UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/AMENDED
IXI QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
OR
I I 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 1-9742
HARBOURTON FINANCIAL SERVICES L.P.
(Exact name of registrant as specified in its charter)
DELAWARE 52-1573349
(State or other jurisdiction of incorporation or
organization) (I.R.S. Employer Identification No.)
2530 S. Parker Road, Suite 500, Aurora, CO
80014
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (303)
745-3661
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
Preferred Units New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
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
At October 14, 1996, registrant had 41,169,558 Preferred
Units outstanding.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security
Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits:
1) Credit agreement dated July 30, 1996 including
exhibits A-J.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
HARBOURTON FINANCIAL SERVICES, L.P.
By: Harbourton Mortgage Corporation, its
General Partner
Date: November 19, 1996 By: s/Jack W. Schakett
Jack W. Schakett
Chief Executive Officer
Date: November 19, 1996 By: s/Paul Szymanski
Paul Szymanski
Chief Financial Officer
Date: November 19, 1996 By: s/Brent F. Dupes
Brent F. Dupes
Executive Vice President
Date: November 19, 1996 By: s/Bill Reid
Bill Reid
Chief Accounting Officer
- 6 -
- 7 -
Draft - 7/29/96
CREDIT AGREEMENT
CREDIT AGREEMENT dated as of July 30, 1996 by and among
HARBOURTON MORTGAGE CO., L.P. (the "Borrower"), a Delaware
limited partnership, the financial institutions party hereto as
lenders from time to time (collectively, the "Lenders," and each
individually, a "Lender"), FIRST BANK NATIONAL ASSOCIATION, a
national banking association, as administrative agent for the
Lenders (together with its successor or successors in such
capacity from time to time, the "Administrative Agent"), THE BANK
OF NEW YORK, a New York corporation, RESIDENTIAL FUNDING
CORPORATION, a Delaware corporation, and BANK ONE, TEXAS,
NATIONAL ASSOCIATION, a national banking association, as
administrative co-agents (together with their respective
successors in such capacities from time to time, the
"Administrative Co-Agents"), and TEXAS COMMERCE BANK NATIONAL
ASSOCIATION, a national banking association, as collateral and
managing agent for the Lenders (together with its successor or
successors in such capacity, the "Collateral and Managing
Agent").
RECITAL
The Borrower has requested the Lenders to provide
certain credit facilities to the Borrower, and the Borrower and
the Lenders have requested that the Administrative Agent, the
Administrative Co-Agents and the Collateral and Managing Agent
act as administrative agent, administrative co-agents and
collateral and managing agent, respectively, for the Lenders with
respect to such credit facilities. The Lenders are willing to
provide such credit facilities, and the Administrative Agent, the
Administrative Co-Agents and the Collateral and Managing Agent
are willing to act in such capacities, all upon the terms and
conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and
of the mutual covenants and agreements hereinafter set forth, the
parties hereto do hereby agree as follows:
SECTION 1. DEFINITIONS AND ACCOUNTING TERMS.
1.01 Certain Defined Terms. As used herein, the terms
defined in the introductory paragraphs hereof shall have the
meanings given them therein and the following terms shall have
the following respective meanings (such terms to be equally
applicable to both the singular and plural forms of the terms
defined):
"Acknowledgement Agreement": with respect to FNMA,
FHLMC or GNMA, an acknowledgement agreement in a standard form
promulgated by such agency which is satisfactory to the
Administrative Agent; and with respect to any other Investor, an
acknowledgement agreement in form and substance satisfactory to
such Investor and the Administrative Agent.
"Affiliate": with respect to any Person, any other
Person directly or indirectly controlling, controlled by, or
under common control with, such Person, whether through the
ownership of voting securities, by contract or otherwise.
"Agents": collectively, the Administrative Agent, the
Administrative Co-Agents and the Collateral and Managing Agent.
"Agreement": this Credit Agreement, as amended,
supplemented, restated or otherwise modified and in effect from
time to time.
"Alternate Base Rate": a fluctuating rate per annum as
shall be in effect from time to time, which rate per annum shall
at all times be equal to the higher of (a) the Reference Rate and
(b) the sum of the Federal Funds Effective Rate plus one-half of
one percent (0.50%) per annum.
"Alternate Base Rate Borrowing": the portion of the
outstanding principal balance of a Servicing Note, Warehousing
Note, Working Capital Note or Discretionary Note that bears
interest as provided in Section 2.05(a)(ii).
"Applicable Margin": with respect to:
(a) an Alternate Base Rate Borrowing consisting of all
or a portion of the outstanding principal balance of a
Servicing Note, 1.00% per annum;
(b) an Alternate Base Rate Borrowing consisting of all
or a portion of the outstanding principal balance of a
Warehousing Note, 0% per annum;
(c) an Alternate Base Rate Borrowing consisting of all
or a portion of the outstanding principal balance of a
Working Capital Note, 0.50% per annum;
(d) an Alternate Base Rate Borrowing consisting of all
or a portion of the outstanding principal balance of a
Discretionary Note, 0% per annum;
(e) a Floating Eurodollar Rate Borrowing consisting of
all or a portion of the outstanding principal balance of a
Servicing Note, 2.25% per annum;
(f) a Floating Eurodollar Rate Borrowing consisting of
all or a portion of the outstanding principal balance of a
Warehousing Note, 1.00% per annum;
(g) a Floating Eurodollar Rate Borrowing consisting of
all or a portion of the outstanding principal balance of a
Working Capital Note, 1.625% per annum;
(h) a Floating Eurodollar Rate Borrowing consisting of
all or a portion of the aggregate principal balance of
Discretionary Tranche 1 Advances outstanding under a
Discretionary Note, 0.35% per annum;
(i) a Floating Eurodollar Rate Borrowing consisting of
all or a portion of the aggregate principal balance of
Discretionary Tranche 2 Advances outstanding under a
Discretionary Note, 0.65% per annum; and
(j) a Floating Eurodollar Rate Borrowing consisting of
all or a portion of the aggregate principal balance of
Discretionary Tranche 3 Advances outstanding under a
Discretionary Note, 0.75% per annum.
"Balance Calculation Period": each calendar month.
"Balances Deficiency": as such term is defined in
Section 2.05(a)(i).
"Balances Deficiency Fee": as such term is defined in
Section 2.05(a)(i).
"Balances Surplus": as such term is defined in Section
2.05(a)(i).
"Board": the Board of Governors of the Federal Reserve
System.
"Borrower": as defined in the opening paragraph of
this Agreement.
"Borrower's Adjusted Tangible Net Worth": at the time
of any determination, the sum of (a) Borrower's Tangible Net
Worth, plus (b) 90% of the aggregate fair market value of the
Servicing Portfolio (determined in the same manner as the
Qualified Servicing Portfolio Value is determined).
"Borrower's Intangible Assets": as of a date of
determination, the net book value of all assets of the Borrower
(to the extent reflected in the balance sheet of the Borrower)
which would be treated as intangibles under GAAP, including,
without limitation, such items as purchased Servicing Rights,
Originated Servicing Rights, capitalized excess servicing fees,
goodwill (whether representing the excess cost over book value of
assets acquired or otherwise), patents, trademarks, trade names,
franchises, copyrights, licenses, service marks, rights with
respect to the foregoing and deferred charges (including, without
limitation, unamortized debt discount and expense, organization
costs and research and development costs).
"Borrower's Net Worth": as of a date of determination,
the sum of the amounts shown on the books of the Borrower as the
aggregate equity of its partners.
"Borrower's Tangible Net Worth": as of the time of any
determination, the remainder of (a) Borrower's Net Worth, less
(b) Borrower's Intangible Assets.
"Borrowing": an Alternate Base Rate Borrowing, a Fixed
Rate Borrowing or a Floating Eurodollar Rate Borrowing.
"Borrowing Base Certificate": a certificate in the
form of Exhibit A.
"Business Day": any day of the year other than a
Saturday, Sunday or other day on which commercial banks in
Minneapolis, Minnesota or Houston, Texas are required or
authorized to close.
"Capital Lease": any lease of property, real or
personal, the obligations of the lessee in respect of which are
required in accordance with GAAP to be capitalized on the balance
sheet of the lessee.
"Capitalized Lease Obligations": as to any Person, the
obligations of such Person to pay rent or other amounts under a
lease of (or other agreement conveying the right to use) real or
personal property which obligations are required to be classified
and accounted for as a capital lease on a balance sheet of such
Person under GAAP (including Statement of Financial Accounting
Standards No. 13 of the Financial Accounting Standards Board)
and, for purposes of this Agreement, the amount of such
obligations shall be the capitalized amount thereof, determined
in accordance with GAAP (including such Statement No. 13).
"Cash Flow": as determined as of the last day of any
fiscal quarter of the Borrower for the period of two consecutive
fiscal quarters ending on such last day, the sum of
(a) net income, plus
(b) noncash expenses, to the extent deducted in
determining such net income, minus
(c) noncash income, to the extent included in
determining such net income, plus
(d) 90% of the capitalized amount (which shall not
exceed market value for current production as determined in
accordance with the most recent Satisfactory Appraisal) of
Originated Servicing Rights, plus
(e) interest expenses on the Servicing Notes,
in each case as determined for the Borrower for such period in
accordance with GAAP.
"Code": the Internal Revenue Code of 1986, together
with all amendments from time to time thereto.
"Collateral" the Servicing Collateral, the Warehousing
Collateral, the Working Capital Collateral and the Discretionary
Collateral.
"Collateral Account": account number 1-902-7206-3180
of the Borrower with the Administrative Agent, which shall be
under the sole dominion and control of the Administrative Agent
for the benefit of the Lenders.
"Committed Whole Loan": a whole Mortgage Loan that is
subject to Take-Out Commitment.
"Commitments": the Servicing Commitments, the
Warehousing Commitments and the Working Capital Commitments.
"Compliance Certificate": a certificate in the form of
Exhibit B.
"Confirmation": a confirmation in the form of
Exhibit C.
"Controlled Disbursement Bank": The First National
Bank of Maryland, its successors and assigns.
"Controlled Disbursement Service Agreement": the
Controlled Disbursement Service Agreement of even date herewith
between the Borrower, the Controlled Disbursement Bank and the
Administrative Agent, as the same may be amended, supplemented,
restated or otherwise modified in writing from time to time by
the parties thereto.
"Debt Service Coverage Ratio": as determined as of
the last day of any fiscal quarter of the Borrower, the ratio of
(a) Cash Flow for the period of two consecutive fiscal
quarters ending on such last day, to
(b) the sum of (i) interest expense on the Servicing
Notes plus (ii) the aggregate amount of Mandatory Servicing
Principal Payments required to be paid on the Servicing
Notes for the period of two consecutive fiscal quarters next
following such last day,
in each case as determined for the Borrower for the applicable
period in accordance with GAAP.
"Default": any event which with the lapse of time,
with notice to the Borrower or with both would constitute an
Event of Default.
"Designated Fixed Rate Borrowing": as such term is
defined in Section 2.05(d).
"Discretionary Advance": a Discretionary Tranche 1
Advance, a Discretionary Tranche 2 Advance or a Discretionary
Tranche 3 Advance.
"Discretionary Tranche 1 Advance": a loan made by a
Discretionary Lender to the Borrower pursuant to Section 2.04(a)
for the purpose of financing or refinancing the origination or
acquisition of a Gestation Security.
"Discretionary Tranche 2 Advance": a loan made by a
Discretionary Lender to the Borrower pursuant to Section 2.04(a)
for the purpose of financing or refinancing the origination or
acquisition of a Gestation Loan.
"Discretionary Tranche 3 Advance": a loan made by a
Discretionary Lender to the Borrower pursuant to Section 2.04(a)
for the purpose of financing or refinancing the origination or
acquisition of a Committed Whole Loan.
"Discretionary Advance Date": the day (which shall be
a Business Day) specified by the Borrower in a Confirmation as
the date on which it requests the Discretionary Lenders to make a
Discretionary Advance.
"Discretionary Borrowing Base": as of any date of
determination, an amount equal to 100% of the Discretionary
Collateral Value of the Discretionary Collateral as determined by
the Administrative Agent from its records.
"Discretionary Collateral": as such term is defined in
the Warehousing and Discretionary Security Agreement.
"Discretionary Collateral Value": on the date of any
determination with respect to the Discretionary Collateral, as
determined by the Collateral and Managing Agent in accordance
with Exhibit D.
"Discretionary Facility": the credit facility provided
for in Section 2.04.
"Discretionary Lenders": at any time, Lenders which
have outstanding Discretionary Advances under their Discretionary
Notes.
"Discretionary Lending Limit": as to any Discretionary
Lender, the amount set opposite the name of such Discretionary
Lender under the column entitled "Discretionary" on Exhibit E.
"Discretionary Note": as such term is defined in
Section 2.04(c).
"Discretionary Termination Date": the earlier of (a)
July 28, 1997 and (b) the date on which the Commitments are
terminated pursuant to Section 6.02.
"Effective Date" the date on which all of the
conditions precedent set forth in Section 5 have been satisfied
and/or waived in writing by the Lenders.
"ERISA": the Employee Retirement Income Security Act
of 1974, together with all amendments from time to time thereto.
"ERISA Affiliate": any trade or business (whether or
not incorporated) that is a member of a group that is treated as
a single employer under Section 414(b) or 414(c) of the Code of
which the Borrower is a member.
"Eurodollar Reserve Percentage": as of any day, that
percentage (expressed as a decimal) which is in effect on such
day, as prescribed by the Board for determining the maximum
reserve requirement (including any basic, supplemental or
emergency reserves) for a member bank of the Federal Reserve
System, with deposits comparable in amount to those held by the
Administrative Agent, in respect of "Eurocurrency liabilities" as
such term is defined in Regulation D. The rate of interest
applicable to any outstanding Floating Eurodollar Rate Borrowings
shall be adjusted automatically on and as of the effective date
of any change in the Eurodollar Reserve Percentage.
"Event of Default": as such term is defined in Section
6.01.
"Existing Servicing Credit Agreement": the Credit
Agreement (Servicing Credit Facility) dated as of July 31, 1995,
as amended, between the Borrower, Chemical Bank, as
Administrative Agent, First Bank as Co-Agent and the lenders
party thereto.
"Existing Warehouse Credit Agreement: the Credit
Agreement (Revolving Warehouse Credit Facility) dated as of July
31, 1995, as amended, between the Borrower, Chemical Bank, as
Agent, First Bank, as Co-Agent, and the lenders party thereto.
"Federal Funds Effective Rate": for any date of
determination, the weighted average of the quotations for such
date for overnight federal funds transactions received by First
Bank from three (3) federal funds brokers of recognized standing
selected by First Bank; provided, that in lieu of determining the
rate in the foregoing manner, the Administrative Agent may
substitute the per annum rate for such transactions displayed on
the Telerate screen, page 120, at 10:00 A.M. (Minneapolis time)
on such date or, if such date is not a Business Day, the most
recent Business Day.
"FHA": Federal Housing Administration and any
successor thereto.
"FHLMC": Federal Home Loan Mortgage Corporation and
any successor thereto.
"Fixed Rate Borrowing": the portion of the outstanding
principal balance of a Servicing Note, Warehousing Note or
Working Capital Note that bears interest as provided in
Section 2.05(a)(i).
"Floating Eurodollar Rate Borrowing": the portion of
the outstanding principal balance of a Servicing Note,
Warehousing Note, Working Capital Note or Discretionary Note that
bears interest as provided in Section 2.05(a)(iii).
"Floating Reserve-Adjusted Eurodollar Rate": on any
date of determination, the rate determined by dividing the
Floating Eurodollar Rate for such date by 1.00 minus the
Eurodollar Reserve Percentage. For purposes hereof, "Floating
Eurodollar Rate" shall mean, for any day, the offered rate for
deposits in United States Dollars for a period of one month which
appears on the Reuters Screen LIBO page on that day, or if not
published by Reuters, the one-month rate determined on that day
based on such other published service of general application as
shall be selected by the Administrative Agent for such purpose
with the Borrower's consent.
"FNMA": Federal National Mortgage Association and any
successor thereto.
"Foreclosure Advance": a loan made by a Working
Capital Lender pursuant to Section 2.03 for the purpose of
funding a Foreclosure Payment.
"Foreclosure Payment": a recoverable payment of
delinquent principal, interest, taxes, insurance or out of pocket
expenses on a Mortgage Loan which is in the process of
foreclosure, liquidation, or FHA or VA claim payment and which
payment the Borrower is obligated to fund under a Servicing
Contract or under applicable FHA or VA requirements and the
payment of which creates a Foreclosure Payment Receivable.
"Foreclosure Payment Receivable": as such term is
defined in the Servicing and Working Capital Security Agreement.
"GAAP": generally accepted accounting principles in
the United States set forth in the opinions and pronouncements of
the Accounting Principles Board of the American Institute of
Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a
significant segment of the accounting profession, which are
applicable to the circumstances as of the date of determination.
"General Partner": Harbourton Funding Corporation, a
Delaware corporation, the general partner of the Borrower.
"Gestation Loans": Mortgage Loans pledged to the
Collateral and Managing Agent, for the benefit of the Lenders,
pursuant to the Warehousing and Discretionary Security Agreement
that have been delivered to a pool custodian acceptable to the
Collateral and Managing Agent and the Administrative Agent for
inclusion in a pool of Mortgage Loans to back Gestation
Securities and with respect to which the pool custodian has
issued its initial certification, provided that the Borrower has
a Take-Out Commitment covering such Gestation Securities, a copy
of which has been delivered to the Collateral and Managing Agent,
that is reasonably satisfactory in all respects to the Collateral
and Managing Agent.
"Gestation Security": a Mortgage-backed Security that
is an interest in a pool of Gestation Loans or is secured by such
an interest and is guaranteed by GNMA or is issued or guaranteed
by FNMA or FHLMC.
"GNMA": Government National Mortgage Association and
any successor thereto.
"Guarantee": any obligation, contingent or otherwise,
of any Person guaranteeing or having the economic effect of
guaranteeing any Indebtedness of any other Person (the "primary
obligor") in any manner, whether directly or otherwise, (i) to
purchase or pay (or advance or supply funds for the purchase or
payment of) such Indebtedness or to purchase (or to advance or
supply funds for the purchase of) any direct or indirect security
therefor, (ii) to purchase property, securities, or services for
the purpose of assuring the owner of such Indebtedness of the
payment of such Indebtedness, (iii) to maintain working capital,
equity capital, or other financial statement condition of the
primary obligor so as to enable the primary obligor to pay such
Indebtedness or otherwise to protect the owner thereof against
loss in respect thereof, or (iv) entered into for the purpose of
assuring in any manner the owner of such Indebtedness of the
payment of such Indebtedness or to protect such owner against
loss in respect thereof; provided, that the term "Guarantee"
shall not include endorsements for collection or deposit, in each
case in the ordinary course of business.
"Guarantors": The General Partner, Harbourton
Financial and Western Sunrise, provided, however, that if Western
Sunrise becomes merged or consolidated with, or its equity
interest is otherwise transferred to, Harbourton Financial, the
term "Guarantors" shall thereafter mean and refer to Harbourton
Financial.
"Guaranty and Pledge Agreement": with respect to a
Guarantor, the Guaranty and Pledge Agreement of even date
herewith from such Guarantor in favor of the Administrative Agent
for the benefit of the Lenders and the Agents, as the same may be
amended, supplemented, restated or otherwise modified in writing
from time to time by the parties thereto.
"Harbourton Financial": Harbourton Financial Services
L.P., a Delaware limited partnership, its successors and assigns.
"Harbourton Financial's Adjusted Tangible Net Worth":
at the time of any determination, the sum of (a) Harbourton
Financial's Tangible Net Worth plus (b) 90% of the aggregate fair
market value of all servicing rights owned by Harbourton
Financial or any of its Subsidiaries.
