Secured by first mortgage loans pending delivery
to permanent investors $ 316.3
--Secured by reverse repurchase agreements 29.6
--Secured by high quality short term investments 152.1
--Borrowings under working capital lines of credit 22.0
--Other short term debt 0.9
--------
520.9
--------
<PAGE>
Term debt of Lomas Mortgage:
--Notes due in 1997 150.0
--Notes due in 2002 190.0
--Other 45.7
--------
385.7
--------
Term notes of STL due in 1996 62.0
Convertible notes of LFC due in 2003 139.9
Stockholders' equity 208.7
--------
$1,317.2
========
Short term debt was $520.9 million at March 31, 1994, including $152.1
million principal amount borrowed under investment lines of credit and $316.3
million principal amount of warehouse debt secured by single-family mortgage
loans pending delivery to permanent investors. Investment lines of credit
were secured by high quality short term investments purchased with the
proceeds of such lines of credit. The short term notes payable under reverse
repurchase agreements are secured by single-family mortgage loans which, at
that date, were committed for sale to institutional investors. Such short
term notes (and therefore the related warehouse indebtedness) normally
revolve every 30 to 60 days. Thus, the short term notes and notes payable
under reverse repurchase agreements are self-liquidating and require no
supplemental liquidity support from LFC or any of its subsidiaries. The
Company's aggregate warehouse line of credit was increased to $580 million
from $317.5 million during the nine months ended March 31, 1994, and total
short term warehouse credit availability was increased to $780 million.
Commercial paper and bank certificates of deposit of non-affiliated
commercial banks are funded with proceeds from, and are pledged as collateral
for, investment lines of credit. The commercial paper and bank certificates
of deposit have fixed rates of interest and generally mature within 31 days,
at which time the investment lines of credit are paid down. As a result, all
short term indebtedness is self-liquidating and none of it constitutes any
burden on operating cash flow.
Lomas Mortgage had outstanding at March 31, 1994 interest rate swaps in
the aggregate notional amount of $800 million, all of which were designated
as hedges. For more information on the interest rate swaps, see NOTE C --
REVERSE INTEREST RATE SWAPS.
Coverage for the term notes payable of Lomas Mortgage is provided by
cash internally generated by that subsidiary. Lomas Mortgage's operations
during the nine months ended March 31, 1994, after paying interest on its
short term debt, generated $89.2 million in cash available for (i) payment of
interest on the subsidiary's $385.7 million of term debt, (ii) investment in
portfolio maintenance and growth, (iii) intercompany advances or payment of
dividends to LFC (subject to restricted payment limitations described below),
and (iv) addition to Lomas Mortgage's working capital.
<PAGE>
Under the terms of the warehouse and investment lines of credit that
contain the most restrictive covenants, Lomas Mortgage is restricted from
making any intercompany advances or dividend payments to LFC if, after giving
effect thereto, the aggregate amount of such payments should exceed the sum
of (i) $25 million (less any intercompany advances); plus (ii) 50 percent of
Lomas Mortgage's accumulated consolidated income before tax since October 1,
1992; or reduced by 100 percent of consolidated loss before income taxes;
plus (iii) the aggregate net cash proceeds received from the issuance or sale
after November 30, 1993, of capital stock and warrants, options and rights to
purchase its capital stock. The maximum amount available for dividends or
intercompany advances from Lomas Mortgage to LFC as of March 31, 1994 was
$0.2 million.
Effective March 31, 1994, the minimum net worth requirement of Lomas
Mortgage is $200 million under the most restrictive covenants of Lomas
Mortgage's warehouse and investment lines of credit. Lomas Mortgage's net
worth, determined in accordance with such lines of credit, was $213.9 million
at March 31, 1994.
Coverage for (i) interest payments on LFC's $140 million of convertible
notes due 2003, (ii) general corporate expenses and (iii) additional advances
to LIS to date have been and in the future are expected to be provided by (a)
LFC's current cash resources, (b) dividends or intercompany advances from
Lomas Mortgage, (c) cash dividends and interest income on other investments,
(d) reinstated liquidity support trust that is provided by STL, and (e)
periodic liquidations of other assets. Subsequent to March 31, 1994, STL,
under the terms of the reinstated liquidity support agreement, advanced $6.2
million to LFC for the interest payment in the total amount of $6.3 million
due April 30, 1994 on LFC's $140 million of convertible notes due 2003.
As of March 31, 1994, the Company's failure to meet certain ratio
requirements contained in the covenants of the Company's $140 million senior
convertible note indenture, while not an event of default, limits the
Company's ability to issue additional term debt.
STL's term notes are related to the Company's discontinued short term
lending operations and are without recourse to the general credit and
resources of LFC or its other subsidiaries. The STL notes are secured by
STL's investments in short term real estate loans and related assets and will
be self-liquidating as the collateral is retired or otherwise liquidated over
the next two years. At March 31, 1994 collateral securing payments of STL's
notes included $49.4 million of earning short term real estate loans, $36.2
million of earning REO, $76.8 million of other REO and approximately $9.3
million of cash. The collateral securing the STL Notes, net of reserves of
$21.4 million and including other assets of $1.0 million, was carried at
March 31, 1994 on STL's books at $151.3 million.
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On September 17, 1990 the plaintiffs purporting to represent a class of
single-family mortgagors having escrow deposits computed by Lomas Mortgage
filed a class-action complaint in Illinois. The complaint alleges that Lomas
Mortgage is in breach of mortgage contracts and is assessing excessive and
unlawful escrow deposits and in addition the complaint asks for punitive
damages. On October 4, 1990 this lawsuit was removed to the United States
District Court for the Northern District of Illinois. Mortgagors have filed
similar class-actions in California and Minnesota and class-action
counterclaims in two pending Illinois foreclosure actions. The state court
actions were removed to federal court and transferred to the Northern
District of Illinois where they are currently pending before the same judge
as the original action. The state court counterclaims are stayed.
Management believes that the calculation of escrow balances is in
accordance with mortgage contracts and RESPA regulations. Similar lawsuits
based on escrow balances have also been brought against other mortgage
banking companies. The ultimate liability with respect to this contingency
is not presently determinable but an adverse settlement or judgment may
require the Company to repay escrow monies to mortgagors or otherwise reduce
the Company's escrow balances which would also result in a higher cost of
funds to the Company, potentially negatively impacting the Company's results
of operations. Assessment of punitive damages in connection with the
litigation could also potentially negatively impact the Company's results of
operations. Management does not believe that any losses incurred as a result
of this litigation will have a material adverse effect on the financial
condition of Lomas Mortgage or the Company.
The Company is involved from time to time in litigation incidental to
its business. Management believes that the outcome of current litigation
will not have a material adverse effect upon the financial condition of the
Company.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
Exhibit
Number
-------
(10.1) Ninth Amendment to Servicing Payments Loan and Security
Agreement dated January 18, 1994 among Lomas Mortgage USA,
Inc., the bank signatories thereto and Bank One, Texas, N.A.
as agent.
(10.2) Tenth Amendment to Servicing Payments Loan and Security
Agreement dated March 31, 1994 among Lomas Mortgage USA, Inc.,
the bank signatories thereto and Bank One, Texas, N.A. as
agent.
<PAGE>
(10.3) Fifth Amendment to Restated Loan and Security Agreement dated
March 31, 1994 among Lomas Mortgage USA, Inc., the bank
signatories thereto and Bank One, Texas, N.A., as
administrative agent, and Texas Commerce Bank National
Association, as syndication agent.
(10.4) Amended and Restated Master Pledge Agreement dated April 8,
1994 between Lomas Mortgage USA, Inc. and Lehman Brothers
Special Financing Inc.
(10.5) Master Repurchase Agreement dated April 11, 1994 between Lomas
Mortgage USA, Inc. and DLJ Mortgage Capital, Inc.
(10.6) First Amendment to Master Repurchase Agreement dated April 11,
1994 between Lomas Mortgage USA, Inc. and DLJ Mortgage
Capital, Inc.
(10.7) Liquidity Support Trust Agreement dated April 12, 1994 among
the registrant and ST Lending, Inc., Bank One, Texas, N.A., as
trustee, and Wilmington Trust Company, as Liquidity Support
Trustee.
(10.8) 3/94 Senior Secured Working Capital Credit Agreement dated
March 21, 1994 between Lomas Mortgage USA, Inc. and Texas
Commerce Bank National Association.
(10.9) Employment Agreement dated March 1, 1994 between the
registrant and David L. Chapman II.
(10.10) Employment Agreement dated March 1, 1994 between the
registrant and Gary H. Kell.
(10.11) Amended and Restated Severance Agreement dated March 31, 1994
between the registrant and Michael E. Patrick.
(10.12) 3/94 (second) Amendment to 6/93 Servicing Purchase Loan
Agreement dated March 31, 1994 between Lomas Mortgage USA,
Inc. and Texas Commerce Bank National Association.
(10.13) 3/31/94 Amendment to 3/94 Senior Secured Working Capital
Credit Agreement dated March 31, 1994 between Lomas Mortgage
USA, Inc. and Texas Commerce Bank National Association.
(11) Computation of Earnings Per Share.
(b) Reports on Form 8-K:
Form 8-K dated March 22, 1994 reporting the Company's retaining Salomon
Brothers, Inc. to assist in evaluating strategic alternatives to
maximize stockholder values. Options being considered include the
possibility of merging with or being acquired by another institution. No
financial statements were filed.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
LOMAS FINANCIAL CORPORATION
Date: May 16, 1994 By: /s/JESS HAY
--------------------------
Jess Hay
Chairman and Chief
Executive Officer
Date: May 16, 1994 By: /s/GARY WHITE
--------------------------
Gary White
Senior Vice President and
Controller<PAGE>
LOMAS FINANCIAL CORPORATION
INDEX TO EXHIBITS
Sequentially
Numbered
Exhibit No. Page
- ----------- ------------
(10.1) Ninth Amendment to Servicing Payments Loan 21
and Security Agreement dated January 18, 1994
among Lomas Mortgage USA, Inc., the bank
signatories thereto and Bank One, Texas,
N.A., as agent.
(10.2) Tenth Amendment to Servicing Payments Loan 26
and Security Agreement dated March 31, 1994
among Lomas Mortgage USA, Inc., the bank
signatories thereto and Bank One, Texas,
N.A., as agent.
(10.3) Fifth Amendment to Restated Loan and 29
Security Agreement dated March 31, 1994
among Lomas Mortgage USA, Inc., the bank
signatories thereto and Bank One, Texas,
N.A., as administrative agent, and Texas
Commerce Bank National Association, as
syndication agent.
(10.4) Amended and Restated Master Pledge Agreement 36
dated April 8, 1994 between Lomas Mortgage
USA, Inc. and Lehman Brothers Special
Financing Inc.
(10.5) Master Repurchase Agreement dated April 11, 51
1994 between Lomas Mortgage USA, Inc. and
DLJ Mortgage Capital, Inc.
(10.6) First Amendment to Master Repurchase 72
Agreement dated April 11, 1994 between
Lomas Mortgage USA, Inc. and DLJ Mortgage
Capital, Inc.
(10.7) Liquidity Support Trust Agreement dated 73
April 12, 1994 among the registrant
and ST Lending, Inc., Bank One, Texas, N.A.,
as trustee, and Wilmington Trust Company, as
Liquidity Support Trustee.
(10.8) 3/94 Senior Secured Working Capital Credit 95
Agreement dated March 21, 1994 between Lomas
Mortgage USA, Inc. and Texas Commerce Bank
National Association.
<PAGE>
(10.9) Employment Agreement dated March 1, 1994 144
between the registrant and
David L. Chapman II.
(10.10) Employment Agreement dated March 1, 1994 146
between the registrant and Gary H. Kell.
(10.11) Amended and Restated Severance Agreement 149
dated March 31, 1994 between the
registrant and Michael E. Patrick.
(10.12) 3/94 (second) Amendment to 6/93 Servicing 156
Purchase Loan Agreement dated March 31, 1994
between Lomas Mortgage USA, Inc. and Texas
Commerce Bank National Association.
(10.13) 3/31/94 Amendment to 3/94 Senior Secured 158
Working Capital Credit Agreement dated
March 31, 1994 between Lomas Mortgage USA,
Inc. and Texas Commerce Bank National
Association.
(11) Computation of Earnings Per Share. 160
EXHIBIT 10.1
NINTH AMENDMENT TO SERVICING PAYMENTS
LOAN AND SECURITY AGREEMENT
THIS AMENDMENT is entered into as of January 18, 1994, between LOMAS
MORTGAGE USA, INC., a Connecticut corporation (the "Company"), the banks
listed on the signature pages of this amendment ("Banks"), and BANK ONE,
TEXAS, N.A., as agent for Banks (in that capacity "Agent").
The Company, Banks, and Agent have entered into the Servicing Payments
Loan and Security Agreement dated as of February 11, 1992 (as amended through
the date of this amendment and as further renewed, extended, amended, and
restated, the "Loan Agreement"), providing for loans to the Company on a
revolving basis up to $25,000,000 outstanding at any time. The Company has
requested an amendment to the Loan Agreement in order to add a new Private
Servicing Agreement to Schedule 1.3 of the Loan Agreement. Accordingly, for
valuable and acknowledged consideration, the Company, Banks, and Agent agree
as follows:
1. Certain Definitions. Unless otherwise stated in this amendment (a)
terms defined in the Loan Agreement have the same meanings when used in this
amendment and (b) references to "Sections" and "Schedules" are to sections
and schedules of or to the Loan Agreement.
2. Amendment. Schedule 1.3 is entirely amended in the form of -- and
all references in the Loan Papers to it are changed to -- the attached
Amended Schedule 1.3.
3. Conditions Precedent. Paragraph 2 above is not effective until
Agent and Banks (a) receive counterparts of this amendment executed by each
party listed below and (b) each document and other item listed on the
attached Annex A.
4. Ratifications. This amendment modifies and supersedes all
inconsistent terms and provisions of the Loan Papers, and, except as
expressly modified and superseded by this amendment, the Loan Papers are
ratified and confirmed and continue in full force and effect. The Company,
Banks, and Agent agree that the Loan Papers as amended by this amendment
continue to be legal, valid, binding, and enforceable in accordance with
their respective terms. Without limiting the generality of the foregoing,
the Company ratifies and confirms that all Liens (except as amended by this
amendment) heretofore granted to Agent, on behalf of Banks, were intended to,
do, and continue to secure the full payment and performance of the
Obligations, and the Company agrees to perform such acts and duly authorize,
execute, acknowledge, deliver, file, and record such additional assignments,
security agreements, modifications or amendments to any of the foregoing, and
such other agreements, documents, and instruments as Agent or any Bank may
reasonably request in order to perfect and protect those Liens and preserve
and protect the rights of Agent and Banks in respect of all present and
future Collateral.
5. Representations and Warranties. The Company represents and
warrants to Banks and Agent that (a) this amendment and the Loan Papers to be
delivered under this amendment have been duly executed and delivered by the
Company, (b) no action of, or filing with, any Tribunal is required to
authorize, or is otherwise required in connection with, the execution,
delivery, and performance by the Company of this amendment and the Loan
Papers to be delivered under this amendment, (c) this amendment and the Loan
Papers to be delivered under this amendment are valid and binding upon the
Company and are enforceable against the Company in accordance with their
respective terms, except as limited by the Bankruptcy Code of the United
States of America and all other similar Laws affecting the rights of
creditors generally, (d) the execution, delivery and performance by the
Company of this amendment and the Loan Papers to be delivered under this
amendment do not require the consent of any other Person and do not and will
not constitute a violation of any laws, agreement, or understanding to which
the Company is a party or by which the Company is bound, (e) the
representations and warranties contained in the Loan Agreement, as amended by
this amendment, are true and correct in all material respects except to the
extent that (i) the representations and warranties speak to a specific date
or (ii) the facts on which the representations and warranties were based have
been changed by transactions contemplated or permitted by the Loan Agreement
as of the date of this amendment, (f) as of the date of this amendment, no
Event of Default or Potential Default has occurred and is continuing, and (g)
no change in the financial condition or prospect of the Company which could
reasonably be expected to be a Material Adverse Event has or will have
occurred.
6. References. All references in the Loan Papers to the "Loan
Agreement" refer to the Loan Agreement as amended by this amendment, and,
because this amendment is a "Loan Paper" referred to in the Loan Agreement,
then the provisions relating to Loan Papers in Section 10 are incorporated in
this amendment by reference, the same as if set forth verbatim in this
amendment.
7. Counterparts. This amendment may be executed in any number of
counterparts with the same effect as if all signatories had signed the same
document. All counterparts must be construed together to constitute one and
the same instrument.
8. Parties Bound. This amendment binds and inures to the Company,
Agent, each Bank, and, subject to Section 10.10, their respective successors
and assigns.
<PAGE>
9. ENTIRETY. THIS AMENDMENT, THE LOAN AGREEMENT AS AMENDED BY THIS
AMENDMENT, AND THE OTHER LOAN PAPERS REPRESENT THE FINAL AGREEMENT BETWEEN
THE PARTIES FOR THE TRANSACTIONS THEREIN, AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BY THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
[REST OF PAGE INTENTIONALLY LEFT BLANK]<PAGE>
EXECUTED as of the date first stated in this amendment.
LOMAS MORTGAGE USA, INC., as the Company BANK ONE, TEXAS, N.A., as Agent
and a Bank
By /s/ROBERT E. BYERLEY, JR. By /s/KATHLEEN C. STEWART
----------------------------------- -------------------------
Robert E. Byerley, Jr., Kathleen C. Stewart,
Senior Vice President & Treasurer Vice President
GUARANTY FEDERAL BANK, F.S.B., as a Bank TEXAS COMMERCE BANK NATIONAL
ASSOCIATION, as a Bank
By /s/JAMES E. ROBERTSON By /s/ABBIE TIDMORE
----------------------------------- -------------------------
James E. Robertson, Vice President Abbie Tidmore,
Vice President
<PAGE>
ANNEX A
CLOSING CONDITIONS
(All dated as of January 18, 1994, unless otherwise stated)
J&G [1.] NINTH AMENDMENT TO CREDIT AGREEMENT (the "Ninth Amendment")
executed by LOMAS MORTGAGE USA, INC. (the "Company"), certain
lenders ("Banks"), and BANK ONE, TEXAS, N.A., as agent for itself
and the other Banks ("Agent"), to which must be attached:
Annex A - Closing Conditions
Amended Schedule 1.3 - Private Servicing Agreement
2. PROSPECTUS dated February 19, 1993, for DLJ Mortgage Acceptance
Corp. Mortgage Pass-Through Certificates (Issuable in Series).
3. POOLING AND SERVICING AGREEMENT dated as of August 1, 1993, between
DLJ Mortgage Acceptance Corp. as Depositor, the Company as Master
Servicer, and Bankers Trust Company as Trustee, for certain
Mortgage Pass-Through Certificates.
J&G [4.] AMENDMENTS TO FINANCING STATEMENTS executed by the Company as
Debtor and Agent as Secured Party, filed in the following
jurisdictions with respect to the following Financing Statements,
for the purpose of amending the Schedule 1.3 attached to those
Financing Statements to be the Amended Schedule 1.3 attached to the
Ninth Amendment:
Original Original
Jurisdiction File No. File Date
-------------- -------- ---------
Sec. State, CT 969751 06/15/92
Sec. State, CT 956434 02/21/92
Sec. State, TX 116774 06/12/92
Sec. State, TX 031203 02/21/92
J&G [5.] POWER OF ATTORNEY executed by the Company in favor of Agent on
behalf of Banks, for the agreement described in Item 3 above.
LM [6.] OFFICERS' CERTIFICATE executed by the Assistant Secretary of the
Company, certifying resolutions adopted by the Company's directors,
incumbency of certain officers of the Company, and changes, if any,
to the Company's corporate charter and bylaws since November 30,
1993, to which must be attached:
Annex A - Resolutions
Annex B - Changes to Corporate Charter, if any
Annex C - Changes to Bylaws, if any
[7.] Such other documents or items as Agent may require, in form and
substance satisfactory to Agent.
- ----------
[ ] denote items not complete or furnished when this version of this
annex was prepared, and the responsibility for those items are
noted by initials or names of parties or counsel.<PAGE>
AMENDED SCHEDULE 1.3
PRIVATE SERVICING AGREEMENTS
1. Amended and Restated Participant Agreement (Sale and Servicing) dated as
of February 13, 1992 between California Public Employee's Retirement
System, Lomas Mortgage USA, Inc., as Manager, and Lomas Mortgage USA,
Inc., as Participant, for the California PERS Member Home Loan Conduit
Program, as the same may be renewed, extended, amended, modified,
restated, or replaced from time to time.
2. Servicing Agreement dated as of August 1, 1992, between Lomas Mortgage
USA, Inc. as Master Servicer, Lomas Mortgage USA, Inc., as Servicer,
Capstead Mortgage Corporation, and the other Owners named therein, as
the same may be renewed, extended, amended, modified, restated, or
replaced from time to time.
3. Pooling and Servicing Agreement dated as of August 1, 1993, between DLJ
Mortgage Acceptance Corp. as Depositor, Lomas Mortgage USA, Inc., as
Master Servicer, and Bankers Trust Company as Trustee, for certain
Mortgage Pass-Through Certificates, as the same may be renewed,
extended, amended, modified, restated, or replaced from time to time.
EXHIBIT 10.2
TENTH AMENDMENT TO SERVICING PAYMENTS
LOAN AND SECURITY AGREEMENT
THIS AMENDMENT is entered into as of March 31, 1994, between LOMAS
MORTGAGE USA, INC., a Connecticut corporation (the "Company"), the banks
listed on the signature pages of this amendment ("Banks"), and BANK ONE,
TEXAS, N.A., as agent for Banks (in that capacity "Agent").
The Company, Banks, and Agent have entered into the Servicing Payments
Loan and Security Agreement dated as of February 11, 1992 (as amended through
the date of this amendment and as further renewed, extended, amended, and
restated, the "Loan Agreement"), providing for loans to the Company on a
revolving basis up to $25,000,000 outstanding at any time. The Company has
requested an amendment to the Loan Agreement in order to amend the minimum-
net-worth covenant under the Loan Agreement. Accordingly, for adequate and
sufficient consideration, the parties agree as follows:
1. Certain Definitions. Unless otherwise stated in this amendment
(a) terms defined in the Loan Agreement have the same meanings when used in
this amendment and (b) references to "Sections" and "Schedules" are to
sections and schedules of or to the Loan Agreement.
2. Amendment. Section 7.4 is entirely amended as follows:
7.4 Consolidated Net Worth. Permit its Consolidated Net Worth to
be less than the greater of either (i) the amount required by FHA,
FHLMC, FNMA, VA, and GNMA at any and all times for maintaining the
Company's status as an approved mortgagee, seller/servicer, or issuer,
or (ii) $200,000,000.
3. Conditions Precedent. The foregoing is not effective until Agent
and Banks receive counterparts of this amendment executed by the Company,
Agent, and all Banks.
4. Ratifications. This amendment modifies and supersedes all
inconsistent terms and provisions of the Loan Papers, and, except as
expressly modified and superseded by this amendment, the Loan Papers are
ratified and confirmed and continue in full force and effect. The Company,
Banks, and Agent agree that the Loan Papers as amended by this amendment
continue to be legal, valid, binding, and enforceable in accordance with
their respective terms. Without limiting the generality of the foregoing,
the Company ratifies and confirms that all Liens (except as amended by this
amendment) heretofore granted to Agent, on behalf of Banks, were intended to,
do, and continue to secure the full payment and performance of the
Obligations, and the Company agrees to perform such acts and duly authorize,
execute, acknowledge, deliver, file, and record such additional assignments,
security agreements, modifications or amendments to any of the foregoing, and
such other agreements, documents, and instruments as Agent or any Bank may
reasonably request in order to perfect and protect those Liens and preserve
and protect the rights of Agent and Banks in respect of all present and
future Collateral.
5. Representations and Warranties. The Company represents and
warrants to Banks and Agent that (a) this amendment and the Loan Papers to be
delivered under this amendment have been duly executed and delivered by the
Company, (b) no action of, or filing with, any Tribunal is required to
authorize, or is otherwise required in connection with, the execution,
delivery, and performance by the Company of this amendment and the Loan
Papers to be delivered under this amendment, (c) this amendment and the Loan
Papers to be delivered under this amendment are valid and binding upon the
Company and are enforceable against the Company in accordance with their
respective terms, except as limited by the Bankruptcy Code of the United
States of America and all other similar Laws affecting the rights of
creditors generally, (d) the execution, delivery and performance by the
Company of this amendment and the Loan Papers to be delivered under this
amendment do not require the consent of any other Person and do not and will
not constitute a violation of any laws, agreement, or understanding to which
the Company is a party or by which the Company is bound, (e) the
representations and warranties contained in the Loan Agreement, as amended by
this amendment, are true and correct in all material respects except to the
extent that (i) the representations and warranties speak to a specific date
or (ii) the facts on which the representations and warranties were based have
been changed by transactions contemplated or permitted by the Loan Agreement
as of the date of this amendment, (f) as of the date of this amendment, no
Event of Default or Potential Default has occurred and is continuing, and
(g) no change in the financial condition or prospect of the Company which
could reasonably be expected to be a Material Adverse Event has or will have
occurred.
6. References. All references in the Loan Papers to the "Loan
Agreement" refer to the Loan Agreement as amended by this amendment, and,
because this amendment is a "Loan Paper" referred to in the Loan Agreement,
then the provisions relating to Loan Papers in Section 10 are incorporated in
this amendment by reference, the same as if set forth verbatim in this
amendment.
7. Counterparts. This amendment may be executed in any number of
counterparts with the same effect as if all signatories had signed the same
document. All counterparts must be construed together to constitute one and
the same instrument.
8. Parties Bound. This amendment binds and inures to the Company,
Agent, each Bank, and, subject to Section 10.10, their respective successors
and assigns.
9. ENTIRETY. THIS AMENDMENT, THE LOAN AGREEMENT AS AMENDED BY THIS
AMENDMENT, AND THE OTHER LOAN PAPERS REPRESENT THE FINAL AGREEMENT BETWEEN
THE PARTIES FOR THE TRANSACTIONS THEREIN, AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BY THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
[REST OF PAGE INTENTIONALLY LEFT BLANK]<PAGE>
EXECUTED as of the date first stated in this amendment.
LOMAS MORTGAGE USA, INC., as the Company BANK ONE, TEXAS, N.A., as
Agent and a Bank
By /s/ROBERT E. BYERLEY, JR. By /s/KATHLEEN C. STEWART
----------------------------------- -------------------------
Robert E. Byerley, Jr., Kathleen C. Stewart,
Senior Vice President & Treasurer Vice President
GUARANTY FEDERAL BANK, F.S.B., as a Bank TEXAS COMMERCE BANK NATIONAL
ASSOCIATION, as a Bank
By /s/ABBIE Y. TIDMORE By /s/CARLOTTA M. HUDLER
----------------------------------- -------------------------
Abbie Y. Tidmore, Vice President Carlotta M. Hudler,
Vice President
EXHIBIT 10.3
FIFTH AMENDMENT TO RESTATED LOAN AND SECURITY AGREEMENT
THIS AMENDMENT is entered into as of March 31, 1994, between LOMAS
MORTGAGE USA, INC., a Connecticut corporation (the "Company"), the banks
listed on the signature pages below ("Lenders"), BANK ONE, TEXAS, N.A., as
Administrative Agent (in that capacity "Administrative Agent"), and TEXAS
COMMERCE BANK NATIONAL ASSOCIATION, as Syndication Agent (together with
Administrative Agent "Agents").
The Company, Lenders, and Agents have entered into the Restated Loan
and Security Agreement dated as of July 8, 1993 (as amended through the
date of this amendment and as further renewed, extended, amended, and
restated, the "Loan Agreement"), providing for loans to the Company on a
revolving basis. The Company has requested an amendment to the Loan
Agreement in order to amend the minimum-net-worth covenant under the Loan
Agreement. Accordingly, for adequate and sufficient consideration, the
parties agree as follows:
1. Certain Definitions. Unless otherwise specified in this
amendment (a) all terms defined in the Loan Agreement have the same
meanings when used in this amendment and (b) all references to "Sections"
and "Schedules" are references to the Loan Agreement's sections and
schedules.
2. Amendments.
(a) Section 2.18(b) is entirely amended as follows:
(b) The Company shall pay to each Lender a facility fee
payable in advance on a quarterly basis, that is equal to
percentage of that Lender's Commitment in effect on the date the
payment is due, which percentage is 0.125% per annum through
March 30, 1994, and 0.150% per annum after that date.
(b) Section 7.4 is entirely amended as follows:
7.4 Consolidated Net Worth. Permit its Consolidated Net Worth
to be less than the greater of either (i) the amount required by FHA,
FHLMC, FNMA, VA, and GNMA at any and all times for maintaining the
Company's status as an approved mortgagee, seller/servicer, or issuer,
or (ii) $200,000,000.
3. Conditions Precedent. The foregoing is not effective unless (a)
Agents have received counterparts of this amendment executed by the
Company, by Agents, and all Lenders and (b) all of the representations and
warranties -- in this amendment and in all other Loan Papers are true and
correct as of -- as if made on -- the date of this amendment.
4. Ratifications. This amendment modifies and supersedes all
inconsistent terms and provisions of the other Loan Papers. Except as
expressly modified and superseded by this amendment, the terms and
provisions of the other Loan Papers are ratified and confirmed and continue
in full force and effect. The Company, Determining Lenders, and Agents
agree that the Loan Papers, as amended by this amendment, continue to be
legal, valid, binding, and enforceable in accordance with their respective
terms. The Company ratifies and confirms that all Liens granted to Agents,
on behalf of Lenders, were intended to, do, and continue to secure the full
payment and performance of the Obligations. The Company shall perform such
acts and duly authorize, execute, acknowledge, deliver, file, and record
such additional documents as either Agent or any Lender may reasonably
request in order to perfect and protect such Liens and preserve and protect
the rights of Agents and Lenders in respect of all present and future
Collateral.
5. Representations and Warranties. The Company represents and
warrants to Lenders and Agents that (a) this amendment and the other Loan
Papers to be delivered under this amendment have been duly authorized,
executed, and delivered by the Company, (b) no action of, or filing with,
any Tribunal is required to authorize, or is otherwise required in
connection with, the execution, delivery, and performance by the Company of
this amendment and those other Loan Papers (c) this amendment and those
other Loan Papers are valid and binding upon the Company and are
enforceable against the Company in accordance with their respective terms,
except as limited by the Bankruptcy Code of the United States of America
and all other similar Laws affecting the rights of creditors generally,
(d) the execution, delivery, and performance by the Company of this
amendment and those other Loan Papers do not require the consent of any
other Person and do not and will not constitute a violation of any Laws,
agreement, or understanding to which the Company is a party or by which the
Company is bound, (e) the representations and warranties in the Loan
Agreement, as amended by this amendment, and each other Loan Paper are true
and correct in all material respects on and as of the date of this
amendment as though made as of the date of this amendment, and (f) as of
the date of this amendment, no Default or Potential Default exists.
6. References. All references in the Loan Papers to the "Loan
Agreement" refer to the Loan Agreement as amended by this amendment.
Because this amendment is a "Loan Paper" referred to in the Loan Agreement,
then the provisions relating to Loan Papers in Section 10 are incorporated
in this amendment by reference, the same as if included in this amendment
verbatim.
7. Counterparts. This amendment may be executed in any number of
counterparts with the same effect as if all signatories had signed the same
document, and all of those counterparts must be construed together to
constitute one and the same document.
8. Parties Bound. This amendment binds and inures to the Company,
Agents, each Lender, and (subject to Section 10.10) their respective
successors and assigns.
9. ENTIRETY. THIS AMENDMENT, THE LOAN AGREEMENT AS AMENDED BY IT,
AND THE OTHER LOAN PAPERS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES
FOR THE TRANSACTIONS THEREIN, AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BY THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]<PAGE>
EXECUTED as of the date first stated.
Lomas Mortgage USA, Inc. LOMAS MORTGAGE USA, INC., as the Company
1600 Viceroy Drive
Dallas, Texas 75235
Attn: Robert E. Byerley, Jr.,
Senior Vice President & By /s/ROBERT E. BYERLEY, JR.
Treasurer -----------------------------------
Telecopy: 214/879-7018 Robert E. Byerley, Jr.,
Senior Vice President and Treasurer
Third Floor, 1717 Main Street BANK ONE, TEXAS, N.A.,
Mortgage Finance Group as Administrative Agent and a Lender
Dallas, Texas 75201
Attn: Kathleen C. Stewart,
Vice President
Telecopy: 214/290-2275 By /s/KATHLEEN C. STEWART
-----------------------------------
Kathleen C. Stewart, Vice President
Texas Commerce Bank National TEXAS COMMERCE BANK NATIONAL
Association ASSOCIATION, as Syndication Agent and
717 Travis Street a Lender
Houston, Texas 77002
Attn: Carlotta M. Hudler,
Vice President
Telecopy: 713/216-2082 By /s/CARLOTTA M. HUDLER
-----------------------------------
Carlotta M. Hudler, Vice President
First Bank Place FIRST BANK NATIONAL ASSOCIATION,
601 2nd Ave. S., as a Lender
2nd Floor MPFP0801
Minneapolis, Minnesota 55402-4302
Attn: Kathlyn Slater,
Vice President
Telecopy: 612/973-0826 By /s/KATHLYN SLATER
-----------------------------------
Kathlyn Slater, Vice President
8333 Douglas Avenue GUARANTY FEDERAL BANK, F.S.B.,
Dallas, Texas 75255 as a Lender
Attn: Abbie Y. Tidmore,
Vice President
Telecopy: 214/360-1660
By /s/ABBIE Y. TIDMORE
-----------------------------------
Abbie Y. Tidmore, Vice President
<PAGE>
280 Park Avenue, 23 West BANKERS TRUST COMPANY, as a Lender
New York, New York 10017
Attn: Matthew C. Bernstein
Vice President
Telecopy: 212/454-3821 By /s/MATTHEW C. BERNSTEIN
-----------------------------------
Matthew C. Bernstein, Vice President
313 Carondelet HIBERNIA NATIONAL BANK, as a Lender
Suite 1400
New Orleans, Louisiana 70130
Attn: Mark L. Freeman
Banking Officer By /s/MARK L. FREEMAN
Telecopy: 504/584-2042 -----------------------------------
Mark L. Freeman, Banking Officer
6222 Wilshire Blvd. BANK HAPOALIM, B.M.,
Los Angeles, California 90048 LOS ANGELES BRANCH, as a Lender
Attn: Robert Pollak,
Vice President
Telecopy: 213/937-1439
By /s/ROBERT POLLAK
-----------------------------------
Robert Pollak, Vice President
By
----------------------------------
Name
----------------------------------
Title
---------------------------------
75 Wall Street DRESDNER BANK, AG, NEW YORK BRANCH,
New York, New York 10005-2889 as a Lender
Attn: Charles H. Hill,
Vice President
Telecopy: 212/574-0129
By
----------------------------------
Name
----------------------------------
Title
---------------------------------
100 Federal Street 01-32-041 THE FIRST NATIONAL BANK OF BOSTON,
Boston, MA 02110 as a Lender
Attn: Corinne M. Barrett,
Vice President
Telecopy: (617) 434-7108
By /s/CORINNE M. BARRETT
-----------------------------------
Corinne M. Barrett, Vice President
One Marine Midland Center, MARINE MIDLAND BANK, N.A., as a Lender
15th Floor
Buffalo, New York 14203
Attn: William F. Dentinger
Vice President
Telecopy: 716/841-2707 By /s/WILLIAM F. DENTINGER
-----------------------------------
William F. Dentinger, Vice President
66th Floor, NationsBank Plaza NATIONSBANK OF TEXAS, N.A., as a Lender
901 Main Street
Dallas, Texas 75202
Attn: Shelley Harper,
Vice President By /s/SHELLEY HARPER
Telecopy: 214/508-0604 -----------------------------------
Shelley Harper, Vice President
380 Madison Avenue BANK OF SCOTLAND, as a Lender
New York, New York 10017
Attn: Catherine Oniffrey,
Vice President
Telecopy: 713/651-9714 By /s/CATHERINE ONIFFREY
-----------------------------------
Catherine Oniffrey, Vice President
1601 Elm Street, 2nd Floor COMERICA BANK - TEXAS, as a Lender
Dallas, Texas 75201
Attn: W. James Meintjes,
Banking Officer
Telecopy: 214/979-8344 By /s/W. JAMES MEINTJES
-----------------------------------
W. James Meintjes, Banking Officer
1230 Peachtree Street NE, COMMERZBANK AKTIENGESELLSCHAFT,
Suite 3500 ATLANTA AGENCY, as a Lender
Atlanta, Georgia 30309
Attn: Harry P. Yergey,
Vice President
Telecopy: 404/888-6539
By /s/ANDREAS BREMER
-----------------------------------
Andreas Bremer, Senior Vice President
By /s/HARRY P. YERGEY
-----------------------------------
Harry P. Yergey, Vice President
<PAGE>
499 Thornall Street MIDLANTIC NATIONAL BANK, as a Lender
Edson, New Jersey 08837
Attn: Glenn Hedde,
Vice President
Telecopy: 908/321-2094 By /s/GLENN HEDDE
-----------------------------------
Glenn Hedde, Vice President
7485 New Horizon Way THE PRUDENTIAL HOME MORTGAGE
Frederick, Maryland 21701 COMPANY, INC., as a Lender
Attn: Russell R. Anderson,
Vice President
Telecopy: 301/696-7405
By /s/RUSSELL R. ANDERSON
-----------------------------------
Russell R. Anderson, Vice President
640 Fifth Avenue, 15th Floor BANK OF IRELAND GRAND CAYMAN BRANCH,
New York, New York 10019 as a Lender
Attn: Roger Burns,
Vice President
Telecopy: 212/586-7752
By /s/ROGER BURNS
-----------------------------------
Roger Burns, Vice President
15 South 20th Street, 15th Floor COMPASS BANK, as a Lender
Birmingham, Alabama 35233
Attn: John D. West,
Mortgage Banking Officer
Telecopy: 205/715-7994 By /s/JOHN D. WEST
-----------------------------------
John D. West, Mortgage Banking
Officer
1 Mercantile Center MERCANTILE BANK OF ST. LOUIS NATIONAL
7th & Washington ASSOCIATION, as a Lender
St. Louis, Missouri 63101
Attn: Michael P. Waters,
Vice President
Telecopy: 314/425-2162 By /s/MICHAEL P. WATERS
-----------------------------------
Michael P. Waters, Vice President
7700 Wisconsin Avenue SIGNET BANK/MARYLAND, as a Lender
Suite 400
Bethesda, Maryland 20814
Attn: David H. Olson,
Vice President By /s/DAVID H. OLSON
Telecopy: 301/652-1174 -----------------------------------
David H. Olson, Vice President
<PAGE>
231 South LaSalle Street CONTINENTAL BANK N.A., as a Lender
Chicago, Illinois 60697
Attn: Mary Jo Hoch,
Vice President
Telecopy: 312/987-5833 By /s/MARY JO HOCH
-----------------------------------
Mary Jo Hoch, Vice President
EXHIBIT 10.4
AMENDED AND RESTATED MASTER PLEDGE AGREEMENT, dated as of April 8, 1994,
made by LOMAS MORTGAGE USA, INC. ("Pledgor") to LEHMAN BROTHERS SPECIAL
FINANCING INC. ("Pledgee").
Pledgor and Pledgee have entered into an Interest Rate and Currency
Exchange Agreement, dated as of July 7, 1992, (the "Agreement"), pursuant to
which Pledgor and Pledgee may enter into Swap Transactions from time to time.
If the Agreement or any such Swap Transaction requires Pledgor to deliver
collateral as security for its obligations thereunder, Pledgor agrees to
pledge and deliver such collateral pursuant to the terms of this Amended and
Restated Master Pledge Agreement (the "Pledge Agreement"). Each confirmation
of a Swap Transaction shall constitute a supplement to, and be part of, the
Agreement and the Pledge Agreement so that the Agreement (as supplemented by
Confirmations of Swap Transactions) and the Pledge Agreement (as supplemented
by Confirmations of Swap Transactions) will form a single agreement between
Pledgor and Pledgee.
Accordingly, the parties hereto agree as follows:
1. Certain Definitions. Unless otherwise defined herein, terms
defined in the Agreement will have such defined meanings when used herein and
terms defined in the 1991 ISDA Definitions, published by the International
Swaps and Derivatives Association, Inc., shall have the meaning assigned
therein when used herein. In addition, as used in this Agreement, the
following terms will have the following meanings.
"Aggregate Applicable Amount" means, as of an Exposure Calculation Date,
the Aggregate Exposure Amount, provided, however, that the Aggregate Exposure
Amount is greater than or equal to $50,000.
"Aggregate Exposure Amount" means, as of an Exposure Calculation Date,
a hypothetical amount, if any, that Pledgor would owe to Pledgee assuming the
Exposure Calculation Date is the Early Termination Date and that Pledgor is
the Defaulting Party. Such amount shall be equal to the sum of (i) the amount
determined in accordance with Indemnification calculated on the basis of
Aggregation, plus (ii) the Unpaid Amounts due to Pledgee minus the Unpaid
Amounts due to Pledgor. If the resulting amount is a negative number, the
Aggregate Exposure Amount shall be zero.
"Aggregate Value of the Collateral" means the sum of the fair market
value of all the Collateral held by or on behalf of Pledgee with respect to
all Swap Transactions under which Pledgor shall then have any obligations to
Pledgee.
"Collateral" means cash, securities of the types referred to in Section
3(a), Mortgage Servicing Collateral (as defined below) and all other property
as shall be agreed to jointly by Pledgee and Pledgor, which shall be pledged
to and received by Pledgee hereunder, together with all collections, income,
distributions and claims in respect thereof and all proceeds of any of the
foregoing.
"Equivalent Collateral" means, with respect to any Collateral,
securities of the same class and issue, issuer, series and maturity and the
same principal amount, and, in the case of Collateral in the form of
mortgage-backed securities, securities backed by the same pool of mortgages
as the Collateral.
"Exposure Calculation Date" means any date or dates as may be selected
by Pledgee, at its option and in its sole discretion, if Pledgee is the Non-
affected Party under Part 5(3) of the Agreement.
"Mortgage Servicing Collateral" means all of Pledgor's right, title and
interest in and to the obligations, rights, remedies, powers, privileges,
benefits and responsibilities of Pledgor (the "Servicing Rights") to service
the mortgage notes which are described by Pool Number on Exhibit "A" hereto
(the "Mortgage Notes") pursuant to and in accordance with the servicing
provisions of the GNMA Guide (hereinafter, to the extent of Pledgor's rights
to service the Mortgage Notes, the "Servicing Agreement"), including, without
limitation, (a) the right to receive servicing fees, management fees,
termination fees and net sales proceeds, (b) the right to hold and administer
the escrow, impound, principal and interest, and custodial accounts relative
to the Mortgage Notes (the "Escrow Accounts"), (c) the right to all loan
files, insurance files, tax records, collection records, documents, ledgers,
computer print-outs, computer tapes and other records, data or information
relating to the Mortgage Notes, the Escrow Accounts, or the Servicing Rights
or otherwise necessary or proper to perform the obligations of servicer under
the Servicing Agreement, and (d) all right, title and interest of Pledgor in
and to, and obligations of Pledgor under the Servicing Agreement, together
with all contracts, general intangibles, accounts, margin deposits and other
rights associated with the Servicing Agreement and together with all monies
and claims for monies which may now or hereafter arise out of the Servicing
Agreement, all claims, right, powers, privileges and remedies of Pledgor
thereunder and, to the extent not included in the foregoing, any and all
proceeds of any and all of the foregoing. The term "Mortgage Servicing
Collateral" also means, in addition to all of the foregoing property, any
accessions, additions and attachments thereto and the proceeds and products
thereof, including without limitation, all cash, general intangibles,
accounts, equipment, fixtures, notes, drafts, acceptances, instruments,
chattel paper, insurance proceeds payable because of loss or damage, or other
property, benefits or rights arising therefrom, and in and to all returned or
repossessed goods arising from or relating to any of the property described
herein or other proceeds of any sale or other disposition of such property.