"Harbourton Financial's Intangible Assets": as of a
date of determination, the net book value of all assets of
Harbourton Financial (to the extent reflected in the consolidated
balance sheet of Harbourton Financial) which would be treated as
intangibles under GAAP, including, without limitation, such items
as purchased servicing rights, originated servicing rights,
capitalized excess servicing fees, goodwill (whether representing
the excess cost over book value of assets acquired or otherwise),
patents, trademarks, trade names, franchises, copyrights,
licenses, service marks, rights with respect to the foregoing and
deferred charges (including, without limitation, unamortized debt
discount and expense, organization costs and research and
development costs).
"Harbourton Financial's Net Worth": as of a date of
determination, the sum of the amounts shown on the books of the
Harbourton Financial as the aggregate equity of its partners.
"Harbourton Financial's Tangible Net Worth": as of the
time of any determination, the remainder of (a) Harbourton
Financial's Net Worth, less (b) Harbourton Financial's Intangible
Assets.
"Hedging Contract": shall mean a contract to buy or
sell an instrument on the futures market, cash forward market,
private investor whole loan market or the options market or an
option or financial future purchased over the counter for future
delivery of such instrument, including without limitation,
treasury strips, mortgage loan derivatives, swaps, futures, caps,
collars and options, each of the foregoing issued in accordance
with the requirements of a Hedging Program.
"Hedging Program": shall mean a program for hedging
interest rate risks of the Borrower, which program shall provide,
without limitation, that all Hedging Contracts will be placed
with futures commission merchants, clearing houses, or private
investor whole loan purchasers, if applicable.
"HTP Financial": shall mean HTP Financial, L.P., a
Delaware limited partnership.
"HUD": the U.S. Department of Housing and Urban
Development and any successor thereto.
"Immediately Available Funds": funds with good value
on the day and in the city in which payment is received.
"Indebtedness": with respect to any Person at any
time, without duplication, all obligations of such Person which,
in accordance with GAAP, consistently applied, should be
classified as liabilities on an unconsolidated balance sheet of
such Person, but in any event shall include: (a) all obligations
of such Person for borrowed money, (b) all obligations of such
Person evidenced by bonds, debentures, notes or other similar
instruments, (c) all obligations of such Person upon which
interest charges are customarily paid or accrued, (d) all
obligations of such Person under conditional sale or other title
retention agreements relating to property purchased by such
Person, (e) all obligations of such Person issued or assumed as
the deferred purchase price of property or services, (f) all
obligations of others secured by any Lien on property owned or
acquired by such Person, whether or not the obligations secured
thereby have been assumed, (g) all Capitalized Lease Obligations
of such Person, (h) all obligations of such Person in respect of
interest rate protection agreements entered into in connection
with obligations of the Borrower described in clauses (a), (b),
(c), (d), (e), (f), (g), (i), (j) or (k) of this definition, (i)
all obligations of such Person, actual or contingent, in respect
of letters of credit or banker's acceptances, (j) all obligations
of any partnership or joint venture as to which such Person is or
may become personally liable, and (k) all Guarantees by such
Person of Indebtedness of others.
"Inventory/Pipeline Report": an inventory/pipeline
position report prepared as of the last day of each week showing
with respect to each Take-Out Commitment: the type, Investor
type, expiration date, price, interest rate and/or required
yield, the original amount or aggregate thereof and the portions
thereof that have been utilized and the portions thereof that
remain available, future contracts, hedged positions, repurchase
agreements and profit and loss, indicating the number of Mortgage
Loans owned by the Borrower, the aggregate principal balance
thereof and the warehouse and pipeline balances (for purposes of
this definition, "inventory" means Mortgage Loans owned by the
Borrower which have been fully funded or with respect to which
the Borrower has paid the full purchase price and "pipeline"
means the Mortgage Loans (or applications for Mortgages) as to
which the Borrower has made either firm or floating price quotes
to purchase or fund but which have not been purchased or funded
by the Borrower.
"Investment": as applied to any Person, any direct or
indirect purchase or other acquisition by that Person of, or a
beneficial interest in, stock or other securities of any other
Person, or any direct or indirect loan, advance (other than
advances to employees for moving and travel expenses, drawing
accounts and similar expenditures in the ordinary course of
business) or capital contribution by that Person to any other
Person, including all Indebtedness and accounts receivable from
that other Person which are not current assets or did not arise
from sales to that other Person in the ordinary course of
business.
"Investment Loan": a Mortgage Loan owned by the
Borrower and held by the Borrower for investment purposes.
"Investment Loan Advance": a loan made by a Working
Capital Lender pursuant to Section 2.03 for the purpose of
financing or refinancing the origination or acquisition of an
Investment Loan.
"Investor": any of the Persons listed on Exhibit F and
any other bank, trust company, savings and loan association,
pension fund, governmental authority, insurance company or other
responsible and substantial institutional investor, dealer or
securities broker designated by the Borrower and approved by the
Administrative Agent and the Collateral and Managing Agent.
"Leverage Ratio": at the time of any determination,
the ratio of (a) an amount equal to the remainder of (i) Total
Liabilities, less Permitted Subdebt, less Indebtedness under the
Discretionary Notes to (b) the sum of (i) Borrower's Adjusted
Tangible Net Worth plus (ii) 50% of the excess, if any, of
Harbourton Financial's Adjusted Tangible Net Worth over
Borrower's Adjusted Tangible Net Worth.
"Lien'': any security interest, mortgage, pledge,
lien, charge, encumbrance, title retention agreement or analogous
instrument, in, of, or on any of the assets or properties, now
owned or hereafter acquired, of any Person, whether arising by
agreement or operation of law.
"Loan Documents": this Agreement, the Notes, the
Warehousing and Discretionary Security Agreement, the Servicing
and Working Capital Security Agreement, the Guaranty and Pledge
Agreements, the Controlled Disbursement Service Agreement, any
Acknowledgement Agreements, any Powers of Attorney and any
separate written agreement entered into between the Borrower and
any Agent or any Lender pursuant to Section 2.05(a)(i), Section
2.05(d) and/or Section 2.06 and all other agreements,
instruments, certificates and other documents at any time
executed and delivered pursuant to or in connection herewith or
therewith, as the same may be supplemented, amended or otherwise
modified from time to time after the Signing Date.
"Mandatory Servicing Principal Payment": on each
Servicing Amortization Date other than the final Servicing
Amortization Date, an aggregate amount equal to 5% of the
aggregate principal amount outstanding under the Servicing Notes
on the initial Servicing Amortization Date, and on the final
(i.e., the twentieth) Servicing Amortization Date, the aggregate
unpaid principal balance outstanding under the Servicing Notes.
"Mandatory Servicing Principal Prepayment": on any
date and after giving effect to the payment of any Mandatory
Servicing Principal Payment due and payable on such date, the
amount by which (a) the aggregate unpaid principal balance
outstanding under the Servicing Notes on such date exceeds (b)
the Qualified Servicing Portfolio Value on such date.
"Material Adverse Event": any event of whatsoever
nature (including, without limitation, any adverse determination
in any litigation, arbitration or governmental investigation or
proceeding) which materially adversely affects the present or
reasonably foreseeable prospective financial condition or
operations of the Borrower or materially impairs the ability of
the Borrower to perform its obligations under the Loan Documents.
"Mortgage": a mortgage, deed of trust or similar
security instrument on real property which has been improved by a
completed single family (i.e., one to four family units) dwelling
unit (i.e., a detached house, townhouse or condominium).
"Mortgage Banker's Financial Reporting Form": Form
Number 1002-1055 of the FNMA Seller's Guide.
"Mortgage Loan": a loan or advance evidenced by a
Mortgage Note and secured by the related Mortgage.
"Mortgage Note": a promissory note which has a term
not exceeding 30 years evidencing a loan or advance which is
secured by a Mortgage.
"Mortgage-backed Security": a security (including,
without limitation, a participation certificate) that is an
interest in a pool of Mortgage Loans or is secured by such an
interest and is guaranteed by GNMA or is issued or guaranteed by
FNMA or FHLMC.
"Notes'': the Servicing Notes, the Warehousing Notes,
the Working Capital Notes and the Discretionary Notes.
"Obligations": all obligations, liabilities and
Indebtedness of the Borrower to the Administrative Agent and to
the Lenders now or hereafter existing under any Loan Document,
whether for principal, premium, interest, fees (including,
without limitation, commitment fees, facility fees, fees payable
to any of the Agents and Balances Deficiency Fees) and other
amounts payable to an Agent or a Lender under any separate
written agreement entered into between the Borrower and any Agent
or any Lender pursuant to Section 2.05(a)(i) or Section 2.05(d),
expenses (including, without limitation, the fees, service
charges and expenses of legal counsel to the Agents and to the
Lenders, subject to the limitations set forth in Section 8.03),
costs (including, without limitation, any increased costs or
other compensation payable under Section 2.09 or Section 2.10),
reimbursement, indemnification or otherwise.
"Originated Servicing Rights": Servicing Rights with
respect to Mortgage Loans originated by the Borrower and
capitalized in accordance with FASB 122 (Accounting for Mortgage
Servicing Rights).
"PBGC": the Pension Benefit Guaranty Corporation
created by Section 4002(a) of ERISA or any governmental body
succeeding to the functions thereof.
"Permitted Subdebt": Indebtedness of the Borrower held
by Harbourton Financial or Harbourton Holdings, L.P. subordinated
to the Obligations in the manner and to the extent reasonably
required by the Required Lenders pursuant to written
subordination agreements satisfactory in form and substance to
the Required Lenders (which subordination agreement shall
provide, among other things, that such subordinated Indebtedness
shall be short-term, unsecured, on market terms and at market
rates, used for working capital purposes, and that after the
occurrence of a Default or Event of Default, no payments of
interest or principal shall be payable with respect thereto,
which Indebtedness shall not at any time exceed an aggregate
principal amount of $15,000,000.
"Person": any natural person, corporation, limited
liability company, partnership, joint venture, firm, association,
trust, unincorporated organization, government or governmental
agency or political subdivision or any other entity, whether
acting in an individual, fiduciary or other capacity.
"P&I Advance": a loan made by a Working Capital Lender
pursuant to Section 2.03 for the purpose of funding a P&I
Payment.
"P&I Payment": a recoverable payment of delinquent
principal or interest on a Mortgage Loan which is delinquent and
which the Borrower is obligated to fund under the terms of a
Servicing Contract and the payment of which creates a P&I Payment
Receivable.
"P&I Payment Receivable": as such term is defined in
the Servicing and Working Capital Security Agreement.
"Plan": each "employee pension benefit plan", as such
term is defined in Section 3 of ERISA, that is subject to the
provisions of Title IV of ERISA and that is maintained on the
Signing Date or at any time after the Signing Date for the
employees of the Borrower or any ERISA Affiliate.
"Prohibited Transaction": the respective meanings
assigned to such term in Section 4975 of the Code and Section 406
of ERISA.
"Pro Rata Share": with respect to each Lender, in each
case expressed as a percentage:
(a) as such term pertains to a Servicing Lender's
obligation to make Servicing Advances under Section 2.01,
the fraction which its Servicing Commitment Amount is to the
total of all the Servicing Commitment Amounts;
(b) as such term pertains to a Warehousing Lender's
obligation to make Warehousing Advances under Section 2.02,
the fraction which its Warehousing Commitment Amount is to
the total of all the Warehousing Commitment Amounts;
(c) as such term pertains to a Working Capital
Lender's obligation to make Working Capital Advances under
Section 2.03, the fraction which its Working Capital
Commitment Amount is to the total of all the Working Capital
Commitment Amounts;
(d) as such term pertains to a Servicing Lender's
right to receive any payment or prepayment of the principal
of its Servicing Note or any payment from the proceeds of
Collateral, the fraction which the unpaid principal amount
outstanding under its Servicing Note is to the total of the
unpaid principal amounts outstanding under all Servicing
Notes;
(e) as such term pertains to a Warehousing Lender's
right to receive any payment or prepayment of the principal
of its Warehousing Note and any payment from the proceeds of
Collateral, the fraction which the unpaid principal amount
outstanding under its Warehousing Note is to the total of
the unpaid principal amounts outstanding under all
Warehousing Notes;
(f) as such term pertains to a Working Capital
Lender's right to receive any payment or prepayment of the
principal of its Working Capital Note and any payment from
the proceeds of Collateral, the fraction which the unpaid
principal amount outstanding under its Working Capital Note
is to the total of the unpaid principal amounts outstanding
under all Working Capital Notes;
(g) as such term pertains to a Discretionary Lender's
right to receive any payment or prepayment of the principal
of its Discretionary Note and any payment from the proceeds
of Collateral, the fraction which the unpaid principal
amount outstanding under its Discretionary Note is to the
total of the unpaid principal amounts outstanding under all
Discretionary Notes; and
(h) as such term pertains to a Lender's obligations
under Section 7.09, and for all other purposes with respect
to such Lender, the fraction which the total of the unpaid
principal amounts outstanding under such Lender's Notes is
to the total of the unpaid principal amounts outstanding
under all the Notes of all the Lenders or, if no principal
amounts are outstanding under any of the Notes of any of the
Lenders, then the fraction which the sum of such Lender's
Servicing Loan Commitment Amount, Warehousing Commitment
Amount and Working Capital Commitment Amount is to the sum
of all Servicing Loan Commitment Amounts, Warehousing
Commitment Amounts and Working Capital Commitment Amounts of
all the Lenders.
"PWRES": shall mean Paine Webber Real Estate
Securities Inc., a Delaware corporation.
"PWRES Financing Agreements": shall mean (i) the
mortgage loan repurchase agreement between PWRES and the
Borrower, (ii) the mortgage loan purchase agreement between PWRES
and the Borrower, and (iii) the servicing advance credit
agreement between PWRES and the Borrower.
"Qualified Servicing Portfolio": at any time, that
portion of the Servicing Portfolio with respect to which the
Administrative Agent, for the benefit of the Lenders, has a
perfected, first-priority security interest (subject only to the
rights of the Investors therein) and as to which the requirements
of Section 4.18 have been met, excluding subservicing.
"Qualified Servicing Portfolio Valuation Date": any
date as of which a Satisfactory Appraisal is prepared in
accordance with Section 4.01(e).
"Qualified Servicing Portfolio Value": as of any date
of determination thereof, an amount equal to 65% of the fair
market value of the Qualified Servicing Portfolio as determined
by a Satisfactory Appraisal as of the most recent Qualified
Servicing Portfolio Valuation Date.
"Reference Rate": at the time of any determination
thereof, the rate per annum which is most recently publicly
announced by First Bank as its "reference rate," which may be a
rate at, above or below which First Bank lends to other Persons.
"Regulation D": Regulation D (or any substitute
regulations) of the Board (or any successor thereto), together
with all amendments from time to time thereto.
"Regulatory Change": any change after the Effective
Date in United States federal, state or foreign laws or
regulations or the adoption or making after such date of any
interpretations, directives or requests applying to a class of
banks including the Lenders under any United States federal,
state or foreign laws or regulations (whether or not having the
force of law) by any court or governmental or monetary authority
charged with the interpretation or administration thereof.
"Reportable Event": as such term is defined in Section
3.09.
"Required Discretionary Lenders": at any time of
determination, Discretionary Lenders whose Discretionary Notes
have unpaid principal balances outstanding aggregating at least
66.67% of the total of the unpaid principal balances outstanding
under the Discretionary Notes of all Discretionary Lenders.
"Required Lenders": at any time of determination,
Lenders which have
(a) Servicing Commitment Amounts, or, if the Servicing
Conversion Date has occurred or the Servicing Commitments
have terminated, Servicing Notes having unpaid principal
balances outstanding,
(b) Warehousing Commitment Amounts, or, if the
Warehousing Commitments have terminated, Warehousing Notes
having unpaid principal balances outstanding,
(c) Working Capital Commitment Amounts, or, if the
Working Capital Commitments have terminated, Working Capital
Notes having unpaid principal balances outstanding, and/or
(e) Discretionary Notes having unpaid principal
balances outstanding,
aggregating at least 66.67% of the total of
(i) the Servicing Loan Commitment Amounts, or,
if the Servicing Conversion Date has occurred or the
Servicing Loan Commitments have terminated, the
outstanding unpaid principal balances of the Servicing
Notes,
(ii) the Warehousing Commitment Amounts, or, if
the Warehousing Commitments have terminated, the
outstanding unpaid principal balances of the
Warehousing Notes,
(iii) the Working Capital Commitment Amounts, or,
if the Working Capital Commitments have terminated, the
outstanding unpaid principal balances of the Working
Capital Notes, and
(v) the outstanding unpaid principal
balances of the Discretionary Notes,
of all Lenders.
"Required Servicing Lenders": at any time of
determination, Servicing Lenders which have Servicing Commitment
Amounts aggregating at least 66.67% of the total of the Servicing
Commitment Amounts of all Servicing Lenders or, if the Servicing
Conversion Date has occurred or the Servicing Commitments have
terminated, Servicing Lenders whose Servicing Notes have
outstanding principal balances aggregating at least 66.67% of the
total of the outstanding principal balances of the Servicing
Notes of all Servicing Lenders.
"Required Warehousing Lenders": at any time of
determination, Warehousing Lenders which have Warehousing
Commitment Amounts aggregating at least 66.67% of the total of
the Warehousing Commitment Amounts of all Warehousing Lenders or,
if the Warehousing Commitments have terminated, Warehousing
Lenders whose Warehousing Notes have outstanding principal
balances aggregating at least 66.67% of the total of the
outstanding principal balances of the Warehousing Notes of all
Warehousing Lenders.
"Required Working Capital Lenders": at any time of
determination, Working Capital Lenders which have Working Capital
Commitment Amounts aggregating at least 66.67% of the total of
the Working Capital Commitment Amounts of all Working Capital
Lenders or, if the Working Capital Commitments have terminated,
Working Capital Lenders whose Working Capital Notes have
outstanding principal balances aggregating at least 66.67% of the
total of the outstanding principal balances of the Working
Capital Notes of all Working Capital Lenders.
"Reserve-Adjusted Balances": for any Balance
Calculation Period, with respect to any Lender, an amount
obtained by multiplying (a) the average net daily collected
noninterest bearing balances of the Borrower on deposit with such
Lender during such Balance Calculation Period over and above any
balances required to compensate such Lender for services provided
by such Lender for said Balance Calculation Period and
assessments payable with respect to such balances by such Lender
to the Federal Deposit Insurance Corporation (or any successor
thereto) for such Corporation's insuring of deposits in dollars
made at such Lender for such Balance Calculation Period by (b) a
percentage equal to 100% minus the average daily Reserve
Percentage in effect for said Balance Calculation Period. For
purposes of the foregoing, with respect to the balances
maintained by the Borrower with any Lender, "Reserve Percentage"
shall mean, on any date of determination, the full reserve
requirement percentage as imposed for such day by Regulation D
that such Lender determines will be applicable to such balances
(including, without limitation, any marginal, emergency,
supplemental, special or other reserves if such Lender, in its
sole discretion, determines that it is required to maintain at
such time).
"Restricted Payments": with respect to the Borrower,
collectively, all dividends or other distributions of any nature
(cash, securities (other than common stock of the Borrower),
assets or otherwise), and all payments, by virtue of redemption
or otherwise, on any class of equity securities (including,
without limitation, warrants, options or rights therefor) issued
by the Borrower, whether such securities are now or may hereafter
be authorized or outstanding and any distribution in respect of
any of the foregoing, whether directly or indirectly.
"Satisfactory Appraisal": an appraisal in form
satisfactory to the Administrative Agent from Bayview Financial,
Inc. or another independent third-party appraiser satisfactory to
the Administrative Agent, showing the fair market value of the
Qualified Servicing Portfolio and the methodology used by such
appraiser in arriving at such fair market value, which
methodology shall be consistent with the methodology used in
prior Satisfactory Appraisals.
"Servicing Advance": as such term is defined in
Section 2.01(a).
"Servicing Advance Date": the day (which shall be a
Business Day) specified by the Borrower in a Confirmation as the
date on which it requests the Servicing Lenders to make Servicing
Advances.
"Servicing Amortization Date": the last day of the
third, sixth, ninth and twelfth months following the month in
which the Servicing Conversion Date occurs and each anniversary
of such first four Servicing Amortization Dates thereafter
occurring to and including the nineteenth such Servicing
Amortization Date (i.e., the last day of the 57th month following
the month in which the Servicing Conversion Date occurs), and the
earlier of (a) the last day of the 60th month following the month
in which the Servicing Conversion Date occurs or (b) July 17,
2002.
"Servicing and Working Capital Security Agreement":
the Servicing and Working Capital Security Agreement of even date
herewith between the Borrower and the Administrative Agent, as
the same may be amended, supplemented, restated or otherwise
modified in writing from time to time by the Borrower and the
Administrative Agent.
"Servicing Collateral": as such term is defined in the
Servicing and Working Capital Security Agreement.
"Servicing Commitment"': as to any Servicing Lender,
the obligation of such Servicing Lender to make a Servicing
Advance pursuant to Section 2.01(a).
"Servicing Commitment Amount": as to any Servicing
Lender, the amount set opposite the name of such Servicing Lender
under the column entitled "Servicing" on Exhibit E.
"Servicing Contract": as such term is defined in the
Servicing and Working Capital Security Agreement.
"Servicing Conversion Date": the earlier of July 28,
1997 or the date on which the Servicing Commitments have been
fully advanced by the Servicing Lenders.
"Servicing Facility": the credit facility provided for
in Section 2.01.
"Servicing Lenders": at any time, Lenders which have
outstanding Servicing Commitments and/or unpaid principal
balances outstanding under their Servicing Notes.
"Servicing Note": as such term is defined in Section
2.01(c).
"Servicing Portfolio": at any time, all Mortgage Loans
that are serviced by the Borrower pursuant to a Servicing
Contract and/or Servicing Rights, including Mortgage Loans owned
and serviced by the Borrower which are held for sale to
Investors.
"Servicing Rights": as such term is defined in the
Servicing and Working Capital Security Agreement.
"Subsidiary": as to any Person, any corporation or
other entity of which securities or other ownership interests
having ordinary voting power to elect a majority of the board of
directors or other Persons performing similar functions are at
the time owned directly or indirectly by such Person.
"Take-Out Commitment": a Firm Take-Out Commitment or a
Standby Take-Out Commitment, as such terms are defined in Exhibit
D.
"T&I Advance": a loan made by a Working Capital Lender
pursuant to Section 2.03 for the purpose of funding a T&I
Payment.
"T&I Payment": a recoverable payment of delinquent
taxes or insurance with respect to a Mortgage Loan which is
delinquent, in foreclosure, in liquidation or in FHA or VA claim
process and which the Borrower is permitted or obligated to fund
under the terms of a Servicing Contract or under applicable FHA
or VA requirements and the payment of which creates a T&I Payment
Receivable.
"T&I Payment Receivable": as such term is defined in
the Servicing and Working Capital Security Agreement.
"Total Liabilities": the sum of the aggregate of all
items that would properly be shown as liabilities on any
consolidated balance sheet of the Borrower prepared in accordance
with GAAP, including, without limitation, Permitted Subdebt.
"Transferee": as such term is defined in Section 8.06.
"Transferred Interest": as such term is defined in
Section 8.06.
"VA": the Department of Veterans Affairs and any
successor thereto.
"Warehousing Advance": a loan made by a Warehousing
Lender to the Borrower pursuant to Section 2.02(a).
"Warehousing Advance Date": the day (which shall be a
Business Day) specified by the Borrower in a Confirmation as the
date on which it requests the Warehousing Lenders to make
Warehousing Advances or First Bank to make a Warehousing Swing
Line Advance.
"Warehousing and Discretionary Security Agreement":
the Warehousing and Discretionary Security Agreement of even date
herewith between the Borrower and the Collateral and Managing
Agent, as the same may be amended, supplemented, restated or
otherwise modified in writing from time to time by the Borrower
and the Collateral and Managing Agent.
"Warehousing Borrowing Base": as of any Warehousing
Advance Date or any other date of determination, an amount equal
to 100% of the Warehousing Collateral Value of the Warehousing
Collateral as determined by the Collateral and Managing Agent
from its records.
"Warehousing Collateral": as such term is defined in
the Warehousing and Discretionary Security Agreement.
"Warehousing Collateral Value": on the date of any
determination with respect to the Warehousing Collateral, as
determined by the Collateral and Managing Agent in accordance
with the provisions of Exhibit D.
"Warehousing Commitment" as to any Warehousing Lender,
the obligation of such Warehousing Lender to make Warehousing
Advances pursuant to Section 2.02(a).
"Warehousing Commitment Amount": as to any Warehousing
Lender, the amount set opposite such Warehousing Lender's name
under the column entitled "Warehousing" on Exhibit E, or such
lesser amount to which such Warehousing Lender's Warehousing
Commitment Amount may be reduced in accordance with Section
2.02(i)(ii) or pursuant to an assignment made in accordance with
Section 8.06.
"Warehousing Facility": the credit facility provided
for in Section 2.02.
"Warehousing Lenders": at any time, Lenders which have
outstanding Warehousing Commitments and/or outstanding
Warehousing Advances (and/or, in the case of First Bank,
outstanding Warehousing Swing Line Advances) under their
Warehousing Notes.
"Warehousing Note": as such term is defined in Section
2.02(d).
"Warehousing Swing Line Advance": a loan made by First
Bank to the Borrower pursuant to Section 2.02(b).
"Warehousing Swing Line Facility": the discretionary
revolving credit facility provided by First Bank to the Borrower
described in Section 2.02(b).
"Warehousing Termination Date": the earliest of (a)
July 28, 1997, (b) the date on which the Warehousing Commitments
are terminated or the Warehousing Commitment Amounts are reduced
to zero pursuant to Section 2.02(i), and (c) the date on which
the Warehousing Commitments are terminated pursuant to Section
6.02.
"Western Sunrise": Western Sunrise Holdings, L.P. a
Delaware limited partnership, its successors and assigns.
"Wet Funding Collateral Account": account number 1731-
0097-1261 of the Borrower with the Administrative Agent, which
shall be under the sole dominion and control of the
Administrative Agent for the benefit of the Lenders.
"Working Capital Advance": a P&I Advance, a T&I
Advance, a Foreclosure Advance or an Investment Loan Advance.
"Working Capital Advance Date": the day (which shall
be a Business Day) specified by the Borrower in a Confirmation as
the date on which it requests the Working Capital Lenders to make
Working Capital Advances or First Bank to make a Working Capital
Swing Line Advance.
"Working Capital Borrowing Base": as of any Working
Capital Advance Date or any other date of determination, an
amount equal to 100% of the Working Capital Collateral Value of
the Working Capital Collateral as determined by the
Administrative Agent from its records.
"Working Capital Collateral": as such term is defined
in the Servicing and Working Capital Security Agreement.
"Working Capital Collateral Value": on the date of any
determination with respect to the Working Capital Collateral, as
determined by the Administrative Agent in accordance with the
provisions of Exhibit D.
"Working Capital Commitment": as to any Working
Capital Lender, the obligation of such Working Capital Lender to
make Working Capital Advances pursuant to Section 2.04(a).
"Working Capital Commitment Amount": as to any Working
Capital Lender, the amount set opposite such Working Capital
Lender's name under the column entitled "Working Capital" on
Exhibit E, or such lesser amount to which such Working Capital
Lender's Commitment Amount may be reduced in accordance with
Section 2.04(i)(ii) or pursuant to an assignment made in
accordance with Section 8.06.
"Working Capital Facility": the credit facility
provided for in Section 2.03.
"Working Capital Lenders": at any time, Lenders which
have outstanding Working Capital Commitments and/or outstanding
Working Capital Advances under their Working Capital Notes.
"Working Capital Note": as such term is defined in
Section 2.03(c).
"Working Capital Termination Date": the earliest of
(a) July 28, 1997, (b) the date on which the Working Capital
Commitments are terminated or the Working Capital Commitment
Amounts are reduced to zero pursuant to Section 2.03(i) and (c)
the date on which the Working Capital Commitments are terminated
pursuant to Section 6.02.
1.02 Accounting Terms. All accounting terms used
herein shall be interpreted and all accounting determinations
hereunder shall be made in
accordance with GAAP, except as otherwise provided herein. To
the extent any change in GAAP after the date of this Agreement
affects any computation or determination required to be made
pursuant to this Agreement, such computation or determination
shall be made as if such change in GAAP had not occurred unless
the Borrower and the Required Lenders agree in writing on an
adjustment to such computation or determination to account for
such change in GAAP.
1.03 Computation of Time Periods. In this Agreement,
in the computation of a period of time from a specified date to a
later specified date, unless otherwise stated the word "from"
means "from and including" and the word "to" or "until" each
means "to but excluding".
1.04 Other Definitional Terms. 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,
schedule, exhibit and like references are to this Agreement
unless otherwise specified. Unless the context in which used
herein otherwise clearly requires, "or" has the inclusive meaning
represented by the phrase "and/or".
SECTION 2. THE CREDIT FACILITIES.
2.01 The Servicing Facility.
(a) Servicing Commitments. Upon the terms and
subject to the conditions hereinafter set forth, until the
Servicing Conversion Date, each Servicing Lender agrees,
severally but not jointly, to lend (and upon repayment prior
to the Servicing Conversion Date, to relend) to the
Borrower, at such times and in such amounts as the Borrower
shall request, up to an aggregate principal amount at any
time outstanding not to exceed such Servicing Lender's
Servicing Commitment Amount, subject to the following
limitations:
(i) the aggregate principal amount of
each Servicing Lender's Servicing Advances shall not
exceed its Servicing Commitment Amount; and
(ii) the aggregate principal amount
outstanding under the Servicing Notes after the making
of any requested Servicing Advances shall not exceed
the Qualified Servicing Portfolio Value (including any
portion of the Qualified Servicing Portfolio acquired
with the proceeds of such Servicing Advances).
(b) Making the Servicing Advances. The Borrower
shall give the Administrative Agent telephonic notice of
each request for Servicing Advances not later than 11:00
a.m. (Minneapolis time) on the Servicing Advance Date for
such Servicing Advances, specifying whether such Servicing
Advances are to be funded as Floating Eurodollar Rate
Borrowings, Fixed Rate Borrowings or Alternate Base Rate
Borrowings; provided, however, that any portion of a
Servicing Advance with respect to which no such designation
has been made by the Borrower shall be funded as an
Alternate Base Rate Borrowing; and provided, further, that
such designation or, in the absence of such designation, the
immediately preceding proviso clause shall be effective only
with respect to that portion of the installments of the
Servicing Advance of a Servicing Lender other than First
Bank which is not to be funded as a Designated Fixed Rate
Borrowing in accordance with Section 2.05(d). Such notice
shall be given by telex, telegram or telecopier or by
telephone (promptly confirmed in writing by the delivery to
the Administrative Agent of a Confirmation). The
Administrative Agent shall, by not later than 12:00 noon
(Minneapolis time) on the date on which such notice is
received by it from the Borrower, notify each Servicing
Lender of such request, of such Servicing Lender's Pro Rata
Share of the Servicing Advances requested, the applicable
Servicing Advance Date therefor, and whether such Servicing
Lender's Servicing Advance is to be funded as a Floating
Eurodollar Rate Borrowing, a Fixed Rate Borrowing or an
Alternate Base Rate Borrowing. Each Servicing Lender shall
deposit into the Collateral Account, in Immediately
Available Funds, by not later than 3:00 p.m. (Minneapolis
time) on the applicable Servicing Advance Date the amount of
the Servicing Advance to be made by such Servicing Lender.
Each request for Servicing Advances shall be deemed to be a
representation by the Borrower that (i) no Default or Event
of Default has occurred or will exist upon the funding of
the requested installments and (ii) the representations and
warranties contained in Section 3, in Section 5 of the
Warehousing and Discretionary Security Agreement and in
Section 5 of the Servicing and Working Capital Security
Agreement are true and correct on and as of the date of such
request as if made on and as of the date of such request.
Upon the deposit of the Servicing Advances in the Collateral
Account on the applicable Servicing Advance Date, the
Administrative Agent shall transfer the proceeds thereof to
the account or accounts designated by the Borrower in its
notice to the Administrative Agent.
(c) Servicing Notes. The Servicing Advances made
by each Servicing Lender shall be evidenced by the
Borrower's promissory note in the form of Exhibit G (each a
"Servicing Note"), which shall be made payable to the order
of such Servicing Lender and shall mature on the final
(i.e., the twentieth) Servicing Amortization Date. The
aggregate amount of the Servicing Advances made by a
Servicing Lender less all repayments of principal thereof
shall be the principal amount owing and unpaid on such
Servicing Lender's Servicing Note. The principal amount of
each Servicing Advance made by a Servicing Lender and all
principal payments and prepayments thereof may be noted by
such Servicing Lender on a schedule attached to its
Servicing Note and shall be entered by such Servicing Lender
on its ledgers and computer records; provided, that the
failure of any Servicing Lender to make such notations or
entries shall not affect the principal amount owing and
unpaid on its Servicing Note. The entries made by a
Servicing Lender on its ledger and computer records and any
notations made by a Servicing Lender on any such schedule
annexed to its Servicing Note shall be presumed accurate
until the contrary is established.
(d) Payment and Prepayment of Principal of
the Servicing Notes.
(i) On each Servicing Amortization Date
the Borrower will pay to the Administrative Agent,
for the accounts of the Servicing Lenders, the
applicable Mandatory Servicing Principal Payment,
and the Administrative Agent shall distribute to
each Servicing Lender its Pro Rata Share thereof.
(ii) If, at any time, the
total of the unpaid principal balances outstanding
under the Servicing Notes exceeds the Qualified
Servicing Portfolio Value (as determined by the
Administrative Agent from its records), the
Borrower shall immediately make principal payments
on the Servicing Notes in an aggregate amount
equal to such excess, and the Administrative Agent
shall distribute to each Servicing Lender its Pro
Rata Share thereof.
(iii) If any Investor
(including, without limitation, FNMA, FHLMC and
GNMA) for whom the Borrower performs Servicing
Rights that are included in the Qualified
Servicing Portfolio shall disaffirm, repudiate or
fail to perform or comply with, in any material
aspect, its obligations under any Acknowledgement
Agreement or shall deny, contest or refuse to give
effect to the security interest granted to the
Administrative Agent, for the benefit of the
Lenders, in any of such Servicing Rights or in any
related Servicing Contract, the Borrower shall,
upon demand by the Administrative Agent given at
the direction of the Required Servicing Lenders,
immediately prepay the Servicing Notes in an
aggregate amount equal to the product of the total
unpaid principal balances outstanding under the
Servicing Notes multiplied by a fraction the
numerator of which is the portion of the Qualified
Servicing Portfolio Value of the Servicing Rights
pertaining to such Investor and the denominator of
which is the total Qualified Servicing Portfolio
Value, which prepayment shall be paid by the
Borrower to the Administrative Agent for the
accounts of the Servicing Lenders and the
Administrative Agent shall distribute to each
Servicing Lender its Pro Rata Share thereof.
(iv) The Borrower shall have the right
to prepay the Servicing Notes in whole or in part
on two Business Days' notice to the Administrative
Agent, which prepayment shall be paid to the
Administrative Agent for the accounts of the
Servicing Lenders and the Administrative Agent
shall distribute to each Servicing Lender its Pro
Rata Share thereof.
(v) All amounts received by each
Servicing Lender as a partial prepayment on its
Servicing Note shall be applied to the
installments of principal of such Servicing Note
in the inverse order of their maturities.
(vi) Amounts paid or prepaid on the
Servicing Notes on or after the Servicing
Conversion Date may not be reborrowed.
(vii) The Borrower shall promptly send
the Administrative Agent a Confirmation confirming
any payment or prepayment of principal made on the
Servicing Notes.
(e) Use of Proceeds of Servicing Advances. The
proceeds of the initial Servicing Advances will be used to
repay the principal of the "Tranche A Loans" and "Tranche B
Loans" (as such terms are defined in the Existing Servicing
Credit Agreement) outstanding under the Existing Servicing
Credit Agreement on the Effective Date. The proceeds of all
subsequent Servicing Advances will be used by the Borrower
solely to finance or refinance the origination or
acquisition of Servicing Rights, all of which must be
eligible for inclusion, and, at the time of the Borrower's
acquisition thereof, be included, in the Qualified Servicing
Portfolio.
(f) Facility Fees. The Borrower shall pay to the
Administrative Agent for the account of each Servicing
Lender on the Signing Date a facility fee equal to the
product of such Servicing Lender's Servicing Commitment
Amount multiplied by a percentage based upon the maximum
Servicing Commitment Amount which such Servicing Lender
originally offered in writing to provide in connection with
the Administrative Agent's syndication of the credit
facilities contemplated by this Agreement (irrespective of
the Servicing Commitment Amount actually allocated to such
Servicing Lender), as set forth in the following table:
Maximum Servicing Commitment
Commitment Amount Fee Percentage
Offered
$15,000,000 or 0.15%
more
$10,000,00 or
more but less than 0.10%
$15,000,000
$5,000,000 or
more but less than 0.05%
$10,000,000
(g) Commitment Fees. The Borrower shall pay to
the Administrative Agent for the account of each Servicing
Lender commitment fees at the rate of one-eighth of one
percent (0.125%) per annum on the unused portion of such
Servicing Lender's Servicing Commitment Amount, payable in
arrears on the first day of each calendar quarter,
commencing October 1, 1996.
2.02 The Warehousing Facility and Warehousing Swing
Line Facility.
(a) Warehousing Commitments. Upon the terms and
subject to the conditions of this Agreement, until the
Warehousing Termination Date, each Warehousing Lender
agrees, severally but not jointly, to lend (and upon
repayment, relend) to the Borrower, at such times and in
such amounts as the Borrower shall request, up to an
aggregate principal amount at any time outstanding not to
exceed such Warehousing Lender's Warehousing Commitment
Amount, subject to the following limitations:
(i) the aggregate principal amount of
Warehousing Advances and Warehousing Swing Line
Advances at any time outstanding shall not exceed the
sum of the Warehousing Commitment Amounts of all the
Warehousing Lenders; and
(ii) the aggregate principal amount of
Warehousing Advances and Warehousing Swing Line
Advances at any time outstanding shall not exceed the
Warehousing Borrowing Base, as determined by the
Collateral and Managing Agent from its records.
The Warehousing Lenders shall not be obligated to make
Warehousing Advances if any of the applicable conditions
precedent set forth in Section 5 has not been satisfied or
if, after giving effect thereto, any of the foregoing
limitations would be exceeded. The failure of any one or
more of the Warehousing Lenders to make a Warehousing
Advance in accordance with its Warehousing Commitment shall
not relieve the other Warehousing Lenders of their several
obligations hereunder, but no Warehousing Lender shall be
liable with respect to the obligation of any other
Warehousing Lender hereunder or be obligated in any event to
make Warehousing Advances in excess of its Warehousing
Commitment Amount.