"GNMA" means the Government National Mortgage Association.
"GNMA Guide" means the GNMA Mortgage-Backed Security Guide, as amended
from time to time.
"Pledgee" means Party A.
"Pledgor" means Party B.
2. Pledge. As security for the prompt and complete payment when due
(whether on a Payment Date, on an Early Termination Date or otherwise) of all
Amounts payable by Pledgor to Pledgee pursuant to one or more Swap
Transactions (collectively, the "Obligations"), Pledgor hereby grants to
Pledgee a first lien on, and a first and prior security interest in and right
of set off against, Collateral pledged by Pledgor pursuant to this Pledge
Agreement.
3. Form of Collateral. (a) With respect to any of the Collateral
consisting of securities or obligations issued or guaranteed by the
government of the United States of America or any of its agencies or
instrumentalities and available only in book-entry form by means of entries
on the records of United States of America Federal Reserve Banks, Pledgor
shall (i) in the case of securities, cause such securities to be transferred
to such account as may be specified by Pledgee in writing.
(b) With respect to any of the Collateral available in definitive,
certificated form, Pledgor shall deliver (as instructed by Pledgee) to
Pledgee or Lehman Brothers Inc., as agent for Pledgee, or Lehman Government
Securities Inc., as agent for the Pledgee, the certificates for such
collateral in suitable form for transfer or accompanied by duly executed
instruments of transfer or appropriate undated powers of assignment thereof
duly executed in blank. All deliveries of certificated securities shall be
made to Pledgee at the Cage, One Battery Park Plaza, 2nd Floor, New York, New
York 10004.
4. Distributions, etc. If, while this Agreement is in effect, Pledgor
shall become entitled to receive or shall receive any debenture, other debt
instrument, stock certificate (including, without limitation, any certificate
representing a distribution in connection with any reclassification, increase
or reduction of capital, or issued in connection with any reorganization),
option, rights or other property, whether as an addition to, in substitution
of, or in exchange for any of the Collateral, or otherwise, Pledgor agrees to
accept the same as Pledgee's agent and to hold the same in trust on behalf of
Pledgee and to deliver the same forthwith to Pledgee in the exact form
received and in compliance with the terms of Section 3 hereof, as additional
Collateral for the Obligations, except that cash received on account of
dividends and interest and, subject to Section 9, moneys attributable to the
Servicing Agreement, may be retained and held by Pledgor. Any sums paid upon
or in respect of the Collateral upon the liquidation or dissolution of the
issuer thereof shall be paid over to Pledgee to be held by it as additional
Collateral for the Obligations; and in case any distribution shall be made on
or in respect of the Collateral or any property shall be distributed upon or
with respect to the Collateral pursuant to the recapitalization or
reclassification of the capital of the issuer thereof or pursuant to the
reorganization thereof, the property so distributed shall be delivered to
Pledgee to be held by it as additional Collateral for the Obligations. All
sums of money and property so paid or distributed in respect of the
Collateral which are received by Pledgor shall, until paid or delivered to
Pledgee, be held by Pledgor in trust as additional Collateral for the
Obligations. Unless an Event of Default or Potential Event of Default, with
respect to Pledgor, referred to in Section 5 of the Agreement has occurred
and is continuing, Pledgor shall be entitled to receive (and to the extent
the same come into possession of Pledgee or its agents, Pledgee shall
promptly remit to the order of Pledgor) any dividends or interest paid in
cash in respect of the Collateral which relates to such Swap Transaction and,
subject to Section 9, any moneys attributable to the Servicing Agreement.
Pledgee shall have no duty, however, to collect such payments. Upon the
occurrence and during the continuance of such an Event of Default or
Potential Event of Default Pledgee shall become entitled to receive and
retain such payments.
5. Adjustment of Collateral. If the Aggregate Value of the
Collateral, as of any Exposure Calculation Date, shall be less than the
Aggregate Applicable Amount, then Pledgor shall, within one (1) New York
Banking Day after written demand by Pledgee, deliver to Pledgee, as
Collateral, sufficient additional Collateral in conformity with Sections 2
and 3 hereof, so that, immediately after delivery of such Collateral, the
Aggregate Value of the Collateral shall be at least equal to the Aggregate
Applicable Amount. The Aggregate Applicable Amount shall be calculated by
Pledgee and the Aggregate Value of Collateral shall be determined by Pledgee
on the basis of the closing sale prices for such Collateral as published in
The Wall Street Journal with respect to such date (or, in the event no such
quote is available, the most recent closing bid prices from a source
selected, in good faith, by Pledgee) or, in the case of Mortgage Servicing
Collateral, on the basis of its good faith determination of the fair market
value thereof. The calculations hereunder shall be binding upon Pledgor
absent manifest error. If the Aggregate Value of the Collateral as of any
date, determined as set forth above, shall be greater than 110% of the
Aggregate Applicable Amount for such date, then Pledgee shall, within five
(5) New York Banking Days after written demand by Pledgor, return to Pledgor
sufficient Collateral or Equivalent Collateral so that immediately after
delivery of such Collateral or Equivalent Collateral, the Aggregate Value of
the Collateral shall be equal to the Aggregate Applicable Amount.
6. Rights of Pledgee. Pledgee shall not be liable for failure to
collect or realize upon the Obligations or any collateral security or
guarantee therefor, or any part thereof, or for any delay in so doing, nor
shall it be under any obligation to take any action whatsoever with regard
thereto. Any or all of the Collateral held by Pledgee hereunder may, without
notice, be registered in the name of Pledgee or its nominee. Except with
respect to Mortgage Servicing Collateral, Pledgee or its nominee may
thereafter, without notice, exercise any and all rights of conversion,
exchange, subscription or any other rights, privileges or options with
respect to such Collateral as if it were the absolute owner thereof,
including, without limitation, the right to exchange at its discretion any
and all of such Collateral upon the merger, consolidation, reorganization,
recapitalization or other readjustment of the issuer thereof or upon the
exercise by any such issuer or Pledgee of any right, privilege or option
pertaining to any of such Collateral, and in connection therewith to deposit
and deliver any and all of such Collateral with any committee, depositary,
transfer agent, registrar or other designated agency upon such terms and
conditions as it may determine, all without liability except to account for
property actually received by it, but Pledgee shall have no duty to exercise
any of the aforesaid rights, privileges or options and shall not be
responsible for any failure to do so or delay in so doing. Except with
respect to Mortgage Servicing Collateral, Pledgor hereby agrees and
acknowledges that Pledgee shall have the right, without obtaining further
consent of Pledgor, to repledge, rehypothecate, reassign, as well as enter
into repurchase transactions (collectively, "Repurchase Transactions") with
respect to any of the Collateral, or direct Lehman Brothers Inc. and/or
Lehman Government Securities, Inc., as its agent, to enter into any such
Repurchase Transactions using the Collateral during any period in which this
Agreement remains in effect. In the event Pledgor makes written request for
substitution of any Collateral pursuant to Section 20 hereof, which at the
time of such request is the subject of any Repurchase Transaction, Pledgee
shall be obligated to redeliver such affected Collateral or Equivalent
Collateral to Pledgor in accordance with Section 20 no later than five (5)
New York Banking Days following Pledgee's receipt of such request, which
redelivery shall be deemed to be the "prompt return" of Collateral required
by such Section 20. Notwithstanding the foregoing, Pledgee's right to enter
into Repurchase Transactions with Collateral under this Section 6, shall in
no way relieve Pledgee of its obligation to redeliver such Collateral to
Pledgor under the terms and in the timely manner provided for in this Pledge
Agreement.
7. Remedies. In the event that any portion of the Obligations has
become due and payable, and has not been paid, Pledgee may forthwith collect
the Collateral, or any part thereof, or may sell, assign, give options to
purchase, contract to sell or otherwise dispose of and deliver said
Collateral, or any part thereof, in one or more parcels at public or private
sale or sales, at any exchange, broker's board or at any of Pledgee's offices
or elsewhere upon such terms and conditions as it may deem advisable and at
such prices as it may deem best, for cash or on credit or for future delivery
without assumption of any credit risk, without advertisement or demand upon
Pledgor, both of which are hereby waived, except Pledgee shall provide
Pledgor with notice on the day of any such sale (which may be a telex,
telegram, telecopy or other similar facsimile transmission and all of which
Pledgor hereby agrees is reasonable notice within the meaning of Section 9-
504(3) of the Uniform Commercial Code as in effect in New York) of Pledgee's
intention to make any such sale, with the right to Pledgee upon any such sale
or sales, public or private, to purchase the whole or any part of said
Collateral so sold, free of any right or equity of redemption in Pledgor,
which right or equity is hereby expressly waived or released. As to Mortgage
Servicing Collateral and without limiting the foregoing, Pledgee is hereby
authorized, at any public or private sale of the Mortgage Servicing
Collateral, to restrict the prospective bidders or purchasers to persons who
will represent that (a) they are GNMA-approved issuers; (b) they will execute
a transfer agreement and related documentation acceptable to GNMA; and (c)
they are able to satisfy and discharge, and will actually satisfy and
discharge, any and all defaults and outstanding obligations (including,
without limitation, mortgage repurchase obligations, recourse obligations, or
repayment of shortages in custodial or buydown accounts) of Pledgor due and
owing to GNMA. Pledgor agrees that any sale or disposition of the Mortgage
Servicing Collateral which is limited to such a transferee shall be deemed to
be a commercially reasonable sale or disposition of the Mortgage Servicing
Collateral and Pledgor agrees that if Pledgee elects to become the transferee
servicer of record with respect to the Servicing Agreement, Pledgee shall be
entitled to apply proceeds of the Mortgage Servicing Collateral to
satisfaction of any liabilities of Pledgor to GNMA that have arisen, and are
unsatisfied, prior to such transfer, and that Pledgee shall incur no
liability to Pledgor if any action taken by Pledgee or in its behalf in good
faith pursuant to this Agreement shall prove to be in whole or in part
inadequate or invalid. Pledgee shall apply the net proceeds of any such
collection or sale, in the case of Mortgage Servicing Collateral, after
payment to GNMA of all amounts due to GNMA under the Servicing Agreement, and
in the case of all Collateral, after deducting all reasonable costs and
expenses incurred therein or incidental to the care, safekeeping or otherwise
of any and all of the Collateral or in any way relating to the rights of
Pledgee hereunder, including reasonable attorney's fees and legal expenses,
to the payment in whole or in part of the Obligations, and only after so
paying over such net proceeds and after the payment by Pledgee of any other
amount required by any provision of law need Pledgee account for the surplus,
if any, to Pledgor. In addition to the rights and remedies granted to it in
this Pledge Agreement and in any other instrument or agreement securing,
evidencing or relating to any of the Obligations, Pledgee shall have all
rights and remedies of a secured party under the Uniform Commercial Code of
the State of New York. Pledgor shall be liable for the deficiency if the
proceeds of any sale or other disposition of the Collateral are insufficient
to pay all amounts to which Pledgee is entitled, and the fees of any
attorneys employed by Pledgee to realize upon such Collateral and collect
such deficiency.
8. Action Under Servicing Agreement. In addition to its rights under
Section 7 hereof, Pledgee shall have the right at any time after the
occurrence of an Event of Default (but Pledgee shall have no obligation) to
take in its name or in the name of Pledgor or otherwise such action as
Pledgee may at any time or from time to time determine to be necessary to
enforce any rights of Pledgor under the Servicing Agreement, to cure any
default under the Servicing Agreement or to protect the rights of Pledgor or
Pledgee thereunder.
9. Receipt of Proceeds in Trust by Pledgor. From and after the
occurrence and during the continuance of an Event of Default or Potential
Event of Default, in the event Pledgor shall receive any moneys, income,
payments or benefits attributable or accruing to the Servicing Agreement,
Pledgor will hold the same in trust for Pledgee and will not commingle the
same with any other property or moneys of Pledgor and will promptly deliver
the same to Pledgee in the form received, and, in Pledgee's sole discretion,
such sums shall be applied toward the payment of the Obligations, in the
order set forth in Section 7 hereof, or held by Pledgee as additional
Collateral; provided, however, that Pledgor may retain, use and dispose of
any moneys received before the occurrence of an Event of Default or Potential
Event of Default under the Agreement for any lawful corporate purpose and
such moneys shall not constitute part of the moneys held in trust.
10. Collection of Accounts and General Intangibles. At any time after
the occurrence of an Event of Default, in addition to the other rights and
remedies of Pledgee, without assuming any rights or obligations under the
Servicing Agreement, Pledgee shall have the right in its own name or in the
name of Pledgor, to require Pledgor forthwith to transmit all proceeds of the
Servicing Agreement not otherwise received in trust hereunder to Pledgee, to
notify GNMA to make payments thereunder directly to Pledgee, to demand,
collect, receive, receipt for, sue for, compound and give acquittances for,
any and all amounts due or to become due thereunder and to endorse the name
of Pledgor on all commercial paper given in payment or part payment thereof,
and in Pledgee's discretion to file any claim or take any other action or
proceeding that Pledgee may deem reasonably necessary or appropriate to
protect and preserve and realize upon the Servicing Agreement. Pledgee shall
have no duty or obligation whatsoever to collect any amounts under the
Servicing Agreement, or to take any other action to preserve or protect the
Servicing Agreement; however, should Pledgee elect to collect any amounts
under the Servicing Agreement or take any other action to protect or preserve
same, Pledgor releases Pledgee from any claim or claims for loss or damage
arising from any act or omission of Pledgee (including Pledgee's ordinary
negligence) in connection therewith (but excluding any act or omission of
Pledgee which constitutes gross negligence or willful misconduct).
11. Assumption Upon Event of Default. Pledgor agrees that it will upon
the written request of Pledgee execute and deliver such documents and
instruments as Pledgee or its counsel may deem reasonably necessary or
desirable to effect the assignment of the Servicing Agreement to Pledgee or
its nominee; provided, however, that any assumption shall not be effective
prior to the occurrence of an Event of Default. Such assumption shall relieve
Pledgor of its obligations under the Servicing Agreement from and after the
date of assignment, and Pledgor shall remain liable for all costs and
expenses incurred in connection with the performance of its obligations under
the Servicing Agreement arising prior to the date of assignment. If the
Servicing Agreement is assigned to Pledgee or its nominee and if Pledgee
shall pay the unpaid amounts due under the Servicing Agreement, Pledgee shall
thereupon be subrogated to all the contracting party's rights against Pledgor
with respect to such payment.
12. Appointment of Receiver. Pledgee, as a matter of right and to the
extent permitted by law, shall be entitled to appointment of a receiver for
all or any part of the Collateral, whether such receivership be incidental to
a proposed sale of the Collateral or otherwise, and Pledgor hereby consents
to the appointment of such a receiver and will not oppose any such
appointment. The receiver at the request of Pledgee, and upon order of the
court, if applicable, shall have all the powers and authority of Pledgee as
provided in this Agreement.
13. Representations, Warranties and Agreements of Pledgor. Pledgor
represents to and agrees with Pledgee, as to all of the Collateral, that (a)
Pledgor is and will be the legal, record and beneficial owner of, and have
good and marketable title to, the Collateral subject to no pledge, lien,
mortgage, hypothecation, security interest, charge, option or other
encumbrance whatsoever, except the lien and security interest in favor of
Pledgee created by this Pledge Agreement subject, in the case of the Mortgage
Servicing Collateral, to the rights of GNMA arising under the GNMA Guide; (b)
there is no financing statement or similar filing now on file in any public
office covering any part of the Collateral, and Pledgor will not execute, and
there will not be on file in any public office, any financing statement or
similar filing except the financing statements filed or to be filed in favor
of Pledgee; (c) all information furnished to Pledgee concerning Pledgor, the
Collateral and the Obligations, or otherwise, is or will be at the time the
same is furnished, accurate and complete in all material respects; and (d)
1600 Viceroy Drive, Dallas, Texas 75235 is Pledgor's place of business if
Pledgor has only one place of business, or Pledgor's chief executive office
if Pledgor has more than one place of business, and Pledgor agrees not to
change such address without advance written notice to Pledgee; (e) the
pledge, assignment and delivery of the Collateral pursuant to this Agreement
will create a valid first lien on and a perfected first security interest in
the Collateral as such Collateral is delivered to Pledgee, and the proceeds
thereof, subject to no prior pledge, lien, mortgage hypothecation, security
interest, charge, option or encumbrance or to any agreement purporting to
grant to any third party a security interest, charge, option or encumbrance
or to any agreement purporting to grant to any third party a security
interest in the property or assets of any Pledgor which would include any
Collateral; (f) it will defend Pledgee's right title and security interest in
and to the Pledged Collateral and the proceeds thereof against the claims and
demands of all persons whomever; (g) it will have like title to and right to
pledge any other property at any time hereafter pledged to Pledgee as
Collateral hereunder and will likewise defend Pledgee's right thereto and
security interest therein; and (h) it will promptly pay when due all taxes,
assessments, license fees, registration fees, and governmental charges levied
or assessed against Pledgor or with respect to the Collateral or any part
thereof. In addition, Pledgor represents to and agrees with Pledgee, with
respect to the Mortgage Servicing Collateral, that (i) Pledgor is the lawful
owner of the Servicing Rights, is custodian of the Escrow Accounts, has the
sole right and authority to pledge, assign and transfer the Servicing Rights
and is not contractually obligated to sell, deliver, pledge or transfer any
rights to all or any part of the Mortgage Servicing Collateral to any person
other than Pledgee; (ii) there are no contracts executed by Pledgor, other
than the Servicing Agreement and the GNMA Guide, affecting the Servicing
Rights or the Mortgage Notes; and (iii) Pledgor has not assigned or granted
a security interest in any of the Mortgage Servicing Collateral to anyone
other than Pledgee. The representations made herein shall be made and deemed
to be repeated at the times at which the representations of Pledgor in
Section 3 of the Agreement are made and deemed to be repeated.
14. Protection of Collateral. Pledgor agrees that Pledgee, at its
option, upon Pledgor's failure to do so within any applicable time period in
the Servicing Agreement (including any time period in which Pledgor is
contesting any claim in good faith) but without any obligation whatsoever to
do so, may (a) discharge taxes, claims, charges, liens, security interests,
assessments or other encumbrances of any and every nature whatsoever at any
time levied, placed upon or asserted against the Collateral, (b) pay any
filing, recording, registration, licensing or certification fees or other
fees and charges related to the Collateral, or (c) take any other action to
preserve and protect the Collateral and Pledgee's rights and remedies under
this Agreement as Pledgee may deem reasonably necessary or appropriate.
Pledgor agrees that Pledgee shall have no duty or obligation whatsoever to
take any of the foregoing action. Pledgor agrees to promptly reimburse
Pledgee upon demand for any payment made or any expense incurred by Pledgee
pursuant to this authorization. These payments and expenditures shall
constitute additional Obligations and shall be secured by and entitled to the
benefits of this Agreement.
15. Retention of Obligations. Further, Pledgor agrees that neither
this assignment nor any action or actions on the part of Pledgee shall
constitute an assumption of any obligation on the part of Pledgee under the
Servicing Agreement and Pledgor shall continue to be liable for all
obligations thereunder. Pledgor agrees to perform each and all of Pledgor's
obligations under the Servicing Agreement and Pledgor agrees to indemnify and
hold Pledgee free and harmless from and against any loss, costs, liability or
expense (including but not limited to reasonable attorneys' fees and
accountants' fees) resulting from any failure of Pledgor to so perform,
unless caused by the gross negligence or willful misconduct of Pledgee.
16. Maintenance of Servicing Agreement; Notice. Pledgor shall, at its
expense, perform and observe all terms and provisions of the Servicing
Agreement to be performed and observed by Pledgor, maintain the Servicing
Agreement in full force and effect, enforce the Servicing Agreement in
accordance with its terms, and take all action to such end as may be
reasonably requested from time to time by Pledgee. Pledgor shall promptly
notify Pledgee of any termination or threatened termination of the Servicing
Agreement, and shall furnish Pledgee with copies of any notices received by
Pledgor with respect to any termination or threatened termination of the
Servicing Agreement within three (3) business days after receipt of any such
notice by Pledgor. At any time after receipt of such notice, and if such
termination or threatened termination would constitute an Event of Default,
then Pledgee may notify GNMA of Pledgee's intention to claim the net sales
proceeds and/or contract termination fees, as applicable, with respect to any
terminated Servicing Rights, and to receive such net sales proceeds and/or
contract termination fees, as applicable, or notify GNMA of Pledgee's
intention to accept a transfer of the Servicing Rights from GNMA, at
Pledgee's option. Any net sales proceeds or contract termination fees
received by Pledgee shall be applied in the order and manner specified in
Section 7 of this Agreement, whether or not any of the Obligations are then
due and payable.
17. Rights of GNMA. Pledgee and Pledgor hereby acknowledge that the
security interest granted hereby in Mortgage Servicing Collateral is subject
and subordinate to all claims of GNMA, whether absolute or contingent,
arising out of any and all defaults and outstanding obligations of Pledgor to
GNMA. Pledgor also acknowledges and agrees that notwithstanding any
termination of the Servicing Agreement by GNMA, Pledgor shall not be released
from the Obligations.
18. No Disposition, etc. Without the prior written consent of Pledgee,
Pledgor agrees that it will not sell, assign, transfer, exchange, or
otherwise dispose of or grant any option with respect to, the Collateral, nor
will it create, incur or permit to exist any pledge, lien, mortgage,
hypothecation, security interest, charge, option or any other encumbrance
with respect to any of the Collateral, or any interest therein, or any
proceeds thereof, except for the lien and security interest provided for by
this Pledge Agreement.
19. Specific Performance. If Pledgee shall determine to exercise its
right to sell any or all of the Collateral pursuant to Section 7 hereof,
Pledgor agrees to do or cause to be done all such other acts and things as
may be necessary to make such sale or sales of any portion or all of the
Collateral valid and binding and in compliance with any and all courts,
arbitrators or governmental instrumentalities, domestic or foreign, having
jurisdiction over any such sale or sales, all at Pledgor's expense. Pledgor
further agrees that a breach of any of the covenants contained in this
Section 19 will cause irreparable injury to Pledgee, that Pledgee has no
adequate remedy at law in respect of such breach and, as a consequence,
agrees that the covenants contained in this paragraph shall be specifically
enforceable against Pledgor and Pledgor hereby waives and agrees not to
assert any defenses against an action for specific performance of such
covenants. Pledgor further acknowledges the impossibility of ascertaining the
amount of damages which would be suffered by Pledgee by reason of a breach of
any such covenants and, consequently, agrees that, if Pledgee shall sue for
damages for breach, it shall pay, as liquidated damages and not as a penalty,
an amount equal to the value of the Collateral on the date Pledgee shall
demand compliance with this Section 19, except to the extent such value shall
exceed the Obligations.
20. Right of Substitution. Upon written request of Pledgor to return
Collateral to Pledgor, so long as such request is accompanied by Collateral
of the type set forth in the Swap Transaction, delivered in compliance with
Sections 2, 3, and 5 hereof, as may be necessary so that the Aggregate Value
of the Collateral (determined pursuant to Section 5 hereof), excluding such
returned Collateral but including such substituted Collateral, shall at least
be equal to the Aggregate Applicable Amount as determined pursuant to Section
5 hereof, Pledgee shall promptly return to Pledgor, subject to Section 6
hereof, such Collateral or Equivalent Collateral as may be specified in such
request; provided, however, that the Pledgee shall give three New York
Banking Days' prior notice of any proposed substitution involving Mortgage
Servicing Collateral, and that such a substitution will be effective only at
the close of business on the day on which a financing statement is filed with
respect to the substituted Mortgage Servicing Collateral. Pledgee shall
execute such instruments of reassignment and delivery necessary to vest in
Pledgor any Collateral returned to Pledgor pursuant to this Section 20.
21. Further Assurances. Pledgor agrees that at any time and from time
to time upon the written request of Pledgee, Pledgor will execute and deliver
such further documents (including without limitation Uniform Commercial Code
Financing Statements) and do such further acts and things as Pledgee may
reasonably request in order to effect the purposes of this Agreement or to
comply with the requirements of GNMA with respect to the Mortgage Servicing
Collateral. Any carbon, photographic or other reproduction of this Agreement
or any financing statement signed by Pledgor is sufficient as a financing
statement for all purposes, including without limitation, filing in any state
as may be permitted by the provisions of the Uniform Commercial Code of such
state.
22. Severability. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
23. Waiver; Cumulative Remedies. Pledgee shall not by any act, delay
omission or otherwise be deemed to have waived any of its rights or remedies
hereunder and no waiver shall be valid unless in writing, signed by Pledgee,
and then only to the extent therein set forth. A waiver by Pledgee of any
right or remedy hereunder on any one occasion shall not be construed as a bar
to any right or remedy which Pledgee would otherwise have on any future
occasion. No failure to exercise nor any delay in exercising on the part of
Pledgee, any right, power of privilege hereunder, shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, power or
privilege hereunder preclude any other or further exercise thereof the
exercise of any other right, power or privilege. The rights and remedies
herein provided are cumulative and may be exercised singly or concurrently,
and are not exclusive of any rights or remedies provided by law.
24. Transfer. Neither this Agreement nor any interest or obligation in
or under this Agreement may be transferred by either party without the prior
written consent of the other party hereto; provided, however, that such
consent shall not be required in connection with any transfer by Pledgee or
any of its Affiliates of its interests and obligations under the Agreement
which is permitted thereunder.
25. Successors; Amendments. (a) This Agreement and all obligations of
Pledgor hereunder shall be binding upon the successors and assigns of
Pledgor, and shall, together with the rights and remedies of Pledgee
hereunder, inure to the benefit of Pledgee and its respective successors and
assigns.
(b) No amendment, modification or waiver in respect of this
Agreement will be effective unless in writing and executed by each of the
parties.
26. Governing Law; Submission to Jurisdiction. (a) This Pledge
Agreement shall be governed by and construed in accordance with the laws of
the State of New York, without reference to choice of law doctrine.
(b) With respect to any claim arising out of this Pledge Agreement
(i) each party irrevocably submits for itself and its property to the
nonexclusive jurisdiction of the courts of the State of New York and the
United States District Court located in the Borough of Manhattan in New York
City and (ii) each party irrevocably waives any objection which it may have
at any time to the laying of venue of any suit, action or proceeding arising
out of or relating to this Agreement brought in any such court, irrevocably
waives any claim that any such suit, action or proceeding brought in any such
court has been brought in an inconvenient forum and further irrevocably
waives the right to object, with respect to such claim, suit, action or
proceeding brought in any such court, that such court does not have
jurisdiction over such party.
27. Notices. Any notice hereunder will be sufficiently given if given
in accordance with the provisions for notices under the Agreement and will be
effective as set forth therein. Any notice or communication under this Pledge
Agreement is to be addressed as follows: if to Pledgee, to Lehman Brothers
Special Financing Inc., Attention: Director, Swap Finance Administration, at
200 Vesey Street, 12th Floor, New York, New York 10285 (Facsimile No. (212)
619-6668); and if to Pledgor to 1600 Viceroy Drive, Dallas, Texas 75201,
Attention: Paul Fletcher (Facsimile No: (214) 879-7018); or at such other
address as either party may notify to the other in writing.
IN WITNESS WHEREOF, Pledgor has caused this Pledge Agreement to be duly
executed and delivered on the day and year first above written.
LOMAS MORTGAGE USA, INC.
BY: /s/ROBERT E. BYERLEY, JR.
------------------------------
TITLE: Executive Vice President
---------------------------
EXHIBIT 10.5
PSA
Public Securities Association
40 Broad Street, New York, NY 10004-2373
Telephone (212) 809-7000
MASTER REPURCHASE AGREEMENT
Dated as of April 11, 1994
Between:
DLJ Mortgage Capital, Inc. and/or
Donaldson, Lufkin & Jenrette Securities Corporation, as applicable
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and
Lomas Mortgage USA, Inc.
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1. Applicability
From time to time the parties hereto may enter into transactions in
which one party ("Seller") agrees to transfer to the other ("Buyer")
securities or financial instruments ("Securities") against the transfer of
funds by Buyer, with a simultaneous agreement by Buyer to transfer to Seller
such Securities at a date certain or on demand, against the transfer of funds
by Seller. Each such transaction shall be referred to herein as a
"Transaction" and shall be governed by this Agreement, including any
supplemental terms or conditions contained in Annex I hereto, unless
otherwise agreed in writing.
2. Definitions
(a) "Act of Insolvency", with respect to any party, (i) the commencement
by such party as debtor of any case or proceeding under any bankruptcy,
insolvency, reorganization, liquidation, dissolution or similar law, or such
party seeking the appointment of a receiver, trustee, custodian or similar
official for such party or any substantial part of its property, or (ii) the
commencement of any such case or proceeding against such party, or another
seeking such an appointment, or the filing against a party of an application
for a protective decree under the provisions of the Securities Investor
Protection Act of 1970, which (A) is consented to or not timely contested by
such party, (B) results in the entry of an order for relief, such an
appointment, the issuance of such a protective decree or the entry of an
order having a similar effect, or (C) is not dismissed within 15 days, (iii)
the making by a party of a general assignment for the benefit of creditors,
or (iv) the admission in writing by a party of such party's inability to pay
such party's debts as they become due;
(b) "Additional Purchased Securities", Securities provided by Seller to
Buyer pursuant to Paragraph 4(a) hereof;
(c) "Buyer's Margin Amount", with respect to any Transaction as of any
date, the amount obtained by application of a percentage (which may be equal
to the percentage that is agreed to as the Seller's Margin Amount under
subparagraph (q) of this Paragraph), agreed to by Buyer and Seller prior to
entering into the Transaction, to the Repurchase Price for such Transaction
as of such date;
(d) "Confirmation", the meaning specified in Paragraph 3(b) hereof;
(e) "Income", with respect to any Security at any time, any principal
thereof then payable and all interest, dividends or other distributions
thereon;
(f) "Margin Deficit", the meaning specified in Paragraph 4(a) hereof;
(g) "Margin Excess", the meaning specified in Paragraph 4(b) hereof;
(h) "Market Value", with respect to any Securities as of any date, the
price for such Securities on such date obtained from a generally recognized
source agreed to by the parties or the most recent closing bid quotation from
such a source, plus accrued Income to the extent not included therein (other
than any Income credited or transferred to, or applied to the obligations of,
Seller pursuant to Paragraph 5 hereof) as of such date (unless contrary to
market practice for such Securities);
(i) "Price Differential", with respect to any Transaction hereunder as
of any date, the aggregate amount obtained by daily application of the
Pricing Rate for such transaction to the Purchase Price for such Transaction
on a 360 day per year basis for the actual number of days during the period
commencing on (and including) the Purchase Date for such Transaction and
ending on (but excluding) the date of determination (reduced by any amount of
such Price Differential previously paid by Seller to Buyer with respect to
such Transaction);
(j) "Pricing Rate", the per annum percentage rate for determination of
the Price Differential;
(k) "Prime Rate", the prime rate of U.S. money center commercial banks
as published in The Wall Street Journal;
(l) "Purchase Date", the date on which Purchased Securities are
transferred by Seller to Buyer;
(m) "Purchase Price", (i) on the Purchase Date, the price at which
Purchased Securities are transferred by Seller to Buyer, and (ii) thereafter,
such price increased by the amount of any cash transferred by Buyer to Seller
pursuant to Paragraph 4(b) hereof and decreased by the amount of any cash
transferred by Seller to Buyer pursuant to Paragraph 4(a) hereof or applied
to reduce Seller's obligations under clause (ii) of Paragraph 5 hereof;
(n) "Purchase Securities", the Securities transferred by Seller to
Buyer in a Transaction hereunder, and any Securities substituted therefor in
accordance with Paragraph 9 hereof. The term "Purchased Securities" with
respect to any Transaction at any time also shall include Additional Purchase
Securities delivered pursuant to Paragraph 4(a) and shall exclude Securities
returned pursuant to Paragraph 4(b);
(o) "Repurchase Date", the date on which Seller is to repurchase the
Purchased Securities from Buyer, including any date determined by application
of the provisions of Paragraphs 3(c) or 11 hereof;
(p) "Repurchase Price", the price at which Purchased Securities are to
be transferred from Buyer to Seller upon termination of a Transaction, which
will be determined in each case (including Transactions terminable upon
demand) as the sum of the Purchased Price and the Price Differential as of
the date of such determination, increased by any amount determined by the
application of the provisions of Paragraph 11 hereof;
(q) "Seller's Margin Amount", with respect to any Transaction as of any
date, the amount obtained by application of a percentage (which may be equal
to the percentage that is agreed to as the Buyer's Margin Amount under
subparagraph (c) of this Paragraph), agreed to by Buyer and Seller prior to
entering into the Transaction, to the Repurchase Price for such Transaction
as of such date.
3. Initiation; Confirmation; Termination
(a) An agreement to enter into a Transaction may be made orally or in
writing at the initiation of either Buyer or Seller. On the Purchase Date for
the Transaction, the Purchased Securities shall be transferred to Buyer or
its agent against the transfer of the Purchase Price to an account of Seller.
(b) Upon agreeing to enter into a Transaction hereunder, Buyer or
Seller (or both), as shall be agreed, shall promptly deliver to the other
party a written confirmation of each Transaction (a "Confirmation"). The
Confirmation shall describe the Purchased Securities (including CUSIP number,
if any), identify Buyer and Seller and set forth (i) the Purchase Date, (ii)
the Purchase Price, (iii) the Repurchase Date, unless the Transaction is to
be terminable on demand, (iv) the Pricing Rate or Repurchase Price applicable
to the Transaction, and (v) any additional terms or conditions of the
Transaction not inconsistent with this Agreement. The Confirmation, together
with this Agreement, shall constitute conclusive evidence of the terms agreed
between Buyer and Seller with respect to the Transaction to which the
Confirmation relates, unless the respect to the Confirmation specific
objection is made promptly after receipt thereof. In the event of any
conflict between the terms of such Confirmation and this Agreement, this
Agreement shall prevail.
(c) In the case of Transactions terminable upon demand, such demand
shall be made by Buyer or Seller, no later than such time as is customary in
accordance with market practice, by telephone or otherwise on or prior to the
business day on which such termination will be effective. On the date
specified in such demand, or on the date fixed for termination in the case of
Transactions having a fixed term, termination of the Transaction will be
effected by transfer to Seller or its agent of the Purchased Securities and
any Income in respect thereof received by Buyer (and not previously credited
or transferred to, or applied to the obligations of, Seller pursuant to
Paragraph 5 hereof) against the transfer of the Repurchase Price to an
account of Buyer.
4. Margin Maintenance
(a) If at any time the aggregate Market Value of all Purchase
Securities subject to all Transactions in which a particular party hereto is
acting as Buyer is less than the aggregate Buyer's Margin Amount for all such
Transactions (a "Margin Deficit"), then Buyer may by notice to Seller require
Seller in such Transactions, at Seller's option, to transfer to Buyer cash or
additional Securities reasonably acceptable to Buyer ("Additional Purchase
Securities"), so that the cash and aggregate Market Value of the Purchased
Securities, including any such Additional Purchased Securities, will
thereupon equal or exceed such aggregate Buyer's Margin Amount (decreased by
the amount of any Margin Deficit as of such date arising from any
Transactions in which such Buyer is acting as Seller).
(b) If at any time the aggregate Market Value of all Purchased
Securities subject to all Transactions in which a particular party hereto is
acting as Seller exceeds the aggregate Seller's Margin Amount for all such
Transactions at such time (a "Margin Excess"), then Seller may by notice to
Buyer require Buyer in such Transactions, at Buyer's option, to transfer cash
or Purchased Securities to Seller, so that the aggregate Market Value of the
Purchased Securities, after deduction of any such cash or any Purchased
Securities so transferred, will thereupon not exceed such aggregate Seller's
Margin Amount (increased by the amount of any Margin Excess as of such date
arising from any Transactions in which such Seller is acting as Buyer).
(c) Any cash transferred pursuant to this Paragraph shall be attributed
to such Transactions as shall be agreed upon by Buyer and Seller.
(d) Seller and Buyer may agree, with respect to any or all Transactions
hereunder, that the respective rights of Buyer or Seller (or both) under
subparagraphs (a) and (b) of this Paragraph may be exercised only where a
Margin Deficit or Margin Excess exceeds a specified dollar amount or a
specified percentage of the Repurchase Prices for such Transactions (which
amount or percentage shall be agreed to by Buyer and Seller prior to entering
into any such Transactions).
(e) Seller and Buyer may agree, with respect to any or all Transactions
hereunder, that the respective rights of Buyer and Seller under subparagraphs
(a) and (b) of this Paragraph to require the elimination of a Margin Deficit
or a Margin Excess, as the case may be, may be exercised whenever such a
Margin Deficit or Margin Excess exists with respect to any single Transaction
hereunder (calculated without regard to any other Transaction outstanding
under this Agreement).
5. Income Payments
Where a particular Transaction's terms extends over an Income payment
date on the Securities subject to that Transaction, Buyer shall, as the
parties may agree with respect to such Transaction (or, in the absence of any
agreement, as Buyer shall reasonably determine in its discretion), on the
date such Income is payable either (i) transfer to or credit to the account
of Seller an amount equal to such Income payment or payments with respect to
any Purchased Securities subject to such Transaction or (ii) apply the Income
payment or payments to reduce the amount to be transferred to Buyer by Seller
upon termination of the Transaction. Buyer shall not be obligated to take any
action pursuant to the preceding sentence to the extent that such action
would result in the creation of a Margin Deficit, unless prior thereto or
simultaneously therewith Seller transfers to Buyer cash or Additional
Purchased Securities sufficient to eliminate such Margin Deficit.
6. Security Interest
Although the parties intend that all Transactions hereunder be sales and
purchases and not loans, in the event any such Transactions are deemed to be
loans, Seller shall be deemed to have pledged to Buyer as security for the
performance by Seller of its obligations under each such Transaction, and
shall be deemed to have granted to Buyer a security interest in, all of the
Purchased Securities with respect to all Transactions hereunder and all
proceeds thereof.
7. Payment and Transfer
Unless otherwise mutually agreed, all transfers of funds hereunder shall
be in immediately available funds. All Securities transferred by one party
hereto to the other party (i) shall be in suitable form for transfer or shall
be accompanied by duly executed instruments of transfer or assignment in
blank and such other documentation as the party receiving possession may
reasonably request, (ii) shall be transferred on the book-entry system of a
Federal Reserve Bank, or (iii) shall be transferred by any other method
mutually acceptable to Seller and Buyer. As used herein with respect to
Securities, "transfer" is intended to have the same meaning as when used in
Section 8-313 of the New York Uniform Commercial Code or, where applicable,
in any federal regulation governing transfers of the Securities.
8. Segregation of Purchased Securities
To the extent required by applicable law, all Purchased Securities in
the possession of Seller shall be segregated from other securities in its
possession and shall be identified as subject to this Agreement. Segregation
may be accomplished by appropriate identification on the books and records of
the holder, including a financial intermediary or a clearing corporation.
Title to all Purchased Securities shall pass to Buyer and, unless otherwise
agreed by Buyer and Seller, nothing in this Agreement shall preclude Buyer
from engaging in repurchase transactions with the Purchased Securities or
otherwise pledging or hypothecating the Purchased Securities, but no such
transaction shall relieve Buyer of its obligations to transfer Purchased
Securities to Seller pursuant to Paragraphs 3, 4 or 11 hereof, or of Buyer's
obligation to credit or pay Income to, or apply Income to the obligations of,
Seller pursuant to Paragraph 5 hereof.
Required Disclosure for Transactions in Which the Seller Retains
Custody of the Purchased Securities
Seller is not permitted to substitute other securities for
those subject to this Agreement and therefore must keep Buyer's
securities segregated at all times, unless in this Agreement Buyer
grants Seller the right to substitute other securities. If Buyer
grants the right to substitute, this means that Buyer's securities
will likely be commingled with Seller's own securities during the
trading day. Buyer is advised that, during any trading day that
Buyer's securities are commingled with Seller's securities, they
[will]* [may]** be subject to liens granted by Seller to [its
clearing bank]* [third parties]** and may be used by Seller for
deliveries on other securities transactions. Whenever the
securities are commingled, Seller's ability to resegregate
substitute securities for Buyer will be subject to Seller's ability
to satisfy [the clearing]* [any]** lien or to obtain substitute
securities.
* Language to be used under 17 C.F.R. Section 403.4(e) if Seller is a
government securities broker or dealer other than a financial
institution.
**Language to be used under 17 C.F.R. Section 403.5(d) if Seller is a
financial institution.
9. Substitution
(a) Seller may, subject to agreement with and acceptance by Buyer,
substitute other Securities for any Purchased Securities. Such substitution
shall be made by transfer to Buyer of such other Securities and transfer to
Seller of such Purchased Securities. After substitution, the substituted
Securities shall be deemed to be Purchased Securities.
(b) In Transactions in which the Seller retains custody of Purchased
Securities, the parties expressly agree that Buyer shall be deemed, for
purposes of subparagraph (a) of this Paragraph, to have agreed to and
accepted in this Agreement substitution by Seller of other Securities for
Purchased Securities; provided, however, that such other Securities shall
have a Market Value at least equal to the Market Value of the Purchased
Securities for which they are substituted.
10. Representations
Each of Buyer and Seller represents and warrants to the other that (i)
it is duly authorized to execute and deliver this Agreement, to enter into
the Transactions contemplated hereunder and to perform its obligations
hereunder and has taken all necessary action to authorize such execution,
delivery and performance, (ii) it will engage in such Transactions as
principal (or, if agreed in writing in advance of any Transaction by the
other party hereto, as agent for a disclosed principal), (iii) the person
signing this Agreement on its behalf is duly authorized to do so on its
behalf (or on behalf of any such disclosed principal), (iv) it has obtained
all authorizations of any governmental body required in connection with this
Agreement and the Transactions hereunder and such authorizations are in full
force and effect and (v) the execution, delivery and performance of this
Agreement and the Transactions hereunder will not violate any law, ordinance,
charter, by-law or rule applicable to it or any agreement by which it is
bound or by which any of its assets are affected. On the Purchase Date for
any Transaction Buyer and Seller shall each be deemed to repeat all the
foregoing representations made by it.
11. Events of Default
In the event that (i) Seller fails to repurchase or Buyer fails to
transfer Purchased Securities upon the applicable Repurchase Date, (ii)
Seller or Buyer fails, after one business day's notice, to comply with
Paragraph 4 hereof, (iii) Buyer fails to comply with Paragraph 5 hereof, (iv)
an Act of Insolvency occurs with respect to Seller or Buyer, (v) any
representation made by Seller or Buyer shall have been incorrect or untrue in
any material respect when made or repeated or deemed to have been made or
repeated, or (vi) Seller or Buyer shall admit to the other its inability to,
or its intention not to, perform any of its obligations hereunder (each an
"Event of Default"):
(a) At the option of the nondefaulting party, exercised by written
notice to the defaulting party (which option shall be deemed to have been
exercised, even if no notice is given, immediately upon the occurrence of an
Act of Insolvency), the Repurchase Date for each Transaction hereunder shall
be deemed immediately to occur.