(b) Discretionary Warehousing Swing Line
Facility. Upon the terms and subject to the conditions of
this Agreement, until the Warehousing Termination Date,
First Bank, in its sole discretion, may lend to the Borrower
at such times and in such amounts as the Borrower shall
request, up to an aggregate principal amount at any time
outstanding equal to First Bank's Warehousing Commitment
Amount less the principal amount outstanding under First
Bank's Warehousing Note; provided, that First Bank will not
make a Warehousing Swing Line Advance if (i) after giving
effect thereto, either of the limitations set forth in
Sections 2.02(a)(i) or 2.02(a)(ii) would be exceeded, or
(ii) one or more of the conditions precedent set forth in
Section 5 for the making of a Warehousing Advance have not
been satisfied.
(c) Manner of Borrowing. The Borrower shall give
the Administrative Agent telephonic notice of each request
for Warehousing Advances or Warehousing Swing Line Advances,
as the case may be, not later than 12:00 noon (Minneapolis
time) on the applicable Warehousing Advance Date, in the
case of Warehousing Advances, and not later than 3:00 p.m.
(Minneapolis time) on such Warehousing Advance Date, in the
case of Warehousing Swing Line Advances, specifying the
aggregate amount of Warehousing Advances or Warehousing
Swing Line Advances requested and whether such Warehousing
Advances or Warehousing Swing Line Advances are to be funded
as Floating Eurodollar Rate Borrowings, Fixed Rate
Borrowings or Alternate Base Rate Borrowings; provided, that
any portion of a Warehousing Advance or Warehousing Swing
Line Advance not so designated shall be funded as an
Alternate Base Rate Borrowing; and provided, further, that
such designation or, in the absence of such designation, the
preceding proviso clause shall be effective only with
respect to that portion of the Warehousing Advances of a
Lender other than First Bank which is not to be funded as a
Designated Fixed Rate Loan in accordance with Section
2.05(d). The Borrower shall promptly confirm any such
request by delivering to the Administrative Agent a duly
completed and executed Confirmation. The Administrative
Agent shall, by not later than 1:00 p.m. (Minneapolis time)
on the date on which a request for Warehousing Advances is
received by it from the Borrower, notify each Warehousing
Lender of such request, of such Warehousing Lender's Pro
Rata Share of the Warehousing Advances requested, the
applicable Warehousing Advance Date therefor, and whether
such Warehousing Lender's Warehousing Advances are to be
funded as Floating Eurodollar Rate Borrowings, Fixed Rate
Borrowings or Alternate Base Rate Borrowings. Each
Warehousing Lender shall deposit into the Collateral Account
in Immediately Available Funds by not later than 3:00 p.m.
(Minneapolis time) on said Warehousing Advance Date the
total amount of the Warehousing Advance or Advances to be
made by such Warehousing Lender. First Bank shall, not
later than 4:00 p.m. (Minneapolis time) on the Warehousing
Advance Date on which it makes any Warehousing Swing Line
Advance, deposit the amount thereof into the Collateral
Account. Unless the Administrative Agent shall have
received notice from a Warehousing Lender prior to 3:00 p.m.
(Minneapolis time) on the date any Warehousing Advances are
to be made that such Lender will not make available to the
Administrative Agent the Warehousing Advances to be made by
such Lender on such date, the Administrative Agent may
assume that such Lender has made such Warehousing Advances
available to the Administrative Agent on such date and the
Administrative Agent in its sole discretion may, in reliance
upon such assumption, make available to the Borrower on such
date a corresponding amount on behalf of such Lender. If a
Warehousing Lender shall not have timely given such a
notice, and to the extent such Lender shall not have so made
available to the Administrative Agent the Warehousing
Advance to be made by such Lender on such date and the
Administrative Agent shall have so made available to the
Borrower a corresponding amount on behalf of such Lender,
such Lender shall, on demand, pay to the Administrative
Agent such corresponding amount together with interest
thereon, at the Federal Funds Effective Rate, for each day
from the date such amount shall have been so made available
by the Administrative Agent to the Borrower until the date
such amount shall have been repaid to the Administrative
Agent. If such Warehousing Lender does not pay such
corresponding amount promptly upon the Agent's demand
therefor, the Administrative Agent shall promptly notify the
Borrower and the Borrower shall immediately repay such
corresponding amount to the Administrative Agent together
with accrued interest thereon at the applicable rate or
rates provided in Section 2.05. Each request for
Warehousing Advances or Warehousing Swing Line Advances
shall be deemed to be a representation by the Borrower that
(i) no Default or Event of Default has occurred or will
exist upon the making of the requested Warehousing Advances
or Warehousing Swing Line Advances and (ii) the
representations and warranties contained in Section 3, in
Section 5 of the Warehousing and Discretionary Security
Agreement and in Section 5 of the Servicing and Working
Capital Security Agreement are true and correct with the
same force and effect as if made on and as of the date of
such request. Upon the deposit of the Warehousing Advances
and/or Warehousing Swing Line Advance in the Collateral
Account on the applicable Warehousing Advance Date, the
Administrative Agent shall transfer the proceeds thereof to
the account or accounts designated by the Borrower in its
notice to the Administrative Agent.
(d) Warehousing Notes. Warehousing Advances made
by each Warehousing Lender and, in the case of First Bank,
Warehousing Swing Line Advances shall be evidenced by the
Borrower's promissory note in the form of Exhibit H (each a
"Warehousing Note"), which shall be made payable to the
order of such Warehousing Lender and shall mature on the
Warehousing Termination Date. The aggregate amount of the
Warehousing Advances made by a Warehousing Lender under its
Warehousing Note less all repayments of principal thereof
shall be the principal amount owing and unpaid on such
Warehousing Note. The principal amount of each Warehousing
Advance made by a Warehousing Lender and each Warehousing
Swing Line Advance made by First Bank and all principal
payments and prepayments thereof may be noted by such
Warehousing Lender on a schedule attached to its Warehousing
Note and shall be entered by such Warehousing Lender on its
ledgers and computer records; provided, that the failure of
any Warehousing Lender to make such notations or entries
shall not affect the principal amount owing and unpaid on
its Warehousing Note. The entries made by a Warehousing
Lender on its ledgers and computer records and any notations
made by such Warehousing Lender on any such schedule annexed
to its Warehousing Note shall be presumed to be accurate
until the contrary is established.
(e) Payment and Prepayment of Warehousing Notes.
The Borrower shall pay the principal of the Warehousing
Notes as follows:
(i) Mandatory Payments. The entire unpaid
principal balance of each Warehousing Lender's
Warehousing Note shall be due and payable on the
Warehousing Termination Date.
(ii) Mandatory Prepayments. If, at any
time, the total of the unpaid principal amounts
outstanding under the Warehousing Notes exceeds the
lesser of the total of the Warehousing Commitment
Amounts or the Warehousing Borrowing Base (as
determined by the Collateral and Managing Agent from
its records), the Borrower shall immediately make
principal prepayments on the Warehousing Notes in an
aggregate amount equal to the amount of such excess,
which aggregate amount shall be paid to the
Administrative Agent and distributed (A) first, to
First Bank as a prepayment on the principal balance of
any Warehousing Swing Line Advances outstanding under
First Bank's Warehousing Note and (B) after repayment
in full of any Warehousing Swing Line Advances
outstanding under First Bank's Warehousing Note, to the
Warehousing Lenders ratably on the basis of each
Warehousing Lender's Pro Rata Share thereof.
(iii) Optional Prepayments. The Borrower
shall have the right to prepay the outstanding
principal balances of the Warehousing Notes in whole or
in part at any time and from time to time, each such
principal prepayment to be paid to the Administrative
Agent and distributed (A) first, to First Bank as a
prepayment on the principal balance of any Warehousing
Swing Line Advances outstanding under First Bank's
Warehousing Note and (B) after repayment in full of the
Warehousing Swing Line Advances outstanding under First
Bank's Warehousing Note, to the Warehousing Lenders
ratably on the basis of each Warehousing Lender's Pro
Rata Share thereof.
(iv) Confirmation. The Borrower shall
promptly send the Administrative Agent a Confirmation
confirming any payment or prepayment of principal made
on the Warehousing Notes.
(f) Refinancing of Warehousing Swing Line
Advances.
(i) Permitted Refinancings of Warehousing
Swing Line Advances. First Bank, at any time in its
sole and absolute discretion, may, upon notice given to
each other Warehousing Lender by not later than 1:00
p.m. (Minneapolis time) on any Business Day, request
that each Warehousing Lender (including First Bank)
make a Warehousing Advance in an amount equal to its
Pro Rata Share of the portion of the aggregate unpaid
principal amount of any outstanding Warehousing Swing
Line Advances for the purpose of refinancing such
Warehousing Swing Line Advances.
(ii) Mandatory Refinancings of Warehousing
Swing Line Advances. Not later than 1:00 p.m.
(Minneapolis time) on the second Business Day of each
week, First Bank will notify each other Warehousing
Lender of the aggregate amount of Warehousing Swing
Line Advances which are then outstanding and the amount
of Warehousing Advances required to be made by each
Warehousing Lender (including First Bank) to refinance
such outstanding Warehousing Swing Line Advances (which
shall be in the amount of each Warehousing Lender's Pro
Rata Share of such outstanding Warehousing Swing Line
Advances).
(iii) Warehousing Lenders' Obligation
to Fund Refinancings of Warehousing Swing Line
Advances. Upon the giving of notices by First Bank
under Section 2.02(f)(i) or 2.02(f)(ii), each
Warehousing Lender (including First Bank) shall make a
Warehousing Advance in an amount equal to its Pro Rata
Share of the aggregate principal amount of Warehousing
Swing Line Advances to be refinanced, and deposit the
proceeds of such Warehousing Advances into the
Collateral Account, in Immediately Available Funds, by
not later than 3:00 p.m. (Minneapolis time) on the date
such notice was received; provided, however, that a
Warehousing Lender shall not be obligated to make any
such Warehousing Advance unless (A) First Bank believed
in good faith that all conditions to making the subject
Warehousing Swing Line Advance were satisfied at the
time such Warehousing Swing Line Advance was made, or
(B) if the conditions to such Warehousing Advance were
not satisfied, such Warehousing Lender had actual
knowledge, by receipt of the statements furnished to it
pursuant to Section 4.01 or otherwise, that any such
condition had not been satisfied and failed to notify
First Bank in a writing received by First Bank prior to
the time it made such Warehousing Swing Line Advance
that First Bank was not authorized to make a
Warehousing Swing Line Advance until such condition has
been satisfied, or (C) the satisfaction of any such
condition that was not satisfied had been waived in a
writing by the Required Warehousing Lenders prior to or
at the time such Warehousing Swing Line Advance was
made. The proceeds of Warehousing Advances made
pursuant to the preceding sentence shall be paid to
First Bank (and not to the Borrower) and applied to the
payment of principal of the outstanding Warehousing
Swing Line Advances, and the Borrower authorizes the
Administrative Agent to charge the Borrower's operating
account or any other account (other than escrow or
custodial accounts) maintained by it with the
Administrative Agent (up to the amount available
therein) in order to immediately pay First Bank the
principal amount of such Warehousing Swing Line
Advances to the extent amounts received from the other
Warehousing Lenders are not sufficient to repay in full
the principal of the outstanding Warehousing Swing Line
Advances requested or required to be refinanced. Upon
the making of a Warehousing Advance by a Warehousing
Lender pursuant to this Section 2.02(f)(iii), the
amount so funded shall become due under such
Warehousing Lender's Warehousing Note and the
outstanding principal amount of the Warehousing Swing
Line Advances shall be correspondingly reduced. If any
portion of any such amount paid to First Bank should be
recovered by or on behalf of the Borrower from First
Bank in bankruptcy or otherwise, the loss of the amount
so recovered shall be ratably shared among all the
Warehousing Lenders in the manner contemplated by
Section 7.11. Each Warehousing Lender's obligation to
make Warehousing Advances referred to in this Section
2.02(f)(iii) shall, subject to the proviso to the first
sentence of this Section 2.02(f)(iii), be absolute and
unconditional and shall not be affected by any
circumstance, including, without limitation, (1) any
setoff, counterclaim, recoupment, defense or other
right which such Warehousing Lender may have against
First Bank, the Borrower or anyone else for any reason
whatsoever; (2) the occurrence or continuance of a
Default or an Event of Default; (3) any adverse change
in the condition (financial or otherwise) of the
Borrower; (4) any breach of this Agreement by the
Borrower, the Administrative Agent or any Lender; or
(5) any other circumstance, happening or event
whatsoever, whether or not similar to any of the
foregoing; provided, that in no event shall a
Warehousing Lender be obligated to make a Warehousing
Advance if, after giving effect thereto, the
outstanding principal balance of such Warehousing
Lender's Warehousing Note would exceed its Warehousing
Commitment Amount.
(iv) Funding of Warehousing Advances. Each
Warehousing Advance made to refund a Warehousing Swing
Line Advance pursuant to Section 2.02(f)(iii) shall be
funded as an Alternate Base Rate Borrowing, Floating
Eurodollar Rate Borrowing or Fixed Rate Borrowing as
designated by the Borrower, but if not so designated,
then as an Alternate Base Rate Borrowing.
(g) Facility Fees. The Borrower shall pay to the
Administrative Agent for the account of each Warehousing
Lender, for the period ending on the Warehousing Termination
Date, a facility fee at the rate of one-eighth of one
percent (0.125%) per annum on such Warehousing Lender's
Warehousing Commitment Amount, whether used or unused, which
facility fee shall be payable by the Borrower in advance on
the first Business Day of each month, commencing August 1,
1996.
(h) Use of Proceeds. The proceeds of the initial
Warehousing Advances will be used to repay the principal of
the "Tranche A Loans" and "Swing-Line Loans" (as such terms
are defined in the Existing Warehouse Credit Agreement)
outstanding under the Existing Warehouse Credit Agreement on
the Effective Date. The proceeds of subsequent Warehousing
Advances and Warehousing Swing Line Advances will be used by
the Borrower to finance or refinance the acquisition or
origination of Mortgage Loans by the Borrower.
(i) Termination and Reduction of Warehousing
Commitments.
(i) Termination. The
Borrower shall have the right, prior to any termination
of the Warehousing Commitments pursuant to Section
6.02, to terminate the Warehousing Commitments of all
(but not less than all) Warehousing Lenders by giving
the Administrative Agent notice in writing, specifying
the date on which the Warehousing Commitments are to
terminate, which notice shall be effective upon receipt
by the Administrative Agent and which termination date
shall not be earlier than 30 days after the date on
which such notice is received by the Administrative
Agent. The Administrative Agent shall give telephonic
notice (confirmed in writing) to each Warehousing
Lender of the Agent's receipt of a notice of
termination of the Warehousing Commitments given by the
Borrower by not later than the Agent's close of
business on the second Business Day following the date
of receipt of such notice by the Administrative Agent.
Notwithstanding the foregoing, any termination of the
Commitments pursuant to Section 6.02 shall supersede
any notice of termination under this Section
2.02(i)(i). Once the Warehousing Commitments have been
terminated, they may not be reinstated.
(ii) Reduction. The Borrower
shall have the right at any time upon at least 30 days'
prior written notice to the Administrative Agent to
reduce the Warehousing Commitment Amounts of all (but
not less than all) Warehousing Lenders, which reduction
shall be applied pro rata among the Warehousing Lenders
in proportion to their respective Warehousing
Commitment Amounts; provided, that the aggregate amount
of each such reduction in the Warehousing Commitment
Amounts shall be in a minimum amount of $5,000,000 or
an integral multiple in excess thereof for all
Warehousing Commitments; and provided, further, that no
such reduction shall reduce the aggregate of the
Warehousing Commitment Amounts to less than the
aggregate principal amount outstanding under the
Warehousing Notes. The Administrative Agent shall give
telephonic notice (confirmed in writing) to each
Warehousing Lender of the Agent's receipt of a notice
of reduction of the Warehousing Commitments given by
the Borrower by not later than the Agent's close of
business on the second Business Day following receipt
of such notice by the Administrative Agent. Once the
Warehousing Commitment Amounts have been reduced, they
may not be reinstated.
2.03 The Working Capital Facility.
(a) Working Capital Commitments. Upon the terms
and subject to the conditions of this Agreement, until the
Working Capital Termination Date, each Working Capital
Lender agrees, severally but not jointly, to lend (and upon
repayment, relend) to the Borrower, at such times and in
such amounts as the Borrower shall request, up to an
aggregate principal amount at any time outstanding equal to
such Working Capital Lender's Working Capital Commitment
Amount, subject to the following limitations:
(i) the aggregate principal
amount of Working Capital Advances and Working Capital
Swing Line Advances at any time outstanding shall not
exceed the sum of the Working Capital Commitment
Amounts of all the Working Capital Lenders;
(ii) the aggregate principal
amount of Working Capital Advances and Working Capital
Swing Line Advances at any time outstanding shall not
exceed the Working Capital Borrowing Base as determined
by the Administrative Agent from its records.)
(iii) the principal amount of
P&I Advances applied to fund any P&I Payment shall not
exceed 95% of the P&I Payment Receivable resulting from
such P&I Payment, and the aggregate principal amount of
P&I Advances at any time outstanding shall not exceed
$15,000,000;
(iv) the principal amount of
T&I Advances applied to fund any T&I Payment shall not
exceed 90% of the T&I Payment Receivable resulting from
such T&I Payment, the principal amount of Foreclosure
Advances applied to fund any Foreclosure Payment shall
not exceed 90% of the Foreclosure Payment Receivable
resulting from such Foreclosure Payment, and the total
of the aggregate principal amount of T&I Advances plus
the aggregate principal amount of Foreclosure Advances
at any time outstanding shall not exceed $25,000,000;
and
(v) the principal amount of
Investment Loan Advances applied to finance or
refinance the origination or acquisition of any
Investment Loan shall not exceed 80% of the Working
Capital Collateral Value of such Investment Loan, and
the aggregate principal amount of Investment Loan
Advances at any time outstanding shall not exceed
$5,000,000.
The Working Capital Lenders shall not be obligated to make
Working Capital Advances if, after giving effect thereto,
any of the foregoing limitations would be exceeded. The
failure of any one or more of the Working Capital Lenders to
make a Working Capital Advance in accordance with its
Working Capital Commitment shall not relieve the other
Working Capital Lenders of their several obligations
hereunder, but no Working Capital Lender shall be liable
with respect to the obligation of any other Working Capital
Lender hereunder or be obligated in any event to make
Working Capital Advances in excess of its Working Capital
Commitment Amount.
(b) Discretionary Working Capital Swing Line
Facility. Upon the terms and subject to the conditions of
this Agreement, until the Working Capital Termination Date,
First Bank, in its sole discretion, may lend to the Borrower
at such times and in such amounts as the Borrower shall
request, up to an aggregate principal amount at any time
outstanding equal to First Bank's Working Capital Commitment
Amount less the principal amount outstanding under First
Bank's Working Capital Note; provided, that First Bank will
not make a Working Capital Swing Line Advance if (i) after
giving effect thereto, either of the limitations set forth
in Sections 2.03(a)(i) or 2.03(a)(ii) would be exceeded, or
(ii) one or more of the conditions precedent set forth in
Section 5 for the making of a Working Capital Advance have
not been satisfied.
(c) Manner of Borrowing. The Borrower shall give
the Administrative Agent telephonic notice of each request
for Working Capital Advances or Working Capital Swing Line
Advances not later than 11:00 a.m. (Minneapolis time) on the
applicable Working Capital Advance Date, specifying the
aggregate amount of Working Capital Advances requested, the
Working Capital Advances or Working Capital Swing Line
Advances to be made by each Working Capital Lender, whether
such Working Capital Advances or Working Capital Swing Line
Advances are P&I Advances, T&I Advances, Foreclosure
Advances and/or Investment Loan Advances, and the portions
of such Working Capital Advances that are to be funded as
Floating Eurodollar Rate Borrowings, Fixed Rate Borrowings
or Alternate Base Rate Borrowings; provided, that any
portion of a Working Capital Advance or Working Capital
Swing Line Advance not so designated shall be funded as an
Alternate Base Rate Borrowing; and provided, further, that
such designation or, in the absence of such designation, the
preceding proviso clause, shall be effective only with
respect to that portion of the outstanding Working Capital
Advances of a Lender other than First Bank which is not to
be funded as a Designated Fixed Rate Advance in accordance
with Section 2.05(d). The Borrower shall promptly confirm
any such request by delivering to the Administrative Agent a
duly completed and executed Confirmation. The
Administrative Agent shall, by not later than 12:00 noon
(Minneapolis time) on the date on which such request for
Working Capital Advances is received by it from the
Borrower, notify each Working Capital Lender of such
request, of such Working Capital Lender's Pro Rata Share of
the Working Capital Advances requested, the applicable
Working Capital Advance Date therefor, and the portions of
such Working Capital Lender's Working Capital Advances that
are to be funded as Floating Eurodollar Rate Borrowings,
Fixed Rate Borrowings or Alternate Base Rate Borrowings.
Each Working Capital Lender shall deposit into the
Collateral Account in Immediately Available Funds by not
later than 3:00 p.m. (Minneapolis time) on said Working
Capital Advance Date the total amount of the Working Capital
Advances to be made by such Working Capital Lender. Unless
the Administrative Agent shall have received notice from a
Working Capital Lender prior to 3:00 p.m. (Minneapolis time)
on the date any Working Capital Advances are to be made that
such Lender will not make available to the Administrative
Agent the Working Capital Advances to be made by such Lender
on such date, the Administrative Agent may assume that such
Lender has made such Working Capital Advances available to
the Administrative Agent on such date and the Administrative
Agent in its sole discretion may, in reliance upon such
assumption, make available to the Borrower on such date a
corresponding amount on behalf of such Lender. If a Working
Capital Lender shall not have timely given such a notice,
and to the extent such Lender shall not have so made
available to the Administrative Agent the Working Capital
Advances to be made by such Lender on such date and the
Administrative Agent shall have so made available to the
Borrower a corresponding amount on behalf of such Lender,
such Lender shall, on demand, pay to the Administrative
Agent such corresponding amount together with interest
thereon, at the Federal Funds Effective Rate, for each day
from the date such amount shall have been so made available
by the Administrative Agent to the Borrower until the date
such amount shall have been repaid to the Administrative
Agent. If such Working Capital Lender does not pay such
corresponding amount promptly upon the Agent's demand
therefor, the Administrative Agent shall promptly notify the
Borrower and the Borrower shall immediately repay such
corresponding amount to the Administrative Agent together
with accrued interest thereon at the applicable rate or
rates provided in Section 2.05. First Bank shall, not later
than 3:00 p.m. (Minneapolis time) on the Working Capital
Advance Date on which it makes any Working Capital Swing
Line Advance, deposit the amount thereof into the Collateral
Account. Each request for Working Capital Advances shall be
deemed to be a representation by the Borrower that (i) no
Default or Event of Default has occurred or will exist upon
the making of the requested Working Capital Advances and
(ii) the representations and warranties contained in
Section 3, in Section 5 of the Warehousing and Discretionary
Security Agreement and in Section 5 of the Servicing and
Working Capital Security Agreement, are true and correct
with the same force and effect as if made on and as of the
date of such request. Upon the deposit of the Working
Capital Advances in the Collateral Account on the applicable
Working Capital Advance Date, the Administrative Agent shall
transfer the proceeds thereof to the account or accounts
designated by the Borrower in its notice to the
Administrative Agent.
(d) Working Capital Notes. Working Capital
Advances made by each Working Capital Lender and, in the
case of First Bank, Working Capital Swing Line Advances
shall be evidenced by the Borrower's promissory note in the
form of Exhibit I (each a "Working Capital Note"), which
shall be made payable to the order of such Working Capital
Lender and shall mature on the Working Capital Termination
Date. The aggregate amount of the Working Capital Advances
and, in the case of First Bank, Working Capital Swing Line
Advances made by a Working Capital Lender under its Working
Capital Note less all repayments of principal thereof shall
be the principal amount owing and unpaid on such Working
Capital Note. The principal amount of each Working Capital
Advance and, in the case of First Bank, Working Capital
Swing Line Advance made by a Working Capital Lender and all
principal payments and prepayments thereof may be noted by
such Working Capital Lender on a schedule attached to its
Working Capital Note and shall be entered by such Lender on
its ledgers and computer records; provided, that the failure
of any Working Capital Lender to make such notations or
entries shall not affect the principal amount owing and
unpaid on its Working Capital Note. The entries made by a
Working Capital Lender on its ledgers and computer records
and any notations made by such Working Capital Lender on any
such schedule annexed to its Working Capital Note shall be
presumed to be accurate until the contrary is established.
(e) Payment and Prepayment of Working Capital
Advances. The Borrower shall pay the principal of the
Working Capital Notes as follows:
(i) Mandatory Payment. The entire unpaid
principal balance of each Working Capital Lender's
Working Capital Note shall be due and payable on the
Working Capital Termination Date.
(ii) Mandatory Prepayments. Principal of
the Working Capital Notes shall be subject to mandatory
prepayment as follows:
(A) If, at any time, the
aggregate principal amount of all Working Capital
Advances outstanding exceeds the lesser of the
total of the Working Capital Commitment Amounts or
the Working Capital Borrowing Base (as determined
by the Administrative Agent from their records),
the Borrower shall immediately make principal
prepayments on the Working Capital Notes in an
aggregate amount equal to the amount of such
excess, which aggregate amount shall be paid to
the Administrative Agent and distributed to the
Working Capital Lenders ratably on the basis of
each Working Capital Lender's Pro Rata Share
thereof.
(B) During the period
beginning on and including the third Business Day
of each calendar month and ending on and including
the fourteenth calendar day of such calendar
month, there shall be no P&I Advances outstanding
under any of the Working Capital Notes, and the
Borrower shall make such prepayments on the
Working Capital Notes, and shall refrain from
requesting further P&I Advances, as shall be
necessary to comply with this requirement.
(C) If any Investor
(including, without limitation, FNMA, FHLMC and
GNMA) for whom the Borrower performs Servicing
Rights that are included in the Qualified
Servicing Portfolio shall disaffirm, repudiate or
fail to perform or comply with, in any material
respect, its obligations under any Acknowledgement
Agreement or shall deny, contest or refuse to give
effect to the security interest granted to the
Administrative Agent, for the benefit of the
Lenders, in any such Servicing Rights or in any
related Servicing Contract, the Borrower shall,
upon demand by the Administrative Agent given at
the direction of the Required Working Capital
Lenders, immediately prepay all outstanding P&I
Advances, T&I Advances and Foreclosure Advances
made to fund P&I Payment, T&I Payment and
Foreclosure Advances in respect of the Mortgage
Loans serviced pursuant to such Servicing Rights,
which prepayments shall be paid to the
Administrative Agent for the accounts of the
Working Capital Lenders and the Administrative
Agent shall distribute to each Working Capital
Lender its Pro Rata Share thereof.
(iii) Optional Prepayments. The Borrower
shall have the right to prepay the outstanding
principal balances of the Working Capital Notes in
whole or in part at any time and from time to time,
each such principal prepayment to be paid to the
Administrative Agent and distributed to the Working
Capital Lenders ratably on the basis of each Working
Capital Lender's Pro Rata Share thereof.
(iv) Confirmation. The Borrower shall
promptly send the Administrative Agent a Confirmation
confirming any payment or prepayment of principal made
on the Working Capital Notes.
(f) Refinancing of Working Capital Swing Line
Advances.
(i) Permitted Refinancings of Working
Capital Swing Line Advances. First Bank, at any time
in its sole and absolute discretion, may, upon notice
given to each other Working Capital Lender by not later
than 12:00 noon (Minneapolis time) on any Business Day,
request that each Working Capital Lender (including
First Bank) make a Working Capital Advance in an amount
equal to its Pro Rata Share of the portion of the
aggregate unpaid principal amount of any outstanding
Working Capital Swing Line Advances for the purpose of
refinancing such Working Capital Swing Line Advances.
(ii) Mandatory Refinancings of Working
Capital Swing Line Advances. Not later than 12:00 noon
(Minneapolis time) on the second Business Day of each
week, First Bank will notify each other Working Capital
Lender of the aggregate amount of Working Capital Swing
Line Advances which are then outstanding and the amount
of Working Capital Advances required to be made by each
Working Capital Lender (including First Bank) to
refinance such outstanding Working Capital Swing Line
Advances (which shall be in the amount of each Working
Capital Lender's Pro Rata Share of such outstanding
Working Capital Swing Line Advances).
(iii) Working Capital Lenders'
Obligation to Fund Refinancings of Working Capital
Swing Line Advances. Upon the giving of notices by
First Bank under Section 2.03(f)(i) or 2.03(f)(ii),
each Working Capital Lender (including First Bank)
shall make a Working Capital Advance in an amount equal
to its Pro Rata Share of the aggregate principal amount
of Working Capital Swing Line Advances to be
refinanced, and deposit the proceeds of such Working
Capital Advances into the Collateral Account, in
Immediately Available Funds, by not later than 3:00
p.m. (Minneapolis time) on the date such notice was
received; provided, however, that a Working Capital
Lender shall not be obligated to make any such Working
Capital Advance unless (A) First Bank believed in good
faith that all conditions to making the subject Working
Capital Swing Line Advance were satisfied at the time
such Working Capital Swing Line Advance was made, or
(B) if the conditions to such Working Capital Advance
were not satisfied, such Working Capital Lender had
actual knowledge, by receipt of the statements
furnished to it pursuant to Section 4.01 or otherwise,
that any such condition had not been satisfied and
failed to notify First Bank in a writing received by
First Bank prior to the time it made such Working
Capital Swing Line Advance that First Bank was not
authorized to make a Working Capital Swing Line Advance
until such condition has been satisfied, or (C) the
satisfaction of any such condition that was not
satisfied had been waived in a writing by the Required
Working Capital Lenders prior to or at the time such
Working Capital Swing Line Advance was made. The
proceeds of Working Capital Advances made pursuant to
the preceding sentence shall be paid to First Bank (and
not to the Borrower) and applied to the payment of
principal of the outstanding Working Capital Swing Line
Advances, and the Borrower authorizes the
Administrative Agent to charge the Borrower's operating
account or any other account (other than escrow or
custodial accounts) maintained by it with the
Administrative Agent (up to the amount available
therein) in order to immediately pay First Bank the
principal amount of such Working Capital Swing Line
Advances to the extent amounts received from the other
Working Capital Lenders are not sufficient to repay in
full the principal of the outstanding Working Capital
Swing Line Advances requested or required to be
refinanced. Upon the making of a Working Capital
Advance by a Working Capital Lender pursuant to this
Section 2.03(f)(iii), the amount so funded shall become
due under such Working Capital Lender's Working Capital
Note and the outstanding principal amount of the
Working Capital Swing Line Advances shall be
correspondingly reduced. If any portion of any such
amount paid to First Bank should be recovered by or on
behalf of the Borrower from First Bank in bankruptcy or
otherwise, the loss of the amount so recovered shall be
ratably shared among all the Working Capital Lenders in
the manner contemplated by Section 7.11. Each Working
Capital Lender's obligation to make Working Capital
Advances referred to in this Section 2.03(f)(iii)
shall, subject to the proviso to the first sentence of
this Section 2.03(f)(iii), be absolute and
unconditional and shall not be affected by any
circumstance, including, without limitation, (1) any
setoff, counterclaim, recoupment, defense or other
right which such Working Capital Lender may have
against First Bank, the Borrower or anyone else for any
reason whatsoever; (2) the occurrence or continuance of
a Default or an Event of Default; (3) any adverse
change in the condition (financial or otherwise) of the
Borrower; (4) any breach of this Agreement by the
Borrower, the Administrative Agent or any Lender; or
(5) any other circumstance, happening or event
whatsoever, whether or not similar to any of the
foregoing; provided, that in no event shall a Working
Capital Lender be obligated to make a Working Capital
Advance if, after giving effect thereto, the
outstanding principal balance of such Working Capital
Lender's Working Capital Note would exceed its Working
Capital Commitment Amount.
(iv) Funding of Working Capital Advances.
Each Working Capital Advance made to refund a Working
Capital Swing Line Advance pursuant to Section
2.03(f)(iii) shall be funded as an Alternate Base Rate
Borrowing, Floating Eurodollar Rate Borrowing or Fixed
Rate Borrowing as designated by the Borrower, but if
not so designated, then as an Alternate Base Rate
Borrowing.
(g) Facility Fees. The Borrower shall pay to the
Administrative Agent for the account of each Working Capital
Lender a facility fee for the period ending on the Working
Capital Termination Date at a per annum rate of one-fourth
of one percent (0.25%) on the unused portion of such
Lender's Working Capital Commitment Amount, which facility
fee shall be payable in arrears on the first day of each
month.
(h) Use of Proceeds. The proceeds of the initial
P&I Advances will be used to repay the principal of the
"Tranche C Loans" (as such term is defined in the Existing
Servicing Credit Agreement) outstanding under the Existing
Servicing Credit Agreement on the Effective Date, the
proceeds of the initial T&I Advances will be used to repay
that portion of the principal of the "Tranche D Loans" (as
such term is defined in the Existing Servicing Credit
Agreement) outstanding under the Existing Servicing Credit
Agreement on the Effective Date which is attributable to
"T&I Advances" (as such term is defined in the Existing
Servicing Credit Agreement), the proceeds of the initial
Foreclosure Advances will be used to repay that portion of
the principal of such Tranche D Loans outstanding under the
Existing Servicing Credit Agreement on the Effective Date
which is attributable to "Expense Advances" (as such term is
defined in the Existing Servicing Credit Agreement), and the
proceeds of the initial Investment Loan Advances will be
used to repay that portion of the principal of such Tranche
D Loans outstanding under the Existing Servicing Credit
Agreement on the Effective Date which is attributable to the
acquisition or origination of Investment Loans by the
Borrower. The proceeds of subsequent Working Capital
Advances and Working Capital Swing Line Advances shall be
used as follows: (i) P&I Advances shall be used to fund P&I
Payments; (ii) T&I Advances shall be used to fund T&I
Payments; (iii) Foreclosure Advances shall be used to fund
Foreclosure Payments; and (iv) Investment Loan Advances
shall be used to finance or refinance the origination or
acquisition of Investment Loans.
(i) Termination of Working Capital Commitments;
Reduction of Working Capital Commitment Amounts.
(i) Termination. The Borrower shall
have the right, prior to any termination of the Working
Capital Commitments pursuant to Section 6.02, to
terminate the Working Capital Commitments of all (but
not less than all) Working Capital Lenders by giving
the Administrative Agent notice in writing, specifying
the date on which the Working Capital Commitments are
to terminate, which notice shall be effective upon
receipt by the Administrative Agent and which
termination date shall not be earlier than 30 days
after the date on which such notice is received by the
Administrative Agent. The Administrative Agent shall
give telephonic notice (confirmed in writing) to each
Working Capital Lender of the Agent's receipt of a
notice of termination of the Working Capital
Commitments given by the Borrower by not later than the
Agent's close of business on the second Business Day
following the date of receipt of such notice by the
Administrative Agent. Notwithstanding the foregoing,
any termination of the Commitments pursuant to Section
6.02 shall supersede any notice of termination under
this Section 2.03(i)(i). Once the Working Capital
Commitments have been terminated, they may not be
reinstated.
(ii) Reduction. The Borrower shall
have the right at any time upon at least 30 days' prior
written notice to the Administrative Agent and the
Lenders to reduce the Working Capital Commitment
Amounts of all (but not less than all) Working Capital
Lenders, which reduction shall be applied pro rata
among the Working Capital Lenders in proportion to
their respective Working Capital Commitment Amounts;
provided, that the aggregate amount of each such
reduction in the Working Capital Commitment Amounts
shall be in a minimum amount of $1,000,000 or an
integral multiple in excess thereof for all Working
Capital Commitments; and provided, further, that no
such reduction shall reduce the aggregate of the
Working Capital Commitment Amounts to less than the
aggregate principal amount outstanding under the
Working Capital Notes. The Administrative Agent shall
give telephonic notice (confirmed in writing) to each
Lender of the Agent's receipt of a notice of reduction
of the Working Capital Commitments by not later than
the Agent's close of business on the second Business
Day following the date of receipt of such notice by the
Administrative Agent. Once the Working
Capital Commitment Amounts have been reduced, they may
not be reinstated.
2.04 The Discretionary Facility.
(a) Discretionary Advances. Upon the terms and
subject to the conditions of this Agreement, until the
Discretionary Termination Date, each Discretionary Lender
may, upon the request of the Borrower, in the sole and
absolute discretion of such Discretionary Lender, lend (and
upon repayment, relend) to the Borrower, at such times and
in such amounts as the Borrower shall request, up to an
aggregate principal amount not to exceed at any time
outstanding such Discretionary Lender's Discretionary
Lending Limit, subject to the following limitations:
(i) the aggregate principal amount of
Discretionary Advances at any time outstanding shall
not exceed the sum of the Discretionary Lending Limits
of all the Discretionary Lenders; and
(ii) the aggregate principal amount of
Discretionary Advances at any time outstanding shall
not exceed the Discretionary Borrowing Base as
determined by the Collateral and Managing Agent and the
Administrative Agent from their records.
Any Discretionary Lender may at any time, upon notice to and
with the written consent of the Administrative Agent,
increase such Discretionary Lender's Discretionary Lending
Limit, whereupon the Administrative Agent shall prepare and
distribute to each Lender a new Exhibit F reflecting such
increased Discretionary Lending Limit.
(b) Manner of Borrowing. The Borrower shall give
the Administrative Agent telephonic notice of each request
for Discretionary Advances not later than 12:00 noon
(Minneapolis time) on the applicable Discretionary Advance
Date for such Discretionary Advances, specifying the
aggregate amount of Discretionary Advances requested and
the Discretionary Advances to be made by each Discretionary
Lender which are to be funded as Floating Eurodollar Rate
Borrowings or Alternate Base Rate Borrowings; provided, that
any portion of a Discretionary Advance not so designated
shall be funded as an Alternate Base Rate Borrowing. Fixed
Rate Borrowings shall not be available with respect to
Discretionary Advances. The Borrower shall promptly confirm
any such request by delivering to the Administrative Agent a
duly completed and executed Confirmation. The
Administrative Agent shall, by not later than 1:00 p.m.
(Minneapolis time) on the date on which such request for
Discretionary Advances is received by it from the Borrower,
notify each Discretionary Lender of such request, of such
Discretionary Lender's Pro Rata Share of the Discretionary
Advances requested, the applicable Discretionary Advance
Date therefor, and whether such Discretionary Lender's
Discretionary Advances are to be funded as Floating
Eurodollar Rate Borrowings or Alternate Base Rate
Borrowings. Each Discretionary Lender shall give notice to
the Agent by not later than 1:30 p.m. (Minneapolis time) on
such Discretionary Advance Date stating whether or not it
will make the Discretionary Advance requested of it. If, in
its notice to the Lender, any Discretionary Lender declines
to make the Discretionary Advance requested of it, the
Administrative Agent shall promptly notify the Borrower of
such fact, in which event the Borrower may request the
Administrative Agent to request any other Discretionary
Lender designated by the Borrower to make all or part of the
Discretionary Advance so declined. Each Discretionary
Lender that desires to make a Discretionary Advance
requested of it shall deposit into the Collateral Account in
Immediately Available Funds by not later than 3:00 p.m.
(Minneapolis time) on said Discretionary Advance Date the
total amount of the Discretionary Advance to be made by such
Discretionary Lender. Each request for Discretionary
Advances shall be deemed to be a representation by the
Borrower that (i) no Default or Event of Default has
occurred or will exist upon the making of the requested
Discretionary Advances and (ii) the representations and
warranties contained in Section 3, in Section 5 of the
Warehousing and Discretionary Security Agreement and in
Section 5 of the Servicing and Working Capital Security
Agreement, are true and correct with the same force and
effect as if made on and as of the date of such request.