(b) In all Transactions in which the defaulting party is acting as
Seller, if the nondefaulting party exercises or is deemed to have exercised
the option referred to in subparagraph (a) of this Paragraph, (i) the
defaulting party's obligations hereunder to repurchase all Purchased
Securities in such Transactions shall thereupon become immediately due and
payable, (ii) to the extent permitted by applicable law, the Repurchase Price
with respect to each such Transaction shall be increased by the aggregate
amount obtained by daily application of (x) the greater of the Pricing Rate
for such Transaction or the Prime Rate to (y) the Repurchase Price for such
Transaction as of the Repurchase Date as determined pursuant to subparagraph
(a) of this Paragraph (decreased as of any day by (A) any amounts retained by
the nondefaulting party with respect to such Repurchase Price pursuant to
clause (iii) of this subparagraph, (B) any proceeds from the sale of
Purchased Securities pursuant to subparagraph (d)(i) of this Paragraph, and
(C) any amounts credited to the account of the defaulting party pursuant to
subparagraph (e) of this Paragraph) on a 360 day per year basis for the
actual number of days during the period from and including the date of the
Event of Default giving rise to such option to but excluding the date of
payment of the Repurchase Price as so increased, (iii) all Income paid after
such exercise or deemed exercise shall be retained by the nondefaulting party
and applied to the aggregate unpaid Repurchase Prices owed by the defaulting
party, and (iv) the defaulting party shall immediately deliver to the
nondefaulting party any Purchased Securities subject to such Transactions
then in the defaulting party's possession.
(c) In all Transactions in which the defaulting party is acting as
Buyer, upon tender by the nondefaulting party of payment of the aggregate
Repurchase Prices for all such Transactions, the defaulting party's right,
title and interest in all Purchased Securities subject to such Transactions
shall be deemed transferred to the nondefaulting party, and the defaulting
party shall deliver all such Purchased Securities to the nondefaulting party.
(d) After one business day's notice to the defaulting party (which
notice need not be given if an Act of Insolvency shall have occurred, and
which may be the notice given under subparagraph (a) of this Paragraph or the
notice referred to in clause (ii) of the first sentence of this Paragraph),
the nondefaulting party may:
(i) as to Transactions in which the defaulting party is acting as
Seller, (A) immediately sell, in a recognized market at such price or
prices as the nondefaulting party may reasonably deem satisfactory, any
or all Purchased Securities subject to such Transactions and apply the
proceeds thereof to the aggregate unpaid Repurchase Prices and any other
amounts owing by the defaulting party hereunder or (B) in its sole
discretion elect, in lieu of selling all or a portion of such Purchased
Securities, to give the defaulting party credit for such Purchased
Securities in an amount equal to the price therefor on such date,
obtained from a generally recognized source or the most recent closing
bid quotation from such a source, against the aggregate unpaid
Repurchase Prices and any other amounts owing by the defaulting party
hereunder; and
(ii) as to Transactions in which the defaulting party is acting as
Buyer, (A) purchase securities ("Replacement Securities") of the same
class and amount as any Purchased Securities that are not delivered by
the defaulting party to the nondefaulting party as required hereunder or
(B) in its sole discretion elect, in lieu of purchasing Replacement
Securities, to be deemed to have purchased Replacement Securities at the
price therefor on such date, obtained from a generally recognized source
or the most recent closing bid quotation from such a source.
(e) As to Transactions in which the defaulting party is acting as
Buyer, the defaulting party shall be liable to the nondefaulting party (i)
with respect to Purchased Securities (other than Additional Purchased
Securities), for any excess of the price paid (or deemed paid) by the
nondefaulting party for Replacement Securities therefor over the Repurchase
Price for such Purchased Securities and (ii) with respect to Additional
Purchased Securities, for the price paid (or deemed paid) by the
nondefaulting party for the Replacement Securities therefor. In addition, the
defaulting party shall be liable to the nondefaulting party for interest on
such remaining liability with respect to each such purchase (or deemed
purchase) of Replacement Securities from the date of such purchase (or deemed
purchase) until paid in full by Buyer. Such interest shall be at a rate equal
to the greater of the Pricing Rate for such Transaction or the Prime Rate.
(f) For purposes of this Paragraph 11, the Repurchase Price for each
Transaction hereunder in respect of which the defaulting party is acting as
Buyer shall not increase above the amount of such Repurchase Price for such
Transaction determined as of the date of the exercise or deemed exercise by
the nondefaulting party of its option under subparagraph (a) of this
Paragraph.
(g) The defaulting party shall be liable to the nondefaulting party for
the amount of all reasonable legal or other expenses incurred by the
nondefaulting party in connection with or as a consequence of an Event of
Default, together with interest thereon at a rate equal to the greater of the
Pricing Rate for the relevant Transaction or the Prime Rate.
(h) The nondefaulting party shall have, in addition to its rights
hereunder, any rights otherwise available to it under any other agreement or
applicable law.
12. Single Agreement
Buyer and Seller acknowledge that, and have entered hereinto and will
enter into each Transaction hereunder in consideration of and in reliance
upon the fact that, all Transactions hereunder constitute a single business
and contractual relationship and have been made in consideration of each
other. Accordingly, each of Buyer and Seller agrees (i) to perform all of its
obligations in respect of each Transaction hereunder, and that a default in
the performance of any such obligations shall constitute a default by it in
respect of all Transactions hereunder, (ii) that each of them shall be
entitled to set off claims and apply property held by them in respect of any
Transaction against obligations owing to them in respect of any other
Transactions hereunder and (iii) that payments, deliveries and other
transfers made by either of them in respect of any Transaction shall be
deemed to have been made in consideration of payments, deliveries and other
transfers in respect of any other Transactions hereunder, and the obligations
to make any such payments, deliveries and other transfers may be applied
against each other and netted.
13. Notices and Other Communications
Unless another address is specified in writing by the respective party
to whom any notice or other communication is to be given hereunder, all such
notices or communications shall be in writing or confirmed in writing and
delivered at the respective addresses set forth in Annex II attached hereto.
14. Entire Agreement; Severability
This Agreement shall supersede any existing agreements between the
parties containing general terms and conditions for repurchase transactions.
Each provision and agreement herein shall be treated as separate and
independent from any other provision or agreement herein and shall be
enforceable notwithstanding the unenforceability of any such other provision
or agreement.
15. Non-assignability; Termination
The rights and obligations of the parties under this Agreement and under
any Transaction shall not be assigned by either party without the prior
written consent of the other party. Subject to the foregoing, this Agreement
and any Transactions shall be binding upon and shall inure to the benefit of
the parties and their respective successors and assigns. This Agreement may
be canceled by either party upon giving written notice to the other, except
that this Agreement shall, notwithstanding such notice, remain applicable to
any Transactions then outstanding.
16. Governing Law
This Agreement shall be governed by the laws of the State of New York
without giving effect to the conflict of law principles thereof.
17. No Waivers, Etc.
No express or implied waiver of any Event of Default by either party
shall constitute a waiver of any other Event of Default and no exercise of
any remedy hereunder by any party shall constitute a waiver of its right to
exercise any other remedy hereunder. No modification or waiver of any
provision of this Agreement and no consent by any party to a departure
herefrom shall be effective unless and until such shall be in writing and
duly executed by both of the parties hereto. Without limitation on any of the
foregoing, the failure to give a notice pursuant to subparagraphs 4(a) or
4(b) hereof will not constitute a waiver of any right to do so at a later
date.
18. Use of Employee Plan Assets
(a) If assets of an employee benefit plan subject to any provision of
the Employee Retirement Income Security Act of 1974 ("ERISA") are intended to
be used by either party hereto (the "Plan Party") in a Transaction, the Plan
Party shall so notify the other party prior to the Transaction. The Plan
Party shall represent in writing to the other party that the Transaction does
not constitute a prohibited transaction under ERISA or is otherwise exempt
therefrom, and the other party may proceed in reliance thereon but shall not
be required so to proceed.
(b) Subject to the last sentence of subparagraph (a) of this Paragraph,
any such Transaction shall proceed only if Seller furnishes or has furnished
to Buyer its most recent available audited statement of its financial
condition and its most recent subsequent unaudited statement of its financial
condition.
(c) By entering into a Transaction pursuant to this Paragraph, Seller
shall be deemed (i) to represent to Buyer that since the date of Seller's
latest such financial statements, there has been no material adverse change
in Seller's financial condition which Seller has not disclosed to Buyer, and
(ii) to agree to provide Buyer with future audited and unaudited statements
of its financial condition as they are issued, so long as it is a Seller in
any outstanding Transaction involving a Plan Party.
19. Intent
(a) The parties recognize that each Transaction is a "repurchase
agreement" as that term is defined in Section 101 of Title 11 of the United
States Code, as amended (except insofar as the type of Securities subject to
such Transaction or the term of such Transaction would render such definition
inapplicable), and a "securities contract" as that term is defined in Section
741 of Title 11 of the United States Code, as amended.
(b) It is understood that either party's right to liquidate Securities
delivered to it in connection with Transactions hereunder or to exercise any
other remedies pursuant to Paragraph 11 hereof, is a contractual right to
liquidate such Transaction as described in Sections 555 and 559 of Title 11
of the United States Code, as amended.
20. Disclosure Relating to Certain Federal Protections
The parties acknowledge that they have been advised that:
(a) in the case of Transactions in which one of the parties is a broker
or dealer registered with the Securities and Exchange Commission ("SEC")
under Section 15 of the Securities Exchange Act of 1934 ("1934 Act"), the
Securities Investor Protection Corporation has taken the position that the
provisions of the Securities Investor Protection Act of 1970 ("SIPA") do not
protect the other party with respect to any Transaction hereunder;
(b) in the case of Transactions in which one of the parties is
government securities broker or a government securities dealer registered
with the SEC under Section 15C of the 1934 Act, SIPA will not provide
protection to the other party with respect to any Transaction hereunder; and
(c) in the case of Transactions in which one of the parties is a
financial institution, funds held by the financial institution pursuant to a
Transaction hereunder are not a deposit and therefore are not insured by the
Federal Deposit Insurance Corporation, the Federal Savings and Loan Insurance
Corporation or the National Credit Union Share Insurance Fund, as applicable.
DLJ Mortgage Capital, Inc. Lomas Mortgage USA, Inc.
[Name of Party] [Name of Party]
By /s/ROD ENNICO By /s/ROBERT E. BYERLEY, JR.
--------------------------- -------------------------------
Title Senior Vice President Title Executive Vice President
----------------------- ----------------------------
Date April 12, 1994 Date April 11, 1994
------------------- -------------------
Donaldson, Lufkin & Jenrette Lomas Mortgage USA, Inc.
Securities Corporation
[Name of Party] [Name of Party]
By /s/ROD ENNICO By /s/ROBERT E. BYERLEY, JR.
--------------------------- -------------------------------
Title Senior Vice President Title Executive Vice President
----------------------- ----------------------------
Date April 12, 1994 Date April 11, 1994
------------------- -------------------
<PAGE>
ANNEX I
Supplemental Terms and Conditions
The MASTER REPURCHASE AGREEMENT ("Agreement"), dated April 11, 1994 between
DLJ MORTGAGE CAPITAL, INC. ("Buyer") and LOMAS MORTGAGE USA, INC. ("Seller"),
is amended and supplemented as set forth below. All capitalized terms used
herein are defined in the Agreement except to the extent such terms are
amended or supplemented herein.
1. Paragraph 1 of the Agreement is amended by adding the following after
the word "instruments" and before the parenthetical "("Securities")" in
the second line thereof:
"or whole mortgage loans or any interests in any whole mortgage loans,
including, without limitation, mortgage participation certificates and
mortgage pass-through certificates".
2. Subparagraph 2(a) of the Agreement is amended by adding the following
after the word "any" and before the word "bankruptcy" in the second line
thereof:
"conservatorship or receivership (within the meaning of the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989),".
3. Subparagraph 2(a) of the Agreement is further amended by adding the
following after the word "a" and before the word "receiver" in the third
line thereof:
"conservator,".
4. Subparagraph 2(h) of the Agreement is amended by deleting the defined
term "Market Value" and replacing it with the defined term "Assumed
Repurchase Value", and the term Market Value throughout the Agreement
shall be deemed to refer to the Assumed Repurchase Value.
5. Subparagraph 2(h) of the Agreement is amended by adding at the end
thereof:
"except that the Assumed Repurchase Value of any Securities that are
loans secured by mortgages or deeds of trust on residential dwellings
(such loans, "Mortgage Loans") as of any date shall be the dollar amount
ascribed to such Mortgage Loans on that date by Buyer in its sole
discretion, and shall not include any Income on such Mortgage Loans paid
to and held by Seller pursuant to Paragraph 5 hereof, and the Assumed
Repurchase Value of any Additional Purchased Securities shall be the
fair market value thereof as determined by Buyer in its sole discretion"
6. Subparagraph 3(b) of the Agreement is amended by adding at the end of
the first sentence:
"In the case of Transactions involving Securities that are Mortgage
Loans, (a) the Purchased Securities shall be identified on a detailed
listing to be provided by Seller to Buyer (a "Mortgage Loan Schedule")
attached to the related Confirmation, (b) the documents contained in the
Mortgage File (defined in Paragraph 7) shall be delivered to the entity
acting as bailee of and agent for DLJ with respect to any transaction
contemplated hereunder ("Custodian") and held by Custodian pursuant to
a Custody Agreement ("Custody Agreement"), among Seller, Buyer and
Custodian pursuant to which Custodian shall, among other things, issue
Trust Receipts as defined therein ("Trust Receipts"), and (c) the
Mortgage Loans shall be serviced for Buyer by Seller or Seller's agent
in accordance with Accepted Servicing Practices. "Accepted Servicing
Practices" shall mean those servicing practices of prudent mortgage
servicers servicing mortgage loans of the same type as the Mortgage
Loans in those jurisdictions in which the related Mortgage Properties
(defined in Paragraph 7) are located, but in no event shall such
standards or practices be lower than the standards and practices of
Seller with respect to its own portfolio of similar mortgage loans. For
purposes of this Agreement, Accepted Servicing Practices shall also
include the use of one or more accounts maintained at an independent
depository institution approved by DLJ.
7. Paragraph 3(b) of the Agreement is further amended by deleting the last
sentence and replacing it with the following:
"In the event of any conflict between the Confirmation and this
Agreement, the terms of such Confirmation shall prevail."
8. Subparagraph 3(c) of the Agreement is amended by adding at the end of
the first sentence:
"In the case of Transactions involving Securities that are Mortgage
Loans, such demand by Buyer or Seller shall be for a repurchase of all
Purchased Securities subject to the related Transaction and such demand
shall be made no later than 5:00 p.m. New York City time on the business
day preceding the day on which such termination will be effective, which
termination shall also be on a business day. Upon receipt of the
Repurchase Price in immediately available funds, Buyer shall deliver the
Trust Receipt for such Transaction to Custodian for further disposition
in accordance with the terms of the Custody Agreement.
9. Paragraph 4 of the Agreement is amended by adding new subparagraphs (f)
and (g) as follows:
"(f) In the case of Transactions involving Securities that are Mortgage
Loans, (i) the percentage used in calculating Buyer's Margin Amount for
such Transaction shall be as set forth in the related Confirmation and
(ii) Additional Purchased Securities shall be limited to cash, Mortgage
Loans, obligations issued by the United States government, the Federal
National Mortgage Association ("FNMA"), or the Federal Home Loan
Mortgage Corporation ("FHLMC"), or guaranteed by the Government National
Mortgage Association ("GNMA"), and (iii) the provisions of subparagraphs
(b), (d) and (e) of this Paragraph shall not apply.
(g) The provisions of this paragraph 4 shall not be applicable to any
Transaction as to which the Buyer (or an affiliate of the Buyer) agrees
to purchase the related Securities on a forward delivery basis."
10. Paragraph 5 of the Agreement is amended by adding the following at the
end of the last sentence:
"Notwithstanding the foregoing and except as provided in Paragraph 11 of
this Agreement, in the case of Transactions involving Securities that
are Mortgage Loans, Seller shall be deemed to hold for the benefit of,
and in trust for, Buyer all Income (including all scheduled and
unscheduled principal and interest payments) received by Seller with
respect to such Mortgage Loans. Seller shall service the Mortgage Loans,
or supervise the servicing of the Mortgage Loans, for the benefit of
Buyer in accordance with Accepted Servicing Practices. Upon request by
Buyer, Seller will provide Buyer with reports substantially identical in
form to FNMA's form 2010 remittance report with respect to all Mortgage
Loans subject to a Transaction. Within three business days of its
receipt of each such report, Buyer either (i) shall determine that a
Margin Deficit has occurred and direct Seller to pay to Buyer all Income
received in the period covered by such report to the extent of such
Margin Deficit, in which case Buyer shall be deemed to have released any
excess Income to Seller, or (ii) shall determine that a Margin Deficit
has not occurred, in which case Buyer shall be deemed to have released
all such Income to Seller."
11. Paragraph 6 of the Agreement is amended by adding the following after
the word "the" and before the words "Purchased Securities" in the fourth
line thereof:
"Seller's right (including the power to convey title thereto), title and
interest in and to the".
12. Paragraph 6 of the Agreement is amended by adding the following after
the words "Purchased Securities" and before the word "with" in the
fourth line thereof:
", the contractual right to receive payments, including the right to
payments of principal and interest and the right to enforce such
payments, arising from or under any of the Purchased Securities, the
contractual right to service each Mortgage Loan, any sub-servicing
agreements with respect to each Mortgage Loan, and all documents in each
Mortgage File,".
13. Paragraph 6 of the Agreement is amended by adding the following after
the word "all" and before the word "proceeds" in the fifth line thereof:
"income, payments, products and".
14. Paragraph 6 of the Agreement is amended by adding the following after
the word "thereof" and before the period in the fifth line thereof:
"(the "Collateral")".
15. Paragraph 6 of the Agreement is amended by adding the following at the
end of the last sentence of Paragraph 6:
"In such event, the parties hereto intend to create for the benefit of
Buyer, as secured party, a legally valid and enforceable first priority
perfected security interest in the Collateral. On or prior to each
Purchase Date, Seller shall cause to be filed in the appropriate filing
offices of the jurisdiction in which Seller maintains its place of
business, or its chief executive office if Seller has more than one
place of business, in accordance with applicable law, Uniform Commercial
Code financing statements naming Seller as debtor, Buyer as secured
party, and identifying the Collateral as collateral."
16. Paragraph 7 of the Agreement is amended by adding the following at the
end of the last sentence of Paragraph 7:
"In the case of Transactions involving Securities that are Mortgage
Loans, the transfer of such Mortgage Loans for the purposes of this
Paragraph 7 shall include the delivery to the Custodian of the following
documents (the "Mortgage File") with respect to each Mortgage Loan, as
set forth in the Custody Agreement:
(i) the original note or other evidence of indebtedness ("Mortgage
Note") of the obligor thereon (each obligor a "Mortgagor"), endorsed to
the order of or assigned to Seller by the holder/payee thereof, without
recourse, together with all intervening endorsements, and endorsed by
Seller, without recourse, in blank;
(ii) the original or certified copy of the mortgage, deed of trust or
other instrument ("Mortgage") creating a first lien on the underlying
property securing the Mortgage Loan (the "Mortgaged Property"), naming
Seller as the "mortgagee" or "beneficiary" thereof, and bearing on the
face thereof the address of Seller as provided in Paragraph 13 of this
Agreement, or, if the Mortgage does not name Seller as the
mortgagee/beneficiary, the Mortgage, together with an instrument of
assignment assigning the Mortgage, individually or together with other
Mortgages, to Seller and bearing on the face thereof the address of
Seller as provided in Paragraph 13 of this Agreement, and, in either
case, bearing evidence acceptable to Buyer that such instruments have
been or are currently being submitted for recordation in the appropriate
governmental recording office of the jurisdiction where the Mortgaged
Property is located);
(iii) an original assignment of Mortgage with assignee in blank but
otherwise in recordable form, but not recorded, and all intervening
assignments, if any;
(iv) an original copy or a copy of any assumption, modification,
extension or guaranty agreement relating to the Mortgage Loan;
(v) if the Mortgage Note or Mortgage or any other material (as
determined by Buyer in its reasonable discretion) document or instrument
relating to the Mortgage Loan has been signed by a person on behalf of
the Mortgagor, the power of attorney or other instrument that authorized
and empowered such person to sign; and
(vi) with respect to any Mortgage Loan subject to an existing lien, an
original executed Warehouse Lender Release Letter substantially in the
form attached to the Custody Agreement, duly executed by the appropriate
party."
17. Paragraph 8 of the Agreement is amended by deleting the last sentence
and substituting the following:
"Title to all Purchased Securities (except Securities that are Mortgage
Loans) shall pass to Buyer. In the case of Mortgage Loans, upon transfer
of the Mortgage Loans to Buyer as set forth in Paragraph 3(a) of this
Agreement and until termination of any Transactions as set forth in
Paragraphs 3(c) or 11 of this Agreement, ownership of each Mortgage
Loan, including each document in the related Mortgage File, is vested in
Buyer and record title in the name of Seller to each Mortgage shall be
retained by Seller in trust, for the benefit of Buyer, for the sole
purpose of facilitating the servicing and the supervision of the
servicing of the Mortgage Loans by Seller. Further, nothing in this
Agreement shall preclude Buyer from engaging in repurchase transactions
with the Purchased Securities or otherwise pledging or hypothecating the
Purchased Securities, but no such transaction shall relieve Buyer of its
obligations to transfer Purchased Securities to Seller pursuant to
Paragraphs 3, 4 or 11 hereof. Upon termination of any Transaction as set
forth in Paragraph 3(c) of this Agreement, Buyer agrees to execute
promptly endorsements of the Mortgage Notes, assignments of the
Mortgages and UCC-3 assignments, to the extent that such documents are
prepared by Seller for Buyer's execution, are delivered to Buyer by
Seller, and are necessary to reconvey without recourse to Seller. Buyer
agrees to cooperate with Seller to identify documents that may be
required to effect such reconveyance to Seller."
18. Subparagraph 9(b) of the Agreement is amended by adding the following
after the word "substituted" and before the period in the fifth line
thereof:
"; provided, further, that, in the case of Transactions involving
Securities that are Mortgage Loans, Seller's retention of any document
in any Mortgage File shall be held by Seller in trust for Buyer for
purposes of servicing the related Mortgage Loan and shall not be deemed
to constitute Seller's retention of custody of the Purchased Securities
for purposes of this subparagraph."
19. Paragraph 10 of the Agreement is amended by replacing the word "and"
before clause (v) with a comma, and adding the following clause at the
end of the first sentence of Paragraph 10 after the word "affected" and
before the period:
"and (vi) Seller and Buyer have executed the Confirmation
contemporaneously with the sale of the Purchased Securities by Seller to
Buyer and the transfer of the Purchase Price by Buyer to Seller, or, in
the event that the Transaction is deemed to constitute a loan,
contemporaneously with the grant of the security interest in the
Collateral by Seller to Buyer pursuant to Paragraph 6 hereof and the
transfer of the consideration therefor, consisting of the extension of
the Purchase Price, which represents the loan proceeds, by Buyer to
Seller."
20. Paragraph 10 of the Agreement is amended by deleting the second sentence
of Paragraph 10 and substituting the following:
"In addition to the foregoing, in the case of Transactions involving
Securities that are Mortgage Loans, Seller represents and warrants to
Buyer that, as to each Mortgage Loan and the related Mortgage and
Mortgage Note as of the Purchase Date unless otherwise indicated:
(A) The information set forth in the related Mortgage Loan Schedule and
all other information or data furnished by, or on behalf of, Seller to
Buyer is complete, true and correct in all material respects, and Seller
acknowledges that Buyer has not verified the accuracy of such
information or data.
(B) Seller is the sole owner of record and holder of the Mortgage Loan.
The Mortgage Loan is not assigned or pledged, and Seller has good and
marketable title thereto, and has full right and authority to transfer
and sell the Mortgage Loan to Buyer free and clear of any encumbrance,
equity, participation interest, lien, pledge, charge, claim or security
interest.
(C) All payments required to be made up to the Purchase Date for the
Mortgage Loan under the terms of the Mortgage Note have been made and
credited. No payment required under the Mortgage Loan is delinquent nor
has any payment under the Mortgage Loan been delinquent at any time
during the 12 month period immediately preceding the Purchase Date.
(D) To Seller's knowledge there are no defaults in complying with the
terms of the Mortgage, and all taxes, assessments, insurance premiums,
water, sewer and municipal charges, leasehold payments or ground rents
which previously became due and owing have been paid, or an escrow of
funds has been established in an amount sufficient to pay for every such
item which remains unpaid and which has been assessed but is not yet due
and payable. Seller has not advanced funds, or induced, solicited or
knowingly received any advance of funds by a party other than the
Mortgagor, directly or indirectly, for the payment of any amount
required under the Mortgage Loan, except for interest accruing from the
date of the Mortgage Note or date of disbursement of the Mortgage Loan
proceeds, whichever is greater, to the day which precedes by one month
the Purchase Date.
(E) The terms of the Mortgage Note and the Mortgage have not been
impaired, waived, altered or modified in any respect, except by a
written instrument which has been recorded, if necessary, to protect the
interests of Buyer and which has been delivered to Buyer. The substance
of any such waiver, alteration or modification has been approved by the
issuer of any related primary mortgage insurance policy and the title
insurer, to the extent required by the policy, and its terms are
reflected on the Mortgage Loan Schedule. No Mortgagor has been released,
in whole or in part, except in connection with an assumption agreement
approved by the issuer of any related primary mortgage insurance policy
and the title insurer, to the extent required by the policy, and which
assumption agreement is part of the Mortgage Loan File delivered to
Buyer and the terms of which are reflected in the Mortgage Loan
Schedule.
(F) The Mortgage Loan is not subject to any right of rescission, set-
off, counterclaim or defense, including without limitation the defense
of usury, nor will the operation of any of the terms of the Mortgage
Note or the Mortgage, or the exercise of any right thereunder, render
either the Mortgage Note or the Mortgage unenforceable, in whole or in
part, or subject to any right of rescission, set-off, counterclaim or
defense, including without limitation the defense of usury, and no such
right of rescission, set-off, counterclaim or defense has been asserted
with respect thereto.
(G) Pursuant to the terms of the Mortgage, all buildings or other
improvements upon the Mortgaged Property are insured by a generally
acceptable insurer against loss by fire, hazards of extended coverage
and such other hazards as are customary in the area where the Mortgaged
Property is located pursuant to insurance policies conforming to the
requirements of prudent lenders conducting business in the area in which
the Mortgaged property is located. If, upon origination of the Mortgage
Loan, the Mortgaged Property was in an area identified in the Federal
Register by the Federal Emergency Management Agency as having special
flood hazards (and such flood insurance has been made available) a flood
insurance policy meeting the requirements of the current guidelines of
the Federal Insurance Administration is in effect which policy conforms
to the requirements of prudent lenders conducting business in the area
in which the Mortgaged Property is located. All individual insurance
policies contain a standard mortgagee clause naming Seller and its
successors and assigns as mortgagee, and all premiums thereon have been
paid. The Mortgage obligates the Mortgagor thereunder to maintain the
hazard insurance policy at the Mortgagor's cost and expense, and on the
Mortgagor's failure to do so, authorizes the holder of the Mortgage to
obtain and maintain such insurance at such Mortgagor's cost and expense,
and to seek reimbursement therefor from the Mortgagor. Seller has not
engaged in, and has no knowledge of the Mortgagor's or any other party's
having engaged in, any act or omission which would impair the coverage
of any such policy, the benefits of the endorsement provided for herein,
or the validity and binding effect of either.
(H) Any and all requirements of any federal, state or local law
applicable to the Mortgage Loan have been complied with.
(I) The Mortgage has not been satisfied, canceled, subordinated or
rescinded, in whole or in part, and the Mortgaged Property has not been
released from the lien of the Mortgage, in whole or in part, nor has any
instrument been executed that would effect any such release,
cancellation, subordination or rescission.
(J) The Mortgaged Property consists of a parcel or parcels of real
property improved by one or more detached multifamily housing structures
comprising five or more dwelling units and used exclusively for
residential purposes ("Multifamily Property"), or a single parcel of
real property with a detached single family residence erected thereon,
or a two- to four-family dwelling, or an individual condominium unit in
a low-rise condominium project, or an individual unit in a planned unit
development, provided, however, that any condominium unit or planned
unit development shall conform with the applicable FNMA and FHLMC
requirements regarding such dwellings and that no residence or dwelling
is a mobile home. No portion of the Mortgaged Property is used for
commercial purposes.
(K) The Mortgage is a valid, enforceable first lien on the Mortgaged
Property, including all buildings on the Mortgaged Property and all
installations and mechanical, electrical, plumbing, heating and air
conditioning systems located in or annexed to such buildings, and all
additions, alterations and replacements made at any time with respect to
the foregoing. The lien of the Mortgage is subject only to (1) the lien
of current real property taxes and assessments not yet due and payable,
(2) covenants, conditions and restrictions, rights of way, easements and
other matters of the public record as of the date of recording
acceptable to mortgage lending institutions generally and specifically
referred to in the lender's title insurance policy delivered to the
originator of the Mortgage Loan and (i) referred to or to otherwise
considered in the appraisal made for the originator of the Mortgage Loan
or (ii) which do not adversely affect the appraised value of the
Mortgaged Property set forth in such appraisal, and (3) other matters to
which like properties are commonly subject which do not materially
interfere with the benefits of the security intended to be provided by
the Mortgage or the use, enjoyment, value or marketability of the
related Mortgaged Property.
(L) Any security agreement, chattel mortgage or equivalent document
related to and delivered in connection with the Mortgage Loan
establishes and creates a valid and enforceable first lien and first
priority security interest on the property described therein and Seller
has full right to sell and assign the same to Buyer.
(M) The Mortgage Note and the Mortgage are genuine, and each is the
legal, valid and binding obligation of the maker thereof enforceable in
accordance with its terms. All parties to the Mortgage Note and the
Mortgage had legal capacity to enter into the Mortgage Loan and to
execute and deliver the Mortgage Note and the Mortgage, and the Mortgage
Note and the Mortgage have been duly and properly executed by such
parties.
(N) The proceeds of the Mortgage Loan have been fully disbursed and
there is no requirement for future advances thereunder, and any and all
requirements as to completion of any on-site or off-site improvements
and as to disbursements of any escrow funds therefor have been duly
complied with. All costs, fees and expenses incurred in making or
closing the Mortgage Loan and the recording of the Mortgage were paid,
and the Mortgagor is not entitled to any refund of any amounts paid or
due under the Mortgage Note or Mortgage.
(O) To Seller's knowledge, all parties that have had any interest in
the Mortgage Loan, whether as mortgagee, assignee, pledgee or otherwise,
are or, during the period in which they held and disposed of such
interest, were (1) in compliance with any and all applicable licensing
requirements of the laws of the state wherein the Mortgaged Property is
located, and (2) either (a) organized under the laws of such state, or
(b) qualified to do business in such state, or (c) federal savings and
loan associations or national banks having principal offices in such
state, or (d) not doing business in such state.
(P) Unless otherwise agreed to in writing by Buyer, the Mortgage Loan
has a loan-to-value ratio equal to or less than 90%. Either (a) the
original loan-to-value ratio of the Mortgage Loan was not more than 80%
or (b) the excess over 75% is and will be insured as to payment defaults
by a primary mortgage insurance policy until the loan-to-value ratio of
such Mortgage Loan is reduced to 80%. All provisions of such primary
mortgage insurance policy have been and are being complied with, such
policy is in full force and effect, and all premiums due thereunder have
been paid. Any Mortgage Loan subject to a primary mortgage insurance
policy obligates the Mortgagor thereunder to maintain the primary
mortgage insurance policy and to pay all premiums and charges in
connection therewith. The interest rate for the Mortgage Loan as set
forth on the Mortgage Loan Schedule is net of any such insurance
premium.
(Q) The Mortgage Loan is covered by either (1) an attorney's opinion of
title and abstract of title, the form and substance of which are
acceptable to mortgage lending institutions making mortgage loans in the
area where the Mortgaged Property is located or (2) an ALTA lender's
title insurance policy or other generally acceptable form of policy or
insurance acceptable to FNMA or FHLMC, issued by a title insurer
acceptable to FNMA or FHLMC and qualified to do business in the
jurisdiction where the Mortgaged Property is located, insuring Seller,
its successors and assigns, as to the first priority lien of the
Mortgage in the original principal amount of the Mortgage Loan, subject
only to the exceptions contained in clauses (1), (2) and (3) of
paragraph (K) of this Paragraph 10. Seller is the sole insured of such
lender's title insurance policy, and such lender's title insurance
policy is in full force and effect and will be in force and effect upon
the consummation of the transactions contemplated by this Agreement. No
claims have been made under such lender's title insurance policy, and no
prior holder of the Mortgage, including Seller, has done, by act or
omission, anything that would impair the coverage of such lender's title
insurance policy.
(R) There is no default, breach, violation or event of acceleration
existing under the Mortgage or the Mortgage Note and no event which,
with the passage of time or with notice and the expiration of any grace
or cure period, would constitute a default, breach, violation or event
of acceleration, and neither Seller nor its predecessors have waived any
default, breach, violation or event of acceleration.
(S) To Seller's knowledge, there are no mechanics' or similar liens or
claims which have been filed for work, labor or material, and no rights
are outstanding that under the law could give rise to such liens,
affecting the related Mortgaged Property which are or may be liens prior
to, or equal or coordinate with, the lien of the related Mortgage.
(T) All improvements which were considered in determining the appraised
value of the Mortgaged Property lay wholly within the boundaries and
building restriction lines of the Mortgaged Property and no improvements
on adjoining properties encroach upon the Mortgaged Property. No
improvement located on or being part of the Mortgaged Property is in
violation of any applicable zoning law or regulation.
(U) The Mortgage Loan was originated by Seller, a FNMA-, FHLMC- or HUD-
approved mortgage banker, a savings and loan association, a savings
bank, a commercial bank or similar banking institution which is
supervised and examined by a Federal or State authority. The Mortgage
Note is payable on the first day of each month in equal monthly
installments of a principal and interest, with interest calculated and
payable in arrears, sufficient to amortize the Mortgage Loan fully by
the stated maturity date, over an original term of not more than thirty
years from commencement of amortization.
(V) The Mortgage contains customary and enforceable provisions such as
to render the rights and remedies of the holder thereof adequate for the
realization against the Mortgaged Property of the benefits of the
security provided thereby, including, (1) in the case of a Mortgage
designated as a deed of trust, by trustee's sale, and (2) otherwise by
judicial foreclosure.
(W) The Mortgage Loan was underwritten in accordance with Seller's
underwriting standards in effect at the time the Mortgage Loan was
originated. The Mortgage Loan is in conformity with the standards of
Seller under one of its home mortgage purchase or refinance programs.
(X) To Seller's knowledge, the Mortgaged Property is lawfully occupied
under applicable law. All inspections, licenses and certificates
required to be made or issued with respect to all occupied portions of
the Mortgaged Property and, with respect to the use and occupancy of the
same, including but not limited to certificates of occupancy and fire
underwriting certificates, have been made or obtained from the
appropriate authorities. The Mortgagor represented at the time of
origination of the Mortgage Loan that the Mortgagor would occupy the
Mortgaged Property as the Mortgagor's primary residence.
(Y) The Mortgage Note is not and has not been secured by any collateral
except the lien of the corresponding Mortgage and the security interest
of any applicable security agreement or chattel mortgage referred to in
(K) above.
(Z) In the event the Mortgage constitutes a deed of trust, a trustee,
duly qualified under applicable law to serve as such, has been properly
designated and currently so serves and is named in the Mortgage, and no
fees or expenses are or will become payable by Buyer to the trustee
under the deed of trust, except in connection with a trustee's sale
after default by the Mortgagor.
(AA) Seller has no knowledge of any circumstances or conditions with
respect to the Mortgage, the Mortgaged Property, the Mortgagor or the
Mortgagor's credit standing that can reasonably be expected to generally
cause private institutional investors to regard the Mortgage Loan as an
unacceptable investment, cause the Mortgage Loan to become delinquent,
or adversely affect the value or marketability of the Mortgage Loan.
(BB) The documents contained in the Mortgage File and any other
documents required to be delivered under this Agreement have been
delivered to Custodian.
(CC) The Assignment of Mortgage is in recordable form and is acceptable
for recording under the laws of the jurisdiction in which the Mortgaged
Property is located.
(DD) The Mortgage contains an enforceable provision for the
acceleration of the payment of the unpaid principal balance of the
Mortgage Loan in the event that the Mortgaged Property is sold or
transferred without the prior written consent of the mortgagee
thereunder.
(EE) For Mortgage Loans which contain provisions pursuant to which
monthly payments are paid or partially paid with funds deposited in any
separate account established by Customer, the mortgagor or anyone on
behalf of the mortgagor, which may constitute a "buydown" provision, the
amount of each assistance payment shall be the sum necessary to make up
the difference between the monthly principal and interest payment
required by the terms of the note and the reduced monthly payment, as
stated in the buydown certification. However, if for any reason the
assistance payments from the escrow funds are not made by the escrow
agent as contemplated, it shall be the obligation of the mortgagor to
make the monthly payments required by the terms of the note. For
graduated payment Mortgage Loans, the scheduled annual payment
adjustments are sufficient to cover all interest due and to fully
amortize the loan in 15 years. No Mortgage Loan contains a shared
appreciation or other contingent interest feature.
(FF) Any future advances made prior to the Purchase Date have been
consolidated with the outstanding principal amount secured by the
Mortgage, and the secured principal amount, as consolidated, bears a
single interest rate and single repayment term. The lien of the Mortgage
securing the consolidated principal amount is expressly insured as
having first lien priority by a title insurance policy, an endorsement
to the policy insuring the mortgagee's consolidated interest or by other
title evidence acceptable to FNMA and FHLMC. The consolidated principal
amount does not exceed the original principal amount of the Mortgage
Loan.
(GG) The Mortgaged Property is undamaged by waste, fire, earthquake or
earth movement, windstorm, flood, tornado or other casualty so as to
affect adversely the value of the Mortgaged Property as security for the
Mortgage Loan or the use for which the premises were intended.
(HH) The origination and collection practices used with respect to the
Mortgage Loan have been in accordance with generally accepted servicing
practices in the industry, and have been in all respects legal and
proper. With respect to escrow deposits and escrow payments, all such
payments are in the possession of Seller and there exist no deficiencies
in connection therewith for which customary arrangements for repayment
thereof have not been made. No escrow deposits or escrow payments or
other charges or payments due Seller have been capitalized under the
Mortgage or the Mortgage Note.
On the Purchase Date for any Transaction, Seller shall be deemed to make
all of the foregoing representations and warranties."
21. Paragraph 11 is amended by inserting the words ", other than any
representation made by Seller as to a particular Mortgage Loan," after
the words "made by Seller or Buyer" on the fourth line thereof.
22. Subparagraph 11(d) of the Agreement is amended by deleting the words
that precede Subparagraph 11(d)(i) and replacing them with the words
"The non-defaulting party may with concurrent immediate notice to the
defaulting party:".
23. Subparagraph 11(d)(i) of the Agreement is amended by adding the
following after the word "hereunder" and before the semicolon on the
ninth line thereof:
"and in either case upon the determination and receipt by Buyer, in a
manner deemed final and complete by Buyer in its reasonable judgment, of
the aggregate unpaid Repurchase Prices and any other amounts owing by
the defaulting party, including, without limitation, any unpaid fees,
expenses or other amounts owing to the Custodian under the Custody
Agreement, or to which Buyer is otherwise entitled hereunder, Buyer
shall transfer the portion of the Collateral and proceeds thereof,
including without limitation, any proceeds of a sale of the servicing
rights to the Mortgage Loans, held by Buyer following such receipt to
either (i) Seller, if in Buyer's reasonable judgment Seller is legally
entitled thereto, (ii) such other party or person as is in Buyer's
reasonable judgment is legally entitled thereto, or (iii) if Buyer
cannot determine in its reasonable judgment the person or party entitled
thereto, a court of competent jurisdiction."
24. Paragraph 11 of the Agreement is amended by adding a new Subparagraph
(i) as follows:
"(i) Seller acknowledges that any delay in the ability of Seller to
exercise its remedies pursuant to Paragraph 11 hereof shall result in
irreparable injury to Buyer."
25. Paragraph 13 of the Agreement is amended by deleting the words "in Annex
II attached hereto" and replacing them with the words "at the end of
this Annex I."
26. Paragraph 14 of the Agreement is amended by inserting the words "with
respect to Securities that consist of Mortgage Loans" after the word
"transactions" and before the period on the second line thereof.
27. Subparagraph 19(a) of the Agreement is amended by adding a new sentence
at the end:
"The parties also recognize that each Transaction, this Agreement and
each Confirmation constitute a "qualified financial contract" as that
term is defined in Section 11(e)(8)(D)(i) of the Federal Deposit
Insurance Act ("FDIA"), a "repurchase agreement" as that term is defined
in Section 11(e)(8)(D)(v) of the FDIA, and a "securities contract" as
that term is defined in Section 11(e)(8)(D)(ii) of the FDIA. The parties
further agree and acknowledge that this Agreement constitutes a "master
agreement" within the meaning of Section 11(e)(8)(A)(iii) of the FDIA
and The FDIC Statement of Policy on Qualified Financial Contracts, dated
December 12, 1989 and The RTC Statement of Policy on Qualified Financial
Contracts, dated December 12, 1989 (collectively, the "Policy
Statements"), an "ancillary agreement" within the meaning of the Policy
Statements and a "security arrangement" within the meaning of Sections
11(e)(8)(A)(ii) and 11(e)(8)(E)(ii) of the FDIA and the Policy
Statements."
28. Subparagraph 19(b) of the Agreement is amended by adding a new sentence
at the end:
"It is also understood that either party's rights to liquidate
Collateral delivered to it in connection with Transactions hereunder or
to exercise any other remedies pursuant to Paragraph 11 hereof is (i) a
right to cause the termination or liquidation of a qualified financial
contract with an insured depository institution that arises upon the
appointment of the FDIC or the Resolution Trust Corporation as receiver
for such institution at any time after such appointment, as described in
Section 11(e)(8)(A)(i) of the FDIA, (ii) a right under a security
arrangement related to a contract or agreement described in clause (i)
above, as described in Section 11(e)(8)(A)(ii) of the FDIA, (iii) a
right to offset or net out any termination value, payment amount, or
other transfer obligation arising under or in connection with one or
more contracts and agreements described in clause (i) above, including
any master agreement for such contracts or agreements, as described in
Section 11(e)(8)(A)(iii) of the FDIA, (iv) a right to cause the
termination, liquidation or acceleration of a qualified financial
contract with a depository institution in a conservatorship based upon
a default under such financial contract that is enforceable under
applicable non-insolvency law, as described in Section 11(e)(8)(E)(i) of
the FDIA, (v) a right under a security arrangement relating to a
qualified financial contract, as described in Section 11(e)(8)(E)(ii) of
the FDIA, and (vi) a right to offset or net out any termination values,
payment amounts, or other transfer obligations arising under or in
connection with a qualified financial contract, as described in Section
11(e)(8)(E)(iii) of the FDIA."
29. Subparagraph 20(c) is amended by deleting the words "the Federal Savings
and Loan Insurance Corporation" in the third line thereof and
substituting therefor the following:
"through either the Bank Insurance Fund or the Savings Association
Insurance Fund,"
30. Seller shall promptly provide such further assurances or agreements as
Buyer may request in order to effect the purposes of this Agreement,
including, without limitation, the delivery of any further documents to
ensure that this Agreement, each Confirmation and each Transaction
constitutes a "qualified financial contract", as that term is defined in
Section 11(e)(8)(D)(i) of the FDIA, and to ensure that Buyer maintains
a first priority perfected security interest in the Collateral.
31. Buyer is hereby appointed the attorney-in-fact of Seller for the purpose
of carrying out the provisions of this Agreement and taking any action
and executing or endorsing any instruments that Buyer may deem necessary
or advisable to accomplish the purposes hereof, including, without
limitation, completing or correcting any endorsement of a Mortgage Note
or assignment of a Mortgage, which appointment as attorney-in-fact is
irrevocable and coupled with an interest. Without limiting the
generality of the foregoing, Buyer shall have the right and power during
the occurrence and continuation of any Event of Default to receive,
endorse and collect all checks made payable to the order of Seller
representing any payment on account of the principal of or interest on
any of the Collateral and to give full discharge for the same.
32. Seller shall pay all expenses to administer this Agreement, including
the fees and expenses of legal counsel and Custodian. Seller shall
promptly pay as and when payment is due all of fees relating to this
Agreement.