Upon the deposit of the Discretionary Advances in the
Collateral Account on the applicable Discretionary Advance
Date, the Administrative Agent shall transfer the proceeds
thereof to the account or accounts designated by the
Borrower in its notice to the Administrative Agent.
(c) Discretionary Notes. Discretionary Advances
made by each Discretionary Lender shall be evidenced by the
Borrower's promissory note in the form of Exhibit J (each a
"Discretionary Note"), which shall be made payable to the
order of such Discretionary Lender and shall mature on the
Discretionary Termination Date. The aggregate amount of the
Discretionary Advances made by a Discretionary Lender under
its Discretionary Note less all repayments of principal
thereof shall be the principal amount owing and unpaid on
such Discretionary Note. The principal amount of each
Discretionary Advance made by a Discretionary Lender and all
principal payments and prepayments thereof may be noted by
such Discretionary Lender on a schedule attached to its
Discretionary Note and shall be entered by such Lender on
its ledgers and computer records; provided, that the failure
of any Discretionary Lender to make such notations or
entries shall not affect the principal amount owing and
unpaid on its Discretionary Note. The entries made by a
Discretionary Lender on its ledgers and computer records and
any notations made by such Discretionary Lender on any such
schedule annexed to its Discretionary Note shall be presumed
to be accurate until the contrary is established.
(d) Payment and Prepayment of Discretionary
Advances. The Borrower shall pay the principal of the
Discretionary Notes as follows:
(i) Mandatory Payments. Each Discretionary
Advance shall be repaid on the tenth (10th) day
following the Discretionary Advance Date on which such
Discretionary Advance was made, and the entire unpaid
principal balance of each Discretionary Lender's
Discretionary Note shall be due and payable on the
Discretionary Termination Date.
(ii) Mandatory Prepayments. If, at any
time, the aggregate principal amount of all
Discretionary Advances outstanding exceeds the lesser
of (A) the aggregate amount of the Discretionary
Lenders' Discretionary Lending Limits, or (B) the
Discretionary Borrowing Base (as determined by the
Collateral and Managing Agent and the Administrative
Agent from their records), the Borrower shall
immediately make principal prepayments on the
Discretionary Notes in an aggregate amount equal to the
amount of such excess, which aggregate amount shall be
paid to the Administrative Agent and distributed to the
Discretionary Lenders ratably on the basis of each
Discretionary Lender's Pro Rata Share thereof.
(iii) Optional Prepayments. The Borrower
shall have the right to prepay the outstanding
principal balances of the Discretionary Notes in whole
or in part at any time and from time to time, each such
principal prepayment to be paid to the Administrative
Agent and distributed to the Discretionary Lenders
ratably on the basis of each Discretionary Lender's Pro
Rata Share thereof.
(iv) Confirmation. The Borrower shall
promptly send the Administrative Agent a Confirmation
confirming any payment or prepayment of principal made
on the Discretionary Notes.
(e) Use of Proceeds. The proceeds of the initial
Discretionary Tranche 1 Advances will be used to repay the
principal of that portion of the "Tranche B Loans" (as such
term is defined in the Existing Warehouse Credit Agreement)
outstanding under the Existing Warehouse Credit Agreement on
the Effective Date which is attributable to "Eligible
Gestation MBS" (as such term is defined in the Existing
Warehouse Credit Agreement) and the proceeds of the initial
Discretionary Tranche 2 Advances will be used to repay the
principal of that portion of the "Tranche B Loans" (as such
term is defined in the Existing Warehouse Credit Agreement)
outstanding under the Existing Warehouse Credit Agreement on
the Effective Date which is attributable to "Eligible
Gestation Mortgage Loans" (as such term is defined in the
Existing Warehouse Credit Agreement). The proceeds of
subsequent Discretionary Advances shall be used as follows:
(i) Discretionary Tranche 1 Advances shall be used to
finance or refinance the origination or acquisition of
Gestation Securities by the Borrower, (ii) Discretionary
Tranche 2 Advances shall be used to finance or refinance the
origination or acquisition of Gestation Loans by the
Borrower, and (iii) Discretionary Tranche 3 Advances shall
be used to finance or refinance the origination or
acquisition of Committed Whole Loans by the Borrower.
2.05 Interest on the Notes; Balances Deficiency Fees;
Continuations and Conversions; Designated Fixed Rate Borrowings.
(a) Interest Rates; Balances Deficiency Fees.
The Borrower will pay each Lender interest on the unpaid
principal balance of each Advance from time to time
outstanding as follows:
(i) with respect to Fixed Rate Borrowings
and Designated Fixed Rate Borrowings, at the per annum
rate of (A) with respect to Fixed Rate Borrowings and
Designated Fixed Rate Borrowings consisting of any
portion of the outstanding principal balance of a
Servicing Note, 2.25%; (B) with respect to Fixed Rate
Borrowings and Designated Fixed Rate Borrowings
consisting of any portion of the outstanding principal
balance of a Warehousing Note, 1%; and (C) with respect
to Fixed Rate Borrowings and Designated Fixed Rate
Borrowings consisting of any portion of the outstanding
principal balance of a Working Capital Note, 1.625%;
provided, that if for any Balance Calculation Period
the weighted average daily Reserve-Adjusted Balances
maintained by the Borrower with any Lender are less
than an amount equal to the weighted average daily
aggregate unpaid principal balance of the Fixed Rate
Borrowings (other than Designated Fixed Rate
Borrowings) owed to such Lender during such Balance
Calculation Period (such deficiency being herein
referred to as the "Balances Deficiency"), the Borrower
will pay each Lender a fee (the "Balances Deficiency
Fee") for said Balance Calculation Period on the
Balances Deficiency at a per annum rate equal to the
average daily Floating Reserve-Adjusted Eurodollar Rate
in effect during said Balance Calculation Period; and
provided, further, that the amount by which the
weighted average Reserve-Adjusted Balances maintained
by the Borrower with such Lender for any Balance
Calculation Period exceeds the weighted average daily
aggregate unpaid principal balance of the Fixed Rate
Borrowings (other than Designated Fixed Rate
Borrowings) owed to such Lender during such Balance
Calculation Period (such excess being defined herein as
the "Balances Surplus"), such Balances Surplus, or, if
the Borrower and the Lender shall so agree, the
earnings credit for such Balances Surplus (as
determined by such Lender), may be carried forward and
applied to succeeding Balance Calculation Periods (but
not to any Balance Calculation Period occurring in any
subsequent calendar year, unless the Borrower and such
Lender shall otherwise agree in writing); and provided,
further, that if the Borrower and any Lender so agree
in writing, the Borrower may obtain a lower fixed rate
from such Lender for Fixed Rate Borrowings (other than
Designated Fixed Rate Borrowings) by maintaining
additional Reserve-Adjusted Balances with such Lender;
(ii) with respect to Alternate Base Rate
Borrowings, the Alternate Base Rate plus the Applicable
Margin, as adjusted automatically on and as of the
effective date of any change in the Alternate Base
Rate; and
(iii) with respect to Floating
Eurodollar Rate Borrowings the Floating Adjusted
Eurodollar Rate plus the Applicable Margin, as adjusted
automatically on and as of the effective date of any
change in the Floating Reserve-Adjusted Eurodollar
Rate.
(b) Payment of Interest, Facility Fees and
Balances Deficiency Fees. Interest accrued on the Notes
through the last day of each calendar month shall be payable
on the first Business Day of the next succeeding calendar
month and, in addition, on the last Servicing Amortization
Date, in the case of the Servicing Notes, on the Warehousing
Termination Date, in the case of the Warehousing Notes, on
the Working Capital Termination Date, in the case of the
Working Capital Notes, and on the Discretionary Termination
Date, in the case of the Discretionary Notes. All payments
of interest and facility fees shall be made to the
Administrative Agent for the account of the Lenders and
shall be distributed by the Administrative Agent to the
Lenders ratably on the basis of each Lender's Pro Rata Share
thereof. Any Balances Deficiency Fee payable hereunder
shall be payable to the applicable Lender, quarterly after
the end of each calendar quarter within two Business Days
after receipt by the Borrower and the Administrative Agent
from such Lender of a statement therefor containing the
calculations made to determine such Balances Deficiency Fee,
which statement shall be conclusive absent manifest error.
Unless an Event of Default shall have occurred and be
continuing, each payment of interest and facilities fees
made to the Administrative Agent shall be distributed by the
Administrative Agent to the Lenders in the amount of
interest and facilities fees accrued on such Lender's
Advances for the applicable period. If an Event of Default
shall have occurred and be continuing, all such payments of
interest and facilities fees shall be distributed to the
Lenders ratably on the basis of each Lender's Pro Rata Share
(determined under clause (j) of the definition thereof).
(c) Continuation and Conversions of Outstanding
Borrowings. Subject to the terms and conditions of this
Agreement, the Borrower shall have the option to convert
all or any portion of any outstanding Borrowing into
Borrowings of another type (i.e., Floating Eurodollar Rate
Borrowings, Fixed Rate Borrowings or Alternate Base Rate
Borrowings) or to continue any such Floating Eurodollar Rate
Borrowing, Fixed Rate Borrowing or Alternate Base Rate
Borrowing as such; provided, however, that the Borrower's
option to convert Borrowings into other types of Borrowings
shall be limited to the portions of outstanding Borrowings
which are not Designated Fixed Rate Borrowings.
Notwithstanding the foregoing, however:
(i) no Borrowing may be continued as or
converted into a Floating Eurodollar Rate Borrowing if
a Default or an Event of Default has occurred and is
continuing on the proposed date of such continuation or
conversion;
(ii) each Fixed Rate Borrowing requested
by the Borrower shall be effective only with respect to
a designated calendar month (or, where clause (A) below
is applicable, the remaining portion of such month) and
shall be requested either (A) at the time the
applicable Servicing Advance, Warehousing Advance,
Warehousing Swing Line Advance, Working Capital Advance
or Working Capital Swing Line Advance is made, if such
Warehousing Advance, Warehousing Swing Line Advance,
Working Capital Advance or Working Capital Swing Line
Advance is to be made in whole or in part in the form
of a Fixed Rate Borrowing, or (B) prior to the first
day of the month for which such Fixed Rate Borrowing is
to be effective, if a Borrowing of another type is to
be converted to a Fixed Rate Borrowing.
(iii) no portion of the outstanding
principal balance of any of a Lender's Notes may be
funded as or converted to a Fixed Rate Borrowing
without the prior consent of such Lender, which shall
be confirmed to the Administrative Agent in writing by
such Lender, if the Reserve-Adjusted Balances
maintained by the Borrower at such Lender are
substantially less than the aggregate amount of Fixed
Rate Borrowings owed to such Lender, after giving
effect to the making or conversion of such Advance; and
(iv) Fixed Rate Borrowings shall not be
available with respect to Discretionary Notes.
The Borrower shall provide the Administrative Agent with
telephonic notice of each proposed conversion by 11:00 a.m.
(Minneapolis time) on the date of such conversion, in the
case of conversion of Borrowings under the Servicing Notes
and Working Capital Notes, and by 12:00 noon (Minneapolis
time) on the date of such conversion, the case of conversion
of Borrowings under the Warehousing Notes and Discretionary
Notes. Such notice shall set forth the proposed date
therefor (which shall be a Business Day). The Borrower
shall promptly confirm any such proposed conversion by
delivering to the Administrative Agent a duly completed and
executed Confirmation. By not later than 12:00 noon
(Minneapolis time) on the date on which such notice is
received by the Administrative Agent from the Borrower, in
the case of conversion of Borrowings under the Servicing
Notes and the Working Capital Notes, and by not later than
1:00 p.m. (Minneapolis time) on such date, in the case of
conversion of Borrowings under the Warehousing Notes and the
Discretionary Notes, the Administrative Agent shall notify
each affected Lender of the Borrowings of such Lender being
converted and the types of Borrowings into which such
Borrowings are being converted.
(d) Designated Fixed Rate Borrowings.
Notwithstanding any other provision of this Agreement
(including, without limitation, Sections 2.01(b), 2.02(c),
2.03(c), 2.04(b) and 2.05(c)) to the contrary or any
contrary designation or conversion made by the Borrower
pursuant to Section 2.01(b), 2.02(c), 2.03(c), 2.04(b) or
2.05(c), the Administrative Agent may, subject to and in
accordance with its separate written agreement with the
Borrower, notify any Lender other than First Bank, on or
prior to the first day of any calendar month, that all or up
to a specified amount of the outstanding principal balance
of such Lender's Servicing Note, Warehousing Note and/or
Working Capital Note shall bear interest for such month as
provided in Section 2.05(a)(i). The portion of the
outstanding principal balance of such Lender's Servicing
Note, Warehousing Note and/or Working Capital Note which is
designated by the Administrative Agent to bear interest in
accordance with the preceding sentence is referred to herein
as a "Designated Fixed Rate Borrowing." The Borrower shall
pay interest monthly on each Designated Fixed Rate Borrowing
to each affected Lender in accordance with Sections
2.05(a)(i), 2.05(c) and 2.07. In addition, the
Administrative Agent shall pay to each such Lender monthly
an amount (an "Earnings Credit") calculated by multiplying
the weighted average daily aggregate principal amount of
such Lender's Designated Fixed Rate Borrowings outstanding
during such month by a rate per annum equal to the average
daily Federal Funds Effective Rate for such month, computed
on the basis of actual days elapsed and a year of 360 days.
The parties hereto acknowledge that Earnings Credits payable
by the Administrative Agent hereunder are attributable to
Reserve-Adjusted Balances on deposit with the Administrative
Agent in accounts which are not demand deposit accounts as
such term is used in Regulation Q of the Board.
2.06 Administrative Agent's and Collateral and
Managing Agent's Fees. The Borrower shall pay to the
Administrative Agent and the Collateral and Managing Agent such
agent's fees and collateral monitoring fees as the Borrower may
agree upon in writing from time to time with the Administrative
Agent and the Collateral and Managing Agent, respectively.
2.07 Payments and Computations.
(a) Payments. All payments and prepayments by
the Borrower of principal of and interest on each Note and
all fees, expenses and other obligations under this
Agreement payable to the Lenders shall be made in
Immediately Available Funds to the Administrative Agent not
later than
(i) 11:00 a.m. (Minneapolis time), in
the case of principal, interest and fees in respect of
the Servicing Notes, Servicing Advances, Working
Capital Notes and Working Capital Advances,
(ii) 12:00 noon (Minneapolis time), in
the case of principal, interest and fees in respect of
the Warehousing Notes, Warehousing Advances,
Discretionary Notes and Discretionary Advances,
(iii) 2:30 p.m. (Minneapolis time) in
the case of principal, interest and fees in respect of
Warehousing Swing Line Advances and Working Capital
Swing Line Advances, and
(iv) 11:00 a.m. (Minneapolis time) in
the case of expenses and other obligations payable
under this Agreement,
on the dates called for under this Agreement, at the main
office of the Administrative Agent in Minneapolis. Funds
received after such hour shall be deemed to have been
received by the Administrative Agent on the next Business
Day. The Borrower irrevocably authorizes the Administrative
Agent to charge the Collateral Account or any other account
of the Borrower maintained with the Administrative Agent in
an amount equal to any such payment or prepayment of
principal, interest, fees, expenses and other Obligations
then due and payable by the Borrower to the Lenders or the
Administrative Agent under this Agreement and the Notes, as
the case may be.
(b) Computations. Balances Deficiency Fees,
facility fees and interest on each Note shall be computed on
the basis of actual days elapsed and a year of 360 days.
2.08 Setoff. Whenever an Event of Default shall have
occurred and be continuing, the Borrower hereby irrevocably
authorizes each Lender to set off the Obligations owed to such
Lender against all deposits and credits of the Borrower with, and
any and all claims of the Borrower against, such Lender,
excluding deposits of the Borrower with such Lender which the
Borrower holds in escrow or in trust for the benefit of third
parties, whether or not the Obligations owed to such Lender, or
any part thereof, shall be then due.
2.09 Increased Capital Requirements. In the event
that, as a result of any Regulatory Change, compliance by any
Lender with any applicable law or governmental rule, requirement,
regulation, guideline or order (whether or not having the force
of law) regarding capital adequacy has the effect of reducing the
rate of return on such Lender's capital or on the capital of such
Lender's parent corporation as a consequence of the Commitments
or amounts outstanding under such Lender's Notes to a level below
that which such Lender or its parent would have achieved but for
such compliance, then from time to time the Borrower shall pay to
such Lender or its parent such additional amount or amounts as
will compensate such Lender or its parent for such reduction;
provided, however, that the Borrower shall not be obligated to
pay any such amount or amounts (a) unless such Lender shall have
first notified the Borrower in writing that it intends to seek
compensation from the Borrower pursuant to this sentence, and (b)
which are attributable to any period of time occurring prior to
the date which is one year prior to the date of receipt by the
Borrower of such notice. A certificate as to the amount of any
such reduction (including calculations in reasonable detail
showing how such Lender computed such reduction and a statement
that such Lender has not allocated to the Commitments or amounts
outstanding under such Lender's Notes a proportionately greater
amount of such reduction than is attributable to each of its
other commitments to lend or to each of its other outstanding
credit extensions that are affected similarly by such compliance
by such Lender or its parent, whether or not such Lender
allocates any portion of such reduction to such other commitments
or credit extensions) shall be furnished promptly by such Lender
to the Borrower.
2.10 Provisions Relating to Floating Eurodollar Rate
Borrowings, Fixed Rate Borrowings and Designated Fixed Rate
Borrowings.
(a) Interest Rate Not Ascertainable, Etc. If, on
the date for determining the Floating Reserve-Adjusted
Eurodollar Rate in respect of any Floating Eurodollar Rate
Borrowing, any Lender determines (which determination shall
be conclusive and binding, absent manifest error) that:
(i) deposits in dollars (in the applicable
amount) are not being made available to such Lender in
the relevant market, or
(ii) the Floating Reserve-Adjusted
Eurodollar Rate, as the case may be, will not
adequately and fairly reflect the cost to such Lender
of funding,
then such Lender shall notify the Administrative Agent, and
the Administrative Agent shall forthwith give notice to the
Borrower, of such determination, whereupon the obligation of
such Lender to make or continue, or to convert any
Borrowings to, Floating Eurodollar Rate Borrowings, as the
case may be, shall be suspended until such Lender notifies
the Administrative Agent, and the Administrative Agent
notifies the Borrower, that the circumstances giving rise to
such suspension no longer exist. Outstanding Floating
Eurodollar Rate Borrowings, as the case may be, owed to the
Lender making such determination shall thereupon
automatically be converted to Alternate Base Rate
Borrowings.