LOMAS MORTGAGE USA, INC., as Seller
By: /s/ROBERT E. BYERLEY, JR.
--------------------------
Name: ROBERT E. BYERLEY, JR.
------------------------
Title: Executive Vice President
--------------------------
DLJ MORTGAGE CAPITAL, INC., as Buyer
By: /s/ROD ENNICO
-------------------
Name: Rod Ennico
-----------------
Title: Senior Vice President
-----------------------
140 Broadway, 40th Floor, New York, NY 10005-1285
Attention: Whole Loan Funding/Rod Ennico
Telephone: 212-504-8071
Facsimile: (212) 504-8072
<PAGE>
ANNEX II
Names and Addresses for Communications Between Parties
EXHIBIT 10.6
FIRST AMENDMENT TO MASTER REPURCHASE AGREEMENT
The Master Repurchase Agreement ("Agreement") dated April 11, 1994
between DLJ Mortgage Capital, Inc. ("Buyer") and Lomas Mortgage USA, Inc.
("Seller") is amended and supplemented as set forth below. All capitalized
terms used herein are defined in the Agreement except to the extent such
terms are defined herein or amended or supplemented herein.
1. Subparagraph 2(h) of the Agreement is amended by adding at the end
thereof:
"provided however, that the Assumed Repurchase
Value of any Securities that are Mortgage
Loans subject to a take-out commitment from
California Public Employees' Retirement System
("PERS") shall be the take-out price specified
in such commitment"
2. Paragraph 7(i) of the Agreement is amended by adding the following
clause after the word "blank" and before the semi-colon:
"or to the order of the Custodian, unless
otherwise specified by Buyer"
3. Paragraph 7(iii) of the Agreement is amended by adding the
following clause after the phrase "with assignee in blank" and
before the word "but":
"or in the name of the Custodian, unless
otherwise specified by the Buyer"
4. Paragraph 10 of the Agreement is amended by adding the following
clause in the second sentence after the word "indicated" and before
the colon"
"either each Mortgage Loan and the related
Mortgage and Mortgage Note are the subject of
a take-out commitment from PERS or"
<PAGE>
Dated: April 11, 1994
Lomas Mortgage USA, Inc., as Seller
By: /s/ROBERT E. BYERLEY, JR.
-------------------------------
Name: Robert E. Byerley, Jr.
----------------------------
Title: Executive Vice President
---------------------------
DLJ Mortgage Capital, Inc., as Buyer
By: /s/ROD ENNICO
------------------------------
Name: Rod Ennico
----------------------------
Title: Senior Vice President
---------------------------
EXHIBIT 10.7
==========================================================================
ST LENDING, INC.,
LOMAS FINANCIAL CORPORATION,
BANK ONE, TEXAS, N.A.
as Indenture Trustee
and
WILMINGTON TRUST COMPANY
as Liquidity Support Trustee
LIQUIDITY SUPPORT TRUST AGREEMENT
dated as of April 12, 1994
==========================================================================<PAGE>
TABLE OF CONTENTS*
ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions . . . . . . . . . . . . . . . . . . . 1
1.02. Indenture Definitions; Definitional
Conventions . . . . . . . . . . . . . . . . . . 3
ARTICLE II
DECLARATION OF TRUST;
ISSUANCE OF TRUST CERTIFICATE;
DUTIES OF LIQUIDITY SUPPORT TRUSTEE
SECTION 2.01. Declaration of Trust. . . . . . . . . . . . . . . 4
2.02. Deposits. . . . . . . . . . . . . . . . . . . . . 4
2.03. Trust Property. . . . . . . . . . . . . . . . . . 4
2.04. Issuance and Transfer of Trust Certificate. . . . 4
2.05. Directions to Liquidity Support Trustee . . . . . 4
2.06. Collection of Moneys. . . . . . . . . . . . . . . 5
2.07. Liquidity Support Trust Account . . . . . . . . . 5
2.08. Withdrawals from Trust Account. . . . . . . . . . 5
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE ISSUER
SECTION 3.01. Good Standing . . . . . . . . . . . . . . . . . . 6
3.02. Corporate Power . . . . . . . . . . . . . . . . . 6
3.03. Consents and Approvals. . . . . . . . . . . . . . 6
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE LIQUIDITY SUPPORT TRUSTEE
SECTION 4.01. Organization; Good Standing; Capital. . . . . . . 6
4.02. Corporate Power . . . . . . . . . . . . . . . . . 7
4.03. Consents and Approvals. . . . . . . . . . . . . . 7
ARTICLE V
CONCERNING THE LIQUIDITY SUPPORT TRUSTEE
SECTION 5.01. General Matters Relating to the Liquidity
Support Trustee . . . . . . . . . . . . . . . . 7
5.02. Books and Records; Filings . . . . . . . . . . . . . . 9
5.03. Compensation and Indemnification of Liquidity Support
Trustee. . . . . . . . . . . . . . . . . . . . . . . 9
5.04. Resignation, Discharge or Removal of Liquidity Support
Trustee; Successor . . . . . . . . . . . . . . . . .10
5.05. Qualification of Liquidity Support Trustee . . . . . .11
5.06. Not Acting in Individual Capacity. . . . . . . . . . .11
5.07. Further Assurances . . . . . . . . . . . . . . . . . .11
- ----------------
*The Table of Contents is not part of this Agreement.<PAGE>
ARTICLE VI
MISCELLANEOUS
SECTION 6.01. Benefit of Agreement. . . . . . . . . . . . . . .11
6.02. Severability. . . . . . . . . . . . . . . . . . .11
6.03. Amendments and Waivers. . . . . . . . . . . . . .12
6.04. Notices . . . . . . . . . . . . . . . . . . . . .12
6.05. Governing Law . . . . . . . . . . . . . . . . . .12
6.06. Counterparts. . . . . . . . . . . . . . . . . . .12
6.07. Termination of the Trust; No Power to
Revoke or Withdraw Trust Property . . . . . . .12
6.08. Nature of Interest in Trust Property. . . . . . .13
6.09. Grantor Trust . . . . . . . . . . . . . . . . . .13
6.10. Headings. . . . . . . . . . . . . . . . . . . . .13
<PAGE>
LIQUIDITY SUPPORT TRUST AGREEMENT, dated as of April 12, 1994 among ST
LENDING, INC., a Delaware corporation, LOMAS FINANCIAL CORPORATION, a
Delaware corporation, BANK ONE, TEXAS, N.A., as Trustee under the Indenture,
and Wilmington Trust Company, a banking corporation under the laws of the
State of Delaware.
ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions. Capitalized terms set forth below shall have
the following meanings when used in this Agreement:
"Agreement" means this Liquidity Support Trust Agreement and any
amendments or modifications hereof.
"Business Day" means any day except a Saturday, Sunday or other day on
which commercial banks in New York City, Dallas, Texas or Wilmington,
Delaware are authorized by law to close.
"Cash Collateral Account" means the account opened by the Issuer
pursuant to Section 12.2 of the Indenture.
"Code" means the Internal Revenue Code of 1986, as amended.
"Corporate Trust Office" of a Person means the principal corporate trust
or other similar office of such Person.
"Eligible Certificates of Deposit" means commercial bank certificates of
deposit, time deposits, bankers acceptances of other debt obligations of any
bank having a Thompson Bank Watch, Inc. rating of at least B/C or a Standard
& Poor's long-term debt rating of at least BBB or a Moody's long-term debt
rating of Baa and with capital, surplus and undivided profits aggregating at
least $300 million.
"Eligible Investments" means (i) U.S. Government Securities, (ii)
Eligible Certificates of Deposit, (iii) commercial paper and other short-term
money market instruments which are rated at least P-2 by Moody's and at least
A-2 by Standard & Poor's and which have a fixed maturity of no more than 365
days from the date of their original issuance, (iv) Repurchase Agreements and
Reverse Repurchase Agreements with any Person the long-term unsecured debt
securities of which are rated Aa by Moody's and AA by Standard & Poor's,
provided that the Liquidity Support Trustee or its agent takes immediate
physical possession of the collateral for such Repurchase Agreements or
Reverse Repurchase Agreements (or obtains the equivalent protection through
book entries) and (v) interests in any mutual fund or investment company that
invests only in cash or obligations issued or guaranteed by the United States
of America or any agency thereof or in Repurchase Agreements secured by
obligations issued or guaranteed by the United States of America or any
agency thereof.
"Income Measuring Period" means, with respect to any LFC Senior
Convertible Note Payment Date, the period from and including [October 1,
1991] through the end of the last fiscal quarter ended before such LFC Senior
Convertible Note Payment Date.
"Indenture" means the trust indenture dated as of November 1, 1991
between the Issuer and Team Bank (the predecessor of Bank One, Texas, N.A.),
as Trustee, as the same may be amended, supplemented or modified from time to
time.
"Indenture Payment" means any payment made by the Indenture Trustee to
the Liquidity Support Trustee for deposit into the Liquidity Support Trust
Account pursuant to Section 12.3 of the Indenture.
"Indenture Trustee" means the Trustee under the Indenture.
"Initial Deposit" has the meaning specified in Section 2.02.
"Interest Shortfall Amount" means, with respect to any LFC Senior
Convertible Note Payment Date, the amount by which (A) the amount of interest
payable on the LFC Senior Convertible Notes during the period commencing
[November 1, 1991] and ending on such LFC Senior Convertible Note Payment
Date exceeds (B) an amount equal to (a) the sum of (i) 50% of (x) LMUSA's net
income for the relevant Income Measuring Period, plus (y) any tax expense
recorded on the books of LMUSA for such Income Measuring Period which will
never be required to be paid in cash and which has arisen solely from the
application of net operating loss carryforwards of the consolidated tax group
of which LFC was the common parent for taxable years ending on or before
January 30, 1992, (ii) all dividends received by LFC during such Income
Measuring Period from any company other than LMUSA, (iii) LFC's interest
income for such Income Measuring Period, (iv) an amount carried on LFC's
balance sheet representing the amount of taxes which have been prepaid by LFC
during the relevant Income Measuring Period, (v) all amounts withdrawn from
the Trust Account pursuant to Section 2.08 (a) during such Income Measuring
Period and (vi) all net income earned by any subsidiary of LFC other than
LMUSA during such Income Measuring Period to the extent that (A) no legal or
contractual provision prevented the distribution of such income to LFC as a
dividend and (B) the distribution of such income to LFC as a dividend would
not have left such subsidiary with an unduly small capital for its operations
and anticipated obligations in the judgment of the board of directors of such
subsidiary, less (b) the sum of (i) LFC's general and administrative expenses
for the relevant Income Measuring Period and (ii) all federal, state and
local income, excise, franchise, ad valorem and other taxes attributable to
LFC and its activities and actually paid during such Income Measuring Period.
"Issuer" means ST Lending, Inc., a Delaware corporation, and its
permitted successors and assigns.
"LFC" means Lomas Financial Corporation, a Delaware corporation.
"LFC Liquidity Support Trust Note" means a promissory note in the form
attached hereto as Annex 2 issued to the Issuer by LFC.
"LFC Senior Convertible Note Payment Date" means each date for the
payment of scheduled installments of interest on the LFC Senior Convertible
Notes.
"LFC Senior Convertible Notes" means the senior convertible notes issued
pursuant to the Indenture between LFC and Texas Commerce Bank, National
Association, Trustee, dated as of November 1, 1991, as the same may be
amended, supplemented or modified from time to time.
"Liquidity Support Trustee" means Wilmington Trust Company, a banking
corporation under the laws of Delaware, acting not in its individual
capacity, but solely in its capacity as trustee hereunder, and any banking
corporation that shall have become its successor pursuant to Section 5.04.
"LMUSA" means Lomas Mortgage USA, Inc., a corporation organized under
the laws of the State of Connecticut, and its successors.
"Moody's" means Moody's Investors Services, Inc. and any successor
thereto.
"Person" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a
government of political subdivision or an agency or instrumentality thereof.
"Pledge Agreement" means the Pledge and Security Agreement dated as of
January 30, 1992 among the Issuer, the Indenture Trustee and Bank One, Texas,
N.A., as Pledge Agent, and any amendments or modifications thereto.
"Repurchase Agreement" (which definition also applies to "Reverse
Repurchase Agreement") means an agreement, including related terms, which
provides for the transfer of Eligible Certificates of Deposit or U.S.
Government Securities against the transfer of funds by the transferee of such
Eligible Certificates of Deposit or U.S. Government Securities with a
simultaneous agreement by such transferee to transfer to the transferor
thereof Eligible Certificates of Deposit or U.S. Government Securities, at a
date certain not later than one year after such transfers or on demand,
against the transfer of funds.
"Restricted Payment" means, with respect to any Person, (i) any dividend
or other distribution on any shares of such Person's capital stock or (ii)
any payment on account of the purchase, redemption, retirement or acquisition
of (a) any shares of such Person's capital stock or (b) any option, warrant
or other right to acquire shares of such Person's capital stock.
"Securities" shall mean the STL Secured Notes Due 1996 issued pursuant
to the Indenture.
"Standard & Poor's" means Standard & Poor's Corporation and any
successor thereto.
"Termination Date" means the earliest to occur of (i) the last Euro-
Dollar Business Day of October 1996, (ii) the date specified in a Notice of
Termination delivered by LFC in accordance with Section 6.07, (iii) the date
on which LFC shall make any Restricted Payment, (iv) the date of any
acceleration of the LFC Liquidity Support Trust Note, (v) the date on which
the LFC Senior Convertible Notes and all amounts due and payable under the
Indenture related thereto shall have been paid in full and (vi) the date on
which the Securities and all amounts due and payable under the Indenture
shall have been paid in full.
"Trust" means the trust existing pursuant to this Agreement, designated
as the "LFC Liquidity Support Trust."
"Trust Account" has the meaning specified in Section 2.07(a).
"Trust Certificate" means the trust certificate representing the entire
undivided beneficial interest in the Trust to be issued to the Issuer
pursuant to Section 2.04 and pledged to the Indenture Trustee pursuant to the
Pledge Agreement.
"Trust Property" means the Initial Deposit, any Indenture Payments
received by the Liquidity Support Trustee and all other money, instruments
and other property deposited in the Trust pursuant hereto, including all
proceeds thereof.
"Trust Withdrawal Certificate" means a completed certificate in the form
attached hereto as Annex 3, signed by an officer of LFC.
"U.S. Government Securities" means securities of the United States
government or United States government agencies (other than federal farm loan
banks) backed by the full faith and credit of the United States, issued after
July 18, 1984 and having current maturities of one year or less.
"Wilmington Trust" means Wilmington Trust Company, a Delaware banking
corporation.
SECTION 1.02. Indenture Definitions; Definitional Conventions. (a)
Capitalized terms used herein and not otherwise defined herein shall have the
meanings assigned to them in the Indenture.
(b) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole
and not to any particular provision of this Agreement, and section references
are to this Agreement unless otherwise specified.
(c) Wherever required by the context of this Agreement, the singular
shall include the plural, and vice versa, and masculine and feminine genders
shall include the neuter gender and vice versa.
ARTICLE II
DECLARATION OF TRUST;
ISSUANCE OF TRUST CERTIFICATE;
DUTIES OF LIQUIDITY SUPPORT TRUSTEE
SECTION 2.01. Declaration of Trust. Wilmington Trust is hereby
appointed to hold and agrees to hold the Trust Property as Liquidity Support
Trustee in trust upon the terms and conditions and for the use and benefit of
the Issuer as herein set forth. The Trust shall constitute a business trust
under Title 12, Chapter 38 of the Delaware Code. The Issuer, as owner of the
beneficial interest in the Trust and holder of the Trust Certificate, shall
be entitled and this Agreement shall constitute the governing instrument of
the Trust under Section 3803 of the Delaware Code to the same limitation of
personal liability extended to stockholders of private corporations for
profit.
SECTION 2.02. Deposits. (a) Simultaneously with the execution and
delivery of this Agreement, the Issuer hereby grants, transfers, delivers and
sets over to the Liquidity Support Trustee, its successors and assigns, all
right, title and interest of the Issuer in and to the sum of Two Hundred
dollars ($200) (the "Initial Deposit").
(b) From time to time hereafter, Indenture Payments may be paid over to
the Liquidity Support Trustee, for deposit to the Trust Account, by or for
the account of the Indenture Trustee under and pursuant to the provisions of
the Indenture.
SECTION 2.03. Trust Property. The Liquidity Support Trustee hereby
agrees to have and to hold the Trust Property until the Termination Date, in
trust under and subject to the conditions and agreements herein set forth,
for the use, benefit and security of the Issuer, subject to the pledge of the
Trust Certificate by the Issuer on behalf of the Indenture Trustee pursuant
to the Pledge Agreement.
SECTION 2.04. Issuance and Transfer of Trust Certificate. (a) The
Liquidity Support Trustee acknowledges receipt on the date hereof of the
Initial Deposit, duly paid by the Issuer, and agrees to hold the Initial
Deposit in trust in accordance with the terms hereof, and the Issuer
acknowledges receipt on the date hereof of a Trust Certificate representing
the entire undivided beneficial interest in the Trust, duly executed and
delivered to the Issuer in exchange for the Initial Deposit in substantially
the form attached hereto as Annex 1.
(b) No offer, sale, transfer, assignment, pledge, hypothecation,
encumbrance or other disposition of the Trust Certificate or any part thereof
or interest therein, other than the pledge of the Trust Certificate on behalf
of the Indenture Trustee pursuant to the Pledge Agreement, shall be made by
the Issuer. If the Indenture Trustee shall, pursuant to the Pledge Agreement,
succeed to the rights and benefits of the Issuer as holder of the Trust
Certificate, then the Indenture Trustee, upon notice from the Indenture
Trustee to the Liquidity Support Trustee of such succession, shall be treated
for all purposes as the owner of the beneficial interest in the Trust
represented thereby and shall be considered as the Issuer for all purposes
hereof.
SECTION 2.05. Directions to Liquidity Support Trustee. The Liquidity
Support Trustee shall take such action or shall refrain from taking such
action under this Agreement as it shall be directed pursuant to a specific
provision of this Agreement or, absent such a specific provision, as it shall
be directed in a notice given by (a) the Indenture Trustee, until such time
as the Liquidity Support Trustee shall receive notice from the Indenture
Trustee that the Securities and all amounts due and payable under the
Indenture have been paid in full or (b) from and after such time, the Issuer.
SECTION 2.06. Collection of Moneys. The Liquidity Support Trustee at
any time may, but shall have no obligation to, demand payment or delivery of
all money and other property payable to or receivable by the Liquidity
Support Trustee at such time pursuant to the Indenture and this Agreement.
The Liquidity Support Trustee shall hold as part of the Trust Property all
such money and property received by it as part of the Trust Property and
shall apply such money and property as provided in this Agreement.
SECTION 2.07. Liquidity Support Trust Account. (a) On the date hereof,
the Liquidity Support Trustee shall open, at the Corporate Trust Office of
Wilmington Trust, an account titled "Liquidity Support Trust Account,
Wilmington Trust Company, as Liquidity Support Trustee" (the "Trust
Account"). The Liquidity Support Trustee shall deposit in the Trust Account,
promptly upon receipt, the Initial Deposit and the full amount of all
Indenture Payments received by it. All amounts so deposited in the Trust
Account and all investments made with such moneys, including all income or
other gain from such investments, shall be held by the Liquidity Support
Trustee in the Trust Account as part of the Trust Property as herein provided
and shall only be subject to withdrawal by the Liquidity Support Trustee at
the times and for the purposes set forth in Section 2.08 or 5.03.
(b) At the direction of the Issuer, the Liquidity Support Trustee shall
invest and reinvest all or any specified portion of the Trust Account in
Eligible Investments specified by the Issuer. Subject to Section 2.08(b), all
income or other gain from such investments shall be credited to, and any loss
resulting from such investments shall be charged to, the Trust Account. If
the Issuer shall not have given any direction with respect to all or any
portion of the Trust Account pursuant to this Section 2.07(b), the Trust
Account or such portion thereof, as the case may be, shall not be invested by
the Liquidity Support Trustee. If the Liquidity Support Trustee shall receive
any amount for deposit into the Trust Account (other than any amount which
the Liquidity Support Trustee is required at the time of receipt to withdraw
from the Trust Account pursuant to Section 2.08) and the Issuer shall not
have given any direction with respect to the investment of such amount, the
Liquidity Support Trustee shall promptly notify the Issuer that it has not
received any such direction with respect to such amount.
(c) If the provisions of Section 2.08 or 5.03 shall require or permit
the withdrawal from the Trust Account of any amounts invested as provided in
Section 2.07(b), the Liquidity Support Trustee shall, to the extent
practicable, cause a sufficient amount of such investments to be sold or
otherwise converted to cash to permit such withdrawal. The Liquidity Support
Trustee shall have no liability as a result of its inability to make any
required payment from the Trust Account other than by reason of its gross
negligence or willful misconduct.
SECTION 2.08. Withdrawals from Trust Account. (a) So long as the
Termination Date has not occurred, the Liquidity Support Trustee shall
withdraw from the Trust Account and pay to LFC, in immediately available
funds, on any LFC Senior Convertible Note Payment Date, upon delivery by LFC
to the Liquidity Support Trustee, on the second Business Day prior to such
LFC Senior Convertible Note Payment Date, of a Trust Withdrawal Certificate
in substantially the form attached hereto as Annex 3 setting forth (i) such
Interest Shortfall Amount, (ii) the calculation thereof and (iii) payment
instructions for the wire transfer or other payment of such amount to LFC. If
the amount available in the Trust Account is insufficient to pay such
Interest Shortfall Amount in full, the Liquidity Support Trustee shall make
such payment to the extent funds are available therefor, and shall thereafter
withdraw funds and make the remainder of such payment as and to the extent
that funds become available therefor. The Liquidity Support Trustee shall
notify the Issuer and the Indenture Trustee of the date and amount of each
withdrawal made pursuant to this Section 2.08(a).
(b) Any amounts earned on the investment of the Trust Account pursuant
to Section 2.07(b) from and after the Final Deposit Date shall, on the first
Business Day of the second calendar week after the Final Deposit Date and the
first Business Day of every second calendar week thereafter, to the extent
such amounts are available for withdrawal and distribution by the Liquidity
Support Trustee on each such date, be withdrawn from the Trust Account by the
Liquidity Support Trustee and paid to the Indenture Trustee for deposit into
the Cash Collateral Account. "Final Deposit Date" means the date on which the
sum of the amounts deposited into the Trust Account in accordance with clause
second of Section 12.3(a) of the Indenture and the amounts earned on the
Trust Account pursuant to Section 2.07(b) shall first be equal to or greater
than $20,000,000. The Issuer shall notify the Liquidity Support Trustee of
the occurrence of the Final Deposit Date.
(c) Notwithstanding any provision of this Agreement to the contrary, no
amount shall be paid by the Liquidity Support Trustee to LFC pursuant to
Section 2.08(a) if the Liquidity Support Trustee shall have been notified by
the Issuer or by the Indenture Trustee that an event of default under the LFC
Liquidity Support Trust Note has occurred and is continuing or that, after
giving effect to such payment, an event of default under the LFC Liquidity
Support Trust Note would have occurred and be continuing.
(d) On the Termination Date, or as soon thereafter as practicable, the
Liquidity Support Trustee shall pay the entire amount in the Trust Account to
the Indenture Trustee in Federal or other immediately available funds for
deposit into the Cash Collateral Account; provided that if the Indenture
Trustee shall have previously notified the Liquidity Support Trustee in
writing that the Securities and all amounts due and payable under the
Indenture have been paid in full, the Liquidity Support Trustee shall pay
such amount to the Issuer. The Issuer will notify the Liquidity Support
Trustee of the occurrence of the Termination Date (unless the Liquidity
Support Trustee shall have received notice of such occurrence pursuant to a
Notice of Termination delivered by LFC in accordance with Section 6.07).
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE ISSUER
The Issuer represents and warrants that:
SECTION 3.01. Good Standing. The Issuer is a corporation validly
existing and in good standing under the laws of the State of Delaware.
SECTION 3.02. Corporate Power. The execution, delivery and performance
by the Issuer of this Agreement are within the corporate power of the Issuer,
have been duly authorized by all necessary corporate action on the part of
the Issuer, and do not and will not (i) violate or contravene any judgment,
injunction, order or decree binding on the Issuer or (ii) violate, contravene
or constitute a default under any provision of the certificate of
incorporation or by-laws of the Issuer or of any material agreement,
contract, mortgage or other instrument binding on the Issuer or (iii) result
in the creation or imposition of any lien, mortgage, pledge, charge, security
interest or incumbrance of any kind (collectively, a "Lien") attributable to
the Issuer on the Trust Property.
SECTION 3.03. Consents and Approvals. No consent, approval,
authorization or order of, or filing with, any court or regulatory,
supervisory or governmental agency or body is required in connection with the
execution, delivery and performance by the Issuer of this Agreement of the
consummation by the Issuer of the transactions contemplated hereby, except as
provided in Section 5.02(c).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE LIQUIDITY SUPPORT TRUSTEE
Wilmington Trust represents and warrants that:
SECTION 4.01. Organization; Good Standing; Capital. Wilmington Trust is
a banking corporation organized, doing business, validly existing and in good
standing, under the laws of the State of Delaware and has all corporate power
and all material governmental licenses, authorizations, consents, and
approvals required under the laws of the State of Delaware to carry on a
trust business as now conducted and to enter into and perform its obligations
under this Agreement. Wilmington Trust has an aggregate capital, surplus and
undivided profits of not less than $100,000,000.
SECTION 4.02. Corporate Power. The execution, delivery and performance
by Wilmington Trust of this Agreement and the issuance of the Trust
Certificate by the Liquidity Support Trustee pursuant to this Agreement are
within the corporate power of Wilmington Trust, have been duly authorized by
all necessary corporate action on the part of Wilmington Trust and do not and
will not (i) violate or contravene any judgment, injunction, order or decree
binding on Wilmington Trust or (ii) violate, contravene or constitute a
default under any provision of the certificate of incorporation or by-laws of
Wilmington Trust or of any material agreement, contract, mortgage or other
instrument binding on Wilmington Trust or (iii) result in the creation or
imposition of any Lien attributable to Wilmington Trust on the Trust Property
except for any Lien that may be created pursuant to Section 5.03 with respect
to payments to be made to the Liquidity Support Trustee out of the Trust
Property.
SECTION 4.03. Consents and Approvals. No consent, approval,
authorization or order of, or filing with, any court or regulatory,
supervisory or governmental agency or body is required to be made or obtained
by Wilmington Trust under Delaware law in connection with (i) the execution
and delivery of this Agreement by Wilmington Trust, (ii) the performance by
Wilmington Trust, as Liquidity Support Trustee, of this Agreement or (iii)
the issuance of the Trust Certificate by Wilmington Trust, as Liquidity
Support Trustee, pursuant to this Agreement (except as provided in Section
5.02(c) and as may be required by the Delaware securities laws; it being
understood, however, that the Issuer and LFC assume all obligations for, and
Wilmington Trust shall have no obligation or liability with respect to, the
making of any filings or the obtaining of any consents or approvals required
by the Delaware securities laws).
ARTICLE V
CONCERNING THE LIQUIDITY SUPPORT TRUSTEE
SECTION 5.01. General Matters Relating to the Liquidity Support
Trustee. (a) Subject to the terms of Sections 2.07, 2.08 and 5.03, all moneys
deposited with or received by the Liquidity Support Trustee hereunder shall
be held by it without interest in trust as part of the Trust Property until
distributed to LFC, the Issuer or the Indenture Trustee in accordance with
Section 2.08.
(b) The Liquidity Support Trustee shall be under no liability (except as
provided in Section 5.01(j)) for any action taken by the Liquidity Support
Trustee in good faith in reliance upon any signature, paper, order, list,
demand, request, consent, affidavit, notice, opinion, direction, endorsement,
assignment, resolution, draft or other document, prima facie properly
executed, or for the disposition of moneys or Trust Property pursuant to this
Agreement. Without limitation, the Liquidity Support Trustee shall have no
duty or obligation to ascertain the correctness of any dollar amounts or
other information set forth in, or calculations made pursuant to, any Trust
Withdrawal Certificate or other document or instrument delivered to the
Trustee under this Agreement or in connection with the transactions
contemplated hereby; except that the Liquidity Support Trustee shall be
obligated to verify that any Trust Withdrawal Certificate delivered to the
Trustee under this Agreement is in the form required by Section 2.08 and,
assuming the correctness of the amounts set forth in items (A) through (K) of
the Trust Withdrawal Certificate, that the computation of the Interest
Shortfall Amount set forth in such Trust Withdrawal Certificate is correct.
(c) The Liquidity Support Trustee may construe any of the provisions of
this Agreement, insofar as the same may appear to be ambiguous or
inconsistent with any other provisions hereof, in accordance with its best
judgment in order to effectuate the purposes hereof, and any such
construction by the Liquidity Support Trustee made in good faith shall be
binding upon the Issuer and LFC.
(d) The Liquidity Support Trustee shall not be liable (except as
provided in Section 5.01(j)) with respect to any action taken or omitted to
be taken by the Liquidity Support Trustee in good faith in accordance with
directions given to the Liquidity Support Trustee in accordance with Section
2.05. During the respective time periods in which the Indenture Trustee and
the Issuer have the right to give directions to the Liquidity Support Trustee
as provided in Section 2.05, the Liquidity Support Trustee may rely on, and
act exclusively pursuant to, the directions of the Person then entitled to
give directions, notwithstanding any contrary direction from any Person not
then entitled to give directions under Section 2.05.
(e) The Liquidity Support Trustee shall be entitled to rely on the
accuracy of all directions given to it under Section 2.07 or 2.08 with
respect to the deposit, investment or withdrawal of funds in the Trust
Account and shall have no responsibility (i) for determining whether directed
investments are Eligible Investments, (ii) for investigating or determining
the appropriateness of maturities of directed investments or (iii) for any
decline in market value of any investments made pursuant to Section 2.07.
(f) The Liquidity Support Trustee shall not be responsible for or in
respect of the recitals herein, the validity or sufficiency of this Agreement
or for the due execution hereof by the Issuer or LFC or for or in respect of
the validity or sufficiency of the Trust Certificate (except for the due
execution and delivery thereof by the Liquidity Support Trustee), and the
Liquidity Support Trustee shall in no event assume or incur any liability
(except as provided in Section 5.01(j)), duty or obligation to the Issuer,
LFC, the Indenture Trustee or any other Person, other than as expressly
provided for herein.
(g) The Liquidity Support Trustee shall not be under any obligation to
appear in, prosecute or defend any action, which in its opinion may require
it to incur any out-of-pocket expense or any liability unless it shall be
furnished with such reasonable security and indemnity against such expense or
liability as it may require in accordance with the terms of Section 5.03
hereof. The Liquidity Support Trustee may, but shall be under no duty to,
undertake such action as it may deem necessary at any and all times to
protect the Trust Property and the rights and interests of the Issuer
pursuant to the terms of this Agreement.
(h) In the exercise or administration of the trusts and powers
hereunder, the Liquidity Support Trustee may employ agents (who may be
affiliates of the Liquidity Support Trustee) and enter into agreements with
them, and the Liquidity Support Trustee shall not be answerable for the
default or misconduct of any such agents if such agents shall have been
selected by it in good faith.
(i) The Liquidity Support Trustee shall not have any duty or obligation
to manage, control, use, sell, dispose of or otherwise deal with the Trust
Property, or otherwise take or refrain from taking any action under or in
connection with this Agreement, except as expressly required by the terms of
this Agreement or expressly directed in written instructions pursuant to
Section 2.05; and no implied duties or obligations shall be read into this
Agreement against the Liquidity Support Trustee.
(j) Neither the Liquidity Support Trustee nor Wilmington Trust shall
have any liability hereunder to any Person, except for (i) any liability of
the Liquidity Support Trustee to the Trust or to the Issuer or the Indenture
Trustee, as the case may be, in its capacity as owner of the beneficial
interest in the Trust, on account of any act or omission of the Liquidity
Support Trustee constituting gross negligence or willful misconduct in the
performance of its duties hereunder, (ii) any liability of Wilmington Trust
arising by reason of any representation or warranty contained in Article IV
being incorrect in any material respect when made and (iii) any liability of
the Liquidity Support Trustee for taxes on net income payable by it based on
or measured by any fees, commissions or compensation paid to the Liquidity
Support Trustee in connection with its services hereunder.
(k) The limitations on the liability of the Liquidity Support Trustee
and Wilmington Trust set forth herein shall not limit the claims of the Trust
against any other Person providing services to the Trust.
(l) The Liquidity Support Trustee may consult with counsel, and (except
as provided in Section 5.01(j)) the written advice of counsel or any opinion
of counsel shall be full and complete authorization and protection in respect
of any action taken or omitted by it hereunder in good faith reliance
thereon.
(m) The Liquidity Support Trustee shall not be required to take any
action under this Agreement if it shall reasonably determine, or shall have
been advised by counsel, that such action is likely to result in personal
liability, or is contrary to the terms hereof or otherwise contrary to law.
(n) The Liquidity Support Trustee and its affiliates may, without having
to account therefor to any other party hereto, accept deposits from, extend
credit (on a secured or unsecured basis) to and generally engage in any kind
of banking, trust or other business with any such party or any of its
affiliates as if it were not acting as the Liquidity Support Trustee, and may
accept fees and other consideration for services in connection with this
Agreement or otherwise without having to account for the same to any other
party.
(o) It is understood and agreed that should any dispute arise with
respect to the payment and/or ownership or right of possession of the Trust
Account, the Liquidity Support Trustee is authorized and directed to retain
in its possession, without liability to anyone, all or any part of the Trust
Account until such dispute shall have been settled either by mutual agreement
by the parties concerned or by the final order, decree or judgment of a court
or other tribunal of competent jurisdiction in the United States of America
and time for appeal has expired and no appeal has been perfected, but the
Liquidity Support Trustee shall be under no duty whatsoever to institute or
defend any such proceedings.
SECTION 5.02. Books and Records; Filings. (a) The Liquidity Support
Trustee shall keep proper books of record and account of all the transactions
under this Agreement at its Corporate Trust Office, and such books and
records shall be open to inspection by the Issuer upon reasonable notice to
the Liquidity Support Trustee at all reasonable times during usual business
hours of the Liquidity Support Trustee.
(b) The Liquidity Support Trustee shall prepare such tax returns of the
Trust and shall execute on behalf of the Trust such tax returns of the Trust
and such other filings with state and Federal taxing authorities as may from
time to time be requited under any state or Federal statute or any rule or
regulation thereunder. The fiscal year of the Trust shall be the same as the
fiscal year of the Issuer.
(c) The Liquidity Support Trustee shall file a certificate of trust with
respect to the Trust with the Secretary of State of the State of Delaware in
accordance with Title 12, Section 3810 of the Delaware Code, and will make
such other filings with the Secretary of State of the State of Delaware as
may from time to time be required under the Delaware Code or as the Liquidity
Support Trustee may be expressly directed to make in a notice delivered
pursuant to Section 2.05.
SECTION 5.03. Compensation and Indemnification of Liquidity Support
Trustee. (a) the Liquidity Support Trustee shall be entitled to a fee,
payable annually in advance, for its services as Liquidity Support Trustee
hereunder in accordance with the separate agreement between LFC and
Wilmington Trust dated the date hereof (the "Letter Agreement").
(b) In the event any tax is payable by the Trust as reflected in any tax
return prepared by the Liquidity Support Trustee under Section 5.02(b), LFC
shall pay to the Liquidity Support Trustee upon its request the amounts so
due (such amounts to be paid sufficiently in advance of the relevant filing
date as to permit the timely filing of any such return).
(c) LFC shall indemnify, protect, save and hold the Liquidity Support
Trustee harmless against, any and all losses, liabilities, obligations,
damages, claims, penalties, taxes (excluding any taxes on the Liquidity
Support Trustee on, or measured by, any compensation received by the
Liquidity Support Trustee) or expenses arising out of or in connection with
the creation, acceptance, operation or administration of the Trust, including
the reasonable costs and reasonable expenses of defending itself against any
claims or liabilities in connection with the exercise or performance of any
of its powers or duties hereunder. In addition, LFC shall reimburse the
Liquidity Support Trustee and Wilmington Trust upon its request for all
reasonable out-of-pocket expenses, disbursements and advances incurred or
made by the Liquidity Support Trustee in the preparation and any subsequent
amendment of this Agreement and the performance of its obligations under this
Agreement (including the reasonable compensation and the reasonable expenses
and disbursements of its counsel and of all agents and other Persons not
regularly in its employ), except any such expense, disbursement or advance as
may arise from (i) the gross negligence or willful misconduct of the
Liquidity Support Trustee in the performance of its duties hereunder, (ii)
the Liquidity Support Trustee's liability for taxes on net income payable by
the Liquidity Support Trustee based on or measured by any fees, commissions
or compensation paid to the Liquidity Support Trustee in connection with its
services hereunder or (iii) any of its representations and warranties
contained in Article IV being incorrect in any material respect when made.
(d) In the event LFC shall not timely pay any amount due under the
provisions of this Section 5.03 or under the Letter Agreement, the Liquidity
Support Trustee shall have the right to set off and deduct the amount due (as
determined by the Liquidity Support Trustee in good faith) from the Trust
Account; and the Liquidity Support Trustee shall be deemed to have a lien on,
and a security interest in, the Trust Account and all investments and
proceeds forming a part thereof, to the extent of any such amounts from time
to time due and unpaid.
(e) The payment and indemnification obligations of LFC under this
Section 5.03 and the Letter Agreement shall survive any termination of this
Agreement or the Trust or any resignation, discharge or removal of the
Liquidity Support Trustee.
SECTION 5.04. Resignation, Discharge or Removal of Liquidity Support
Trustee; Successor. (a) The Liquidity Support Trustee may resign and be
discharged of the trust created by this Agreement by executing an instrument
in writing and filing the same with the Issuer not less than sixty days
before the date specified in such instrument when, subject to Section
5.04(c), such resignation is to take effect. Upon receiving such notice of
resignation, the Issuer shall use its best efforts promptly to appoint a
successor Liquidity Support Trustee in the manner and meeting the
qualifications hereinafter provided by written instrument or instruments
delivered to such resigning Liquidity Support Trustee and the successor
Liquidity Support Trustee. With the consent of the Indenture Trustee, the
Issuer may remove the Liquidity Support Trustee for any reason and appoint a
successor Liquidity Support Trustee by written instrument or instruments
delivered to the Liquidity Support Trustee so removed and the successor
Liquidity Support Trustee.
(b) In case at any time the Liquidity Support Trustee shall resign and
no successor Liquidity Support Trustee shall have been appointed within
thirty (30) days after notice of such resignation has been filed and mailed
as required by Section 5.04(a), the resigning Liquidity Support Trustee may
forthwith apply to a court of competent jurisdiction for the appointment of
a successor Liquidity Support Trustee. Such court may thereupon, after such
notice, if any, as it may deem proper and prescribed, appoint a successor
Liquidity Support Trustee.
(c) Any successor Liquidity Support Trustee appointed hereunder shall
promptly execute and deliver to the Issuer and the resigning Liquidity
Support Trustee an instrument accepting such appointment hereunder, and the
successor Liquidity Support Trustee without any further act, deed or
conveyance shall become vested with all the rights, powers, duties and
obligations of its predecessor hereunder with like effect as if originally
named the Liquidity Support Trustee herein and shall be bound by all the
terms and conditions of this Agreement. Upon the request of the successor
Liquidity Support Trustee, the retiring Liquidity Support Trustee shall, upon
payment of all amounts due the retiring Liquidity Support Trustee, execute
and deliver an instrument transferring to the successor Liquidity Support
Trustee all the rights and powers of the retiring Liquidity Support Trustee;
and the retiring Liquidity Support Trustee shall transfer, deliver and pay
over to the successor Liquidity Support Trustee all of the Trust Property at
the time held by it, if any, together with all necessary instruments of
transfer and assignment or other documents properly executed necessary to
effect such transfer and such of the records or copies thereof maintained by
the retiring Liquidity Support Trustee in the administration hereof as may be
requested by the successor Liquidity Support Trustee and shall thereupon be
discharged from all duties and responsibilities under this Agreement. Any
resignation or removal of a Liquidity Support Trustee shall not become
effective until acceptance by the successor Liquidity Support Trustee of its
appointment pursuant to this Section 5.04(c). Any successor Liquidity Support
Trustee shall meet the qualifications set forth in Section 5.05.
(d) Any corporation into which the Liquidity Support Trustee may be
merged or with which it may be consolidated, or any corporation resulting
from any merger or consolidation to which the Liquidity Support Trustee shall
be a party, shall be the successor Liquidity Support Trustee under this
Agreement without the execution, delivery or filing of any paper, instrument
or further act to be done on the part of the parties hereto, anything herein,
or in any agreement relating to such merger or consolidation, by which the
predecessor corporation may seek to retain certain powers, rights and
privileges theretofore obtaining for any period of time following such merger
or consolidation, to the contrary notwithstanding; provided that such
corporation resulting from any such merger or consolidation shall meet the
qualifications set forth in Section 5.05.
SECTION 5.05. Qualification of Liquidity Support Trustee. The Liquidity
Support Trustee shall at all times be a banking corporation organized and
doing business under the laws of the United States or the laws of the State
of Delaware, having its principal office in the State of Delaware and all
corporate powers and all material governmental licenses, authorizations,
consents and approvals required to carry on a trust business and having at
all times an aggregate capital, surplus and undivided profits of not less
than $100,000,000.
SECTION 5.06. Not Acting in Individual Capacity. In acting hereunder,
Wilmington Trust acts solely as trustee and not in its individual capacity,
except as otherwise expressly provided herein; and, except as so provided,
all persons having any claim against Wilmington Trust by reason of the
transactions contemplated hereby shall look only to the Trust Property for
payment or satisfaction thereof.
SECTION 5.07. Further Assurances. The Liquidity Support Trustee agrees
to execute and deliver all such other instruments, documents or certificates
as reasonably may be requested pursuant to the written direction of the
Issuer or the Indenture Trustee in connection with the transactions
contemplated hereby and which are in form and content reasonably satisfactory
to the Liquidity Support Trustee; provided, however, that the Liquidity
Support Trustee shall have no obligation to execute any such instrument,
document or certificate which, in the good faith judgment of the Liquidity
Support Trustee, would adversely affect the Liquidity Support Trustee's
rights, duties, obligations or immunities hereunder or under any document
contemplated hereby.
ARTICLE VI
MISCELLANEOUS
SECTION 6.01. Benefit of Agreement. Whenever any of the parties to this
Agreement is referred to, such reference shall be deemed to include any
Person who has become the successor and assign of such party in accordance
with the provisions hereof. This Agreement shall inure solely to the benefit
of the Issuer, the Liquidity Support Trustee, LFC and the Indenture Trustee,
and their respective successors and assigns.
SECTION 6.02. Severability. If any one or more of the covenants,
agreements, provisions or terms of this Agreement shall be held invalid for
any reason whatsoever, then, to the maximum extent permitted by applicable
law, such covenants, agreements, provisions or terms shall be deemed
severable from the remaining covenants, agreements, provisions or terms of
this Agreement, and the invalidity thereof shall not affect the validity or
enforceability of the other provisions of this Agreement or of the Trust
Certificate.
SECTION 6.03. Amendments and Waivers. This Agreement may not be amended
or modified, nor may compliance with any provision hereof be waived, except
in accordance with the provisions of Section 3.18(b) of the Indenture.