(b) Increased Cost. If, after the date hereof,
any Regulatory Change or compliance with any request or
directive (whether or not having the force of law) of any
governmental authority, central bank or comparable agency:
(i) shall subject any Lender to any tax,
duty or other charge with respect to Floating
Eurodollar Rate Borrowings or its obligation to make
Floating Eurodollar Rate Borrowings or shall change the
basis of taxation of payment to such Lender of the
principal of or interest on Floating Eurodollar Rate
Borrowings or any other amounts due under this
Agreement in respect of Floating Eurodollar Rate
Borrowings or its obligation to make Floating
Eurodollar Rate Borrowings (except for changes in the
rate of tax on the overall net income of such Lender
imposed by the laws of the United States or any
jurisdiction in which such Lender's principal office is
located); or
(ii) shall impose, modify or deem applicable
any reserve, special deposit, capital requirement or
similar requirement (including, without limitation, any
such requirement imposed by the Board, but excluding
any such requirement to the extent included in
calculating the applicable Floating Reserve-Adjusted
Eurodollar Rate, as the case may be) against assets of,
deposits with or for the account of, or credit extended
by, any Lender or shall impose on any Lender or on the
United States market for certificates of deposit any
other condition affecting Floating Eurodollar Rate
Borrowings or its obligation to make Floating
Eurodollar Rate Borrowings;
and the result of any of the foregoing is to increase the
cost to such Lender of making or maintaining any Floating
Eurodollar Rate Borrowing, or to reduce the amount of any
sum received or receivable by such Lender under this
Agreement or under the Notes, then, within 30 days after
demand by such Lender, the Borrower shall pay to such Lender
such additional amount or amounts as will compensate such
Lender for such increased cost or reduction. Each Lender
will promptly notify the Borrower of any event of which it
has knowledge, occurring after the date of this Agreement,
which will entitle such Lender to compensation pursuant to
this Section 2.10; provided, however, that the Borrower
shall not be obligated to pay any such amount or amounts (i)
unless such Lender shall have first notified the Borrower in
writing that it intends to seek compensation from the
Borrower pursuant to this sentence, and (ii) which are
attributable to any period of time occurring prior to the
date which is one year prior to the date of receipt by the
Borrower of such notice. A certificate of any Lender
claiming compensation under this Section 2.10, setting forth
the additional amount or amounts to be paid to it hereunder
and stating in reasonable detail the basis for the charge
and the method of computation, shall be conclusive in the
absence of manifest error. In determining such amount, such
Lender may use any reasonable averaging and attribution
methods. Except as provided in the proviso clause of the
second sentence of this Section 2.10(b), failure on the part
of any Lender to demand compensation for any increased costs
or reduction in amounts received or receivable with respect
to any period shall not constitute a waiver of such Lender's
rights to demand compensation for any increased costs or
reduction in amounts received or receivable in any
subsequent period.
(c) Illegality. If, after the date of this
Agreement, the adoption of or any change in any applicable
law, rule or regulation, or any change in the interpretation
or administration thereof by any governmental authority,
central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by
any Lender with any request or directive (whether or not
having the force of law) of any such authority, central bank
or comparable agency shall make it unlawful or impossible
for such Lender to make, maintain or fund Fixed Rate
Borrowings, Designated Fixed Rate Borrowings or Floating
Eurodollar Rate Borrowings, such Lender shall notify the
Borrower and the Administrative Agent, whereupon the
obligation of such Lender to make Fixed Rate Borrowings,
Designated Fixed Rate Borrowings or Floating Eurodollar Rate
Borrowings shall be suspended until such Lender notifies the
Borrower and the Administrative Agent that the circumstances
giving rise to such suspension no longer exist. If any
Lender determines that it may not lawfully continue to
maintain any Fixed Rate Borrowings, Designated Fixed Rate
Borrowings or Floating Eurodollar Rate Borrowings all of the
affected Advances shall be automatically converted to
Alternate Base Rate Borrowings as of the date of such
Lender's notice.
SECTION 3. REPRESENTATIONS AND WARRANTIES. In order
to induce the Lenders to enter into this Agreement and to make
Advances hereunder, the Borrower hereby makes the following
representations and warranties to the Lenders:
3.01 Formation, Powers, Good Standing and
Subsidiaries.
(a) Formation and Powers. The Borrower is a
limited partnership duly organized, validly existing and in
good standing under the laws of the State of Delaware and
has all requisite partnership power and authority to own and
operate its properties, to carry on its business in all
material respects as now conducted and proposed to be
conducted, to enter into each Loan Document to which it is
or will be a party and to carry out the transactions
contemplated hereby and thereby. Each Subsidiary of the
Borrower has been duly organized and is validly existing and
in good standing under the laws of the jurisdiction of its
incorporation or formation, as the case may be, and has all
requisite corporate power and authority or partnership power
and authority, as the case may be, to own and operate its
properties and to carry on its business in all material
respects as now conducted and proposed to be conducted.
(b) Good Standing. The Borrower and each of its
Subsidiaries is in good standing wherever necessary to carry
on its business and operations, except in jurisdictions in
which the failure to be in good standing would not
permanently preclude it from enforcing its rights with
respect to any material asset or expose it to any material
liability.
(c) Subsidiaries, Joint Ventures and
Partnerships. As of the Effective Date, except as described
on Schedule 3.01(c), the Borrower has no Subsidiaries and is
not a partner in any partnership or a participant in any
joint venture.
3.02 Authorization; No Conflict; Governmental
Consents; Binding Effect.
(a) Authorization of Borrowing. The execution,
delivery and performance by the Borrower of each Loan
Document to which it is or will become a party and the
issuance, delivery and payment of the Notes have been duly
authorized by all necessary partnership action of the
Borrower.
(b) No Conflict. The execution, delivery and
performance by the Borrower of each Loan Document to which
it is or will be a party and the issuance, delivery and
payment of the Notes do not and will not (i) violate any
provision of law applicable to it, its partnership agreement
or certificate of limited partnership or any order, judgment
or decree of any court or other agency of government binding
on it, (ii) conflict with, result in a breach of or
constitute (with due notice or lapse of time or both) a
default under any of its contractual obligations, (iii)
result in or require the creation or imposition of any Lien,
charge or encumbrance of any nature whatsoever upon any of
its properties or assets except the Liens granted to the
Collateral and Managing Agent under the Warehousing and
Discretionary Security Agreement and to the Administrative
Agent under the Servicing and Working Capital Security
Agreement, or (iv) require any approval of partners or any
approval or consent of any Person not previously obtained
under any of its contractual obligations, other than the
approval of Investors represented by Acknowledgement
Agreements.
(c) Governmental and Other Consents. The
execution, delivery and performance by the Borrower of each
Loan Document to which it is or will be a party and the
issuance, delivery and payment of the Notes by the Borrower
do not and will not require any registration with, consent
or approval of, or notice to, or other action to, with or
by, any Federal, state or other governmental authority or
regulatory body or other Person, other than the approval of
Investors represented by Acknowledgement Agreements.
(d) Binding Obligations. Each of the Loan
Documents to which it is or will be a party is or will be,
as the case may be, the legally valid and binding obligation
of the Borrower, enforceable against it in accordance with
its terms, except as enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or
similar laws or equitable principles relating to or limiting
creditors' rights generally.
3.03 Financial Condition. The Borrower has heretofore
delivered to the Lenders its audited balance sheet as at December
31, 1995 and its unaudited balance sheet as at March 31, 1996,
together with, in each case, the related
statements of income, partners' equity and cash flow for the
periods then ended. Such financial statements have been prepared
in accordance with GAAP and fairly present the financial
condition of the Borrower and its Subsidiaries as at the dates
indicated and the results of their operations and cash flow for
the periods indicated. As of the date of this Agreement, neither
the Borrower nor any of its Subsidiaries has any material
contingent obligation, contingent liability or liability for
taxes, long-term lease or unusual forward or long-term
commitment, which is not reflected in the foregoing financial
statements or in the notes thereto. No material adverse change
in, or development likely to have a material adverse effect on,
the business, operations, prospects, assets or condition
(financial or otherwise) of the Borrower has occurred since March
31, 1996, and no occurrence or event which is likely to have a
material adverse effect on the rights and remedies of the
Administrative Agent, the Collateral and Managing Agent or the
Lenders or the ability of the Borrower to perform its obligations
to the Agents and the Lenders under the Loan Documents has
occurred since March 31, 1996.
3.04 Title to Property; Liens. The Borrower and each
of its Subsidiaries has good, sufficient and legal title to all
the properties and assets reflected in the balance sheet dated as
at March 31, 1996 referred to in Section 3.03 and all assets held
by the Borrower and each of its Subsidiaries the date of this
Agreement but acquired subsequent to the date of such balance
sheet. The Borrower and each of its Subsidiaries have good,
sufficient and legal title to all of the assets and properties
reflected in such balance sheet. All such properties and assets
are free and clear of Liens, except as permitted hereunder. The
grant of security interests pursuant to the Warehousing and
Discretionary Security Agreement and the Servicing and Working
Capital Security Agreement create valid security interests in the
property subject thereto and the Liens on the Collateral created
by the Warehousing and Discretionary Security Agreement and the
Servicing and Working Capital Security Agreement will be first
priority Liens thereon, subject, with respect to each Servicing
Contract, to the interests of the other parties to such Servicing
Contract, free and clear of any other Liens except as permitted
hereunder.
3.05 Litigation; Adverse Facts. Except as set forth
in Schedule 3.05, there is no action, suit, proceeding or
arbitration at law or in equity or before or by any Federal,
state, municipal or other governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign,
pending or, to the knowledge of the Borrower or any of its
Subsidiaries, threatened against or affecting the Borrower or any
of its Subsidiaries, or any of their respective properties, and
which, if determined adversely to the Borrower or such
Subsidiary, as the case may be, would constitute a Material
Adverse Event, and none of the matters listed on such schedule
would, if decided in a manner adverse to it, result in any
material adverse change in its business, operations, properties,
assets or condition (financial or otherwise) or would materially
adversely affect its ability to perform its obligations under
each Loan Document to which it is or will be a party, and there
is no basis known to it for any action, suit or proceeding which
would have such an effect. Neither the Borrower nor any of its
Subsidiaries of the Borrower is (i) in violation of any
applicable law if such violation materially adversely affects or
may materially adversely affect its business, operations,
properties, assets or condition (financial or otherwise) or (ii)
subject to any final judgment, writ, injunction, decree, rule or
regulation of any court or Federal, state, municipal or other
governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, which could have a material
adverse effect on its business, operations, properties, assets or
condition (financial or otherwise). There is no action, suit,
proceeding or investigation pending or, to the knowledge of the
Borrower or any of its Subsidiaries, threatened against or
affecting the Borrower or any of its Subsidiaries which questions
the validity or the enforceability of any Loan Document.
3.06 Other Agreements; Performance.
(a) Agreements. Neither the Borrower nor any of
its Subsidiaries is a party to or subject to any contractual
obligation or charter or other internal restriction
materially adversely affecting its business, properties,
assets, operations or condition (financial or otherwise).
(b) Performance. Neither the Borrower nor any of
its Subsidiaries is in default in the performance,
observance or fulfillment of any of the obligations,
covenants or conditions contained in any of its contractual
obligations, and no condition exists which, with the giving
of notice or the lapse of time or both, would constitute
such a default, except where the consequences, direct or
indirect, of such default or defaults, if any, would not
have a material adverse effect on its business, properties,
assets, operations or condition (financial or otherwise).
To the best knowledge of the Borrower and its Subsidiaries,
the other parties to any of its contractual obligations are
not in default thereunder, except where the consequences,
direct or indirect, of such default or defaults, if any,
would not have a material adverse effect on its business,
properties, assets, operations or condition (financial or
otherwise).
3.07 Use of Proceeds. All proceeds of Servicing
Advances will be used only in accordance with Section 2.01(e),
all proceeds of Warehousing Advances and Warehousing Swing Line
Advances will be used only in accordance with Section 2.02(h),
all proceeds of Working Capital Advances will be used only in
accordance with Section 2.03(h) and all proceeds of Discretionary
Advances will be used only in accordance with Section 2.04(e).
No part of the proceeds of any Servicing Advance, any Warehousing
Advance, any Warehousing Swing Line Advance, any Working Capital
Advance, any Working Capital Swing Line Advance or any
Discretionary Advance will be used by the Borrower to purchase or
carry any margin stock (as such term is defined in Regulation U
of the Board) or to extend credit to any other Person for the
purpose of purchasing or carrying any margin stock.
3.08 Taxes. The Borrower and each of its Subsidiaries
has filed all tax returns required to be filed by it, and has
paid all taxes and assessments payable by it which have become
due, other than those not yet delinquent and except for those
contested in good faith by appropriate proceedings for which
adequate reserves in conformity with GAAP have been provided; no
material tax Liens have been filed; and, to the knowledge of the
Borrower and its Subsidiaries, no material claims or assessments
are being asserted or will be asserted with respect to any such
taxes or other charges.
3.09 ERISA. With respect to all Plans maintained at
any time by the Borrower or an ERISA Affiliate:
(a) each Plan complies and will comply with all
material applicable requirements of ERISA and of the Code
and with all material applicable rulings and regulations
issued under the provisions of ERISA and the Code setting
forth those requirements,
(b) no reportable event (as defined in Section
4043(b), subdivision (5), (6) or (9) of ERISA) (a
"Reportable Event") has occurred or will occur with respect
to any Plan,
(c) neither the Borrower nor any of its Subsidiaries
has engaged or will engage in any Prohibited Transaction
which (i) has not been corrected within the correction
period applicable to it under Section 502(i) of ERISA or
Section 4975(b) of the Code or (ii) for which an exemption
is not applicable or has not been obtained under Section 408
of ERISA or Section 4975 of the Code,
(d) the Borrower and its Subsidiaries have satisfied
and will satisfy all of the funding standards applicable to
such Plans, and
(e) no event or condition which would permit the
institution of proceedings to terminate any Plan under
Section 4042 of ERISA, exists or will exist.
3.10 Governmental Regulation. Neither the Borrower
nor any of its Subsidiaries is subject to regulation under the
Public Utility Holding Borrower Act of 1935, the Federal Power
Act, the Interstate Commerce Act or the Investment Borrower Act
of 1940 or to any Federal or state statute or regulation limiting
its ability to incur Indebtedness for money borrowed.
3.11 Indebtedness. As of the date of this Agreement,
neither the Borrower nor any of its Subsidiaries has any
Indebtedness outstanding except the Indebtedness permitted
pursuant to Section 4.08 and obligations under the Loan
Documents; none of such Indebtedness is in default.
3.12 No Material Adverse Event. Since the date of the
latest unaudited financial statements referred to in
Section 3.03, none of the business, operation, properties or
assets of the Borrower or any of its Subsidiaries have been
affected in any material adverse way as the result of any
Material Adverse Event, including, without limitation, fire,
explosion, accident, act of God, strike, lockout, flood, drought,
storm, earthquake, or combination of workmen or other labor
disturbance, riot, activity of armed forces or of the public
enemy, embargo or nationalization, condemnation, requisition or
taking of property, or cancellation or modification of contracts,
by any domestic or foreign government or any instrumentality or
agency thereof.
3.13 Licenses and Permits. The Borrower has all
federal, state and local licenses and permits required to be
maintained in connection with and material to the operation of
its businesses the failure to obtain which will result in a
material adverse effect on the business of the Borrower taken as
a whole, and all such licenses and permits are and, after the
closing of the transactions contemplated by the Loan Documents
will continue to be, valid and fully effective.
3.14 Guarantees. Except as set forth on Schedule
3.14, the Borrower has not made, and is not liable in respect of,
any Guarantee.
3.15 GNMA, FHA, VA, FNMA and FHLMC Eligibility of the
Borrower. The Borrower is (a) an FHA-approved, non-supervised
mortgagee in good standing and an eligible lender under the VA
loan guaranty program, meeting all requirements of law and
governmental regulation so as to be eligible to originate,
purchase, hold and service FHA-insured Mortgage Loans, VA-
guaranteed Mortgage Loans and conventional Mortgage Loans and to
issue Mortgage-backed Securities guaranteed by GNMA; (b) an
approved seller/servicer of Mortgage Loans to FNMA and to FHLMC
in the FHLMC regions in which it operates, meeting all applicable
FNMA and FHLMC regulations so as to be able to service Mortgage
Loans for FNMA and FHLMC; and (c) a FNMA, FHLMC and GNMA-approved
servicer of Mortgage-backed Securities, meeting all applicable
regulations of FNMA, FHLMC and GNMA so as to be able to service
the Mortgage Loans that secure Mortgage-backed Securities.
3.16 Accuracy and Completeness of Information. No
representation or warranty of the Borrower contained in this
Agreement or the other Loan Documents contains any untrue
statement of a material fact or omits to state a material fact
necessary in order to make the statements contained herein or
therein not materially misleading. There is no fact known to the
Borrower or any of its Subsidiaries (other than matters of
general public knowledge) which materially adversely affects its
business, operations, property, assets or condition (financial or
otherwise) which has not been disclosed herein or in such other
documents, certificates and statements furnished to the Lenders
for use in connection with the transactions contemplated hereby.
SECTION 4. COVENANTS OF THE COMPANY. So long as any
Commitment is in effect and thereafter so long as any Obligation
shall remain unpaid or unperformed, the Borrower covenants that,
unless the Required Lenders shall otherwise consent in writing,
it will perform all the covenants set forth in this Section 4;
provided, however, that the written consent of
(a) the Required Servicing Lenders, in the case
of a departure from the provisions of Section 4.01(d)(ii),
401(f) or 4.18, and
(b) the Required Warehousing Lenders, in the case
of a departure from the provisions of Section 4.01(e),
shall be required, rather than that of the Required Lenders.
4.01 Financial Statements and Other Reports. The
Borrower will maintain a system of accounting established and
administered in accordance with sound business practices such as
to permit the preparation of financial statements in accordance
with GAAP and furnish or cause to be furnished to each Lender:
(a) as soon as available and in any event within
45 days after the end of each calendar month, a copy of the
unaudited consolidated financial statements of the Borrower
as at the end of such month, consisting of at least a
balance sheet and the related statements of income,
partners' equity and cash flow of the Borrower for such
month and from the beginning of the then current fiscal year
of the Borrower to the end of such month, all in reasonable
detail, and certified by the chief financial officer of the
Borrower as being complete and correct and fairly presenting
the Borrower's consolidated financial condition, subject to
changes resulting from normal year-end adjustments;
(b) as soon as available and in any event within
90 days after the end of each fiscal year, consolidated and
consolidating financial statements of the Borrower and its
Subsidiaries, consisting of at least a balance sheet as at
the end of such fiscal year and the related statements of
income, partners' equity and cash flow for such fiscal year,
setting forth in each case in comparative form for the
previous fiscal year, all in reasonable detail, accompanied
by a report thereon of the accounting firm of Arthur
Andersen & Co. or other independent certified public
accountants selected by the Borrower and reasonably
satisfactory to the Administrative Agent, which report shall
be unqualified as to scope of the audit or nonconformity
with GAAP, shall not contain a going-concern qualification
and shall state that such consolidated financial statements
present fairly the consolidated cash flow of the Borrower
and its Subsidiaries as at the date indicated and the
results of their operations and the changes in their
consolidated financial condition for the periods indicated,
in conformity with GAAP applied on a basis consistent with
prior fiscal years (except as otherwise required by GAAP and
stated therein), and that the examination of such
accountants in connection with such consolidated financial
statements has been made in accordance with generally
accepted auditing standards; and, as soon as available, any
management letters to the Borrower or its partners furnished
by such accounting firm in connection with its audit of the
Borrower's consolidated financial statements;
(c) as soon as available and in any event within
45 days after the end of each calendar month, a properly
completed and executed Compliance Certificate as of the end
of such month;
(d) as soon as available and in any event within
30 days after the end of each calendar month, each of the
following:
(i) a properly completed and executed
Borrowing Base Certificate as of the end of such month;
(ii) a servicing/delinquency report showing
with respect to the Servicing Portfolio: the number of
Mortgage Notes (including Mortgage Notes subject to
Mortgage-backed Securities) included therein, the total
outstanding principal amount thereof, Investor type,
geographic concentration, weighted average coupon,
delinquency status and number of loans in foreclosure;
and
(iii) such additional information concerning
the Servicing Portfolio and such selective detail by
segments and categories thereof as may from time to
time be reasonably requested by any Lender.