SECTION 6.04. Notices. Any notice, demand, direction or instruction to
be given to the Liquidity Support Trustee under this Agreement shall be in
writing and shall be duly given if mailed or delivered or set by telecopy to
it at: Rodney Square North, 1100 North Market Street, Wilmington, Delaware,
19890-0001, telecopy number (302) 651-8882, Attention: Corporate Trust
Administration, or at such other address or telecopy number as shall be
specified by the Liquidity Support Trustee in a notice to the other parties
hereto given in accordance with this Section 6.04. Any notice, demand,
direction or instruction to be given to the Indenture Trustee under this
Agreement shall be in writing and shall be duly given if mailed or delivered
or sent by telecopy to it at: P.O. Box 2604, 500 Throckmorton Street, West
Complex, 6th Floor, Fort Worth, Texas 76113, telecopy number (817) 884-4560,
Attention: Tracey McMillan, or at such other address or telecopy number as
shall be specified by the Indenture Trustee in a notice to the parties hereto
given in accordance with this Section 6.04. Any notice, demand, direction or
instruction to be given to the Issuer under this Agreement shall be in
writing and shall be duly given if mailed or delivered or sent by telecopy to
it as: ST Lending, Inc., 1420 Viceroy Drive, Suite B, Dallas, Texas 75235,
telecopy number (214) 879-1383, Attention: Carey B. Wickland, or at such
other address or telecopy number as shall be specified by the Indenture
Trustee in a notice to the parties hereto given in accordance with this
Section 6.04. Any notice, demand, direction or instruction to be given to LFC
under this Agreement shall be in writing and shall be duly given if mailed or
delivered or sent by telecopy to it at: Lomas Financial Corporation, 1600
Viceroy Drive, Dallas, Texas 75235, telecopy number (214) 879-5528,
Attention: James L. Crowson, or at such other address or telecopy number as
shall be specified by LFC in a notice to the other parties hereto given in
accordance with this Section 6.04. Notice shall be deemed effective when
received by the party to whom it is directed.
SECTION 6.05. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE, AND ALL LAWS
OR RULES OF CONSTRUCTION OF SUCH STATE SHALL GOVERN THE RIGHTS OF THE PARTIES
TO THIS AGREEMENT AND THE INTERPRETATION OF THE PROVISIONS OF THIS AGREEMENT.
SECTION 6.06. Counterparts. This Agreement may be executed and
delivered in any number of counterparts, and such counterparts taken together
shall constitute one and the same instrument.
SECTION 6.07. Termination of the Trust; No Power to Revoke or Withdraw
Trust Property. (a) LFC may designate a Termination Date by delivery to the
Issuer and the Liquidity Support Trustee of a notice specifying the selected
date (the "Notice of Termination"); provided that the Termination Date so
specified shall be a date which is not less than three (3) business days
after the date the Notice of Termination is delivered to the Issuer and the
Liquidity Support Trustee. On the Termination Date (whether such date is
determined pursuant to this Section 6.07 or as otherwise provided in the
definition of such term herein), or as soon thereafter as practicable, any
Trust Property remaining in the Trust (after application of any amounts due
under Section 5.03), shall be distributed in accordance with Section 2.08(d).
Promptly following the Termination Date, the Liquidity Support Trustee shall
take all such actions as it deems necessary or appropriate in connection with
the winding up of the affairs of the Trust and, upon completion of winding
up, shall file a certificate of cancellation with respect to the Trust with
the Secretary of State of the State of Delaware in accordance with Title 12,
Section 3810 of the Delaware Code. Upon the filing of the certificate of
cancellation, this Agreement, subject to the survival provisions of Section
5.03(f), shall terminate and the estate and rights granted hereunder by the
Issuer to the Liquidity Support Trustee shall cease, terminate and be void.
(b) The bankruptcy or other incapacity of the Issuer shall not operate
to terminate this Agreement, nor entitle the Issuer's legal representatives
to claim an accounting or to take any action or proceeding in any court for
a partition or winding up of the Trust or Trust Property, nor otherwise
affect the rights, obligations and liabilities of the parties hereto.
(c) Except as contemplated by the definition of Termination Date herein,
the Issuer shall not be entitled to revoke the Trust established hereunder.
SECTION 6.08. Nature of Interest in Trust Property. Except as provided
in Section 2.08(d), the Issuer shall not have legal title to any part of the
Trust Property.
SECTION 6.09. Grantor Trust. The Issuer, LFC and the Liquidity Support
Trustee shall treat the Trust as a grantor trust subject to the grantor trust
provisions of Sections 671-679 of the Code and shall treat the property,
income, deductions, credits and allowances of the Trust as property, income,
deductions, credits and allowances of the Issuer for federal income tax
purposes, unless the Code shall require otherwise.
SECTION 6.10. Headings. The titles and headings of the articles and
sections of this Agreement are for convenience of reference only and shall
not define or modify any of the terms or provisions hereof.
IN WITNESS WHEREOF, the Issuer, LFC and the Indenture Trustee have
caused this Agreement to be duly executed and delivered to Wilmington Trust
in Delaware and Wilmington Trust has accepted, executed and delivered this
Agreement in Delaware, all as of the date first above written.
<PAGE>
ST LENDING, INC.
By: /s/Carey Wickland
------------------------------
Name: Carey Wickland
Title: President
LOMAS FINANCIAL CORPORATION
Solely with respect to its
obligations and agreements
under Section 2.08, Article V
and Sections 6.04, 6.07 and
6.09
By: /s/James L. Crowson
------------------------------
Name: James L. Crowson
Title: Executive Vice President
BANK ONE, TEXAS, N.A.,
as Indenture Trustee
By: /s/Tracey McMillan
------------------------------
Name: Tracey McMillan
Title: Assistant Vice President
WILMINGTON TRUST COMPANY,
as Liquidity Support Trustee
By: /s/Carolyn C. Daniels
------------------------------
Name: Carolyn C. Daniels
Title: Assistant Vice President
<PAGE>
ANNEX 1
[FORM OF TRUST CERTIFICATE]
TRUST CERTIFICATE
LFC LIQUIDITY SUPPORT TRUST
________________________
THIS CERTIFIES THAT ST LENDING, INC. (the "Owner") is the registered
owner of a 100% undivided beneficial interest in the Trust existing under the
laws of the State of Delaware pursuant to the Liquidity Support Trust
Agreement (the "Agreement"; the capitalized terms herein being used as
therein defined) dated as of April 12, 1994, among ST Lending, Inc., Lomas
Financial Corporation, Bank One, Texas, N.A., as Indenture Trustee, and
Wilmington Trust Company not in its individual capacity but solely in its
capacity as trustee under the Agreement (the "Liquidity Support Trustee"),
has caused this Trust Certificate to be executed by one of its duly
authorized signatories as set forth below. This Trust Certificate is the
Trust Certificate referred to in the Agreement and is issued under and is
subject to the terms, provisions and conditions of the Agreement to which the
holder of this Trust Certificate by virtue of the acceptance hereof agrees
and by which the holder hereof is bound. Reference is hereby made to the
Agreement for a statement of the rights of the holder of this Trust
Certificate, as well as for a statement of the terms and conditions of the
Trust created by the Agreement.
By its acceptance hereof, the holder hereof agrees that it will not
offer, sell, transfer, assign, pledge, hypothecate, encumber or otherwise
dispose of this Trust Certificate except in accordance with Section 2.04(b)
of the Agreement.
IN WITNESS WHEREOF, the Liquidity Support Trustee has caused this Trust
Certificate to be executed as of the date hereof by one of its Vice
Presidents or Trust Officers by his manual signature. This Trust Certificate
shall not be valid or enforceable for any purpose until it shall have been so
signed by a Vice President or Trust Officer.
Dated: April 12, 1994
LFC LIQUIDITY SUPPORT TRUST
By: Wilmington Trust Company,
not in its individual capacity
but solely as Liquidity Support
Trustee
By:
------------------------------
Name:
-----------------------
Title:
-----------------------
<PAGE>
ANNEX 2
[FORM OF LFC LIQUIDITY SUPPORT TRUST NOTE]
LFC LIQUIDITY SUPPORT TRUST NOTE
Dallas, Texas
April 12, 1994
For value received, LOMAS FINANCIAL CORPORATION, a Delaware corporation
(the "Borrower"), promises to pay to the order of ST LENDING, INC. (the
"Issuer") on the Termination Date a principal sum equal to the aggregate
amount of all withdrawals ( each, a "Withdrawal"), if any, theretofore made
by the Borrower from the Liquidity Support Trust Account (the "Trust
Account") pursuant to Section 2.08(a) of the Liquidity Support Trust
Agreement dated as of April 12, 1994 (the "Trust Agreement") among the
Issuer, the Borrower, Bank One, Texas, N.A., as Indenture Trustee, and
Wilmington Trust Company, as Liquidity Support Trustee, and to pay interest
at the Termination Date on the unpaid principal amount hereof from time to
time at the rate or rates provided for below; provided that if, prior to the
Termination Date, the Securities and all amounts due and payable under the
Indenture have been paid in full, then all obligations of the Borrower
hereunder, including the obligations of the Borrower with respect to the
payment of principal and interest, shall be forgiven and discharged and the
Issuer, on demand of the Borrower, shall execute proper instruments
acknowledging satisfaction of and discharging this note. Payment of principal
and interest shall be made in lawful money of the United States in Federal or
other immediately available funds. Withdrawals made by the Borrower shall be
recorded by the Issuer on the schedule attached hereto, or on a continuation
of such schedule attached to and made a part hereof; provided that the
failure of the Issuer to make any such recordation shall not affect the
obligations of the Borrower hereunder.
This note shall bear interest from the date of the first Withdrawal, if
any, at a rater per annum at any time equal to the weighted average rate per
annum that the Liquidity Support Trustee is receiving at such time on the
investment of funds on deposit in the Trust Account or, if no funds are on
deposit in the Trust Account at such time, then for each day at the average
rate for 90-day certificates of deposit that has at such time most recently
been published in The Wall Street Journal.
The Borrower hereby covenants and agrees that, prior to the Termination
Date:
1. The Borrower will comply with the covenants of the Borrower set
forth in Section 3.9 and 3.11 of the Lomas Senior Convertible Note
Indenture dated as of November 1, 1991 between the Borrower and Texas
Commerce, as trustee, as in effect on the date hereof.
2. The Borrower will not create, assume or suffer to exist any Lien
on the capital stock of the Issuer.
In case one or more of the following Events of Default (whatever the
reason for such Event of Default and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body) shall have occurred and be continuing,
that is to say:
(a) failure on the part of the Borrower to pay all or any part of
the principal of or interest on this note as and when the same shall
become due and payable; or
(b) failure on the part of the Borrower duly to observe or perform
any other covenant contained in this note, for a period of 30 days after
the date on which written notice specifying such failure, stating that
such notice is a "Notice of Default" hereunder and demanding that the
Borrower remedy the same, shall have been given by registered or
certified mail, return receipt requested, to the Borrower by the
Liquidity Support Trustee; or
(c) a court having jurisdiction in the premises shall enter a
decree or order (i) for relief in respect of the Borrower in an
involuntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect; (ii) adjudging the Borrower a
bankrupt or insolvent or approving a petition seeking reorganization,
arrangement or composition in respect of or under any applicable
bankruptcy, insolvency or other similar law; (iii) appointing a
receiver, liquidator, assignee, custodian, trustee, sequestrator (or
similar official) of the Borrower or for any substantial part of the
property of the Borrower; or (iv) ordering the winding-up or liquidation
of the Borrower's affairs; or
(d) the Borrower shall (i) commence a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter
in effect or any other case or proceeding to be adjudicated a bankrupt
or insolvent; (ii) consent to the entry of an order for relief in an
involuntary case under any such law; (iii) consent to the appointment of
or taking possession by a receiver, liquidator, assignee, custodian,
trustee, sequestrator (or similar official) the Borrower or for any
substantial part of the property of the Borrower; (iv) make any general
assignment for the benefit of creditors; or
(e) an event of default, as defined in any indenture or instrument
evidencing or under which the Borrower has at the date of this note or
shall hereafter have outstanding more than $5,000,000 aggregate
principal amount of indebtedness for borrowed money, shall occur and be
continuing and such indebtedness shall have been accelerated so that the
same shall be or become due and payable prior to the date on which the
same would otherwise have become due and payable, and such acceleration
shall not be rescinded or annulled within ten days after notice thereof
shall have been given to the Borrower by the Liquidity Support Trustee;
provided that if such event of default under such indenture or
instrument shall be remedied or cured by the Borrower or waived by the
holders of such indebtedness, then the Event of Default hereunder by
reason thereof shall be deemed likewise to have been thereupon remedied,
cured or waived without further action upon the part of the Liquidity
Support Trustee;
then, and in each and every case, the Issuer may, by notice in writing to the
Borrower, declare this note to be, and this note shall thereupon become,
immediately due and payable without presentment, demand, protest or other
notice of any kind, all of which are hereby waived by the Borrower; provided
that, in the case of any of the Events of Default specified in clause (b) or
(c) above, this note shall become immediately due and payable without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Borrower.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF NEW YORK.
This note is the LFC Liquidity Support Trust Note referred to in the
Trust Agreement. Terms defined in the Trust Agreement and not otherwise
defined herein are used herein with the same meanings.
LOMAS FINANCIAL CORPORATION
By:
------------------------------
Name:
-----------------------
Title:
-----------------------<PAGE>
WITHDRAWALS
Date Amount of Withdrawal Notation Made of
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<PAGE>
ANNEX 3
[FORM OF TRUST WITHDRAWAL CERTIFICATE]
TRUST WITHDRAWAL CERTIFICATE
PURSUANT TO SECTION 2.08
OF THE LIQUIDITY SUPPORT TRUST AGREEMENT
I, [Name] , a [Title] of Lomas
Financial Corporation, a Delaware corporation, do hereby certify as follows:
1. On ________, 199__* (the "Senior Note Payment Date") there will be an
Interest Shortfall Amount ("ISA") of $________________, computed as follows:
ISA = A - [(B+C+D+E+F+G+H) - (I+J)]
(A) ________ Interest on the LFC Senior Convertible Notes during the period
commencing November 1, 1991 and ending on the Senior Note
Payment Date.
less the sum of the following:
(B) ________ 50% of LMUSA's net income for the period from October 1, 1991
through the end of the last fiscal quarter ended before the
Senior Note Payment Date (the "Income Measuring Period").
plus
(C) ________ 50% of any tax expense recorded on the books of LMUSA for the
Income Measuring Period which will never be repaid and has
arisen solely from the application of net operating loss
carryforwards.
plus
(D) ________ All dividends received by LFC during the Income Measuring
Period from any company other than LMUSA.
plus
(E) ________ LFC's interest income for the Income Measuring Period.
plus
(F) ________ An amount carried on LFC's balance sheet representing the
amount of taxes which have been prepaid by LFC during the
Income Measuring Period.
plus
- ---------------
*Insert the date of the next succeeding LFC Senior Convertible Note Payment
Date.<PAGE>
(G) ________ All amounts withdrawn from the Trust Account pursuant to
Section 2.08(a) of the Liquidity Support Trust Agreement
during the Income Measuring Period.
plus
(H) ________ All net income earned by any subsidiary of LFC other than
LMUSA during the Income Measuring Period to the extent that
(A) no legal or contractual provision prevented the
distribution of such income to LFC as a dividend and (B) such
distribution would not have left such subsidiary with an
unduly small capital.
less the sum of:
(I) ________ LFC's general and administrative expenses for the Income
Measuring Period.
plus
(J) ________ All federal, state and local income, excise, franchise, ad
valorem and other taxes attributable to LFC and its activities
and actually paid during the Income Measuring Period.
2. On ________, 199__, the Senior Note Payment Date, please make
available to LFC immediately available funds in the amount of the Interest
Shortfall Amount by [insert payment instructions].
3. The Termination Date has not occurred.
Capitalized terms used herein and not otherwise defined herein have the
meanings attributed to such terms in the Liquidity Support Trust Agreement
dated as of April 12, 1994 among ST Lending, Inc., Lomas Financial
Corporation, Bank One, Texas, N.A., as Indenture Trustee, and Wilmington
Trust Company, as Liquidity Support Trustee.
IN WITNESS WHEREOF, I have hereunto set my hand and caused this
certificate to be delivered this ____ day of ________, 199__.
____________________________________
[Name]
[Title]
EXHIBIT 10.8
_______________________________________________________________
LOMAS MORTGAGE USA, INC.,
the Company,
and
TEXAS COMMERCE BANK NATIONAL ASSOCIATION,
the Lender
3/94 SENIOR SECURED WORKING CAPITAL
CREDIT AGREEMENT
March 21, 1994
_______________________________________________________________<PAGE>
DEFINED TERMS
"3/94 Credit Agreement" . . . . . . . . . . . . . . . . . . . . . . . . . 1
"6/93 Servicing Purchase Loan Agreement". . . . . . . . . . . . . . . . . 11
"Advance" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Affiliate" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Agreement" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
"Assignee". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
"Borrowing Base Report" . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Borrowing Date". . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Borrowing" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Business Day". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Ceiling Rate". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Certificate of Sale" . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"Chapter One" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Code". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"Collateral". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"Commitment". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"Company" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
"control" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Credit Agreement". . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
"Credit Request". . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"Debt". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"Debtor Laws" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
"Default Event" . . . . . . . . . . . . . . . . . . . . . . . . . . . .4, 30
"Eligible Collateral" . . . . . . . . . . . . . . . . . . . . . . . . . . 4
"Eligible Foreclosure Receivable" . . . . . . . . . . . . . . . . . . . . 4
"Eligible Property Tax Refund Receivable" . . . . . . . . . . . . . . . . 5
"Eligible REO Sale Receivable". . . . . . . . . . . . . . . . . . . . . 5, 6
"Eligible Servicing Receivable" . . . . . . . . . . . . . . . . . . . . . 6
"Eligible T&I Receivable" . . . . . . . . . . . . . . . . . . . . . . . . 7
"FHA" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
"Financed Receivable" . . . . . . . . . . . . . . . . . . . . . . . . . . 7
"Financial Statements". . . . . . . . . . . . . . . . . . . . . . . . . . 7
"Foreclosure Repurchase Payment". . . . . . . . . . . . . . . . . . . . . 7
"GAAP". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
"Governmental Authority". . . . . . . . . . . . . . . . . . . . . . . . . 8
"indicated rate ceiling". . . . . . . . . . . . . . . . . . . . . . . . . 3
"Ineligible Mortgage Loan". . . . . . . . . . . . . . . . . . . . . . . . 8
"Investment Securities Facilities Agreement". . . . . . . . . . . . . . . 8
"Legal Requirement" . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
"Lender". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1, 8
"Lien". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
"Loan Papers" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"Loan". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
"margin stock". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
"Material Adverse Effect" . . . . . . . . . . . . . . . . . . . . . . . . 9
"Monetary Default". . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
"Mortgage Loan in Foreclosure". . . . . . . . . . . . . . . . . . . . . . 9
"Mortgage Loan" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
"Nonmonetary Default" . . . . . . . . . . . . . . . . . . . . . . . . . . 9
"Note Payment Account". . . . . . . . . . . . . . . . . . . . . . . . . . 9
"Obligations" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
"P&I Payment" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
"Past Due Rate" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
"Person". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
"Potential Default" . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
"Prime Rate". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
"Property". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
"purpose credit". . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
"Regulation U". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
"Regulation X". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
"REO Sold". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
"Security Instruments". . . . . . . . . . . . . . . . . . . . . . . . . . 11
"Servicing Contract". . . . . . . . . . . . . . . . . . . . . . . . . . . 11
"Servicing Payment" . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
"Servicing Sold". . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
"System Copy" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
"Termination Date". . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
"Texas Credit Code" . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"UCC" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
"VA". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
"Working Capital Collateral Value". . . . . . . . . . . . . . . . . . . . 12
"Working Capital Line Limit". . . . . . . . . . . . . . . . . . . . . . . 15
"Working Capital Note". . . . . . . . . . . . . . . . . . . . . . . . . . 15
<PAGE>
TABLE OF CONTENTS
PREAMBLE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
RECITALS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
AGREEMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1. GENERAL TERMS . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Other Terms and References. . . . . . . . . . . . . . . . . . . 15
1.3 Accounting Principles . . . . . . . . . . . . . . . . . . . . . 16
SECTION 2. COMMITMENT AND TERMS OF BORROWING AND PAYMENT . . . . . . . . 16
2.1 Commitment. . . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.2 Borrowing Procedure . . . . . . . . . . . . . . . . . . . . . . 16
2.3 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . 17
2.4 Working Capital Note. . . . . . . . . . . . . . . . . . . . . . 17
2.5 Payment Procedures. . . . . . . . . . . . . . . . . . . . . . . 17
2.6 Interest and Principal Payments . . . . . . . . . . . . . . . . 17
2.7 Past Due Rate . . . . . . . . . . . . . . . . . . . . . . . . . 18
2.8 Interest Calculations . . . . . . . . . . . . . . . . . . . . . 18
2.9 Usury Not Intended; Credit or Refund of Any Excess
Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . 18
2.10 Chapter 15 Inapplicable . . . . . . . . . . . . . . . . . . . . 19
2.11 Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 3. SECURITY. . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.1 Collateral. . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.2 Power of Attorney . . . . . . . . . . . . . . . . . . . . . . . 22
3.3 Collection, Sale or Redemption of Collateral. . . . . . . . . . 23
3.4 Collateral Value. . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 4. CONDITIONS PRECEDENT. . . . . . . . . . . . . . . . . . . . . 24
4.1 Initial Borrowing . . . . . . . . . . . . . . . . . . . . . . . 24
4.2 All Borrowings. . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 5. REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . . 25
5.1 Authorization and Power . . . . . . . . . . . . . . . . . . . . 25
5.2 No Conflicts or Consents. . . . . . . . . . . . . . . . . . . . 25
5.3 Enforceable Obligations . . . . . . . . . . . . . . . . . . . . 25
5.4 Priority of Liens . . . . . . . . . . . . . . . . . . . . . . . 25
5.5 No Liens. . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.6 Financial Condition . . . . . . . . . . . . . . . . . . . . . . 25
5.7 Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . 26
5.8 Survival. . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 6. AFFIRMATIVE COVENANTS.. . . . . . . . . . . . . . . . . . . . 26
6.1 Financial Statements, Reports . . . . . . . . . . . . . . . . . 26
6.2 Borrowing Base Reports. . . . . . . . . . . . . . . . . . . . . 27
6.3 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.4 Certificates of Sale. . . . . . . . . . . . . . . . . . . . . . 27
6.5 Marking Collateral and Records. . . . . . . . . . . . . . . . . 27
6.6 Assignment of Certificate of Sale and Further Acts. . . . . . . 27
6.7 Other Papers. . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.8 Further Assurances. . . . . . . . . . . . . . . . . . . . . . . 28
6.9 Deliveries After a Default Event. . . . . . . . . . . . . . . . 28
6.10 Reimbursement of Expenses . . . . . . . . . . . . . . . . . . . 28
6.11 Right of Inspection . . . . . . . . . . . . . . . . . . . . . . 29
6.12 Notice of Default . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 7. NEGATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . . . 29
7.1 Use of Proceeds; Margin Stock . . . . . . . . . . . . . . . . . 29
7.2 Collateral Matters. . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 8. DEFAULTS AND REMEDIES . . . . . . . . . . . . . . . . . . . . 30
8.1 Nature of Event . . . . . . . . . . . . . . . . . . . . . . . . 30
8.2 Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
8.3 Right of Offset . . . . . . . . . . . . . . . . . . . . . . . . 33
8.4 Private Sales . . . . . . . . . . . . . . . . . . . . . . . . . 34
8.5 Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
8.6 Performance by Lender . . . . . . . . . . . . . . . . . . . . . 34
8.7 No Responsibility . . . . . . . . . . . . . . . . . . . . . . . 35
8.8 No Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
8.9 Rights are Cumulative . . . . . . . . . . . . . . . . . . . . . 35
8.10 Application of Payments and Proceeds. . . . . . . . . . . . . . 35
8.11 Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 9. Lender May Act Through Agents; Standard of Care, Release
and Indemnification.. . . . . . . . . . . . . . . . . . . . . 36
9.1 Employment of Others by the Lender. . . . . . . . . . . . . . . 36
SECTION 10. Standard of Care, Release of Liability and Indemnification . 36
SECTION 11. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . 37
11.1 Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
11.2 Non-Business Days . . . . . . . . . . . . . . . . . . . . . . . 37
11.3 Communications. . . . . . . . . . . . . . . . . . . . . . . . . 38
11.4 Form and Number of Documents. . . . . . . . . . . . . . . . . . 38
11.5 Exceptions to Covenants . . . . . . . . . . . . . . . . . . . . 38
11.6 Survival. . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
11.7 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . 38
11.8 Invalid Provisions. . . . . . . . . . . . . . . . . . . . . . . 39
11.9 Amendments, Waivers, Etc. and Conflicts . . . . . . . . . . . . 39
11.10 Multiple Counterparts . . . . . . . . . . . . . . . . . . . . 39
11.11 Successors and Assigns. . . . . . . . . . . . . . . . . . . . 39
11.12 Waiver of Jury Trial. . . . . . . . . . . . . . . . . . . . . 40
11.13 ENTIRE AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . 40
<PAGE>
3/94 SENIOR SECURED WORKING CAPITAL
CREDIT AGREEMENT
PREAMBLE
THIS 3/94 SENIOR SECURED WORKING CAPITAL CREDIT AGREEMENT dated as of
March 21, 1994 (this "3/94 Credit Agreement" and as it may be supplemented,
amended or restated from time to time, this "Agreement" or the "Credit
Agreement") between LOMAS MORTGAGE USA, INC. (the "Company"), a Connecticut
corporation and TEXAS COMMERCE BANK NATIONAL ASSOCIATION (the "Lender"), a
national banking association.
WITNESSETH:
RECITALS:
Lender has agreed to grant the Company's request to provide secured
senior working capital financing for (1) first mortgage promissory note
receivables owned and held by the Company as approved in writing by the
Lender, (2) a specific contract for deed agreement for a property whose title
is held by the Company until satisfaction of the terms of the contract for
deed by the obligor and (3) the Company's claims as servicer, master servicer
or subservicer for reimbursement from others for whom the Company services
residential mortgage loans or from the mortgagors themselves for (a)
foreclosure costs paid, (b) advances made to pay property taxes, assessments,
maintenance fees and casualty insurance premiums in respect of property
securing such serviced mortgage loans where the related escrow balances are
insufficient to pay them and (c) other advances that the Company's mortgage
loan servicing agreements with such investors obligate the Company to make,
(4) receivables held by the Company for reimbursement of overpayments or
erroneous payments made to taxing authorities, (5) receivables held by the
Company from arm's-length sales to unrelated third parties of real estate
acquired by the Company through foreclosure (or conveyances to the Company in
lieu of foreclosure) of mortgage loans owned by the Company and (6)
receivables held by the Company from arm's length sales to unrelated third
parties of mortgage loan servicing rights.
The Company is the borrower under the Restated Loan and Security
Agreement dated as of July 8, 1993 with Bank One, Texas, N.A., as
"Administrative Agent" and an "Agent" for the "Banks" that are also parties
to it, with the Lender as "Syndication Agent" and also an "Agent" for the
Banks, and with Bank One, Texas, N.A., the Lender and certain other banks as
the "Banks". Such Restated Loan and Security Agreement, as it has been
amended to date, is called the "7/93 RL&S Agreement". The reader is hereby
referred to the 7/93 RL&S Agreement for all purposes, and any capitalized
terms that are italicized and used without definition in this Agreement have
the meanings assigned to them in the 7/93 RL&S Agreement.
The credit shall be provided, secured, earn interest and be repaid, and
shall otherwise operate, in accordance with the following terms, covenants
and conditions.
AGREEMENTS:
For good and valuable consideration, the receipt and sufficiency of
which the Company and the Lender each acknowledge, they hereby agree as
follows:
SECTION 1. GENERAL TERMS
1.1 Defined Terms. As stated in the recitals above, italicized
capitalized terms used in this Agreement are defined in the 7/93 RL&S
Agreement and it is to be referred to for definitions of those terms. As
used in this Agreement and, unless otherwise specified, in each exhibit or
schedule to this Credit Agreement and each Credit Paper, these terms have
these meanings:
"Advance" means an amount lent by Lender to the Company under this
Agreement and is the complement to Borrowing, viewed from the Lender's
position.
"Affiliate" of a Person means any other Person who, directly or
indirectly through ownership, voting securities, contract or otherwise,
controls, is controlled by or is under common control with that Person, and,
for purposes of this definition "control" and correlative terms mean the (i)
power to direct, or to cause the direction of, that Person's management or
policies or (ii) ownership or voting control of ten percent (10%) or more of
the Voting Shares of that Person.
"Borrowing" means an amount borrowed by the Company from the Lender
under this Agreement and is the complement to Advance, viewed from the
Borrower's position.
"Borrowing Base Report" means a report prepared by the Company at least
semimonthly (as of the fifteenth and last day of each month) substantially in
the form of the "Lomas Mortgage USA Borrowing Base Summary as of March 16,
1994" and its supporting "Lomas Mortgage USA Schedule of Eligible Receivables
March 16, 1994" and "Lomas Mortgage USA Schedule of Receivables by Account
March 16, 1994" that are reproduced as Schedule BB.
"Borrowing Date" has the meaning stated in Section 2.2(b).
"Business Day" means any day other than Saturday, Sunday and any other
day that national banks in Houston, Texas are authorized or required by
applicable Law to be closed.
"Ceiling Rate" means, on any day, the maximum nonusurious rate of inter-
est permitted for that day by whichever of applicable federal or Texas law
permits the higher interest rate, stated as a rate per annum. On each day,
if any, that Chapter One ("Chapter One") of Title 79, Texas Revised Civil
Statutes, 1925, as amended (the "Texas Credit Code") establishes the Ceiling
Rate, the Ceiling Rate shall be the "indicated rate ceiling" (as defined in
Chapter One) for that day. As to current and future balances, by notice to
the Company, the Lender may from time to time implement any other ceiling
under Chapter One if--and to the extent--permitted by Chapter One.
"Certificate of Sale" means a certificate of sale, sheriff's
certificate, certificate of purchase or comparable document under applicable
state Law, issued to the Company pursuant to and in accordance with such
applicable state Law following the foreclosure sale of the property securing
a Mortgage Loan in Foreclosure to evidence or confirm the purchase of such
property at such sale (subject to any applicable rights of redemption) by the
Company, FHA or VA.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral" means all Property in which the Company grants a Lien to
Lender under the Credit Papers.
"Commitment" means the obligation of the Lender to make Working Capital
Loans pursuant to this Agreement.
"Company" has the meaning stated in this Agreement's preamble.
"Credit Papers" means (a) this Agreement, the Working Capital Note, (b)
all other agreements, documents or instruments ever executed and delivered by
the Company or any other Person in connection with, or as security for the
payment or performance of, any or all of the Obligations and (c) all
renewals, extensions, supplements, amendments, restatements and replacements
of or to any of them.
"Credit Request" means a written request for a Borrowing substantially
in the form of Exhibit B.
"Debt" of any Person means, at any time, the sum (without duplication)
of (i) all of that Person's debt for borrowed money or for the deferred
purchase price of Property or services or that is evidenced by a bond,
debenture, note or other instrument, (ii) all of that Person's obligations
under any capitalized lease, (iii) all of that Person's obligations in
respect of letters of credit, acceptances or similar obligations issued or
created for the account of that Person, (iv) all of that Person's direct and
indirect guaranties of indebtedness of others, (v) all liabilities secured by
any Lien existing on Property owned by that Person, including liabilities so
secured that have not been assumed by that Person or with respect to which
that Person is not personally liable and (vi) all of that Person's
liabilities in respect of unfunded vested benefits under Plans.
"Debtor Laws" means all applicable liquidation, conservatorship,
bankruptcy, moratorium, arrangement, receivership, insolvency, reorganization
and similar laws from time to time in effect that affect the rights of
creditors generally.
"Default Event" has the meaning stated in Section 8.1.
"Eligible Collateral" means and includes each Eligible Foreclosure
Receivable, Eligible Note Receivable, Eligible REO Sale Receivable, Eligible
Servicing Receivable, Eligible Servicing Sale Receivable, Eligible Property
Tax Refund Receivable and Eligible T&I Receivable.
"Eligible Foreclosure Receivable" means a valid, readily enforceable and
liquidated claim for the payment of money:
(i) that is payable within one (1) year after the date a Foreclosure
Repurchase Payment is made with respect to the related Mortgage Loan in
Foreclosure;
(ii) that is against either:
(x) the VA under a VA guarantee of a Mortgage Loan in Foreclosure,
but excluding any such claim arising out of a determination by VA to pay the
full guaranty fee in respect of such Mortgage Loan in Foreclosure in lieu of
bidding on the property being foreclosed (a so-called "VA no-bid");
(y) the FHA under an FHA insurance policy insuring a Mortgage Loan
in Foreclosure; or
(z) one of the private mortgage insurers (if any) that are listed
on Exhibit C (or otherwise hereafter approved in writing by the Lender) under
a mortgage insurance policy insuring a Mortgage Loan in Foreclosure;
(iii) in which the Lender has been granted (pursuant to Section 3.1 or
otherwise) and continues to hold a readily enforceable, first and prior
perfected Lien;
(iv) with respect to which there is no pending claim against the
Company for any credit, allowance or adjustment; and
(v) that the obligor has not denied or rejected and is enforceable
without offset, counterclaim or defense of any kind.
"Eligible Note Receivable" means a valid, readily enforceable and
liquidated claim for the payment of money:
(i) that is evidenced and secured by a valid and enforceable promissory
note and first Lien against real property, or is evidenced by a valid and
enforceable contract for deed in which the Company is the seller of real
property that is free and clear of any other Lien;
(ii) that is not past due or delinquent;
(iii) in which the Lender has been granted (pursuant to Section 3.1 or
otherwise) and continues to hold a readily enforceable, first and prior
perfected Lien, including the requirements that the promissory note itself
have been endorsed in blank and it, a recordable assignment of the Lien
securing it, an appraisal that meets all current Legal Requirements and a
true copy of its recorded mortgage, have all been delivered to the Lender or
to a custodian and bailee designated by the Lender or (in the case of a
contract for deed) in which the Lender has been granted a Lien that is in
form and substance appropriate, valid and enforceable under the Law of the
State in which the real property that is its subject matter is located to
give the Lender a first and prior perfected Lien in the seller's income
stream, reversionary rights and enforcement rights, but none of the seller's
liability, under the relevant contract for deed and as to which the Company's
local counsel for such state has issued a legal opinion to the Lender in
respect of such Lien that is reasonably satisfactory to the Lender and its
counsel;
(iv) with respect to which there is no pending claim against the
Company for any credit, allowance or adjustment;
(v) that is enforceable without offset, counterclaim or defense of any
kind; and
(vi) that has been specifically approved in writing by the Lender as an
Eligible Note Receivable.
"Eligible Property Tax Refund Receivable" means a valid, readily
enforceable claim against any taxing authority for repayment of any
overpayment, extra payment or mispayment of property taxes paid by the
Company in respect of any Mortgage Loan serviced (or subserviced) by the
Company:
(i) that is currently due from that taxing authority;
(iii) with respect to which there is no pending claim against the
Company for any credit, allowance or adjustment; and
(iv) that is enforceable without offset, counterclaim or defense of any
kind.
"Eligible REO Sale Receivable" means a valid, readily enforceable and
liquidated claim for the payment of money arising from the Company's
disposition of REO Sold:
(i) that is not past due or delinquent;
(ii) that is payable within ninety (90) days after the date the Company
conveyed the related REO Sold;
(iii) in which the Lender has been granted (pursuant to Section 3.1 or
otherwise) and continues to hold a readily enforceable, first and prior
perfected Lien, including the requirements that if there is any promissory
note evidencing it, the note shall have been endorsed in blank and a
recordable assignment of all Liens (if any) securing it have all been
delivered to the Lender or to a custodian and bailee designated by the
Lender;
(iv) with respect to which there is no pending claim against the
Company for any credit, allowance or adjustment;
(v) that is enforceable without offset, counterclaim or defense of any
kind.
"Eligible Servicing Receivable" means a valid, readily enforceable and
liquidated claim for the payment of money:
(i) that is payable within one (1) year after the date the related
Servicing Payment is made;
(ii) that is a valid and enforceable claim under the Servicing Agreement
between the Company, as servicer, master service or subservicer, and another
Person that owns or holds the serviced Mortgage Loans or is its servicer,
against either:
(x) the Person that owns or holds the related Mortgage Loan or its
servicing rights; or
(y) the obligor on the related Mortgage Loan and the accounts of
that obligor, and is a valid and enforceable claim under the Mortgage Loan's
documents; and
(iii) in which the Lender has been granted (pursuant to Section 3.1 or
otherwise) and continues to hold a readily enforceable, first and prior
perfected Lien;
(iv) with respect to which there is no pending claim against the
Company for any credit, allowance or adjustment; and
(v) that is enforceable without offset, counterclaim or defense of any
kind.
"Eligible Servicing Sale Receivable" means a valid, readily enforceable
and liquidated claim for the payment of money arising from the Company's
disposition of Servicing Sold;
(i) that is not past due or delinquent;
(ii) that is payable within one hundred eighty (180) days after the
date the Company conveyed the related Servicing Sold;
(iii) in which the Lender has been granted (pursuant to Section 3.1 or
otherwise) and continues to hold a readily enforceable, first and prior
perfected Lien, including the requirements that if there is any promissory
note evidencing it, the note shall have been endorsed in blank and it, a
recordable assignment of all Liens (if any) securing it have all been
delivered to the Lender or to a custodian and bailee designated by the
Lender;
(iv) with respect to which there is no pending claim against the
Company for any credit, allowance or adjustment;
(v) that is enforceable without offset, counterclaim or defense of any
kind.
"Eligible T&I Receivable" means a valid, readily enforceable claim
against any obligor on any Mortgage Loan and the accounts of that obligor for
repayment of any T&I Payment made by the Company:
(i) that is currently due from that obligor;
(ii) in which the Lender has been granted (pursuant to Section 3.1 or
otherwise) and continues to hold a readily enforceable, first and prior
perfected Lien;
(iii) with respect to which there is no pending claim against the
Company for any credit, allowance or adjustment; and
(iv) that is enforceable without offset, counterclaim or defense of any
kind.
"FHA" means the Federal Housing Administration and any successor.
"Financed Receivable" means any Mortgage Loan in Foreclosure, T&I
Payment, REO Sold, Servicing Payment, Servicing Sold, property tax refund or
Mortgage note or contract for deed that is financed (including refinancings)
or requested to be financed, with Loan proceeds without regard to its
eligibility for financing under this Agreement or its Working Capital
Collateral Value.
"Financial Statements" means balance sheets, profit and loss statements,
statements of cash flow and any other financial statements, reports or
information specified by the Lender.
"Foreclosure Repurchase Payment" means a payment made by the Company to
repurchase a delinquent Mortgage Loan from an investor, whether before or
after foreclosure, that is--or after foreclosure, will be--a Mortgage Loan in
Foreclosure and which payment, when paid, created or will create (as
applicable) a reimbursement claim for the Company against the VA, the FHA or
a private mortgage insurer.
"GAAP" means generally accepted accounting principles consistently
applied as set forth in Opinions of the Accounting Principles Board of the
American Institute of Certified Public Accountants or in statements of the
Financial Accounting Standards Board and is in effect at the time of
application of the provisions hereof so as to properly reflect the financial
condition, and the results of operation and changes in cash flow, of the
Company or such other Person as may be applicable; provided that wherever in
this Agreement principles of accounting different from those required by GAAP
are specified, the principles of accounting specified in this Agreement shall
govern.
"Governmental Authority" means any nation or government, any agency,
department, state or other political subdivision thereof, and any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of government or pertaining to it.
"Ineligible Mortgage Loan" means a Mortgage Loan (a) that the Company
has formally referred to legal counsel (whether in-house or outside legal
counsel) for legal action to protect the Company's interest in the collateral
securing such Mortgage Loan, (b) that is in foreclosure or (c) in respect of
which for any other reason the full and timely recoverability of any T&I
Advance made or to be made is or should be reasonably doubtful.
"Investment Securities Facilities Agreement" means the October 30, 1990
letter loan agreement between the Lender and the Company that currently
provides for a senior secured revolving credit facility for the Company of up
to One Hundred Fifty Million Dollars ($150,000,000) from time to time
permitted to be borrowed and outstanding to finance the Company's short term
investments in investment grade securities, as it has been and may be
supplemented, amended and restated from time to time (all of the other credit
facilities formerly provided for under that loan agreement, as amended,
having terminated.)
"Law" means any law, statute, code, ordinance, order, rule, regulation,
judgment, decree, injunction, franchise, permit, certificate, license,
authorization or other determination, direction or requirement (including any
of the foregoing which relate to environmental standards or controls, energy
regulations and occupational, safety and health standards or controls) of any
(domestic or foreign) arbitrator, court or other Governmental Authority.
"Legal Requirement" means, for any Person, the articles of incorporation
and bylaws or other organization or governing documents of that Person, and
any Law that is applicable to or binding upon that Person or any of its
Property or to which that Person or any of its Property is subject.
"Lender" has the meaning stated in this Agreement's preamble.
"Lien" means any lien, mortgage, security interest, pledge or
encumbrance, conditional sale or title retention agreement, any lease in the
nature thereof, or any other interest in Property designed to secure the
repayment of Debt, whether arising by agreement or under Law, or otherwise.
"Loan" means, on any day, the aggregate outstanding principal amount of
all Borrowings on that day.
"Material Adverse Effect" means any material adverse effect on (i) the
validity or enforceability of this Agreement, the Working Capital Note or any
Security Instrument, (ii) the Company's operations or consolidated financial
condition, (iii) the Collateral (or its value), taken as a whole, (iv) the
Company's ability to continue in business as a going concern--without
limitation, any written statement issued by the Company's accountants or
auditors expressing doubt about the Company's ability to continue in business
as a going concern will be treated as having a Material Adverse Effect
without any requirement for inquiry into the reasons underlying such
statement--or (v) the Company's ability to fulfill its obligations under this
Agreement, the Working Capital Note or any Security Instrument.
"Monetary Default" has the meaning stated in Section 8.1(j).
"Mortgage Loan" means a promissory note that has a term of not more than
thirty (30) years evidencing a loan or advance and the mortgage or deed of
trust that secures it and covers real property that has been improved by a
completed one-, two-, three- or four-family dwelling unit (whether a detached
house, a townhouse or a condominium unit.)
"Mortgage Loan in Foreclosure" means an FHA Mortgage Loan or a VA
Mortgage Loan or a conventional mortgage loan (a) that is (i) covered by
private mortgage insurance, (ii) serviced by the Company and (iii) subject to
a pending or completed foreclosure, (b) for which (unless applicable state
law does not provide for Certificates of Sale) a Certificate of Sale has been
issued (or, after foreclosure, will be issued) pursuant to and in accordance
with applicable state law procedures and (c) that is (or will be when
foreclosure has been completed) subject to a statutory redemption period, if
any, of not more than twelve (12) months.
"Nonmonetary Default" has the meaning stated in Section 8.1(j).
"Note Payment Account" means non-interest bearing demand checking
account no. 001-0 to be maintained by the Company with the
Lender to be used for (a) the Lender's deposits of proceeds of Advances and
payments constituting collections on and other proceeds of Collateral; (b)
the Lender's deposits of payments of the Loan received from the Company or
for its account and (c) only if and when (i) no Potential Default has
occurred unless it has been cured and (ii) no Default Event has occurred
unless the Lender has declared in writing that it has been cured or waived,
the Company's withdrawal of proceeds of Advances for the purposes permitted
for the Loan under this Agreement and the Lender's transfer from the Note
Payment Account to the Company's own designated account (or to a controlled
disbursement account maintained by the Company with the Lender) of proceeds
of collections of Collateral in excess of the Borrowings then outstanding
against such Collateral. The Note Payment Account shall be part of the
Collateral for the Obligations. The Note Payment Account shall be subject to
setoff by the Lender. The Company shall have no right to directly withdraw
funds from the Note Payment Account, but instead such funds may be withdrawn
or paid out only against the order of an authorized officer of the Lender,
although under the circumstances described in clause (c) of the immediately
preceding sentence and subject to the conditions specified in that clause,
the Lender shall use reasonable efforts to cause Advances proceeds and excess
Collateral proceeds that are received as therein described and that are
deposited to the Note Payment Account before 3:00 P.M. on a Business Day, to
be transferred to an account designated by the Company and on which the
Company does have withdrawal order authority on that same Business Day.
"Obligations" means all of the Company's present and future debt,
obligations and liabilities before or after the date of this Agreement and
related to any Credit Paper, whether for principal, interest, premium, fees,
costs, attorneys' fees or other obligation or liability, and whether absolute
or contingent, and all renewals, extensions and modifications of any of them.
"P&I Payment" is a payment made by or for the account of the Company of
principal or interest due to the investor in respect of a Mortgage Loan
serviced by the Company as to which the principal or interest payments
received by the Company from the obligors in respect of such Mortgage Loan
are not timely received or are otherwise insufficient to fully fund the
corresponding principal or interest payment due to the investor or owners of
mortgage-backed securities based on and backed by a pool that includes such
Mortgage Loan.
"Past Due Rate" means, for any day, an annual rate of interest equal
from day to day to the lesser of (a) the Prime Rate plus five percent (5%)
and (b) the Ceiling Rate.
"Person" means any individual, corporation, partnership, joint venture,
association, joint stock company, trust, unincorporated organization,
Governmental Authority or any other form of entity.
"Potential Default" means the occurrence of any event or existence of
any circumstances that would, upon notice or lapse of time or both, become a
Default Event.
"Prime Rate" means, on any day, the prime rate for that day as announced
by the Lender and entered in the minutes of its Loan and Discount Committee.
The Prime Rate is a reference rate and does not necessarily represent the
Lender's best or lowest rate or a favored rate, and the Lender disclaims any
statement, representation or warranty to the contrary.
"Property" means any interest of the Company in any kind of property or
asset, whether real, personal or mixed, or tangible or intangible, including
the Collateral.
"REO Sold" means real estate acquired by the Company through foreclosure
or conveyance in lieu of foreclosure of a Mortgage Loan and sold to an
unrelated third party in an arm's-length transaction.
"Regulation U" means Regulation U promulgated by the Board of Governors
of the Federal Reserve System, 12 C.F.R. Part 221, or any other regulation
when promulgated to replace the prior Regulation U and having substantially
the same function.
"Regulation X" means Regulation X promulgated by the Board of Governors
of the Federal Reserve System, 12 C.F.R. Part 224, or any other regulation
when promulgated to replace the prior Regulation X and having substantially
the same function.
"Security Instruments" means any and all papers now or hereafter
executed and delivered by the Company or any other Person in connection as
security for the payment or performance of the Obligations or otherwise in
connection with them, as those agreements, documents and instruments may be
renewed, extended, amended or substituted from time to time, including this
Agreement.
"Servicing Agreement" means a contract or agreement purchased by the
Company or entered into by the Company for its own account, whether now
existing or hereafter purchased or executed, pursuant to which the Company
master services, services or subservices Mortgage Loans or Mortgage Loan
pools for another Person.
"Servicing Payment" is a payment made by the Company pursuant to its
obligation under a Servicing Agreement as servicer, master servicer or
subservicer of Mortgage Loans other than (a) a P&I Payment, (b) a T&I Payment
or (c) a Foreclosure Repurchase Payment.
"Servicing Sold" means the Mortgage Loan servicing rights under a
Servicing Agreement formerly owned by the Company and that the Company has
sold to an unrelated third party in an arm's-length transaction.
"6/93 Servicing Purchase Loan Agreement" means the June 28, 1993 letter
loan agreement between the Company and the Lender providing for a two-
advance, nonrevolving amortizing term loan by the Lender to the Company of up
to Eleven Million Six Hundred Fifty-seven Thousand Nine Hundred Seventy-three
Dollars ($11,657,973) to finance the Company's purchase from Heartland
Federal Savings and Loan Association and its subsidiary, InterWest Mortgage
Corporation, of certain loan servicing rights, as supplemented, amended or
restated from time to time.
"System Copy" means for any document pertaining or related to a Mortgage
Loan, the exact image (excluding, if applicable, any handwritten notations,
insertions or signatures) of that document stored in the computer or
computers maintained by or on behalf of the Company in such a way that it is
readily retrievable and capable of being printed or otherwise reproduced on
paper in a form substantially identical to the original of that document
(excluding, if applicable, any handwritten notations, insertions or
signatures).
"T&I Payment" means a recoverable payment of real estate taxes or
insurance premiums that the Company is obligated by the terms of a Servicing
Agreement to fund, in respect of a Mortgage Loan serviced by the Company and
that is not an Ineligible Mortgage Loan.
"Termination Date" means the earlier of (a) March 20, 1995 and (b) the
date the Commitment shall have terminated or been canceled.
"UCC" means the Uniform Commercial Code or similar laws of the
applicable jurisdiction, as amended from time to time.
"VA" means the Department of Veterans Affairs and any successor.
"Working Capital Collateral Value" means, on any day, the collateral
values of the Eligible Collateral. Subject to the further provisions of this
definition concerning the circumstances under which otherwise Eligible
Collateral will cease to have Working Capital Collateral Value, the
collateral value of each type of Eligible Collateral is:
(a) for each Eligible Foreclosure Receivable, ninety percent (90%) of
the amount of the claim on that day that the Company has the right, and
reasonably expects, to thereafter recover; or
(b) for each Eligible Note Receivable, Eligible REO Sale Receivable,
Eligible T&I Receivable, Eligible Servicing Receivable, Eligible Servicing
Sale Receivable and Eligible Property Tax Refund Receivable, sixty percent
(60%) of the amount of the claim on that day that the Company has the right,
and reasonably expects, to thereafter recover.
An Eligible Foreclosure Receivable shall cease to have Working Capital
Collateral Value if:
(i) it is not paid--or its obligor informs the Company that it will not
be paid--within one (1) year after the date a Foreclosure Repurchase Payment
is made with respect to the related Mortgage Loan in Foreclosure;
(ii) the claim is dishonored, rejected, repudiated or disputed by the
VA, FHA or private mortgage insurer obligated on it--provided that if such a
claim is rejected in part and confirmed in part by its obligor, then the
Working Capital Collateral Value of that Eligible Foreclosure Receivable
shall be reduced to ninety percent (90%) of the amount so confirmed instead
of to zero--or the Company learns of any grounds for any such dishonor,
rejection, repudiation or dispute;
(iii) the Company fails to comply with the requirements of either of
Sections 6.4 and 6.6 of the Credit Agreement with respect to such claim or
any related Certificate of Sale; or
(iv) the Lender determines that the prospects for its payment are
materially impaired, gives the Company written notice of that determination
and the Company is unable to furnish the Lender clear and convincing evidence
to the contrary on or before thirty (30) days after such notice.
An Eligible Note Receivable shall cease to have Working Capital
Collateral Value if:
(1) any payment (whether of principal, interest, fees, premium--if any-
- -or any escrow deposit) under the terms of the promissory note or mortgage
evidencing and securing it, or if it is a contract for deed, any scheduled
payment of any part of the purchase price or any time price differential or
interest in respect of it, is not paid when due or on or before ten (10) days
after its due date;
(2) any other material default shall occur under the note or the
mortgage evidencing and securing it, or (in the case of a contract for deed)
or under the terms of such contract for deed, whether or not the Company
elects to waive the default, that is not cured on or before thirty (30) days
after its occurrence;
(3) the Lender determines that the prospects for its payment, the value
of its security or its enforceability are materially impaired, gives the
Company written notice of that determination and the Company is unable to
furnish the Lender clear and convincing evidence to the contrary on or before
thirty (30) days after such notice.
An Eligible REO Sale Receivable shall cease to have Working Capital
Collateral Value if:
(A) it is not paid--or its obligor informs the Company that it will not
be paid--within ninety (90) days after the settlement date of the related REO
Sold sale;
(B) the claim is dishonored, rejected, repudiated or disputed by the
Person that owns or holds the related serviced Mortgage Loan, or the Company
learns of any grounds for any such dishonor, rejection, repudiation or
dispute; or
(C) the Lender determines that the prospects for its payment are
materially impaired, gives the Company written notice of that determination
and the Company is unable to furnish the Lender clear and convincing evidence
to the contrary on or before thirty (30) days after such notice.
An Eligible Servicing Receivable shall cease to have Working Capital
Collateral Value if:
(D) it is not paid--or its obligor informs the Company that it will not
be paid--within one (1) year after the funding date of the related Servicing
Payment;
(E) the claim is dishonored, rejected, repudiated or disputed by the
Person that owns or holds the related serviced Mortgage Loan, or the Company
learns of any grounds for any such dishonor, rejection, repudiation or
dispute; or
(F) the Lender determines that the prospects for its payment are
materially impaired, gives the Company written notice of that determination
and the Company is unable to furnish the Lender clear and convincing evidence
to the contrary on or before thirty (30) days after such notice.
An Eligible Servicing Sale Receivable shall cease to have Working
Capital Collateral Value if:
(G) it is not paid--or its obligor informs the Company that it will not
be paid--within one hundred eighty (180) days after the settlement date of
the related Servicing Sold sale;
(H) the claim is dishonored, rejected, repudiated or disputed by the
purchaser of such Servicing Sold, or the Company learns of any grounds for
any such dishonor, rejection, repudiation or dispute; or
(I) the Lender determines that the prospects for its payment are
materially impaired, gives the Company written notice of that determination
and the Company is unable to furnish the Lender clear and convincing evidence
to the contrary on or before thirty (30) days after such notice.
An Eligible T&I Receivable shall cease to have Working Capital
Collateral Value if:
i) the Mortgage Loan in respect of which the T&I Payment that gave rise
to it is (or becomes) an Ineligible Mortgage Loan; or
ii) the Lender determines that the prospects for its payment are
materially impaired, gives the Company written notice of that determination
and the Company is unable to furnish the Lender clear and convincing evidence
to the contrary on or before thirty (30) days after such notice.
An Eligible Property Tax Refund Receivable shall cease to have Working
Capital Collateral Value if:
a) the claim is dishonored, rejected, repudiated or disputed by the
taxing authority that purportedly owes it, or the Company learns of any
grounds for any such dishonor, rejection, repudiation or dispute; or
b) the Lender determines that the prospects for its payment are
materially impaired, gives the Company written notice of that determination
and the Company is unable to furnish the Lender clear and convincing evidence
to the contrary on or before thirty (30) days after such notice.
"Working Capital Line Limit" means Twenty-five Million Dollars
($25,000,000), the maximum aggregate amount of principal Borrowings that are
permitted to be outstanding under this Agreement on any day.
"Working Capital Note" means a promissory note, substantially in the
form of Exhibit A, dated as of the date of this Agreement, executed by the
Company and payable to the order of the Lender, and all of that note's
renewals, extensions, modifications, increases, decreases and replacements.
1.2 Other Terms and References. Except where specifically otherwise
provided:
(a) Wherever the term "including" or any of its correlatives appears in
this Agreement, it shall be read as if it were written, "including (by way of
example and without limiting the generality of the subject or concept
referred to)".
(b) Except where otherwise specified, each time of day used in the
Credit Papers means local time in Houston, Texas.
(c) References in any of the Credit Papers to Article or Section
numbers are references to the Articles and Sections of that Credit Paper.
(d) References in any of the Credit Papers to Exhibits, Schedules,
Annexes and Appendices are references to the Exhibits, Schedules, Annexes and
Appendices to that Credit Paper and they shall be deemed incorporated into
that Credit Paper as if set forth verbatim at each such reference.
(e) Wherever the word "herein" or "hereof" is used in any of the Credit
Papers, it is a reference to that entire Credit Paper and not just to the
Section, clause or subdivision of it in which the word is used.
(f) Words and phrases used or defined in the UCC in force in the State
of Texas on the effective date of this 3/94 Credit Agreement that are not
redefined in any later supplement, amendment or restatement of this 3/94
Credit Agreement have the same meanings here as there.
(g) Accounting terms not otherwise defined have the meanings given them
under GAAP.
(h) Defined terms may be used in the singular or the plural, as the
context requires.
1.3 Accounting Principles. Under the Credit Papers, unless otherwise
stated, (a) GAAP determines all accounting and financial terms and compliance
with financial reporting covenants, (b) GAAP in effect on the date of this
Agreement determines compliance with financial covenants and (c) otherwise,
all accounting principles applied in a current period must be comparable in
all material respects to those applied during the preceding comparable period
other than changes concurred in by the Company's independent public
accountants.
SECTION 2. COMMITMENT AND TERMS OF BORROWING AND PAYMENT.
2.1 Commitment. On the terms and subject to the conditions of the
Credit Papers, on Business Days during the period beginning on the date of
this Agreement and ending on the Termination Date, the Lender agrees to lend
(and after repayment, to relend) Advances to the Company at such times and in
such amounts as the Company shall request, if:
(a) the aggregate principal amount of Advances at any time
outstanding does not (and will not after giving effect to any pending
requested Advance) exceed the lesser of (i) the Working Capital Line Limit or
(ii) the Working Capital Collateral Value of all Eligible Collateral in which
the Lender then has a first and prior perfected Lien; and
(b) either no Potential Default or Default Event has occurred, or
if one has, the Lender has elected in writing to continue funding of Advances
to the Company.
If either of the conditions stated in clauses (a) and (b) of the immediately
preceding sentence is not satisfied, or would not be satisfied after giving
effect to any requested Advance, then the Lender shall have no obligation to
make that Advance.
2.2 Borrowing Procedure. The following conditions and procedures apply
to all Borrowings:
(a) The Company may request a Borrowing by delivering to the
Lender a Credit Request correctly completed in all relevant respects and with
a current Borrowing Base Report attached demonstrating that the Borrower is
entitled to receive the requested Borrowing. The Credit Request and its
attached Borrowing Base Report for each Borrowing must be received by the
Lender by no later than 10:00 AM.
(b) By 11:00 AM on the Business Day ("Borrowing Date") when all
conditions precedent to funding of a requested Borrowing have been satisfied
at or before 10:00 AM, the Lender shall fund the Advance by depositing it in
the Note Payment Account and transferring it from that account (or, at the
Lender's election, funding it directly) to the Company's primary operating
account which currently is non-interest bearing demand deposit account number
0100071638 maintained with Bank One Texas, N.A. ABA #111000614, or to such
account maintained by the Company with another federally-insured financial
institution as the Company may from time to time designate in writing.
2.3 Termination. Upon giving at least three (3) Business Days' prior
written and irrevocable notice to Lender, the Company may terminate the
Commitment in full, whereupon the Lender's obligation to fund future Advances
shall terminate, although no refund of the Commitment Fee shall be due except
to the extent, if any, required to strictly comply with applicable Law,
including applicable usury Law. If not terminated earlier by the Company,
the Commitment automatically terminates on the Termination Date. Once
terminated, the Commitment may not be reinstated except by an amendment to
this Agreement made in accordance with the provisions of Section 11.9.
2.4 Working Capital Note. The Loan (and all of its Advances) shall be
evidenced by the Working Capital Note, executed by the Company, payable to
the order of the Lender and in face principal amount equal to the Commitment.
2.5 Payment Procedures.
(a) The Company shall pay principal of and interest on the Loan to
the Lender by wire transfer in immediately available funds. Payments that
are received by the Lender (i) by 1:30 PM on a Business Day shall be deemed
received on that Business Day, or (ii) after 1:30 PM on a Business Day shall
be deemed received on the next Business Day. Interest shall continue to
accrue through the Business Day immediately before the Business Day when the
payment is deemed received by the Lender under this clause.
(b) Each payment received by the Lender in accordance with this
Agreement is valid and effective to satisfy and discharge the Company's
liability under the Credit Papers to the extent of the payment.
2.6 Interest and Principal Payments.
(a) Interest is due and payable as it accrues (1) through the last
day of the calendar month preceding the payment's due date, on the fifteenth
(15th) day of each calendar month beginning April 15, 1994, and (2) on the
Termination Date, except that any payment under this clause may be deferred
until three (3) days after the Lender notifies the Company of the interest
payment due, provided that interest accruing at the Past Due Rate shall be
due and payable on demand and without grace.
(b) On the Termination Date, the Company shall pay, without notice
or demand, the entire outstanding balance of the Loan, including principal
and interest, and all other sums then owing to the Lender under the Credit
Papers.
(c) If at any time any of the limitations of Section 2.1 are
exceeded (whether because the aggregate of the Working Capital Collateral
Values of all Financed Receivables then pledged to the Lender has diminished
for one or more of the reasons mentioned in the definition of Working Capital
Collateral Value or for any other reason), then before the close of business
on the next Business Day after the Company learns of that change, the Company
will repay Advances in a total amount at least equal to that excess.
(d) The Company may voluntarily prepay all or any part of any
Advance at any time without premium or penalty.
2.7 Past Due Rate. To the extent permitted by applicable law, all past
due principal of the Loan and accrued interest on it shall bear interest from
maturity (whether stated or by acceleration) until paid at the Past Due Rate,
regardless of whether payment is made before or after entry of a judgment.
2.8 Interest Calculations. Except as otherwise specified in this
Agreement or any relevant Credit Papers, interest is to be calculated on the
basis of a year of 360 days (i.e., on the 360/365--or 360/366 in a leap year-
- -day basis), unless that would result in or increase violation of applicable
usury Laws, in which event interest shall be calculated on the basis of the
days elapsed in a calendar year (i.e., on the 365/365--or 366/366 in a leap
year--day basis) to the extent necessary to eliminate (or if it is impossible
to eliminate, minimize) usury. All interest rate determinations and
calculations by the Lender shall be presumed correct.
2.9 Usury Not Intended; Credit or Refund of Any Excess Payments. It is
the intent of the Company and the Lender in the execution and performance of
this Agreement and the other Credit Papers to contract in strict compliance
with the usury laws of the State of Texas and the United States of America
from time to time in effect. In furtherance of that purpose, the Company and
the Lender stipulate and agree that none of the terms and provisions
contained in this Agreement or the other Credit Papers shall ever be
construed to create a contract to pay for the use, forbearance or detention
of money with interest at a rate in excess of the Ceiling Rate and that for
purposes hereof "interest" shall include the aggregate of all charges that
constitute interest under such laws that are contracted for, charged, taken,
reserved or received under this Agreement or any of the other Credit Papers.
In the event that the Working Capital Note's maturity is accelerated by
reason of any election of its holder resulting from any Default Event under
this Agreement or otherwise, or in the event of any mandatory or permitted
prepayment of any Borrowings, then such consideration that constitutes in-
terest may never include more than the maximum nonusurious amount permitted
by applicable Law, and excess interest, if any, provided for in this
Agreement, the Working Capital Note or any of the other Credit Papers or
otherwise shall be canceled automatically as of the date of such acceleration
or prepayment and, if theretofore paid, shall be credited on the Working
Capital Note (or, if the Working Capital Note shall have been paid in full,
refunded to the payor of such interest). The provisions of this Section
shall control over all other provisions of this Agreement, the Working
Capital Note or any of the other Credit Papers that may be in apparent
conflict with this Section. In the event the Lender shall collect monies
that are deemed to constitute interest at a rate in excess of the Ceiling
Rate then in effect, all such sums deemed to constitute interest in excess of
the Ceiling Rate shall be immediately returned to their payor (or, at the
option of the holder of the Obligations in respect of which such monies were
collected, credited against the unpaid principal of those Obligations) upon
such determination, and, to the extent permitted by applicable law, the
Lender shall not be subject to any penalties provided by any Laws for
contracting for, charging, taking, reserving or receiving interest at a rate
in excess of the Ceiling Rate. In determining whether or not the interest
paid or payable under any specific contingency exceeds the Ceiling Rate, to
the maximum extent permitted under applicable Law, the Company and the Lender
shall (a) characterize any non-principal payment as an expense, fee or
premium rather than as interest, (b) exclude voluntary prepayments and their
effects and (c) "spread" the total amount of interest throughout the entire
contemplated term of the Working Capital Note and interest owing on it so
that the interest rate is uniform throughout its entire term.
2.10 Chapter 15 Inapplicable. The Company agrees that Chapter 15,
Subtitle 79, Revised Civil Statutes of Texas, 1925, as amended (which
regulates certain revolving credit loan accounts and revolving triparty
accounts), does not apply to the Obligations.
2.11 Fee. The Company shall pay to the Lender a cash commitment fee of
Sixty-two Thousand Five Hundred Dollars ($62,500) on the day this Agreement
is executed. Such fee is not compensation for the use or detention or
forbearance of money, is in addition to, and not in lieu of, interest and
expenses otherwise described in this Agreement and is non-refundable.
SECTION 3. SECURITY.
3.1 Collateral.
(a) As security for the Obligations and the Company's performance
of its obligations under this Agreement and under the other Credit Papers,
the Company hereby GRANTS to the Lender, as secured party, a first and prior
security interest in, and collaterally assigns to the Lender, any and all
right, title, interest, security interest, power and privilege that the
Company may now or hereafter have or acquire in and to any and all of the
following described Collateral, and agrees to defend the Collateral against
all claims and demands of all Persons at any time claiming any interest in
the Collateral adverse to the Lender, the Collateral being:
(1) all of the following-listed accounts and general
intangibles of the Company, including the Company's present and future claims
for reimbursement, repayment or damages for failing to reimburse the Company
therefor, from (i) Persons for whom the Company services Mortgage Loans or
from obligors on or in respect of Mortgage Loans serviced by the Company for
or on account of payments heretofore, now or hereafter made by the Company in
respect of the Company's obligation to do so under the Company's Servicing
Agreement with such Persons and (ii) FHA, VA or any private mortgage insurer
or guarantor for reimbursement for any foreclosure cost paid by the Company
in respect of any Mortgage Loan serviced by the Company, including all such
claims posted to the following accounts on the Company's books (and all
accounts for similar purposes hereafter created in respect of other Persons
with whom the Company from time to time has Servicing Agreements):
Account Number Description
1225-2000 Tax trade
1225-2100 Tax unbilled
1225-2300 FHA subsidy advance
1225-2400 Overpaid assistance
1225-2500 Insurance advances
1225-2700 LAD-servicing sales
1225-3000 Mortgage claim advances
1225-3200 Foreclosure claims
1225-3300 FNMA specials
1225-3600 Sales-claims sold REOs
1225-4000 LAD-servicing advances
1225-4300 Misapplied payment adv
1225-4500 Custodial advances
1225-5400 GNMA pool to security adv diff
1225-6000 Deficit escrow-T&I advances
1225-6100 Liq & Preserv advances
1225-6200 Short poff suspense advances
1225-6300 Unapplied suspense advances
1225-6400 Acq loans suspense pending
1225-6500 Other prod acct advances
1225-6600 Escrow deficits-USAA
1225-6700 Escrow deficits-Quality
1225-6800 Escrow deficits, LMP, LP
1225-6900 Escrow deficits-subserv collected
1225-7000 Escrow deficits-Subservicing
1225-7100 Escrow deficits-Associates
1225-8100 Third party buydowns
1225-8200 Subservicing misc
but excluding all such claims arising out of P&I Payments made by the Company
and all claims now or hereafter properly posted to the following accounts on
the Company's books:
Account Number Description
1225-1000 MLS cash clearing
1225-1200 MLS cash settlement
1225-1500 LAD-ret cks-corp deposit
1225-1600 LAD-ret cks-lock boxes
1225-1700 Bi-weekly prog return item
1225-2200 Tax clearing
1225-2800 LAD-miscellaneous
1225-3100 Foreclosure miscellaneous advances
1225-3500 Carteret advances
1225-4200 Commercial loan misc adv
1225-4350 Bank recon project-IAD
1225-4400 Cash/payoffs
1225-4600 Private investor advances
1225-4700 Housing authorities advances
1225-4800 GNMA advances
1225-4900 GNMA II advances
1225-5000 FNMA advances
1225-5100 OMBS advances
1225-5200 FHLMC advances
1225-5300 Soldiers relief act advances
1225-8000 Mortgage plan insurance
1225-9000 Misc rec from LMP,LP
(2) the promissory note dated June 30, 1987, in the original
principal amount of $7,937,300, executed by Dallas UTF, Inc., payable to the
order of Lomas & Nettleton Company and now owned and held by the Company, the
mortgage securing that promissory note also dated June 30, 1987, covering and
affecting certain real and personal property in Dallas, County, Texas and
recorded in Volume 87126, Page 3732 of the Real Property Records of Dallas
County, Texas, and all other security for and guaranties of that note, all
other related papers and all renewals, extensions, rearrangements and
restatements of such note, mortgage, security, guaranties and other related
papers;
(3) a contract for deed dated October 15, 1993 by which the
Company agreed to convey to Anderson Plaza Partnership, LP, a Washington
Limited Partnership, for a purchase price of $2,300,000, certain real and
personal property in Clark County, Washington, for a $250,000 cash down
payment and the purchaser's promise to pay the remainder, with interest, in
monthly installments over ten (10) years, a memorandum of said contract
having been recorded in ___________________, _____________________ of the
__________________ Records of Clark County, Washington, and all security
related to that contract for deed, all guaranties or other suretyship
undertakings in respect of it, all related papers, whether now or hereafter
existing, and all modifications, extensions or amendments of such contract or
related papers;
(4) All files, certificates, correspondence, appraisals,
computer programs, tapes, disks, cards, books, accounting records and other
records, information and data of the Company relating to any of such claims
or promissory note;
(5) The Note Payment Account;
(6) Any other asset of the Company that has been or hereafter
is at any time delivered or pledged by any means to the Lender pursuant to
this Credit Agreement;
(7) Any and all balances, credits, deposits, accounts or
monies of the Company in its name representing or evidencing any of the
foregoing; and
(8) all rights to have and receive any of the foregoing and
all proceeds of any of the foregoing, including all accounts, general
intangibles, instruments, real or personal property, documents, chattel paper
and proceeds arising from or by virtue of or collections with respect to, or
comprising part of, any of the foregoing.
(b) In furtherance of the foregoing, the Company (i) hereby agrees
to perform such acts and to duly authorize, execute, acknowledge, deliver,
file and record such financing statements, assignments, security agreements,
deeds of trust, mortgages, bond powers and supplements, modifications or
amendments to any of them, and such other papers as the Lender may reasonably
request in order to establish and preserve the priority of, perfect and
protect the Liens granted or intended to be granted to the Lender in and to
any and all Collateral and to preserve and protect Lender's rights in respect
of all present and future collateral for the Obligations.
3.2 Power of Attorney. The Company hereby irrevocably appoints the
Lender its attorney in fact, with full power of substitution, for and on
behalf and in the name of the Company, to (i) endorse and deliver to any
Person any check, instrument or other paper coming into the Lender's or its
designated custodian's possession and representing payment made in respect of
any Collateral; (ii) endorse and deliver or otherwise transfer or cause to be
identified on the books of any financial intermediary any Collateral and do
every other thing necessary or desirable to effect transfer of all or any
part of the Collateral to Lender, its designated custodian, financial
intermediary or any other Person; (iii) take all necessary and appropriate
action with respect to all Obligations and the Collateral to be delivered to
the Lender or its designated custodian or financial intermediary; (iv)
commence, prosecute, settle, discontinue, defend, or otherwise dispose of any
claim relating to any Collateral and (v) sign the Company's name wherever
appropriate to effect the performance of this Agreement or any of the
Company's obligations under any of the Credit Papers. This section shall be
liberally, not restrictively, construed so to give the greatest latitude to
Lender's power, as the Company's attorney in fact, to collect, sell, enforce,
transfer, identify, perfect Lender's security interest in and deliver any of
the Collateral and all other papers relating to it. The powers and
authorities herein conferred on the Lender may be exercised by the Lender
through its designated custodian or any other Person who, at the time of the
execution of a particular instrument, is an officer of the Lender or such
custodian. The power of attorney conferred by this Section shall not be
exercised by the Lender before the occurrence of a Default Event. It is
granted for a valuable consideration, is coupled with an interest and is
irrevocable for so long as the Obligations, or any part of them, shall remain
unpaid or the Commitment is outstanding. All Persons dealing with the
Lender, its designated custodian or any officer of either acting pursuant
hereto, or any substitute, shall be fully protected in treating the powers
and authorities conferred by this Section as existing and continuing in full
force and effect until advised by the Lender that the Obligations have been
fully and finally paid and satisfied and the Commitment has been terminated.
3.3 Collection, Sale or Redemption of Collateral.
(a) Proceeds of Collateral. Until the occurrence of a Default
Event, the Company may receive all payments and collections on the Collateral
and use them in the normal course of business, provided that the Company
makes such principal payments as shall be required to continuously comply
with the terms and conditions of the Credit Agreement, including the
limitations on the maximum principal permitted to be outstanding on the Loan
at any time set forth in Section 2.1(a). From and after the occurrence of a
Default Event, the Company shall hold all payments and realizations received
in trust for the Lender and segregated from the Company's other property, and
the Company shall deliver to the Lender promptly upon its request made from
time to time, any FHA or private mortgage insurance certificates or VA
guaranties in the Company's possession and relating to any of the Collateral,
and the Lender shall be entitled, pursuant to the power of attorney granted
in this Agreement, to direct the VA, the FHA and any private mortgage insurer
to pay such proceeds to the Lender directly, and to sign all checks and
drafts representing such proceeds for deposit into the Note Payment Account;
provided that the Lender agrees, upon written demand made by the Company, to
release from the Note Payment Account all funds (if any) from time to time in
the Collateral Account that constitute part of another Person's collateral or
property and do not constitute part of the Collateral.
(b) Certain Credits. The Lender shall not be under any duty at
any time to credit the Company for any amounts due from any obligor on any
Collateral until the Lender has actually received payment of such amounts,
and the Lender shall not be under any duty at any time to collect any amounts
or otherwise enforce any obligations due from any obligor on any Collateral,
but instead the Company specifically hereby agrees with the Lender to
diligently require strict performance of all such obligations and enforce
them.
3.4 Collateral Value. If at any time any Financed Receivable shall
cease to meet any of the requirements for an Eligible Foreclosure Receivable,
an Eligible Note Receivable, an Eligible REO Sale Receivable an Eligible
Servicing Receivable, an Eligible Servicing Sale Receivable, an Eligible
Property Tax Refund Receivable or an Eligible T&I Receivable (as the case may
be) under this Agreement, then that item will automatically cease to be
Eligible Collateral and the Company will timely post that change to its
relevant general ledger account so that value is no longer given to that
Financed Receivable on the Company's books or in subsequent Borrowing Base
Reports.
SECTION 4. CONDITIONS PRECEDENT. The Lender's Commitment to make Advances
is subject to fulfillment of the following conditions:
4.1 Initial Borrowing. In addition to the conditions precedent
specified in Section 4.2, the Lender's Commitment to make the initial Advance
is subject to delivery to Lender of all of the closing papers described on
Schedule 4.1.
4.2 All Borrowings. The Lender's commitment to make any Advance is
subject to the following additional conditions precedent:
(a) The Company has delivered a completed Credit Request to the
Lender.
(b) The representations and warranties made by the Company in the
Credit Papers are true and correct in all material respects on and as of the
date of that Borrowing and after giving effect to that Borrowing, except only
to the extent that (i) a representation or warranty speaks to a specific date
or (ii) the facts on which a representation or warranty is based have changed
by transactions or conditions contemplated or expressly permitted by the
Credit Papers.
(c) As of the date of any Borrowing and after giving effect to
that Borrowing, no Potential Default has occurred that has not been cured
before it shall have become a Default Event, and no Default Event has
occurred that has not been declared in writing by the Lender to have been
cured or waived.
(d) No limitation set forth in Section 2.1 is exceeded as of the
date of any Borrowing or will be exceeded after giving effect to that
Borrowing.
(e) Executed financing statements as required by the Lender have
been delivered to the Lender in order to perfect or to establish or maintain
the priority of the Liens granted under this Agreement and under the Security
Instruments.
(f) Any other documents and opinions of counsel have been
delivered to the Lender, including any documents as may be necessary or
desirable to perfect or maintain the priority of any Lien granted or intended
to be granted under this Agreement whether due to any change in any Legal
Requirement or otherwise.
Each Credit Request constitutes a representation and warranty by the Company
on the date of the requested Borrowing that the facts specified in
Subsections 4.2(b), 4.2(c) and 4.2(d) of this Section are true.
SECTION 5. REPRESENTATIONS AND WARRANTIES. The Company hereby makes to the
Lender all of the same representations and warranties as the Company has made
to the lenders under the 7/93 RL&S Agreement, to the same effect as if they
were repeated herein verbatim and republished on the date of this Agreement,
and regardless of whether or not the 7/93 RL&S Agreement expires or is
terminated before this Agreement. Cumulative of those warranties and
representations, the Company also represents and warrants to the Lender as
follows:
5.1 Authorization and Power. The Company has the corporate power and
requisite authority to execute, deliver and perform this Agreement, the
Working Capital Note and the other Credit Papers.
5.2 No Conflicts or Consents. Neither the execution and delivery of
this Agreement, the Working Capital Note or the other Credit Papers, nor the
consummation of any of the transactions herein or therein contemplated, nor
compliance with the terms and provisions hereof or with the terms and
provisions thereof, will materially contravene or conflict with any Law to
which the Company is subject or any credit agreement, mortgage, deed of trust
or other agreement or instrument of which the Company is a party or by which
the Company or any of its Property may be bound, or to which the Company or
any of its Property may be subject.
5.3 Enforceable Obligations. This Agreement, the Working Capital Note
and the other Credit Papers are the legal, valid and binding obligations of
the Company, enforceable in accordance with their respective terms, except as
limited by Debtor Laws and general principles of equity.
5.4 Priority of Liens. Upon the funding of any Advance, the Lender
will have a valid, enforceable, perfected, first priority Lien and security
interest in all Financed Receivables, including those to be funded with the
proceeds of the Advance although such Lien will not attach to them until they
come into existence upon funding of the related advances by the Company. The
Lender will have a valid, enforceable, perfected, first priority Lien and
security interest in all other Collateral described or referred to as
Collateral in this Agreement from (at the latest) the date of the first
funding of any proceeds of the Loan.
5.5 No Liens. The Company has good and indefeasible title to the
Collateral and all the Collateral is free and clear of all Liens and other
adverse claims of any nature, other than the Lender's Lien.
5.6 Financial Condition. The Company has delivered to Lender copies of
(a) its audited balance sheet as of June 30, 1993 and the related statements
of income and cash flows for the period ended on such date and (b) its
unaudited balance sheet and income statement as of January 31, 1994, such
Financial Statements are complete and correct in all material respects and
fairly present the Company's financial condition as of such respective dates
and its results of operations for the periods ended on such respective dates,
and have been prepared in accordance with GAAP, subject to normal year-end
adjustments; as of those dates, there were no obligations, liabilities or
Debt (including material contingent and indirect liabilities and obligations
or unusual forward or long-term commitments) of the Company that are not
reflected in those Financial Statements and are required to be reflected
based upon GAAP; and no change having a Material Adverse Effect has occurred
since the respective dates of those Financial Statements.
5.7 Full Disclosure. There is no material fact that the Company has
not disclosed to the Lender that could reasonably be expected to have a
Material Adverse Effect, except that the Company makes no warranty regarding
general economic conditions. To the best of the Company's knowledge, neither
the Financial Statements referred to in Section 5.6, nor any Credit Request,
officer's certificate or written statement (other than any financial
projections, which the Company does not guarantee but represents are
reasonable) authored by the Company and delivered by the Company to the
Lender in connection with this Agreement contains any untrue statement of
material fact.
5.8 Survival. All representations and warranties made to the Lender by
the Company (including all of them in the 7/93 R&LS Agreement, which are
deemed made by the Company in this Agreement) shall survive delivery of the
Working Capital Note and the making of the Loan, and any investigation at any
time made by or on behalf of the Lender shall not diminish the Lender's right
to rely on those representations and warranties.
SECTION 6. AFFIRMATIVE COVENANTS. The Company hereby agrees with the Lender
to keep, observe and perform the Company's affirmative covenants stated in
the 7/93 RL&S Agreement to the same effect as if they were repeated herein
verbatim and regardless of whether or not the 7/93 RL&S Agreement expires or
is terminated before this Agreement, and to concurrently provide copies to
the Lender herein of all written materials required to be provided to the
agent or the lenders thereunder. Until the Commitment is terminated and the
Obligations are paid and performed in full, the Company shall comply with
those affirmative covenants and with the following, all of which shall be
taken and construed as cumulative of each other:
6.1 Financial Statements, Reports and Notices. The Company shall
furnish directly to the Lender each Financial Statement or other report, each
Compliance Certificate, accountant's opinion and report and each notice that
the Company is obligated to furnish to the lenders or any agent under the
7/93 RL&S Agreement, and such other information concerning the Collateral,
the business, properties or financial condition or operations of the Company,
or otherwise relating to this Agreement, as the Lender may reasonably request
from time to time and shall in any event furnish the Lender a copy of its
unaudited Financial Statements as of the end of each fiscal quarter and a
copy of its annual audited Financial Statements as soon as each is available.
6.2 Borrowing Base Reports. The Company shall furnish to the Lender a
current Borrowing Base Report (a) concurrently with the initial Credit
Request and (b) semimonthly thereafter as soon as available. Each such
Borrowing Base Report (i) shall be dated as of the 15th or the last day of
each month, whichever occurred more recently before the date it is furnished
to the Lender, (ii) dated as of the 15th of a month shall be furnished by the
20th of that month and (iii) dated as of the last day of a month shall be
furnished by the 10th of the next month, except that such deadlines shall
automatically be extended for Borrowing Base Reports dated as of the last day
of a fiscal (x) quarter by ten (10) days and (y) year by fifteen (15) days.
6.3 Taxes. The Company will promptly pay any and all taxes,
assessments and governmental charges on the Collateral before the date when
penalties are incurred or they become a Lien on any of the Collateral, except
only to the extent that the Company is contesting such taxes, assessments and
charges in good faith and by appropriate proceedings and has set aside
reserves adequate under GAAP.
6.4 Certificates of Sale. Promptly after the foreclosure sale for each
Mortgage Loan in Foreclosure--and in any event within the shortest time
required under applicable FHA, VA or private mortgage insurance requirements
or applicable state Law for doing so--the Company will (a) either (i) file or
record the related Certificate of Sale in the real estate records with the
appropriate county (or other) authorities or (ii) deliver the related
Certificate of Sale to FHA or VA and (b) comply with any and all other
statutory requirements applicable to the Company regarding that Certificate
of Sale.
6.5 Marking Collateral and Records. Promptly on the Lender's request,
the Company will mark or permit the Lender to mark in a reasonable manner,
the Company's books, records and accounts showing or dealing with the
Collateral with a notation clearly setting forth that the Lender has been
granted a security interest in the Collateral.
6.6 Assignment of Certificate of Sale and Further Acts. Upon demand
made by the Lender at any time after the occurrence of any Potential Default
or Default Event, whether or not it is caused or waived, the Company will
deliver to the Lender a duly executed assignment of each Certificate of Sale
for each Mortgage Loan in Foreclosure for which one is issued. The Lender
agrees not to file such certificate for recording in the real estate records
unless and until a Potential Default or Default Event occurs.
6.7 Other Papers. The Company shall deliver to the Lender (a) at
closing and no less frequently than every six (6) month anniversary of the
closing a System Copy of the claim documentation filed with FHA, VA or
private mortgage insurer (as applicable) with respect to each Eligible
Foreclosure Receivable, and (b) upon the Lender's requests made from time to
time (i) a certificate signed by a Company officer that, as of the
certificate's date, the Company either has possession of the applicable FHA
or private mortgage insurance certificate or VA guaranty covering the
Mortgage Loan in Foreclosure related to each Eligible Foreclosure Receivable,
or has complied with all requirements and conditions for obtaining it or its
proceeds, and (ii) such other papers as the Lender shall request with respect
to any Eligible Foreclosure Receivable or its related Mortgage Loan in
Foreclosure.
6.8 Further Assurances. The Company shall promptly, and in any event
within three (3) Business Days after the Lender's request, cure any defects
in the execution and delivery of the Working Capital Note, this Agreement and
the other Credit Papers and the Company shall, at its expense, promptly
execute and deliver to the Lender upon request all such other and further
documents, agreements and instruments in compliance with or accomplishment of
the covenants and agreements of the Company in this Agreement and in the
other Credit Papers or to further evidence and more fully describe the
Collateral intended as security for the Obligations or to collaterally assign
it, any related Certificate of Sale or such certificate's subject matter to
the Lender, or to correct any omissions in this Agreement or the other Credit
Papers, or more fully to state the security obligations set out in this
Agreement or in any of the other Credit Papers, or to perfect, protect or
preserve any Liens created (or intended to be created) or their priority,
pursuant hereto or to any of the other Credit Papers, or to make any
recordings, to file any notices, or obtain any consents.
6.9 Deliveries After a Default Event. Upon the Lender's request made
from time to time whenever a Default Event exists, the Company agrees to
endorse and deliver to the Lender any draft, check, note or other writing
that evidences a right to the payment or money and constitutes Collateral
(including proceeds of other Collateral.)
6.10 Reimbursement of Expenses. The Company agrees to pay (a) all
reasonable legal fees incurred by the Lender in connection with the
preparation, negotiation or execution of this Agreement, the Working Capital
Note and the other Credit Papers and in connection with each separate future
amendment, consent, waiver or approval executed in connection with this
Agreement, (b) all fees, charges or taxes for the recording or filing of the
Security Instruments, (c) all other reasonable out-of-pocket expenses of the
Lender in connection with the preparation, negotiation, execution or
administration of this Agreement, the Working Capital Note and the other
Credit Papers, including courier expenses incurred in connection with the
Collateral, and (d) all amounts expended, advanced or incurred by the Lender
to satisfy any obligation of the Company under this Agreement or any of the
other Credit Papers or to collect the Working Capital Note, or to enforce the
Lender's rights under this Agreement or any of the other Credit Papers, which
amounts shall include all court costs, attorneys fees (including costs and
attorneys' fees for trial, appeal or other proceedings), fees of auditors and
accountants and investigation expenses reasonably incurred by the Lender in
connection with any such matters, together with interest at the Stated Rate
from the date the expense, fee, charge or tax is paid by the Lender and at
the Past Due Rate on each item specified in clauses (a) through (d) of the
first sentence in this Section, from the date of written demand or request
for reimbursement until the date of reimbursement. In addition, the Company
agrees to pay any and all stamp and other taxes payable or determined to be
payable in connection with the execution and delivery of this Agreement, the
Working Capital Note and the other Credit Papers, and agrees to save the
Lender harmless from and against any and all liabilities with respect to or
resulting from any delay in paying or omission to pay such taxes.
6.11 Right of Inspection. The Company will permit any of the Lender's
officers, employees or agents, during regular business hours and upon one (1)
Business Day's prior notice, to visit and inspect any of its Property,
examine its books of record and accounts, take copies and extracts therefrom
and discuss its affairs, finances and accounts with its officers, accountants
and auditors, all as often as the Lender may desire.
6.12 Notice of Default. The Company agrees to furnish to the Lender
immediately upon becoming aware of the existence of any Default Event or
Potential Default, a written notice specifying its nature and the period of
its existence and the action that the Company is taking or proposes to take
with respect to it.
SECTION 7. NEGATIVE COVENANTS. The Company hereby agrees with the Lender to
keep, observe and perform the Company's negative covenants stated in the 7/93
RL&S Agreement to the same effect as if they were repeated herein verbatim
and regardless of whether or not the 7/93 RL&S Agreement expires or is
terminated before this Agreement, and to concurrently provide copies of all
written materials required to be provided to the agent or the lenders
thereunder to the Lender herein. Until the Commitment is terminated and the
Obligations are paid and performed in full, the Company shall comply with
those negative covenants and with the following, all of which shall be taken
and construed as cumulative of each other:
7.1 Use of Proceeds; Margin Stock. The Company may not use or permit
any Borrowing proceeds to be used for (i) the purpose of purchasing or
carrying any "margin stock" as defined in Regulation U, (ii) the purpose of
reducing or retiring any Debt that was originally incurred to purchase or
carry margin stock or (iii) any other purpose that might constitute this
transaction a "purpose credit" within the meaning of Regulation U. Neither
the Company nor any Person acting on behalf of the Company shall take any
action in violation of Regulation U or Regulation X or shall violate Section
7 of the Securities Exchange Act of 1934 or any rule or regulation under it,
in each case as now in effect or as it may hereinafter be in effect.
7.2 Collateral Matters. The Company may not:
(a) relocate its principal office, chief executive office or
principal place of business, or change its corporate name or the name under
which it is doing business, without first (i) giving the Lender thirty (30)
days' prior written notice of the proposed relocation or change and (ii)
executing and delivering all additional papers and performing all additional
acts as the Lender in its sole discretion, may request in order to continue
or maintain the existence and priority of the Liens intended to be created
under the Credit Papers in favor of the Lender;
(b) except in the ordinary course of business (provided that no
such action shall be taken in respect of any Eligible Note Receivable whether
or not it is within the ordinary course of business without the Lender's
prior written consent):
(1) compromise, extend, release or adjust payments on any
Collateral, accept a conveyance of security in full or partial satisfaction
of any Collateral or release any security for, or underlying any security
for, any Collateral; or
(2) agree to the amendment or termination of any Financed
Receivable in which the Lender has a Lien;
(c) transfer, sell, assign or deliver any Collateral pledged to
the Lender to any Person other than the Lender or the Lender's designated
custodian or financial intermediary, except that the Company may assign
Mortgage Loan in Foreclosures to VA, FHA or a private mortgage insurer (as
applicable) in connection with the payment of the related foreclosure
receivable claim; or
(d) grant, create, incur, assume, permit, or suffer to exist any
Lien upon any Collateral except for Liens granted to the Lender to secure the
Working Capital Note and the Obligations.
SECTION 8. DEFAULTS AND REMEDIES.
8.1 Nature of Event. As used in this Agreement, "Default Event" means
the occurrence of any one or more of the following:
(a) the Company fails to make any payment of principal of or
interest on the Working Capital Note or any of the Company's other
obligations under the Credit Papers on or before the Business Day when that
payment is due, or, in the case of accrued interest or any fee, expense or
other amount due, on or before three (3) Business Days after the date when
the Company received the Lender's bill for such interest is such third
Business Day is later than the due date of such accrued interest payment;
(b) any material statement, warranty or representation by or on
behalf of the Company contained in this Agreement, the Working Capital Note
or any other Credit Papers or any Credit Request, officer's certificate or
other writing (other than financial projections) made by the Company and
furnished in connection with this Agreement, proves to have been incorrect or
misleading in any material respect as of the date made or deemed made;
(c) the Company shall generally fail to pay its debts as they
become due or shall admit in writing its inability to pay its debts (other
than, in each case, non-recourse debt obligations), or shall make a general
assignment for the benefit of creditors;
(d) The Company shall (i) apply for or consent to the appointment
of a receiver, trustee, custodian, intervenor or liquidator of it or of all
or a substantial part of its assets, (ii) file a voluntary petition in
bankruptcy, (iii) file a petition or answer seeking reorganization or an
arrangement with creditors or to take advantage of any Debtor Laws, (iv) file
an answer admitting the material allegations of, or consent to, or default in
answering, a petition filed against it in any bankruptcy, reorganization or
insolvency proceeding or (v) take any action for the purpose of effecting any
of the foregoing;
(e) An involuntary petition or complaint shall be filed against
the Company seeking bankruptcy or reorganization of that Person or the
appointment of a receiver, custodian, trustee, intervenor or liquidator of
that Person or all or substantially all of its assets, and such petition or
complaint shall not have been dismissed, within sixty (60) days of the filing
thereof; or an order, order for relief, judgment or decree shall be entered
by any court of competent jurisdiction or other competent authority approving
a petition or complaint seeking reorganization of that Person or appointing
a
receiver, custodian, trustee, intervenor or liquidator of, that Person or of
all or substantially all of its assets;
(f) Any material provision of this Agreement, the Working Capital
Note or any other Credit Papers shall for any reason cease to be in full
force and effect, or be declared null and void or unenforceable in whole or
in part by any court or other Governmental Authority of competent
jurisdiction, or the validity or enforceability of any such paper shall be
challenged or denied by the Company;
(g) Any Event of Default or similar event, however denominated,
occurs under the 7/93 RL&S Agreement or any event shall occur that would have
been an Event of Default or similar event, however denominated, under the
7/93 RL&S Agreement but for that agreement's having expired or been
terminated;
(h) Any Event of Default or similar event, however denominated,
occurs under the 6/93 Servicing Purchase Loan Agreement or any event shall
occur that would have been an Event of Default or similar event, however
denominated, under the 6/93 Servicing Purchase Loan Agreement but for that
agreement's having expired or been terminated;
(i) Any Event of Default or similar event, however denominated,
occurs under the Investment Securities Facilities Agreement or any event
shall occur that would have been an Event of Default or similar event,
however denominated, under the Investment Securities Facilities Agreement but
for that agreement's having expired or been terminated; or
(j) any default shall occur in the punctual and complete
performance of any covenant of the Company contained in this Agreement or any
of the other Credit Papers (including covenants incorporated by reference)
which default is not referred to in any of the other subsections of this
Section, if such default is not cured on or before five (5) days (in the case
of a default--a "Monetary Default"--that is susceptible of being cured by
payment of a liquidated sum of money) or thirty (30) days (in the case of a
default--a "Nonmonetary Default"--that is not susceptible of being cured by
payment of a liquidated sum of money);
8.2 Remedies.
(a) Upon the occurrence of a Default Event described in any of
Sections 8.1(c), 8.1(d) or 8.1(e) above, the Lender's Commitment to lend
shall automatically be terminated and the outstanding Loan, the accrued and
unpaid interest on it and the other Obligations shall automatically become
due and payable, without presentment, demand, notice of default, notice of
acceleration or other requirement of any kind, all of which are expressly
waived by the Company.
(b) At any time after a Default Event--other than those described
in Sections 8.1(c), 8.1(d) or 8.1(e) above--occurs and before the time (if
ever) when the Lender shall have declared in writing that such Default Event
has been cured or waived, the Lender may terminate the Commitment to lend by
giving written notice to the Company of its election to do so. Upon the
Lender's termination, the outstanding Loan and the accrued and unpaid
interest on it shall automatically become due and payable, without
presentment, demand, notice of default, notice of acceleration, or other
requirement of any kind, all of which are expressly waived by the Company.
(c) at any time after the termination of the Lender's Commitment
to lend and acceleration of the Working Capital Note, Lender may do any one
or more of the following:
(1) reduce any claim to judgment;
(2) foreclose on or otherwise enforce any Liens on Collateral
pledged, mortgaged or hypothecated to the Lender;
(3) notify any or all obligors in respect of Collateral that
the Collateral has been assigned to the Lender and that all payments thereon
are to be made directly to the Lender or any other party as may be designated
by the Lender; settle, compromise or release, in whole or in part, any
amounts owing on the Collateral by any obligor under any of the Collateral,
on terms acceptable to the Lender; enforce payment and prosecute any action
or proceeding with respect to any and all Collateral and where any such
Collateral is in default, foreclose on and enforce Liens securing such
Collateral by any available judicial procedure or without judicial process
and sell property acquired as a result of any such foreclosure;
(4) perform, or contract with a third party to perform, all
of the Company's obligations, if any, required in connection with the
performance of any conditions to the collection of any Financed Receivable;
(5) exercise all rights and remedies of a secured creditor
under the UCC, including selling the Collateral at public or private sale,
including sale pursuant to any applicable Disposition Agreement. To the
extent that applicable law requires that the Company receive notice of or
prior to any such sale (or any other disposition of Collateral) the Company
agrees that ten (10) days' notice shall be commercially reasonable notice.
At any sale or other disposition, the Collateral may be sold or disposed of
as an entirety or in separate parts, as the Lender may determine. The Lender
may, without notice or publication, adjourn any public or private sale or
cause it to be adjourned from time to time by announcement at the time and
place fixed for the sale, and that sale may be made at any time or place to
which the same may be so adjourned. In case of any sale of all or any part
of the Collateral on credit or for future delivery, the Collateral so sold
may be retained by the Lender until the selling price is paid by its
purchaser, but the Lender shall not incur any liability in case of that
purchaser's failure to take up and pay for the Collateral so sold and, in
case of any such failure, that Collateral may again be sold upon like notice.
However, instead of exercising the power of sale herein conferred upon it,
the Lender may proceed by a suit or suits at law or in equity to collect, or
to have its designated custodian collect, all amounts due upon the Collateral
or to foreclose on and sell the Collateral or any portion of the Collateral
under a judgment or decree of a court or courts of competent jurisdiction, or
both; and
(6) exercise any other rights, remedies and privileges in
this Agreement or provided at law, in equity or otherwise that the Lender may
choose to exercise.
8.3 Right of Offset. Cumulative of all other rights of offset and
banker's lien existing by contract or Law, the Company hereby grants to the
Lender a right of offset, to secure the repayment of the Obligations, upon
any and all monies, securities or other Property of the Company, and the
proceeds from it now or hereafter held or received by or in transit to the
Lender or its designated custodian from or for the account of the Company,
whether for safekeeping, custody, pledge, transmission, collection or other-
wise, and also upon any and all deposits (general or special, time or demand,
provisional or final) and credits of the Company, and any and all claims of
the Company against the Lender at any time existing; provided that the right
of offset shall not apply to accounts with respect to which the Company or
any of its Affiliates is a bona fide trustee or a bona fide escrow agent for
a third party, excluding any person or entity that is an Affiliate of the
Company or has an interest in the Company or any of its Affiliates or in
which the Company or any of its Affiliates has an interest (although, for
purposes of this Section, neither Liberte Investors, a Massachusetts business
trust (formerly Lomas & Nettleton Mortgage Investors), nor Capstead Mortgage
Corporation, nor any other non-consolidated publicly-held corporation or
other entity managed by the Company or any of its Affiliates shall be deemed
to be an Affiliate of the Company. Neither this nor any other provision of
any of the Credit Papers shall imply any obligation of the Company to
maintain any deposit balances with the Lender, and any such obligation is
hereby disclaimed. Upon the occurrence of any Default Event, the Lender is
hereby authorized at any time and from time to time, without notice to the
Company, to offset, appropriate and apply any and all items referred to in
this Section (subject to the proviso in the first sentence of this Section)
against the Obligations.
8.4 Private Sales. Neither the Lender nor any custodian for the Lender
shall incur any liability as a result of the sale of the Collateral, or any
part of the Collateral, at any private sale made (a) after the occurrence of
any Default Event that the Lender has not declared in writing to have been
cured or waived and (b) in a commercially reasonable manner, even if such
sale causes or could cause the Company to breach a contractual obligation to
any other Person. The Company hereby waives any claims it may have against
the Lender or any custodian for the Lender arising because the price at which
the Collateral may have been sold at that private sale was less than the
price which might have been obtained at a public sale or was less than the
Obligations, or because such sale interfered with the Company's ability to
perform a contractual obligation to sell the same Property to another Person.
8.5 Waivers. The Company waives any right to require the Lender to (a)
proceed against the obligor to the Company on any of the Collateral or any
other Person, (b) proceed against or exhaust any of the Collateral or any of
its security or pursue its rights and remedies as against the Collateral in
any particular order or (c) pursue any other remedy in its power. Neither
the Lender nor any custodian for the Lender shall be required to take any
steps necessary to preserve any rights of the Company against any obligor on
or in respect to any Collateral or any other Person, or to preserve rights
against prior parties. The Company and each surety, endorser, pledgor and
other party ever liable or whose Property is ever liable for payment of any
of the Obligations, jointly and severally waive presentment and demand for
payment, protest, notice of intention to accelerate, notice of acceleration
and notice of protest and nonpayment, and agree that their or their
Property's liability with respect to the Obligations, or any part of them,
shall not be affected by any renewal or extension in the time of payment of
the Obligations, by any indulgence or by any release or change in any
security for the payment of the Obligations, and hereby consent to any and
all renewals, extensions, indulgences, releases, or changes, regardless of
the number of them.
8.6 Performance by Lender. Should any covenant, duty or agreement of
the Company fail to be performed in accordance with the terms of this
Agreement or of any document delivered under this Agreement, then the Lender
may, at its option, perform, or attempt to perform, such covenant, duty or
agreement on behalf of the Company and shall notify the Company that it has
done so. In such event, at the request of the Lender, the Company shall
promptly pay any amount expended by the Lender in such performance or
attempted performance to the Lender at its principal place of business in
Houston, Texas, together with interest on the unreimbursed balance of that
amount from time to time outstanding at the Ceiling Rate from the date of
such expenditure by the Lender until paid. Notwithstanding the foregoing, it
is expressly understood that the Lender does not assume and shall never have,
except by the Lender's specific written consent, any liability or
responsibility for the performance of any duties of the Company under this
Agreement, any Financed Receivable or other Collateral, any other paper
delivered under any of them or any of the Company's other debts, undertakings
or obligations.
8.7 No Responsibility. Except in the case of its own fraud, gross
negligence or willful misconduct, neither the Lender nor any custodian for
the Lender nor any of its officers, directors, employees or attorneys shall
assume, or be deemed to have assumed or to have promised to assume, any
obligation under or in respect of any Collateral, and none of them shall ever
have any liability or responsibility for any diminution in the value of any
or all of the Collateral.
8.8 No Waiver. The Lender's acceptance at any time and from time to
time of partial payment or performance by the Company of any of its
Obligations under this Agreement, the Working Capital Note or any of the
other Credit Papers shall not be deemed to be a waiver of any Default Event
then existing. No waiver by the Lender shall be deemed to be a waiver of any
other then existing or subsequent Default Event. No delay or omission by the
Lender in exercising any right under this Agreement or under any of the other
Credit Papers shall impair such right or be construed as a waiver of it or
any acquiescence in the Default Event or Potential Default, nor shall any
single or partial exercise of any such right preclude other or further
exercise of it, or the exercise of any other right under this Agreement or
otherwise.
8.9 Rights are Cumulative. All rights available to the Lender under
this Agreement, the Working Capital Note or any other Credit Papers are
cumulative of all other rights of the Lender granted or existing from time to
time under any other contract, at law or in equity, whether or not the
Working Capital Note or any of the other Obligations is then due and whether
or not the Lender shall have instituted any suit for collection, foreclosure
or other action in connection with this Agreement, the Working Capital Note
or any other Credit Papers.
8.10 Application of Payments and Proceeds.
(a) While a Default Event exists, all payments and all proceeds of
Collateral --whether voluntary, involuntary, through the exercise of any
right of set-off or other right, realization against any Collateral, or
otherwise--received by the Lender shall be applied in the following order:
(1) All costs and expenses incurred by the Lender under or in
connection with the Credit Papers, including those incurred in attempting to
collect the Loan or realize on Collateral.
(2) Accrued and unpaid fees owing to the Lender under the
Credit Papers.
(3) Accrued and unpaid interest on the Loan.
(4) The Loan.
(5) All other portions of the Obligations.
(6) Either (i) to the Company, its successors or assigns, or
(ii) as a court of competent jurisdiction may direct.
(b) If the proceeds of any sale or exercise of any rights are
insufficient to fully satisfy the Obligations, then the Company shall remain
liable for any deficiency.
8.11 Costs. All court costs, reasonable attorneys' fees, other costs of
collection and other sums spent by the Lender in the exercise of any right or
remedy (including any effort to collect or enforce the Working Capital Note
and any effort to enforce any Person's obligation on or in respect to any
Collateral) provided in this Agreement or the other Credit Papers shall be
payable to the Lender on demand, shall become part of the Obligations, and
shall bear interest at a rate per annum equal to the Stated Rate from the
date the cost, fee or sum was paid by the Lender until the date the Lender
demands that the Company reimburse the Lender and which shall bear interest
at a rate per annum equal to the lesser of (x) the Past Due Rate and (y) the
Ceiling Rate, from the date demanded by the Lender until the date repaid.
SECTION 9. Lender May Act Through Agents; Standard of Care, Release and
Indemnification.
9.1 Employment of Others by the Lender. The Lender may execute and
perform any of its duties under the Credit Papers, including any collateral
custodial, handling and delivery operations, by or through a custodian and/or
other agents (other than the Company or any of its Affiliates), employees or
attorneys and shall be entitled to rely (and shall be protected in relying)
upon opinions of counsel concerning all matters pertaining to its duties
under the Credit Papers. No custodian nor any of its directors, officers,
agents or employees shall be liable for any action taken or omitted to be
taken by it or them under or in connection with this Agreement, except for
its or their own gross negligence or willful misconduct, the parties
specifically intending to hereby release the Lenders' custodian, if any, from
liability for its own simple negligence.
SECTION 10. Standard of Care, Release of Liability and Indemnification.
Except in the case of its own fraud, gross negligence or willful misconduct,
neither the Lender, any custodian for the Lender or any other agent appointed
by the Lender, nor any of their officers, directors, employees, attorneys or
agents shall be liable for any action taken or omitted to be taken by it or
them under this Agreement or any of the other Credit Papers in good faith and
believed by it or them to be within the discretion or power conferred upon it
or them by the Credit Papers, or be responsible for consequences of any error
of judgment. Subject to the foregoing limitations, each of the Lender and
any custodian appointed by the Lender shall perform the duties imposed by
this Agreement with respect to the Collateral with the same amount of
diligence and using the same amount of judgment and discretion as if it (the
Lender or the Lender's custodian, as the case may be) were acting solely for
its own account. In connection therewith, the Lender, acting directly or
through any agent, is hereby authorized to (a) settle, compromise and release
claims against the makers of any Collateral and any other Person obligated
with respect to any Collateral, (b) foreclose on and enforce security
interests in any Collateral or Property securing it, (c) sell Collateral and
Property acquired as the result of foreclosure under Collateral Documents and
(d) do all other acts and things as the Lender is authorized by this
Agreement or applicable Law to do to protect its rights and interests and to
realize the benefits of the Collateral and the security intended to be
provided by it. Each of the Lender and any custodian for the Lender and its
officers, directors, employees, attorneys and agents shall be entitled to
rely shall incur no liability by relying and otherwise be fully protected in
relying upon (i) any writing, resolution, notice, consent, certificate,
affidavit, letter, cablegram, telegram, telex or teletype message, statement,
order or other documents or conversation believed by it or them to be genuine
and correct and to have been signed or made by the proper Person, or (ii)
advice of its legal counsel. The Company agrees to indemnify and defend the
Lender, any custodian or other agent appointed hereunder by the Lender, any
Person deemed to control the Lender, any Person deemed to control such
custodian or other appointed agent, and their respective directors, officers,
agents, attorneys and employees, from, and to hold each of them harmless
against, any and all losses, liabilities, claims, damages, deficiencies,
interest, judgments, costs or expenses (including reasonable attorneys' fees)
incurred by any of them, arising from or because of (a) any investigation,
litigation or other proceeding brought or threatened in connection with any
Credit Paper or the transactions contemplated by the Credit Papers, including
any use by the Company of the proceeds of Borrowings, (b) any impoundment,
attachment or retention of any Collateral or any failure of any obligor on
any Collateral to pay the entire amount due in respect of such Collateral, or
to pay timely, (c) any alleged violation of any federal or state law relating
to usury in connection with any Collateral, (d) any alleged violation of any
federal or state securities or Blue Sky law relating to any Collateral and
(3) any representation made by the Company under any Credit Paper; provided
that the release from liability and indemnification provisions of this
Section may not be construed to apply to any indemnitee's own gross
negligence, willful misconduct or fraud, although they are specifically
intended to apply to any indemnitee's own simple negligence. The Company
shall provide indemnification and defense under this Section upon written
request made by any indemnitee. The provisions of this Section and the
Section immediately preceding it are specifically intended to benefit the
Lender, any custodian and all of Lender's other agents, employees or
attorneys acting hereunder.
SECTION 11. MISCELLANEOUS.
11.1 Headings. The headings, captions and arrangements used in any of
the Credit Papers are, unless specified otherwise, for convenience only and
shall not be deemed to limit, amplify or modify the terms of the Credit
Papers nor affect their meaning.
11.2 Non-Business Days. Any payment or action that is due under any
Credit Paper on a day that is not a Business Day may be delayed until the
next-succeeding Business Day (although applicable interest, if any, shall
continue to accrue on any unpaid amount until payment is in fact made).
11.3 Communications. Unless otherwise stated, when a Credit Paper
requires or permits any consent, approval, notice, request, objection or
demand from one party to another, it must be written and is deemed given:
(a) for Credit Requests, only when actually received by the
Lender;
(b) otherwise, if by telecopy, when transmitted to the appropriate
telecopy number (but, without affecting the date deemed given, a telecopy
communication must be promptly confirmed by telephone as having been received
by its intended recipient);
(c) otherwise, if by mail, on the third (3rd) Business Day after
being enclosed in a properly addressed, stamped and sealed envelope and
deposited in the appropriate official U.S. Postal Service mail depository;
and
(d) otherwise, if by other means, when actually delivered;
provided, that any written notice that is actually received shall be treated
as given when received unless it is deemed given earlier by operation of a
preceding provision of this Section.
Until changed by notice, the address and the telephone and telecopy numbers
are stated for each of the Company and the Lender beside its name on the
signature pages below.
11.4 Form and Number of Documents. The form, substance and number of
counterparts of each writing to be furnished under this Agreement must be
satisfactory to the Lender and its legal counsel.
11.5 Exceptions to Covenants. No party to a Credit Paper may take or
fail to take any action that is permitted as an exception to any of the
covenants contained in any Credit Paper if that action or omission would
result in the breach of any other covenant contained in any Credit Paper.
11.6 Survival. All covenants, agreements, undertakings, representations
and warranties made in any of the Credit Papers (a) survive all closings
under the Credit Papers until the Commitment has been terminated and the
Obligations have been paid in full, and (b) except as otherwise indicated,
are not affected by any investigation made by any party.
11.7 Governing Law. The internal Laws of the State of Texas (excluding
its conflict of laws provisions) and the United States of America shall
govern the rights and duties of the parties to the Credit Papers and the
validity, construction, enforcement and interpretation of the Credit Papers.
11.8 Invalid Provisions. Any provision in any Credit Paper held to be
illegal, invalid or unenforceable is fully severable, the appropriate Credit
Paper shall be construed and enforced as if that provision had never been
included and the remaining provisions shall remain in full force and effect
and shall not be affected by the severed provision. The Lender, the Company
and each other party (if any) to the affected Credit Paper shall negotiate
the terms of a replacement provision as similar to the severed provision as
may be possible and be legal, valid and enforceable.
11.9 Amendments, Waivers, Etc. and Conflicts. An amendment of--or an
approval, consent or waiver by the Lender under--any Credit Paper must be in
writing and must be executed by the party sought to be charged with the
effect of such amendment, approval, consent or waiver. The Lender's rights
under the Credit Papers may not be waived by course of dealing or failure or
delay in the exercise of those rights. An approval, consent or waiver is
only effective for the specific instance and purpose for which it is given.
The Credit Papers may only be supplemented by papers delivered according to
their respective express terms. Any conflict or ambiguity between this
Agreement's provisions and any other Credit Paper's provisions must be
resolved in favor of this Agreement's provisions.
11.10 Multiple Counterparts. Any Credit Paper may be executed in a
number of identical counterparts, each of which shall be deemed an original
for all purposes and all of which constitute, collectively, one agreement;
but, in making proof of any Credit Paper, it shall not be necessary to
produce or account for more than one counterpart.
11.11 Successors and Assigns.
(a) This Agreement shall bind and benefit the Company, the Lender
and their respective successors and assigns, except that the Company may not,
directly or indirectly, assign, transfer or delegate (or attempt to do so)
any of its rights, duties or obligations under any Credit Papers without the
Lender's specific written consent;
(b) the Lender, its successors and assigns, may freely sell,
transfer or assign and resell, transfer or reassign, any of the Company's
debt under the Credit Papers, the Working Capital Note or any related
security and any Credit Papers to any Federal Reserve Bank or other Person,
and may also sell, transfer, resell and retransfer participation interests in
them and may disclose to any bona fide purchaser or prospective purchaser of
any such debt, note, related security or participation interest, financial
and other information concerning the Company and its corporate parent, Lomas
Financial Corporation; provided that no such sale, transfer, resale or
retransfer shall be made unless (i) all applicable laws, orders, rules and
regulations of competent governmental authority having jurisdiction are
complied with by both the Lender and its assignee, transferee or participant
(and the Company does not, by virtue of the Credit Papers, assume any duty
with respect to, or assure, any such compliance); (ii) in respect of the
Credit Papers, the Company shall not have any direct obligation or liability
to, or any obligations to negotiate or confer with, any such participant and
(iii) the Company shall be entitled to treat the Lender as the sole owner of
all of its rights under the Credit Papers without regard to notice or actual
knowledge of any such participation; provided further, that if the Lender
shall irrevocably assign all of its rights under the Credit Papers to any
purchaser, assignee, transferee or participant (the "Assignee"), then
effective on the tenth (10th) day after written notice of such assignment is
given to the Company, (1) the Assignee shall have all of the Lender's rights
hereunder, (2) the Company shall be obligated directly to the Assignee and
(3) the Lender shall no longer be deemed a party to the Credit Papers; and
(c) any purported assignment, transfer or sale in contravention of
the foregoing provisions is void from its inception and not effective.
11.12 Waiver of Jury Trial. The Company and the Lender each hereby
knowingly and voluntarily waives any and all rights it may have to a trial by
jury with respect to any litigation based on, or arising out of, under or in
connection with the Credit Papers. Each of them is hereby authorized to
submit, as conclusive evidence of such waiver of jury trial, this Agreement
to a court that has jurisdiction over the subject matter of such litigation
and the parties to this Agreement.
11.13 ENTIRE AGREEMENT. THIS AGREEMENT, THE WORKING CAPITAL NOTE
AND THE OTHER CREDIT PAPERS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES
HERETO AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO ORAL AGREEMENTS
BETWEEN THE PARTIES.
EXECUTED effective as of the date first above written.
1600 Viceroy LOMAS MORTGAGE USA, INC.
Dallas, Texas 75235
Attention: Mr. Paul Fletcher
Vice President and Assistant Treasurer
Telecopy No. (214) 879-5081 By: /s/PAUL D. FLETCHER
------------------------------
Telephone No. (214) 879-7018 Name: Paul D. Fletcher
--------------------------
Title: Senior Vice President
-------------------------
(the "Company")
712 Main Street TEXAS COMMERCE BANK
Houston, Texas 77002 NATIONAL ASSOCIATION
Attention: Manager, Corporate
Real Estate Finance Group
Telecopy No. (713) 216-2182 By: /s/CARLOTTA M. HUDLER
---------------------------------
Telephone No. (713) 216-5298 Name: Carlotta M. Hudler
------------------------------
Title: Vice President
-----------------------------
(the "Lender")
<PAGE>
SCHEDULE 4.1
CLOSING PAPERS
(All dated as of March 21, 1994, unless otherwise indicated)
LSZ 1. 3/94 SENIOR SECURED WORKING CAPITAL CREDIT AGREEMENT (the "3/94
Credit Agreement") between Lomas Mortgage USA, Inc. (the "Company")
and Texas Commerce Bank National Association (the "Lender"),
accompanied by:
Schedule 4.1 - List of Closing Papers
Schedule BB - Form of Borrowing Base Report
Exhibit A - Form of the Working Capital Note
Exhibit B - Credit Request
Exhibit C - List of Approved Private Mortgage Insurers
Exhibit D - Opinion of Company's General Counsel
LSZ 2. WORKING CAPITAL NOTE in the face principal amount of $25,000,000,
executed by the Company, payable to the order of the Lender, in the
form of Exhibit A to the Credit Agreement
LSZ 3. UCC FINANCING STATEMENT, executed by the Company, as debtor, in
favor of the Lender, as secured party, to give notice of the
Lender's security interest in the Collateral described in the
Credit Agreement, for filing in the Office of the Secretary of
State of the State of Texas
LG 4. SECRETARY'S CERTIFICATE for the Company executed by the Secretary
or any Assistant Secretary of the Company as to (a) the due
incumbency of its officers authorized to execute or attest to the
Credit Papers, (b) resolutions duly adopted by its directors
approving and authorizing the execution of the Credit Papers, (c)
any amendments to its corporate charter or articles of
incorporation since the certificate furnished for the 6/93
Servicing Purchase Agreement, (d) any amendments to its Bylaws
since the certificate furnished for the 6/93 Servicing Purchase
Agreement, to which will be attached:
Exhibit A - Resolutions
Exhibit B - Copies of amendments to Charter or articles of
incorporation
Exhibit C - Copies of amendments to Bylaws
LG 5. UCC SEARCH REPORTS showing that no financing statements are on
file in respect of any Collateral, as defined in the 3/94 Credit
Agreement, other than item 3 above.
LG 6. CERTIFICATES OF QUALIFICATION, GOOD STANDING, AND AUTHORITY for
the Company issued by the appropriate governmental officials for
the States of Connecticut and Texas
LG 7. OPINION of General Counsel for the Company, in the form of
Exhibit D to the Credit Agreement.
LSZ 8. Such other papers as the Lender may reasonably request.
<PAGE>
SCHEDULE BB
BORROWING BASE REPORT
<PAGE>
Lomas Mortgage USA
Schedule of Eligible Receivables
March 16, 1994
General Ledger Ineligible Eligible
Balance Receivables Receivables
-------------- --------------- --------------
Accrued interest $ 77,273.44 $ (77,273.44) $ 0.00
T&I Receivables 21,778,711.79 (17,222,570.24) 4,556,141.55
Foreclosure claims 5,920,940.90 0.00 5,920,940.90
Servicing 22,828,442.76 (712,010.09) 22,116,432.67
Master servicing 3,798,666.33 0.00 3,798,666.33
Production 484,425.00 0.00 484,425.00
Notes 9,324,785.13 0.00 9,324,785.13
-------------- --------------- --------------
$64,213,245.35 $(18,011,853.77) $46,201,391.58
============== =============== ==============
<PAGE>
Lomas Mortgage USA
Borrowing Base Summary
As of March 16, 1994
Receivable Eligible Borrowing Base
Category Receivable Advance Rate Borrowing Base
- ---------------------------------------------------------------------------
Servicing
Receivables $22,116,432.67 60% $13,269,859.60
T&I Receivables 4,556,141.55 60% 2,733,684.93
Foreclosure claims 5,920,940.90 90% 5,328,846.81
Notes Receivable 9,324,785.13 60% 5,594,871.08
Other Receivables:
Accrued Interest 0.00
Master Servicing 3,798,666.33
Production 484,425.00
Total Other --------------
Receivables 4,283,091.33 60% 2,569,854.80
--------------
Total Eligible Total Borrowing
Receivables $46,201,391.58 Base $29,497,117.22
============== ==============
<PAGE>
<TABLE>
Lomas Mortgage USA
Schedule of Receivables by Account
March 16, 1994
<CAPTION>
Account General Ledger Ineligible Eligible
Number Description Balance Receivables Receivables
------------ ------------------------------- -------------- --------------- --------------
<S> <C> <C> <C> <C>
1215-1500 Accr Int-Escrow Investments $ 0.00 $ 0.00 $ 0.00
1215-2000 Accr Int-FHLMC T Bill 77,273.44 (77,273.44) 0.00
1215-2500 Accr Int-Mortgage Loans 0.00 0.00 0.00
1215-3000 Accr Int-Swaps 0.00 0.00 0.00
1215-3500 Accr Int-S/T Investment 0.00 0.00 0.00
1215-4000 Accr Int-Other 0.00 0.00 0.00
-------------- --------------- --------------
Total Accrued Interest 77,273.44 (77,273.44) 0.00
1225-6000 Escrow (T&I) Advances 21,778,711.79 (17,222,570.24) 4,556,141.55
p/o 1225-6700 DLJ Quality Escrow Adv. 0.00 0.00 0.00
p/o 1225-6600 USAA Escrow Advances 0.00 0.00 0.00
-------------- --------------- --------------
Total T & I Receivable 21,778,711.79 (17,222,570.24) 4,556,141.55
1225-3200 Foreclosure Claims (777,959.38) 0.00 (777,959.38)
1225-3200 Foreclosure Claims-Leader 0.00 0.00 0.00
1225-3400 GNMA Custodial Account 6,698,900.28 0.00 6,698,900.28
p/o 1225-6100 Liq & Preserv advances 0.00 0.00 0.00
-------------- --------------- --------------
Total Foreclosure Claims 5,920,940.90 0.00 5,920,940.90
1225-1000 MLS cash clearing (8,978,188.34) 8,978,188.34 0.00
1225-1200 MLS cash settlement 10,824,050.54 (10,824,050.54) 0.00
1225-1500 LAD-ret cks-corp deposit 3,740.19 (3,740.19) 0.00
1225-1600 LAD-ret cks-lock boxes (198,991.03) 198,991.03 0.00
1225-1700 Bi-weekly prog return item 24,611.04 (24,611.04) 0.00
1225-2000 Tax trade 639,663.86 639,663.86
1225-2100 Tax unbilled 46,690.13 46,690.13
1225-2200 Tax clearing 13,458.10 (13,458.10) 0.00
1225-2300 FHA subsidy advance 7,921.97 7,921.97
1225-2400 Overpaid assistance 186,046.68 186,046.68
1225-2500 Insurance advances 61,805.48 61,805.48
1225-2700 LAD-servicing sales 983,993.43 983,993.43
1225-2800 LAD-miscellaneous 981,731.27 (981,731.27) 0.00
1225-3000 Mortgage claim advances 496,905.91 496,905.91
1225-3100 Foreclosure miscellaneous advance 92,306.93 (92,306.93) 0.00
1225-3300 FNMA specials 0.00 (1) 0.00
1225-3500 Carteret advances 54,843.22 (54,843.22) 0.00
1225-3600 Sales-claims sold REOs 1,286,870.00 (2) 1,286,870.00
1225-4000 LAD-servicing advances 169,907.05 169,907.05
1225-4100 National customer service advances 45,693.06 45,693.06
1225-4200 Commercial loan misc adv 13,986.03 (13,986.03) 0.00
1225-4300 Misapplied payment adv 39,635.01 39,635.01
1225-4350 Bank recon project - IAD (9,311,793.91) 9,311,793.91 0.00
1225-4400 Cash/payoffs 172,385.40 (172,385.40) 0.00
1225-4500 Custodial advances 121,271.68 121,271.68
1225-4600 Private investor advances 96,682.68 (96,682.68) 0.00
1225-4700 Housing authorities advances 315,217.23 (315,217.23) 0.00
1225-4800 GNMA advances 0.00 0.00 0.00
1225-4900 GNMA II advances 0.00 0.00 0.00
1225-5000 FNMA advances 18,294.38 (18,294.38) 0.00
1225-5100 OMBS advances 4,293,442.76 (4,293,442.76) 0.00
1225-5200 FHLMC advances 708,757.04 (708,757.04) 0.00
1225-5300 Soldiers relief act advances 220,637.03 (220,637.03) 0.00
1225-5400 GNMA pool to security adv diff 185,766.40 185,766.40
1225-6100 Liq & Preserv advances 15,332,471.73 15,332,471.73
p/o 1225-6100 Recorded in Foreclosure Claims 0.00 0.00
1225-6200 Short poff suspense advances 158,996.17 158,996.17
1225-6300 Unapplied suspense advances 98,002.62 98,002.62
1225-6400 Acq loans suspense pending 4,699.75 4,699.75
1225-6500 Other prod acct advances (3,375.45) (3,375.45)
1225-6600 Escrow deficits-USAA 137,130.80 137,130.80
p/o 1225-6600 Recorded in T&I Receivable 0.00 0.00 0.00
1225-6700 Escrow deficits-Quality 2,104,423.72 2,104,423.72
p/o 1225-6700 Recorded in T&I Receivable 0.00 0.00 0.00
1225-6800 Escrow deficits-LMP,LP 53,459.88 (53,459.88) 0.00
1225-6900 Escrow deficits-subserv collected (2,635,519.32) (2,635,519.32)
1225-7000 Escrow deficits-Subservicing 2,509,370.30 2,509,370.30
1225-7100 Escrow deficits-Associates 564.20 (564.20) 0.00
1225-8000 Mortgage plan insurance 287,867.34 (287,867.34) 0.00
1225-8100 Third party buydowns 46,055.45 46,055.45
1225-8200 Subservicing misc 91,756.24 91,756.24
1225-9000 Misc rec from LMP,LP 1,024,908.93 (1,024,908.93) 0.00
1225-9100 Misc rec from LMP 39.18 (39.18) 0.00
1225-9810 IAD-Servicing Receivable 250.00 0.00 250.00
-------------- --------------- --------------
Total Servicing Receivables 22,828,442.76 (712,010.09) 22,116,432.67
1230-1000 MSD-Admin Fee Accrual 0.00 0.00 0.00
1230-2000 MSD-Corporate Advances 3,798,666.33 0.00 3,798,666.33
-------------- --------------- --------------
Total Master Servicing Rec 3,798,666.33 0.00 3,798,666.33
1240-1000 Acquisitions/Prod Receivable 64,365.00 0.00 64,365.00
1240-2000 GNMA Pool Settlements 0.00 0.00 0.00
1240-3000 PERS Consumer Loan Advance 420,060.00 0.00 420,060.00
Total Production Receivable 484,425.00 0.00 484,425.00
1285-1000 N/R Landel Plaza 2,045,470.11 0.00 2,045,470.11
1285-1300 N/R Landel Plaza - Rent 6,979.80 0.00 6,979.80
1285-2000 N/R United Trust Fund 7,272,335.22 0.00 7,272,335.22
-------------- --------------- --------------
Total Notes Receivable 9,324,785.13 0.00 9,324,785.13
Total Receivables $64,213,245.35 $(18,011,853.77) $46,201,391.58
============== =============== ==============
<FN>
(1) Reverse $(2,520,017.37) for additional funds received from FNMA for March repurchases. Lomas will pay for repurchases of
FNMA special loans on March 18th.
(2) February accrual to be reversed when March accrual is posted.
</FN>
</TABLE>
<PAGE>
EXHIBIT A
(The "3/94 Working Capital Note")
$25,000,000 Houston, Texas March 21, 1994
ON OR BEFORE MARCH 20, 1995, FOR VALUE RECEIVED, LOMAS MORTGAGE USA,
INC. (the "Company"), a Connecticut corporation, promises to pay to the
order of TEXAS COMMERCE BANK NATIONAL ASSOCIATION ("Payee"), a national
banking association at 712 Main Street, Houston, Texas 77002 or at such
other place as the holder (the "Holder", whether or not Payee is such
holder) of this note may hereafter designate in writing, in immediately
available funds and in lawful money of the United States of America, the
principal sum of Twenty-five Million Dollars ($25,000,000) (or the unpaid
balance of all principal advanced against this note, if that amount is
less), together with interest on the unpaid principal balance of this note
from time to time outstanding until maturity at the Stated Rate, and
interest on all past due amounts, both principal and accrued interest, at
the Past Due Rate; provided that for the full term of this note the
interest rate produced by the aggregate of all sums paid or agreed to be
paid to Holder for the use, forbearance or detention of the debt evidenced
hereby shall not exceed the Ceiling Rate.
1. Definitions. In addition to the definitions given above, the
definitions given in the 3/94 Senior Secured Working Capital Credit
Agreement dated as of March 21, 1994, as it may from time to time in the
future may be supplemented, amended or restated (the "Credit Agreement")
between the Company and Payee, for capitalized terms that are used in this
note shall apply here as well as there, and the following term has this
meaning when used in this note:
"Prime Rate" means, on any day, the prime rate for that day as
announced by Payee and entered in the minutes of its Loan and Discount
Committee. The Prime Rate is a reference rate and does not necessarily
represent Payee's best or lowest rate or a favored rate, and Payee
disclaims any statement, representation or warranty to the contrary. In
case of any dispute as to what the Prime Rate was on any day, the
certificate of Payee's chief credit officer shall be conclusive.
"Stated Rate" means, for any day, a rate per annum equal to the Prime
Rate for that day; provided that if on any day, the Stated Rate shall
exceed the Ceiling Rate for that day, then the Stated Rate shall be fixed
at the Ceiling Rate on that day and on each day thereafter until the total
amount of interest accrued at the Stated Rate on the unpaid balance of this
note equals the total amount of interest that would have accrued if there
were no Ceiling Rate. However, neither the maturity of this note nor the
Company's privilege to prepay it shall be affected by this paragraph, and
if this note matures (or is prepaid) before such equality is achieved,
then, in addition to the unpaid principal and accrued interest then owing
pursuant to the other provisions of this note, the Company promises to pay
INITIALLED FOR
IDENTIFICATION:
---------------
Page 1 of 5<PAGE>
on demand to the order of Holder interest in an amount equal to the excess
(if any) of (a) the lesser of (i) the total interest that would have
accrued on this note if the Stated Rate had been defined as equal to the
Ceiling Rate from time to time in effect and (ii) the total interest which
would have accrued on this note if the Stated Rate were not so prohibited
from exceeding the Ceiling Rate, over (b) the total interest actually
accrued hereon to such maturity (or prepayment) date.
2. Rates Change Automatically and Without Notice. Without notice to
the Company or any other Person and to the full extent allowed by
applicable law from time to time in effect, the Stated Rate, the Past Due
Rate and the Ceiling Rate shall each automatically fluctuate upward and
downward as and in the amount by which the Prime Rate, the Past Due Rate
and the maximum nonusurious rate of interest permitted by applicable law,
respectively, fluctuate.
3. Excess Interest Will be Refunded or Credited. If, for any reason
whatever, the interest paid or received on this note during its full term
produces a rate which exceeds the Ceiling Rate, Holder shall refund to the
payor or, at Holder's option, credit against the principal of note such
portion of said interest as shall be necessary to cause the interest paid
on this note to produce a rate equal to the Ceiling Rate.
4. Interest Will be Spread. To the extent (if any) necessary to
avoid violation of applicable usury laws (or to minimize the extent of the
violation if complete avoidance is impossible for any reason, it being the
intent and purpose of the Company and all Holders to comply strictly with
all applicable usury and other laws), all sums paid or agreed to be paid to
Holder for the use, forbearance or detention of the indebtedness evidenced
hereby shall, to the extent permitted by applicable law, be amortized,
prorated, allocated and spread in equal parts throughout the full term of
this note, so that the interest rate is uniform throughout the full term of
this note.
5. Payment Schedule. Principal of this note and accrued interest on
it shall be due and payable as provided in the Credit Agreement; provided,
that on March 16, 1995, its final stated maturity date, all principal of
this note and all accrued interest then unpaid shall be finally due and
payable. All such scheduled payments shall be applied first to accrued
interest and the balance (if any) shall be applied to principal.
6. Prepayment. The Company may prepay this note in accordance with
and subject to the provisions of the Credit Agreement.
7. The Credit Agreement, this Note and its Security. This note is
the Working Capital Note as defined in the Credit Agreement, it is issued
pursuant to the Credit Agreement (to which reference is made for all
purposes) and may be referred to as the "3/94 Working Capital Note", and as
it may hereafter be renewed, extended, rearranged, increased, decreased,
modified or replaced may be referred to as the "Working Capital Note".
Holder is entitled to the benefits of and security provided for in the
Credit Agreement. Such security includes, among other security, the
INITIALLED FOR
IDENTIFICATION:
---------------
Page 2 of 5<PAGE>
security interests granted by Section 3 of the Credit Agreement (as such
Section may have been modified and/or renumbered under the Credit
Agreement.)
8. Revolving Credit. Upon and subject to the terms and conditions
of the Credit Agreement, the Company may borrow, repay and reborrow against
this note under the circumstances, in the manner and for the purposes
specified in the Credit Agreement, but for no other purposes. Advances
against this note by Payee or other Holder shall be governed by the terms
of the Credit Agreement. The unpaid principal balance of this note at any
time shall be the total of all principal lent or advanced against this note
less the sum of all principal payments and permitted prepayments made on
this note by or for the account of the Company. Absent manifest error,
Holder's computer records shall on any day conclusively evidence the unpaid
balance of this note and its advances and payments history posted up to
that day. All loans and advances and all payments and permitted
prepayments made hereon may be (but are not required to be) endorsed by or
on behalf of Holder on the schedule which is attached as Annex I hereto
(which is hereby made a part hereof for all purposes) or otherwise recorded
in Holder's computer or manual records; provided, that any failure to make
notation of (a) any principal advance or accrual of interest shall not
cancel, limit or otherwise affect the Company's obligations or any Holder's
rights with respect to that advance or accrual, or (b) any payment or
permitted prepayment of principal or interest shall not cancel, limit or
otherwise affect the Company's entitlement to credit for that payment as of
the date of its receipt by Holder.
9. Defaults and Remedies. Any Default Event under the Credit
Agreement or any other Credit Papers shall constitute a Default Event under
this note and all other Credit Papers and shall have the consequences
provided for in the Credit Agreement. Holder may waive any default without
waiving any other prior or subsequent default. Holder or the Lender may
remedy any default without Holder's waiving the default remedied. Holder's
or the Lender's failure to exercise any right, power or remedy upon any
default shall not be construed as a waiver of such default or as a waiver
of the right to exercise any such right, power or remedy at a later date.
No single or partial exercise by Holder or the Lender of any right, power
or remedy shall exhaust it or shall preclude any other or future exercise
of it, and every such right, power or remedy under this note, any of the
other Credit Papers or applicable Law may be exercised at any time and from
time to time. No modification or waiver of any provision of this note nor
consent to any departure by the Company from its terms shall be effective
unless it is in writing and signed by Holder (or, if authorized for that
purpose by the Credit Agreement, the Lender), and then such waiver or
consent shall be effective only in the specific instance given, for the
purposes for which given and to the extent therein specified.
EDG Legal Costs. If any Holder or the Lender retains an attorney in
connection with any such default or to collect, enforce or defend this note
or any papers intended to secure or guarantee it in any lawsuit or in any
probate, reorganization, bankruptcy or other proceeding, or if the Company
or anyone claiming by, through or under the Company sues any Holder in
INITIALLED FOR
IDENTIFICATION:
---------------
Page 3 of 5<PAGE>
connection with this note or any such papers and does not prevail, then the
Company agrees to pay to each such Holder and the Lender, respectively, in
addition to principal and interest, all reasonable costs and expenses
incurred by such Holder or the Lender in trying to collect this note or in
any such suit or proceeding, including reasonable attorneys' fees. An
amount equal to ten percent (10%) of the unpaid principal and accrued
interest owing on this note when and if this note is placed in the hands of
an attorney for collection after default is stipulated to be reasonable
attorneys' fees unless a Holder, the Lender or the Company timely pleads
otherwise to a court of competent jurisdiction.
11. Waivers. The Company and any and all co-makers, endorsers,
guarantors and sureties severally waive notice (including, but not limited
to, notice of intent to accelerate and notice of acceleration, notice of
protest and notice of dishonor), demand, presentment for payment, protest,
diligence in collecting and the filing of suit for the purpose of fixing
liability and consent that the time of payment hereof may be extended and
re-extended from time to time without notice to any of them. Each such
Person agrees that his, her or its liability on or with respect to this
note shall not be affected by any release of or change in any guaranty or
security at any time existing or by any failure to perfect or maintain
perfection of any lien against or security interest in any such security or
the partial or complete unenforceability of any guaranty or other surety
obligation, in each case in whole or in part, with or without notice and
before or after maturity.
12. Governing Law, Jurisdiction and Venue. This note shall be
governed by and construed in accordance with the laws of the State of Texas
(except its conflicts of law provisions) and the United States of America
from time to time in effect. The Company and all endorsers, guarantors and
sureties each hereby irrevocably submits to the nonexclusive jurisdiction
of the United States District Court for the Southern District of Texas and
the state district courts of Harris County, Texas, for purposes of all
legal proceedings arising out of or relating to this note, the debt
evidenced hereby or any loan agreement, security agreement, guaranty or
other papers or agreements relating to this note. To the fullest extent
permitted by law, the Company and all endorsers, guarantors and sureties
each irrevocably waives any objection which he, she or it may now or
hereafter have to the laying of venue for any such proceeding brought in
such a court and any claim that any such proceeding brought in such a court
has been brought in an inconvenient forum. Harris County, Texas shall be a
proper place of venue for suit on or in respect of this note. Nothing
INITIALLED FOR
IDENTIFICATION:
---------------
Page 4 of 5<PAGE>
herein shall affect the right of the Company or any Holder at any time to
initiate any suit in the United States District Court for the Southern
District of Texas, Houston Division, or to remove any pending suit to that
Court.
13. General Purpose of Loan. The Company warrants and represents to
Payee and all other Holders that all loans evidenced by this note are and
will be for business, commercial, investment or other similar purpose and
not primarily for personal, family, household or agricultural use, as such
terms are used in Chapter One of the Texas Credit Code.
LOMAS MORTGAGE USA, INC. (the "Company")
By:
-----------------------------------
Name:
--------------------------------
Title:
--------------------------------
Page 5 of 5<PAGE>
<TABLE>
ANNEX 1
to $25,000,000
Lomas Mortgage USA, Inc.
3/94 Working Capital Note
LOANS AND PAYMENTS OF PRINCIPAL AND INTEREST
<CAPTION>
_______________________________________________________________________________
| Payment | | | |
Date of | Applied on | Payment | | | Name of
Payment or | (or advance | Applied on | Principal | Interest | Person Making
Advance | vs.) Principal | Interest | Balance | Paid to | Notation
- -----------|----------------|------------|-----------|----------|---------------
<S> | <C> |<C> |<C> |<C> |<C>
| | | | |
- -----------|----------------|------------|-----------|----------|---------------
| | | | |
| | | | |
- -----------|----------------|------------|-----------|----------|---------------
| | | | |
| | | | |
- -----------|----------------|------------|-----------|----------|---------------
| | | | |
| | | | |
- -----------|----------------|------------|-----------|----------|---------------
| | | | |
| | | | |
- -----------|----------------|------------|-----------|----------|---------------
| | | | |
| | | | |
- -----------|----------------|------------|-----------|----------|---------------
| | | | |
| | | | |
- -----------|----------------|------------|-----------|----------|---------------
| | | | |
| | | | |
- -----------|----------------|------------|-----------|----------|---------------
/TABLE
<PAGE>
EXHIBIT B
CREDIT REQUEST
LENDER: Texas Commerce Bank National Association
COMPANY: Lomas Mortgage USA, Inc.
DATE: _____________________, 199____
- ---------------------------------------------------------------------------
This request is delivered under the 3/94 Senior Secured Working
Capital Credit Agreement (as supplemented, amended or restated from time to
time, the "Credit Agreement") dated as of March 21, 1994, between the
Company and the Lender. Unless they are otherwise defined in this request,
terms defined in the Credit Agreement have the same meanings here as there.
This request is for a $_______________________ Borrowing (the
"Requested Borrowing") to be funded on __________________, 199____ (the
"Requested Borrowing Date"). Please fund the Requested Borrowing in the
manner specified in Section 2.2(b) of the Credit Agreement.
This Borrowing is to finance the Company's existing Eligible Working
Capital Collateral. The attached current Borrowing Base Report
demonstrates that, after giving effect to the $________________ Advance
that is requested in this paragraph, the outstanding principal of the Loan
will not exceed the Working Capital Collateral Value of such existing
Collateral.
The undersigned Company officer hereby certifies that as of the
Requested Borrowing Date, after giving effect to the Requested Borrowing,
(a) the Loan will not exceed the lesser of (i) the Commitment or (ii) the
aggregate Working Capital Collateral Value of all Collateral in which the
Lender then has an enforceable, first and prior perfected security
interest, (b) the Company is entitled to receive the Requested Borrowing
under the Credit Agreement, (c) all other items that the Company is
required by the Credit Agreement to furnish to the Lender for this
Requested Borrowing and otherwise have been delivered, or will be delivered
before this Requested Borrowing is funded, in all respects as required by
the Credit Agreement and the other Credit Papers, (d) no Default Event has
occurred that the Lender has not declared in writing to have been cured or
waived, (e) no Potential Default has occurred that has not been cured
before it shall have become a Default Event and (f) the Company's
representations and warranties stated in the Credit Papers are true and
correct in all material respects except only to the extent that (1) a
representation or warranty speaks to a specific date or (2) the facts on
which a representation or warranty is based have changed by transactions or
conditions contemplated or expressly permitted by the Credit Papers.
<PAGE>
LOMAS MORTGAGE USA, INC.
By
---------------------------
(Name)
-----------------------
(1) (Title)
-----------------------
(1) Must be the President, Treasurer or Assistant Treasurer, a Vice
President or the Controller of the Company.
<PAGE>
EXHIBIT C
LIST OF APPROVED PRIVATE MORTGAGE INSURERS
(None)
<PAGE>
EXHIBIT D
BASIC FORM OF OPINION OF COMPANY'S GENERAL COUNSEL
March 21, 1994
Texas Commerce Bank
National Association, Agent
712 Main Street
Houston, Texas 77002
Re: 3/94 Senior Secured Working Capital Credit Agreement dated March
21, 1994 (the "3/94 Credit Agreement") between Lomas Mortgage
USA, Inc. (the "Company") and Texas Commerce Bank National
Association (the "Lender")
Ladies and Gentlemen:
I am general counsel for the Company, and have acted as such in
connection with the 3/94 Credit Agreement. This opinion is rendered to you
in compliance with Section 4.1 of the 3/94 Credit Agreement.
Unless otherwise defined in this opinion, or unless the context
requires a different meaning, each capitalized term that is defined in the
3/94 Credit Agreement (or is defined by reference in the 3/94 Credit
Agreement to another paper) and is used in this opinion has the same
meaning here as there.
In my capacity as general counsel, I have examined:
a. the Credit Papers;
b. the Company's articles or certificate of incorporation and
bylaws;
c. the records of the corporate proceedings and actions of the
Company's board of directors with respect to the Credit Papers and the
transactions that they contemplate;
d. a certificate of good standing of the Company from each of the
States of Connecticut and Texas; and
e. such other documents and matters as I have deemed necessary to
render the opinions set forth in this letter, subject the limitations,
assumptions and qualifications noted below.
I have been furnished with--and, with the consent of the Lender have relied
on--certificates of the Company's officers (copies of which certificates
have been provided to you) and other information supplied by them with
respect to certain factual matters. In addition, I have obtained and
relied upon such certificates and assurances from public officials as I
have deemed necessary. I have also assumed the authenticity of all
materials so examined and the genuineness of signatures on them. For
purposes of my opinions I have assumed the due authorization, execution,
delivery and performance of the 3/94 Credit Agreement by the Lender.
Based on the foregoing, and subject to the assumptions and
qualifications set forth later in this letter, it is my opinion that:
14. The Company (a) is a corporation duly organized, validly existing
and in good standing under the Laws of the State of Connecticut, (b) has
the full legal power and authority to own its Property and carry on its
business as currently conducted and (c) is duly qualified to transact
business as a foreign corporation and licensed to operate as a mortgage
company in each jurisdiction where the nature of the business it transacts
or Property it owns requires such qualification or licensing, except in
jurisdictions where the failure to be in good standing or be licensed (as
the case may be) would have no Material Adverse Effect.
15. The Company has the requisite corporate power and authority to
execute, deliver and comply with the terms of the 3/94 Credit Agreement,
the Working Capital Note and the other Credit Papers.
16. The Company's execution, delivery and performance of the 3/94
Credit Agreement, the Working Capital Note and the other Credit Papers (a)
have been duly authorized by all necessary corporate action on the part of
the Company, (b) do not conflict with the Company's articles or certificate
of incorporation or bylaws, (c) do not conflict with any Laws or Legal
Requirements, (d) do not conflict with any agreement or instrument
("Company Papers") to which the Company is a party or by which the Company
or any of its Property is bound or affected, (e) do not result in a breach
of any Company Papers, (f) do not constitute a default under any Company
Papers, (g) do not require any consent under any Company Papers, (h) do not
result in the creation of any Lien upon any of the Company's Property or
assets (except for the Liens created by the Credit Papers) and (i) do not
result in acceleration of any of the Company's debt under any of the
Company Papers or trigger any right of any such acceleration.
17. The 3/94 Credit Agreement and the Working Capital Note each
constitute legal, valid and binding obligations of the Company and grant
perfected Liens in the Collateral to the Lender enforceable in accordance
with their respective terms, except as limited by (i) bankruptcy,
insolvency or other such Laws in effect affecting the enforcement of
creditors' rights generally and (ii) the application of equitable
principles.
18. The Company is not an "investment company" or "controlled by" an
"investment company" within the meaning of the Investment Company Act of
1940, as amended.
<PAGE>
19. There are no claims, suits or proceedings pending, threatened or
reasonably anticipated against or affecting the Company or with respect to
any of the Credit Papers or any transactions contemplated in them which, if
adversely affected, could reasonably be expected to result in a Material
Adverse Effect.
[Qualifications agreed to by the issuer and the Lender and its legal
counsel may be put here.]
Very truly yours,
EXHIBIT 10.9
March 1, 1994
David L. Chapman II
Lomas Mortgage USA, Inc.
1600 Viceroy
Dallas, Texas 75235
Dear David:
As you are aware, Lomas Financial Corporation (the "Parent") established on
June 30, 1990, an Employee Protection Plan (the "Plan") for certain officers
and employees of the Lomas Financial Group of affiliated companies. You were
a participant in the Plan, which by its terms expired July 31, 1993, eighteen
months after the Company's final emergence from Chapter 11 proceedings on
January 31, 1992. However, I am pleased to report to you that Lomas Mortgage
USA, Inc. (the "Company") has decided to provide you on an individual basis
with protection comparable to that provided by the Plan through June 30,
2008.
Specifically, should you be involuntarily terminated (for any reason other
than for cause or by reason of a transfer to a position with another entity
within the Lomas Financial Group), you will receive in addition to all
otherwise accrued and vested benefits, a lump sum cash payment equal to 200%
of your then current annual base salary. The foregoing severance benefit
will also be paid in the event of your "constructive discharge," "mutually
agreed to early retirement" or voluntary termination of employment following
a "change-in-control."
"Constructive Discharge" is defined as termination of employment due to (a)
a reduction in your base salary of 10 percent or more in any calendar year or
an aggregate reduction in your base salary of 20 percent or more in any four
calendar years, (b) a material reduction in your job function, duties or
responsibilities, or (c) a required relocation of more than 100 miles from
your current location of employment. Provided, however, that if you elect to
continue to be employed after an event of "constructive discharge," you may
not receive benefits under this letter.
"Change-in-Control" is defined as a change in control, without your
concurrence, of a nature that would be required to be reported in response to
Item 1 or Item 2 of the Form 8-K Current Report promulgated pursuant to
Sections 13 and 15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"); provided that, without limitation, such a Change-in-Control
shall be deemed to have occurred if (y) any "person" (as such term is used in
Sections 13(d) and 14(d) of the Exchange Act) is or becomes a "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Parent representing twenty-five percent
(25%) or more of the combined voting power of the Parent's then outstanding
securities, and (z) individuals who, at the date of this letter, constituted
the Board of Directors of the Parent cease for any reason to constitute at
least a majority thereof, unless the election of each director who was not a
director at the date of this letter has, prior to such election, been
approved by directors who both represent at least two-thirds (2/3) of the
directors in office at the time of such approval and who were also directors
at the date of this letter.
"Mutually agreed to early retirement" is defined as early retirement under
any preexisting retirement plan of the Company agreed to by the Company. If
the Company and you mutually agree to an early retirement you will receive
payment as if involuntarily terminated and may, in the sole discretion of the
chief executive officer of the Company, be granted up to three additional
years of credited service for purposes of calculation of benefits under any
retirement plan in effect at the time of severance.
If, as a result of your involuntary termination prior to attaining age 55 or
in the event of your "constructive discharge," "mutually agreed to early
retirement" or voluntary termination of employment following a "change-in-
control" (as such phrases are defined above), you receive payment of the
severance benefit provided in this letter, you also will receive, upon
payment of any plan-required employee contributions, an enhanced retirement
benefit derived by crediting you with additional years of pay and service
through your fifty-fifth birthday for purposes of calculating benefits under
the Management Security Plan.
In addition, the Company will continue your coverage under the Company's
group medical plan on the same terms as provided for an active employee for
two years following any involuntary termination of your employment which
results in payment of the severance benefits described above.
Finally, you will forfeit the benefits described in this letter if you
voluntarily terminate your employment or if your employment is "terminated
for cause" by the Company.
"Terminated for cause" is defined as termination of employment due to any of
the following circumstances:
(1) gross incompetence, insubordination, excessive absences, negligence
or dishonesty in the performance of Company duties; or
(2) actions which cause the Company to lose any license or
certification necessary for the operation of the Company; or
(3) conviction of fraud, theft or embezzlement or conviction of any
felony.
The severance benefits provided in this letter are in recognition of your
past and anticipated future valuable contributions to the Company and are
governed entirely by the terms of this letter. This letter supersedes in its
entirety the Company's letter to you dated December 1, 1993 relating to the
subject matter covered by this letter.
<PAGE>
Sincerely,
/s/JESS HAY
Jess Hay
JH:LPG:msg
EXHIBIT 10.10
March 1, 1994
Gary Kell
Lomas Mortgage USA, Inc.
1820 Regal Row
Dallas, Texas 75235
Dear Gary:
As you are aware, Lomas Financial Corporation (the "Parent") established on
June 30, 1990, an Employee Protection Plan (the "Plan") for certain officers
and employees of the Lomas Financial Group of affiliated companies. You were
a participant in the Plan, which by its terms expired July 31, 1993, eighteen
months after the Company's final emergence from Chapter 11 proceedings on
January 31, 1992. However, I am pleased to report to you that Lomas Mortgage
USA, Inc. (the "Company") has decided to provide you on an individual basis
with protection comparable to that provided by the Plan through December 31,
2005.
Specifically, should you be involuntarily terminated (for any reason other
than for cause or by reason of a transfer to a position with another entity
within the Lomas Financial Group), you will receive in addition to all
otherwise accrued and vested benefits, a lump sum cash payment equal to 200%
of your then current annual base salary. The foregoing severance benefit
will also be paid in the event of your "constructive discharge", "mutually
agreed to early retirement" or voluntary termination of employment following
a "change-in-control."
"Constructive Discharge" is defined as termination of employment due to (a)
a reduction in your base salary of 10 percent or more in any calendar year or
an aggregate reduction in your base salary of 20 percent or more in any four
calendar years, (b) a material reduction in your job function, duties or
responsibilities, or (c) a required relocation of more than 100 miles from
your current location of employment. Provided, however, that if you elect to
continue to be employed after an event of "constructive discharge," you may
not receive benefits under this letter.
"Change-in-Control" is defined as a change in control, without your
concurrence, of a nature that would be required to be reported in response to
Item 1 or Item 2 of the Form 8-K Current Report promulgated pursuant to
Sections 13 and 15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"); provided that, without limitation, such a Change-in-Control
shall be deemed to have occurred if (y) any "person" (as such term is used in
Sections 13(d) and 14(d) of the Exchange Act) is or becomes a "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Parent representing twenty-five percent
(25%) or more of the combined voting power of the Parent's then outstanding
securities, and (z) individuals who, at the date of this letter, constituted
the Board of Directors of the Parent cease for any reason to constitute at
least a majority thereof, unless the election of each director who was not a
director at the date of this letter has, prior to such election, been
approved by directors who both represent at least two-thirds (2/3) of the
directors in office at the time of such approval and who were also directors
at the date of this letter.
"Mutually agreed to early retirement" is defined as early retirement under
any preexisting retirement plan of the Company agreed to by the Company. If
the Company and you mutually agree to an early retirement you will receive
payment as if involuntarily terminated and may, in the sole discretion of the
chief executive officer of the Company, be granted up to three additional
years of credited service for purposes of calculation of benefits under any
retirement plan in effect at the time of severance.
If, as a result of your involuntary termination prior to attaining age 55 or
in the event of your "constructive discharge," "mutually agreed to early
retirement" or voluntary termination of employment following a "change-in-
control" (as such phrases are defined above) you receive payment of the
severance benefit provided in this letter, you also will receive an enhanced
retirement benefit derived by crediting you with additional years of pay and
service through your fifty-fifth birthday for purposes of calculating
benefits under The Lomas Financial Group Pension Plan, and, upon payment of
any plan-required employee contributions, under the Management Security Plan.
As you know, a portion of your incentive compensation for the fiscal years
ended June 30, 1991, 1992 and 1993 has been deferred pursuant to letter
agreements between the Company and you dated August 22, 1991, July 1, 1992
and August 24, 1993 (collectively, the "Deferred Incentive Compensation
Agreements"). Pursuant to the Deferred Incentive Compensation Agreements,
you will be paid, subject to continued employment as described below, the
following amounts on the dates indicated:
Payment Date Amount
July 1, 1994 $ 138,770
July 1, 1995 131,205
July 1, 1996 123,640
July 1, 1997 82,075
July 1, 1998 42,400
If you die before payment in full under the Deferred Incentive Compensation
Agreements, all unpaid installments will be paid to your wife, if she
survives you, or to your estate if she does not survive you, at the time and
in the manner set forth above. If you are involuntarily terminated (for any
reason other than for cause or by reason of transfer to a position with
another entity within the Lomas Financial Group) or in the event of your
"constructive discharge," "mutually agreed to early retirement" or voluntary
termination of employment following a "change-in-control" (as such phrases
are defined above) the remaining unpaid installments under the Deferred
Incentive Compensation Agreements will be paid to you upon the effective date
of your termination. In addition, the Company will continue your coverage
under the Company's group medical plan on the same terms as provided for an
active employee for two years following any involuntary termination of your
employment which results in payment of the severance benefits described
above.
Finally, you will forfeit the benefits described in this letter and any
unpaid installments under the Deferred Incentive Compensation Agreements if
you voluntarily terminate your employment or if your employment is
"terminated for cause" by the Company.
"Terminated for cause" is defined as termination of employment due to any of
the following circumstances:
(1) gross incompetence, insubordination, excessive absences, negligence
or dishonesty in the performance of Company duties; or
(2) actions which cause the Company to lose any license or
certification necessary for the operation of the Company; or
(3) conviction of fraud, theft or embezzlement or conviction of any
felony.
The severance benefits provided in this letter and the deferred payments
under the Deferred Incentive Compensation Agreements are in recognition of
your past and anticipated future valuable contributions to the Company and
are governed by the terms of this letter and, to the extent consistent with
this letter, by the Deferred Incentive Compensation Agreements. This letter
supersedes in its entirety the Company's letter to you dated September 1,
1993 relating to the subject matter covered by this letter.
Sincerely,
/s/JESS HAY
Jess Hay
JH:LPG:msg
EXHIBIT 10.11
AMENDED AND RESTATED
SEVERANCE AGREEMENT
This Amended and Restated Severance Agreement (this "Agreement") is made
effective the 31st day of March, 1994, by and between Lomas Financial
Corporation ("Lomas") and Michael E. Patrick ("Employee").
W I T N E S S E T H
WHEREAS, Lomas Mortgage USA, Inc. ("Lomas Mortgage") and Employee
entered into an Employment Agreement (the "Employment Agreement") on the 14th
day of October 1991;
WHEREAS, pursuant to the Employment Agreement, Employee served as an
executive officer or director of Lomas, Lomas Mortgage and various other
direct and indirect subsidiaries of Lomas;
WHEREAS, Lomas and Employee provided for the termination of the
employer-employee relationship between Lomas and Employee pursuant to a
Severance Agreement (the "Severance Agreement") dated December 31, 1993 by
and between Lomas and Employee; and
WHEREAS, Lomas and Employee desire to enter into this Agreement to amend
and restate the Severance Agreement and provide, among other things, for the
payment to Employee of certain severance benefits upon termination of the
employer-employee relationship between Lomas and Employee.
NOW, THEREFORE, Lomas and Employee in consideration of the mutual
promises and agreements contained herein, and for other good and valuable
consideration the receipt and sufficiency of which are hereby acknowledged,
agree as follows:
1. Termination of Employment. Employee's employment (a) by Lomas,
Lomas Mortgage and all direct and indirect subsidiaries of Lomas,
other than Lomas Information Systems, Inc. ("LIS"), terminated
effective as of December 31, 1993, and (b) by LIS will be
terminated effective as of June 30, 1994 (the "Termination Date").
Effective the Termination Date, Employee will resign as a director
and executive officer of LIS. Effective December 31, 1993,
Employee resigned as a director of Lomas, Lomas Mortgage and all
other direct and indirect subsidiaries of Lomas (other than LIS).
Until the Termination Date, Employee will continue as a director
and President of LIS, at his current salary and Lomas shall provide
Employee with an office in Lomas' office space at 1750 Viceroy,
Dallas, Texas and secretarial and other administrative support
services.
2. Severance Benefit.
(a) Contemporaneous with the execution of the Severance
Agreement Lomas paid Employee $845,000 representing one-half of his
severance benefits pursuant to the Employment Agreement less all
applicable federal, state and local withholding taxes.
Contemporaneous with the execution of this Agreement, Lomas has
paid an additional $845,000 representing the remaining one-half of
severance benefits pursuant to the Employment Agreement less all
applicable federal, state and local withholding taxes.
(b) If, prior to the Termination Date (i) Lomas enters into a
definitive agreement with Prudential Insurance Co. or its
affiliates ("Prudential") to effect a Transaction, as hereinafter
defined, or (ii) (A) Lomas enters into an agreement in principle
with Prudential to effect a Transaction and (B) such agreement in
principle results, within the sixty (60) day period following the
Termination Date, in a definitive agreement with Prudential to
effect a Transaction, Lomas agrees to pay Employee an amount equal
to twenty-five (25) basis points of the aggregate consideration
received by Lomas as a result of such Transaction. In the context
of this paragraph, a "Transaction" shall mean a disposition of all
or a majority of the stock or assets of LIS, whether in the form of
a sale, spin-off, joint venture or other similar arrangement, in
one or a series of transactions.
(c)(i) Employee will be eligible to participate in Lomas'
group medical plan, group life plan, group long term disability
plan and group accidental death and dismemberment plan at the
employee premium rate for twelve (12) months subsequent to the
Termination Date; provided, however, that Employee's right to such
continued participation shall cease if Employee receives comparable
coverage as a result of future employment, (ii) Employee will not
receive any distribution from the Lomas Qualified Pension Plan and
(iii) Employee will receive a lump sum distribution of Employee's
vested benefit in the Lomas 401(k) Plan.
(d) As a result of the severance benefits provided above,
Employee acknowledges that he is not entitled to and will not
receive any accrued and unpaid benefits provided for under the
Lomas Short Term Incentive Compensation Plan or any other incentive
plan.
3. Release.
(a) As a material inducement to enter into this Agreement,
and in consideration of payment of (i) the severance benefits
described in Section 2 hereof and (ii) the employment benefits
described in Section 1 hereof, Employee (for himself, his heirs,
executors, administrators and assigns) hereby irrevocably and
unconditionally releases, acquits and forever discharges Lomas and
each of Lomas' owners, stockholders, predecessors, successors,
assigns, agents, directors, officers, employees, representatives,
attorneys, divisions, subsidiaries, affiliates, (and agents,
directors, officers, employees, representatives and attorneys of
such parent companies, divisions, subsidiaries and affiliates), and
all persons acting by, through, under or in concert with any of
them (collectively "Releasees"), or any of them, from any and all
charges, complaints, claims, liabilities, obligations, promises,
agreements, controversies, damages, actions, causes of action,
suits, rights, demands, costs, losses, debts and expenses
(including reasonable attorney's fees and costs actually incurred)
of any nature whatsoever relating to the employer-employee
relationship between Lomas or any of its affiliates and Employee,
whether pursuant to the Employment Agreement or otherwise, which
claims accrued or arose on or prior to the date of this Agreement,
or which claims accrue or arise on or prior to the Termination
Date, whether known or unknown, suspected or unsuspected,
including, but not limited to, rights under federal, state or local
laws prohibiting discrimination, claims growing out of any legal
restrictions on Lomas' right to terminate its employees ("Claim" or
"Claims"), which Employee now has, owns or holds, or claims to have
owned or held, or which Employee at any time heretofore had, owned
or held, or which Employee at any time hereinafter has , owns or
holds, or may claim to own or hold or previously to have owned or
held against each of any of the Releasees; provided, however, if
Employee is named as a codefendant with the Releasees, or any of
them, on account of a cause of action brought by a third party and
arising out of matters related to Employee's performance of his
duties and responsibilities as an employee of Lomas, Lomas will, at
Lomas' expense, defend Employee in such cause of action and
indemnify him from and against any liability arising out of such
cause of action.
(b) Employee expressly acknowledges and agrees that the
severance benefits described in Section 2 of this Agreement
constitute the only benefits to which Employee is entitled as a
result of Employee's severance, that neither Lomas nor any of the
Releasees shall have any further liability to Employee in
connection therewith and that, upon execution of this Agreement by
Employee, the Employment Agreement shall be null and void.
4. No Competition. Employee agrees that, for a period of eighteen
(18) months from and after the date hereof, Employee will not,
except pursuant to the terms of a written agreement between Lomas
and Employee, directly or indirectly, (a) seek to divert any
business opportunity to any competitors of Lomas or any of its
affiliates and away from Lomas or any of its affiliates, or
otherwise interfere with the business of Lomas or any of its
affiliates, or (b) entice or induce any customer of Lomas or any of
its affiliates to cancel or not renew, or otherwise interfere with,
the business relationship of such customers with Lomas or any of
its affiliates.
5. Solicitation of Employees. Employee agrees that, for a period of
eighteen (18) months from and after the date hereof, Employee will
not, directly or indirectly, employ or solicit for employment by
him or any entity for which he may be employed or any other entity
any employee of Lomas or any of its affiliates, without the prior
written consent of Lomas which consent shall not be unreasonably
withheld; provided, however, that Employee will not be prohibited
from making any general advertisement of a position which may be
suitable for any such employee or former employee, and making an
offer of employment and hiring any persons who may approach
Employee as a result of such advertisement.
6. Confidential Information.
(a) Employee shall not knowingly use for his own benefit or
disclose or reveal to any unauthorized person any information
concerning Lomas or any of its affiliates which is furnished to
Employee by or on behalf of Lomas or any of its affiliates whether
furnished before or after the date of this Agreement including,
without limitation, any trade secrets, customer lists, customer
needs, price and performance information, hardware, software,
business opportunities, marketing, promotional, pricing and
financing techniques, or other information relating to Lomas or any
of its affiliates or to any of their respective businesses, or
analyses or other documents prepared by Employee on the basis of
such information (collectively, the "Material"). The term
"Material" shall also include any processes, programs or other
products that Employee may have conceived, created, organized,
prepared or produced during his employment with Lomas or any of its
affiliates. Employee acknowledges that all such Material is the
property of Lomas or its affiliates irrespective of whether
Employee has in fact executed an assignment thereof to Lomas or its
affiliates. The term "Material" does not include information that
(i) is or becomes generally available to the trade or the public
other than as a result of a disclosure by Employee, (ii) is or
becomes available to Employee on a nonconfidential basis from a
source (other than Lomas or its affiliates, directors, officers,
employees or authorized representatives) that is not prohibited
from transmitting the information to Employee by a contractual or
legal obligation, or (iii) is personal, personnel or confidential
information concerning Employee including, but not limited to,
information furnished in his capacity as a mortgagor or customer of
Lomas or any of its affiliates.
(b) If Employee is requested or required (by legal process,
civil investigative demand or similar process) to disclose any
Material, Employee agrees to promptly notify Lomas so that Lomas
may seek, at Lomas's expense, an appropriate protective order or
waive compliance with this Agreement. If Employee is nonetheless
compelled to disclose information concerning Lomas or any of its
affiliates by any tribunal, Employee may disclose such information
as is required by the tribunal; provided, however, that Employee
shall use his best efforts to obtain, at Lomas's expense, an order
or other reasonable assurance that confidential treatment will be
accorded to such information.
(c) Employee shall promptly deliver to Lomas all Material
furnished by Lomas or its agents to Employee without retaining any
copy thereof. All other documents constituting Material will be
destroyed or, if not possible, held by Employee subject to this
Agreement.
7. Remedies. Employee acknowledges that the possible restrictions on
his activities that may result from his performance of the
obligations imposed by Sections 4, 5 and 6 of this Agreement are
required for the reasonable protection of Lomas and its affiliates,
and Employee acknowledges that such restrictions are fair and
reasonable for that purpose. Employee further acknowledges that
money damages alone may not be an adequate remedy for any breach or
violation of such obligations and that Lomas, in addition to all
other remedies at law or in equity to which it may be entitled,
shall be entitled, as a matter of right, to appropriate equitable
relief, including injunctive relief and specific performance of the
terms of this Agreement, with respect to any such breach or
violation, in any court of competent jurisdiction. If any of the
provisions of Sections 4, 5 and 6 are held to be in any respect an
unreasonable restriction on Employee's activities, then such
provisions shall be deemed to extend only to the maximum period of
time and range of activities as to which such provisions are
enforceable.
8. Severability of Provisions. Any provision of this Agreement which
is prohibited or unenforceable in any jurisdiction will, in such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions
hereof; any such prohibition will not invalidate or render
unenforceable such provisions in any other jurisdiction.
9. Notices. Any notices, requests, instructions or other documents to
be given hereunder to any party will be in writing delivered
personally or sent by mail, Return Receipt Requested, as follows:
To Lomas:
Office of the General Counsel
Lomas Financial Group
1600 Viceroy Drive
Dallas, Texas 75235
Attention: James L. Crowson
<PAGE>
To Employee:
Michael E. Patrick
4506 Kelsey Road
Dallas, Texas 75229
10. Entire Agreement. This Agreement contains the entire Agreement
between the parties hereto and supersedes all prior agreements and
understandings, including the Severance Agreement, with respect to
the subject matter hereof. Neither this Agreement nor any
provision hereof may be waived, modified, amended, discharged or
terminated, except by an instrument, in writing, authorized and
signed by the party to be charged, and then only to the extent set
forth in such instrument.
11. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Texas.
12. Assignment. Neither party to this Agreement may assign rights or
responsibilities to a third party under any circumstances.
13. Arbitration of Disputes. In the event a dispute should arise under
this Agreement, both parties agree to in good faith use all best
efforts to resolve the dispute in a reasonable manner. Any
disputes which cannot be settled amicably, arising out of or
relating to this Agreement, or the breach thereof, except
controversies involving less than One Thousand Dollars ($1,000),
shall be settled by binding arbitration in accordance with the
rules of the American Arbitration Association in Dallas, Texas, and
judgment upon the award rendered by the arbitrators may be entered
in any court having jurisdiction thereof.
IN WITNESS WHEREOF, Lomas and Employee have executed this Agreement,
each intending to be legally bound hereby.
LOMAS FINANCIAL CORPORATION
By: /s/JAMES L. CROWSON
--------------------------
James L. Crowson
Executive Vice President
Employee
/s/MICHAEL E. PATRICK
----------------------------
Michael E. Patrick
EXHIBIT 10.12
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
P. O. BOX 2558
HOUSTON, TEXAS 77252-8056
March 31, 1994
Lomas Mortgage USA, Inc.
1600 Viceroy Drive
Dallas, Texas 75235
Re: 3/94 (second) Amendment to 6/93 Servicing Purchase Loan Agreement (the
"3/94 Amendment to 6/93 Servicing Purchase Loan Agreement")
Ladies and Gentlemen:
The June 28, 1993 letter loan agreement (the "6/93 Servicing Purchase
Loan Agreement") between your Company and this Bank (all terms that are
defined in which and that are used herein without definition having the same
meaning here as there) that has been amended once previously by the letter
agreement (the "8/93 Amendment to 6/93 Servicing Purchase Loan Agreement")
between us dated August ___, 1993 is hereby further amended by mutual
agreement as follows:
Subsection (k) (titled "Maintain $215 Million Net Worth; No Business
Changes") of Section 3.1 (titled "Affirmative Covenants") of the 6/93
Servicing Purchase Agreement is amended in its entirety so that, from and
after the effective date of this 3/94 Amendment to 6/93 Servicing Purchase
Loan Agreement, it will read as follows:
(k) Maintain $200 Million Net Worth; No Business Changes.
Your Company will maintain a net worth, determined in accordance
with GAAP, of not less than Two Hundred Million Dollars
($200,000,000) and will make no material change in the nature or
character of its business.
Each of your Company and this Bank hereby acknowledges receipt of $10
and other good and valuable consideration for this amendment, and ratifies
and confirms (a) the 6/93 Servicing Purchase Loan Agreement, as amended by
the 8/93 Amendment to 6/93 Servicing Purchase Loan Agreement and as further
amended by this 3/94 Amendment to 6/93 Servicing Purchase Loan Agreement (the
"Amended 6/93 Servicing Purchase Loan Agreement"), and (b) the other Loan
Papers, remain in full force and effect. Your Company hereby republishes all
of its warranties and representations made in them, declares that they are
true on the date of this letter and reconfirms the debt to your Bank that is
presently evidenced by the 6/93 Servicing Purchase Note.
<PAGE>
Lomas Mortgage USA, Inc.
March 31, 1994
Page 2
Notice Pursuant to Tex. Bus. & Comm. Code Section 26.02. THE AMENDED
6/93 SERVICING PURCHASE LOAN AGREEMENT AND THE OTHER LOAN PAPERS TOGETHER
CONSTITUTE A WRITTEN LOAN AGREEMENT WHICH REPRESENTS 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.
Very truly yours,
TEXAS COMMERCE BANK
NATIONAL ASSOCIATION
By: /s/CARLOTTA M. HUDLER
-----------------------
Carlotta M. Hudler
Vice President
Accepted and agreed to:
LOMAS MORTGAGE USA, INC.
By: /s/PAUL D. FLETCHER
------------------------
Name: Paul D. Fletcher
-----------------------
Title: Vice President
----------------------
Date: March 31, 1994
-----------------------
EXHIBIT 10.13
3/31/94 AMENDMENT TO
3/94 SENIOR SECURED WORKING CAPITAL
CREDIT AGREEMENT
PREAMBLE
THIS 3/31/94 [first] AMENDMENT TO 3/94 SENIOR SECURED WORKING CAPITAL
CREDIT AGREEMENT (the "3/31/94 Amendment to WCC Agreement") dated as of March
31, 1994 amending the 3/94 Senior Secured Working Capital Credit Agreement
dated as of March 21, 1994 (the "3/94 Credit Agreement" and as it is hereby
and may from time to time hereafter be supplemented, amended or restated the
"Credit Agreement") between LOMAS MORTGAGE USA, INC. (the "Company"), a
Connecticut corporation and TEXAS COMMERCE BANK NATIONAL ASSOCIATION (the
"Lender"), a national banking association,
WITNESSETH:
RECITALS:
The Company has requested that the minimum Consolidated Net Worth
negative covenant of the 3/94 Credit Agreement be amended to reduce the
second element of the test for compliance specified in that covenant from
$215,000,000 to $200,000,000, and the Lender has agreed to do so.
The Sections of this 3/31/94 Amendment to WCC Agreement are numbered to
correspond to those in the 3/94 Credit Agreement and are therefore not in
sequential order. All capitalized terms used without definition in this
Agreement that are defined in the 3/94 Credit Agreement have the same
meanings here as there. All italicized capitalized terms used in the Credit
Agreement, including this amendment of it, are defined in the 7/93 RL&S
Agreement, and it is to be referred to for definitions of those terms.
AGREEMENTS:
For good and valuable consideration, the receipt and sufficiency of
which the Company and the Lender each acknowledge, they hereby agree as
follows:
The first sentence of Section 7 (titled "Negative Covenants") of the
3/94 Credit Agreement is amended in its entirety to henceforth read as
follows:
The Company hereby agrees with the Lender to keep, observe and
perform the Company's negative covenants stated in the 7/93 RL&S
Agreement to the same effect as if they were repeated herein
verbatim and regardless of whether or not the 7/93 RL&S Agreement
expires or is terminated before this Agreement, and to concurrently
provide copies of all written materials required to be provided to
the agent or the lenders thereunder to the Lender herein; provided
that Section 7.4 of the 7/93 RL&S Agreement shall be deemed for
purposes of this Agreement to read as follows from and after
March 31, 1994:
7.4 Consolidated Net Worth. Permit its
Consolidated Net Worth to be less than the greater of (i)
the amount required by FHA, FHLMC, FNMA, VA and GNMA at
any and all times for maintaining the Company's status as
an approved mortgagee, seller/servicer, or issuer, or
(ii) $200,000,000.
SECTION 11. MISCELLANEOUS.
11.13 ENTIRE AGREEMENT. THE 3/94 CREDIT AGREEMENT, AS AMENDED BY
THIS 3/31/94 AMENDMENT TO WCC AGREEMENT, THE WORKING CAPITAL NOTE AND THE
OTHER CREDIT PAPERS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES HERETO
AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO ORAL AGREEMENTS
BETWEEN THE PARTIES.
EXECUTED effective as of the date first above written.
1600 Viceroy LOMAS MORTGAGE USA, INC.
Dallas, Texas 75235
Attention: Mr. Paul Fletcher
Vice President and Assistant Treasurer
Telecopy No. (214) 879-5081 By: /s/ PAUL D. FLETCHER
Telephone No. (214) 879-7018 --------------------------
Name: Paul D. Fletcher
------------------------
Title: Vice President and
Assistant Treasurer
-----------------------
(the "Company")
712 Main Street TEXAS COMMERCE BANK
Houston, Texas 77002 NATIONAL ASSOCIATION
Attention: Manager, Corporate
Real Estate Finance Group
Telecopy No. (713) 216-2182 By: /s/CARLOTTA M. HUDLER
Telephone No. (713) 216-5298 --------------------------
Name: Carlotta M. Hudler
------------------------
Title: Vice President
-----------------------
(the "Lender")
EXHIBIT 11
LOMAS FINANCIAL CORPORATION AND SUBSIDIARIES
COMPUTATION OF EARNINGS (LOSS) PER SHARE
(in thousands, except per share amounts)
Quarter Ended Nine Months Ended
March 31 March 31
----------------- -------------------
1994 1993 1994 1993
-------- ------ --------- -------
Primary earnings (loss) per share:
Average common shares
outstanding 20,100 20,084 20,099 20,087
Common stock equivalents under
Nonemployee Directors Long
Term Incentive Plan 35 30 32 30
-------- ------ --------- -------
Total shares 20,135 20,114 20,131 20,117
======== ====== ========= =======
Income (loss) from continuing
operations $(10,669) $3,519 $(104,374) $11,055
Income (loss) from discontinued
operations (7,000) (16) (11,000) 167
-------- ------ --------- -------
Net income (loss) $(17,669) $3,503 $(115,374) $11,222
======== ====== ========= =======
Primary earnings (loss) per
share:
Income (loss) from continuing
operations $(.53) $.17 $(5.18) $.55
Income (loss) from discontinued
operations (.35) -- (.55) .01
----- ---- ------ ----
Net income (loss) $(.88) $.17 $(5.73) $.56
===== ==== ====== ====
<PAGE>
Fully diluted earnings (loss)
per share:
Average common shares outstanding 20,100 20,084 20,099 20,087
Common stock equivalents under
Nonemployee Directors Long Term
Incentive Plan 35 30 32 30
-------- ------ --------- -------
Total shares 20,135 20,114 20,131 20,117
======== ====== ========= =======
Income (loss) from continuing
operations $(10,669) $3,519 $(104,374) $11,055
Income (loss) from discontinued
operations (7,000) (16) (11,000) 167
-------- ------ --------- -------
Net income (loss) $(17,669) $3,503 $(115,374) $11,222
======== ====== ========= =======
Fully diluted earnings (loss)
per share:
Income (loss) from continuing
operations $(.53) $.17 $(5.18) $.55
Income (loss) from discontinued
operations (.35) -- (.55) .01
----- ---- ------ ----
Net income (loss) $(.88) $.17 $(5.73) $.56
===== ==== ====== ====