(e) as soon as available and in any event on the
first Business Day of each calendar week, an
Inventory/Pipeline Report prepared as of the last day of the
preceding calendar week, provided, that such
Inventory/Pipeline Report need be provided to Lenders other
than the Administrative Agent and the Collateral and
Management Agent only for the last calendar week in a
calendar month;
(f) (i) prior to the Effective Date, a
Satisfactory Appraisal prepared as of June 30, 1996, (ii)
within 30 days after each September 30, December 31, March
31 and June 30 occurring thereafter, a Satisfactory
Appraisal prepared as of such date (iii) prior to the date
on which any Servicing Advances are to be made, a
Satisfactory Appraisal with respect to the portion of the
Qualified Servicing Portfolio which is to be purchased with
the proceeds of such installments, prepared as of a date
satisfactory to the Administrative Agent, and (iv) within 30
days after receipt of the Administrative Agent's written
request therefor, a Satisfactory Appraisal prepared as of a
date specified in such request;
(g) as soon as available and in any event not
later than each date on which the same is to be filed with
FNMA, a copy of its Mortgage Banker's Financial Reporting
Form;
(h) within five Business Days after their
occurrence, notice of each of the following events:
(i) the commencement of any action, suit,
proceeding or arbitration against the Borrower or any
of its Subsidiaries, or any material development in any
action, suit, proceeding or arbitration pending or
threatened against the Borrower or any of its
Subsidiaries, (A) in which the aggregate uninsured
amount claimed is more than $500,000, (B) which would,
if decided in a manner adverse to the Borrower or any
of its Subsidiaries, constitute a Material Adverse
Event or (C) which relates to this Agreement or any
document executed pursuant hereto or any transaction
financed or to be financed in whole or in part directly
or indirectly with the proceeds of the loans made
pursuant hereto;
(ii) any Default or Event of Default;
(iii) any notice from FNMA, FHLMC, GNMA, HUD
or the VA that such Person intends to terminate, revoke
or transfer, for cause, any Servicing Contract or
Servicing Rights owned by the Borrower or restrict or
limit the rights of the Borrower thereunder in any
material respect, or that it will cease purchasing
Mortgage Loans from the Borrower or that it will cease
permitting the Borrower to service Mortgage Loans owned
or guaranteed by it or, in the case of HUD or the VA,
that it has revoked the Borrower's status as an
approved mortgagee or lender in good standing eligible
to participate in any FHA insurance or VA guaranty
program; and
(iv) notice of any other Material Adverse
Event, including any material adverse development which
occurs in any litigation, arbitration or governmental
investigation or proceeding previously disclosed by the
Borrower to the Lenders;
(i) promptly upon their becoming available,
copies of all audit reports prepared for FNMA, GNMA and
FHLMC with respect to the Borrower;
(j) not later than 45 days after the beginning of
each fiscal year, all annual budgets, forecasts and pro-
forma cash flow projections adopted by the Borrower for such
fiscal year;
(k) as soon as available and in any event within
45 days after the end of each calendar month, a copy of the
unaudited consolidated financial statements of Harbourton
Financial and its Subsidiaries as at the end of such month,
consisting of at least a balance sheet and the related
statements of income, partners' equity and cash flow of
Harbourton Financial and its Subsidiaries for such month and
from the beginning of the then current fiscal year of
Harbourton Financial to the end of such month, all in
reasonable detail, and certified by the chief financial
officer or other authorized officer of Harbourton Financial
as being complete and correct and fairly presenting
Harbourton Financial's consolidated financial condition,
subject to changes resulting from normal year-end
adjustments;
(l) as soon as available and in any event within
90 days after the end of each fiscal year, consolidated and
consolidating financial statements of Harbourton Financial
and its Subsidiaries, consisting of at least a balance sheet
as at the end of such fiscal year and the related statements
of income, partners' equity and cash flow for such fiscal
year, setting forth in each case in comparative form the
figures for the previous fiscal year, all in reasonable
detail, accompanied by a report thereon of the accounting
firm of Arthur Andersen & Co. or other independent certified
public accountants selected by Harbourton Financial and
reasonably satisfactory to the Administrative Agent, with
respect to any subsequent fiscal year, which report shall be
unqualified as to scope of the audit or nonconformity with
GAAP, shall not contain a going-concern qualification and
shall state that such consolidated financial statements
present fairly the consolidated cash flow of Harbourton
Financial and its Subsidiaries as at the date indicated and
the results of their operations and the changes in their
consolidated financial condition for the periods indicated,
in conformity with GAAP applied on a basis consistent with
prior fiscal years (except as otherwise required by GAAP and
stated therein), and that the examination of such
accountants in connection with such consolidated financial
statements has been made in accordance with generally
accepted auditing standards, accompanied by any management
letters to Harbourton Financial or its board of directors
furnished by such accounting firm in connection with its
audit of Harbourton Financial's consolidated financial
statements;
(m) as soon as available and in any event within
45 days after the end of each fiscal quarter, a copy of the
Form 10-Q prepared for Harbourton Financial for such fiscal
quarter;
(n) as soon as available and in any event within
90 days after the end of each fiscal year, a copy of Form 10-
K prepared for Harbourton Financial for such fiscal year;
and
(o) from time to time, such other information
regarding the business, operations, affairs and financial
condition of the Borrower, its Subsidiaries and the
Guarantors as any Lender may reasonably request.
4.02 Existence. The Borrower will, and will cause
each of its Subsidiaries to, maintain (a) its partnership
existence or corporate existence, as the case may be, under the
laws of the jurisdiction of its formation or incorporation and
(b) its good standing and its right to carry on its business and
operations in the jurisdiction of its formation or incorporation
and in each other jurisdiction in which the character of the
properties owned or leased by it or the business conducted by it
makes such qualification necessary and the failure to be in good
standing would permanently preclude the Borrower from enforcing
its rights with respect to any material assets or expose the
Borrower to any material liability.
4.03 Compliance with Laws, Taxes, etc. The Borrower
will, and will cause each of its Subsidiaries to, comply with all
applicable laws, rules, regulations and orders (including without
limitation Regulations G, T, U and X of the Board), the failure
to be in compliance with which would have a materially adverse
effect on the consolidated financial condition of the Borrower,
such compliance to include, without limitation, paying before the
same become delinquent all taxes, assessments and governmental
charges imposed upon it or upon its property except to the extent
contested in good faith by appropriate proceedings and for which
any reserves required by GAAP have been established. In the
event the Borrower fails, or fails to cause any of its
Subsidiaries, to satisfy its obligations under this Section 4.03,
as to taxes, assessments and governmental charges, the Lenders
may but are not obligated to satisfy such obligations in whole or
in part and any payments made and expenses incurred in doing so
shall constitute Obligations and shall be paid or reimbursed by
the Borrower.
4.04 ERISA. The Borrower will, and will cause each of
its Subsidiaries to, at all times maintain each of its Plans in
compliance with all material applicable rulings and regulations
issued under the provisions of ERISA and the Code.
4.05 Assets and Insurance. The Borrower will, and
will cause each of its Subsidiaries to, maintain or require to be
maintained in full force and effect (a) an adequate errors and
omissions insurance policy, (b) such other insurance coverage by
financially sound and respectable insurers, on all properties of
a character usually insured by organizations engaged in the same
or similar business (including, without limitation, all real
property covered by Mortgages to the extent normally required by
prudent mortgagees) against loss or damage of a kind customarily
insured against by such organizations, (c) adequate public
liability insurance against tort claims which may be asserted
against the Borrower, and (d) a mortgage bankers blanket bond
insurance policy in an amount customarily maintained by
organizations engaged in the same or similar business and under
similar circumstances as the Borrower.
4.06 Inspection, Visitation, etc. The Borrower will,
and will cause each of its Subsidiaries to, permit any Person
designated by any Lender in writing, at such Lender's expense,
upon reasonable notice to visit and inspect any of the
properties, corporate books and financial records of the Borrower
and discuss its affairs and finances with the principal officers
of the Borrower and their independent public accountants, all at
such times during normal business hours as any Lender shall
reasonably request.
4.07 Further Assurances. The Borrower will, and will
cause each of its Subsidiaries to, take all such further actions
and execute all such further documents and instruments as the
Administrative Agent or the Collateral and Managing Agent may at
any time reasonably determine in its sole discretion to be
necessary or advisable to further carry out and consummate the
transactions contemplated by the Loan Documents and to perfect or
protect the Liens of the Administrative Agent and the Collateral
and Managing Agent granted under any Loan Document.
4.08 Indebtedness. The Borrower will not, and will
not permit any of its Subsidiaries to, directly or indirectly,
create, incur, assume, guarantee, or otherwise become or remain
directly or indirectly liable with respect to any Indebtedness,
except:
(a) the Obligations;
(b) current obligations incurred in the ordinary
course of business and not overdue (unless the same are
being contested in good faith and by appropriate proceedings
and adequate reserves are maintained therefor in accordance
with GAAP);
(c) the Permitted Subdebt;
(d) Guaranties permitted under Section 4.11;
(e) Indebtedness secured by Liens permitted under
Section 4.09;
(f) Indebtedness existing on the Effective
Date as described in Schedule 4.08;
(g) Indebtedness incurred to finance the
acquisition of fixed or capital assets (whether pursuant to
a loan, a Capital Lease or otherwise) in an aggregate
principal amount outstanding not to exceed $500,000 at any
time:
(h) Indebtedness provided by PWRES to the
Borrower for the purpose of (a) originating or acquiring
Mortgage Loans (i) to be simultaneously sold to PWRES or
(ii) to be held not more than five (5) Business Days by the
Borrower before being sold to HTP Financial or PWRES, which
Mortgage Loans are in either case financed by PWRES under
the PWRES Financing Agreements or (b) financing principal
and interest, or taxes, insurance and expense advances under
the PWRES Financing Agreements; provided that in each case
such Indebtedness shall be subject to the terms of the
intercreditor agreement in form and substance substantially
similar to the agreement between PWRES and the Borrower's
lenders under the Existing Warehouse Credit Agreement;
(i) Indebtedness arising under short-term
arbitrage lines of credit with any of the Lenders, each
borrowing under which is secured solely by certificates of
deposit issued by such Lender thereunder, A-1/P-1 commercial
paper and/or marketable direct obligations issued or
guaranteed by the United States government or any agency
thereof and backed by the full faith and credit of the
United States, in each case substantially matching such
borrowings in dollar amount and maturity;
(j) any Indebtedness which has been reclassified
as Indebtedness, which, at the time of the creation of such
Indebtedness, had been reasonably classified in accordance
with GAAP as a sale or transfer of defaulted FHA or VA
Mortgage Loans on a servicing retained basis to any other
Person;
(k) Indebtedness consisting of the portion of the
purchase price of mortgage Servicing Rights purchased by the
Borrower that is deferred in order to secure the
indemnification obligations of the seller of such servicing
rights;
(l) Indebtedness consisting of reserves for
foreclosure losses incurred in the ordinary course of
business and other reserves established in accordance with
GAAP in the ordinary course of business; and
(m) renewals, extensions, replacements,
refinancings or refundings or any of the foregoing.
4.09 Liens. The Borrower will not, and will not
permit any of its Subsidiaries to, directly or indirectly,
create, incur, assume or permit to exist, any Lien with respect
to the Collateral or any other property now owned or hereafter
acquired by the Company, or any income or profits therefrom,
except:
(a) the security interests granted to the
Administrative Agent under the Loan Documents;
(b) Liens (other than Liens with respect to the
Collateral) existing on the Effective Date as described in
Schedule 4.09;
(c) Liens in connection with deposits or pledges
to secure payment of workers' compensation, unemployment
insurance, old age pensions or other social security
obligations, in the ordinary course of business of the
Borrower and its Subsidiaries;
(d) Liens for taxes, fees, assessments and
governmental charges not delinquent or which are being
contested in good faith by appropriate proceedings;
provided, however, that the Borrower shall have set aside on
its books and shall maintain adequate reserves for the
payment of same in conformity with GAAP;
(e) encumbrances consisting of zoning
regulations, easements, rights of way, survey exceptions and
other similar restrictions on the use of real property and
minor irregularities in titles thereto which do not
materially impair their use in the operation of its
business;
(f) Liens on Mortgage Loans delivered to a
custodian for a pool of Mortgage Loans being formed but for
which a Mortgage-backed Security has not been issued, any
said Lien being for the sole benefit of the Investor which
has agreed to purchase such Mortgage-backed Security;
(g) Liens, deposits or pledges made to secure
statutory obligations, surety or appeal bonds, or bonds for
the release of attachments or for stay of execution, or to
secure the performance of bids, tenders, contracts (other
than for the payment of borrowed money), leases or for
purposes of like general nature in the ordinary course of
the Borrower's business; and
(h) purchase money Liens on tangible personal
property in the nature of office equipment and other
equipment utilized in the normal operation of the Borrower's
business which Liens secure Indebtedness incurred to
purchase such property.
(i) Liens of the types permitted by Section
4.01(h) securing Indebtedness permitted by Section 4.08(h).
4.10 Investments. The Borrower will not, and will not
permit any of its Subsidiaries to, directly or indirectly, make
or own any Investment in any Person, except:
(a) Investments in (i) marketable direct
obligations issued or unconditionally guaranteed by the
United States Government or issued by any agency thereof and
backed by the full faith and credit of the United States, in
each case maturing within one year from the date of
acquisition thereof, (ii) marketable direct obligations
issued by any state of the United States of America or any
political subdivision of any such state or any public
instrumentality thereof maturing within one year from the
date of acquisition thereof and, at the time of acquisition,
having the highest rating obtainable from either Standard &
Poor's Corporation or Moody's Investors Service, Inc., (iii)
commercial paper maturing no more than 270 days from the
date of creation thereof and, at the time of acquisition,
having the highest rating obtainable from either Standard &
Poor's Corporation or Moody's Investors Service, Inc., and
(iv) time deposits maturing within one (1) year from the
date of creation thereof with, including certificates of
deposit issued by, any office located in the United States
of any bank or trust company that is organized under the
laws of the United States or any state thereof and whose
certificates of deposit are rated P-1 or better by Moody's
or A-1 or better by S&P;
(b) the Servicing Portfolio;
(c) Mortgage Loans and Mortgage-backed
Securities;
(d) Foreclosure Payment Receivables, P&I Payment
Receivables and T&I Payment Receivables;
(e) real estate acquired by foreclosure and held
by the Borrower for not more than one year unless the
Borrower shall be diligently attempting to dispose of such
real estate for a price not exceeding its fair market value;
(f) Investments required by FNMA, FHLMC or GNMA
in order to obtain or maintain qualification of the Borrower
as an approved seller or servicer of Mortgage Loans or
Mortgage pools;
(g) (i) the Borrower's Investment in HTP
Financial as of the date of this Agreement, (ii) Investments
related to the acquisition of mortgage banking operations in
the ordinary course of business, and (iii) other Investments
in Subsidiaries, Affiliates (including HTP Financial) or
entities to be formed to engage in mortgage banking-related
businesses, provided that the aggregate amount of such other
Investments permitted under this clause (g)(iii) shall not
at any time exceed 10% of the Borrower's Net Worth;
(h) short-term loans or advances to any current
or former officers of the Borrower, for the purpose of
assisting such officers in the payment of relocation
expenses or car loans, in an aggregate principal amount
outstanding at any time not to exceed $1,000,000;
(i) investments made in the ordinary course of
business for the purpose of implementing the Hedging
Program; and
(j) other investments made in the ordinary course
of the Borrower's business, in an aggregate principal amount
outstanding at any time not to exceed $1,000,000.
4.11 Guarantees. The Borrower will not, and will not
permit any of its Subsidiaries to, directly or indirectly, create
or become or be liable with respect to any Guarantee, except:
(a) commitments issued by the Borrower in the
ordinary course of business pursuant to which the Borrower
commits to purchase Mortgage Loans to be held in its
portfolio or to be used in the formation of Mortgage-backed
Securities or to be sold in the secondary market;
(b) agreements to repurchase Mortgage Loans
incidental to sales thereof in the ordinary course of
business; and
(c) commitments by the Borrower incidental to its
Servicing Contracts in the ordinary course of business.
4.12 Restriction on Fundamental Changes. The Borrower
will not, and will not permit any of its Subsidiaries to, engage
in any business activities or operations substantially different
from or unrelated to those in which it is engaged on the
Effective Date, enter into any transaction of merger or
consolidation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution), or convey, sell, lease,
transfer or otherwise dispose of, in one transaction or a series
of transactions, all or substantially all of its business or
property, whether now owned or hereafter acquired, or acquire by
purchase or otherwise all or substantially all the business or
property of, or stock or other evidence of beneficial ownership
of, any Person, or acquire, purchase, redeem or retire any shares
of its capital stock now or hereafter outstanding for value,
except:
(a) the Borrower may sell or otherwise dispose of
Mortgage Loans, Mortgage-backed Securities, Servicing Rights
and Take-out Commitments in the ordinary course of business
(provided that no Default or Event of Default exists or will
exist after giving effect to such sale or disposition);
(b) the Borrower may sell or otherwise dispose of
obsolete or worn out property in the ordinary course of
business;
(c) the Borrower may sell or otherwise dispose of
property, other than Mortgage Loans, Mortgage-backed
Securities and Servicing Rights and Take-Out Commitments, in
the ordinary course of business, for not less than its fair
market value; and
(d) the Borrower may be consolidated with or
merged with any of its Subsidiaries provided that:
(i) in any such merger or consolidation
the Borrower shall be the surviving or resulting
corporation,
(ii) such merger or consolidation shall
not result in a Material Adverse Effect,
(iii) immediately after the
effectiveness of such merger or consolidation there
shall not have occurred and be continuing a Default or
an Event of Default; and
(iv) the Borrower shall reaffirm in
writing all of its Obligations hereunder and under the
other Loan Documents.
4.13 Restricted Payments. The Borrower will not make
any Restricted Payments; provided, however, that the Borrower
may, if no Default or Event of Default shall have occurred and be
continuing immediately prior to such payment, or would exist
immediately after such payment, (a) pay to its partners on the
Closing Date a distribution in an aggregate amount not to exceed
$20,000,000, (b) pay to its partners with respect to any taxable
year an amount sufficient to pay income taxes payable by its
partners (or the ultimate parent entities of such partners) on a
consolidated basis which are attributable to taxable income
derived from the Borrower for such taxable year, which is agreed
to be equal to 45% of the Borrower's net income (determined in
accordance with GAAP), and (c) pay to its partners each fiscal
quarter an amount equal to 50% of the Borrower's net income
(determined in accordance with GAAP) after distribution to its
partners of the amount allowed under clause (b) of this Section
4.13 during such fiscal quarter and the preceding three fiscal
quarters.
4.14 Net Worth. the Borrower will not at any time
permit Borrower's Net Worth to be less than $30,000,000.
4.15 Leverage Ratio. The Borrower will not at any
time permit the Leverage Ratio to be greater than 10 to 1.
4.16 Debt Service Coverage Ratio. The Borrower shall
not permit the Debt Service Coverage Ratio to be less than 1.2 to
1 as of the last day of any fiscal quarter of the Borrower, which
last day occurs after the Servicing Conversion Date.
4.17 Servicing Portfolio. The Borrower shall at all
times maintain in the Servicing Portfolio Mortgage Loans having
an aggregate principal balance not less than $3,000,000,000 ($3
billion).
4.18 Investor Consents. The Borrower shall (a) from
time to time at the request of the Administrative Agent execute
and deliver, and cause FNMA and FHLMC to execute and deliver, to
the Administrative Agent Acknowledgement Agreements in the
standard forms prescribed by such agencies relating to FNMA and
FHLMC Servicing Contracts and Servicing Rights with respect to
Mortgage Loans included in the Qualified Servicing Portfolio, (b)
give prompt written notice (in form and substance satisfactory to
the Servicing Lenders) to each Investor other than FNMA, FHLMC
and GNMA to whom the Borrower gives, or is required to give, any
other type of notice in connection with the acquisition of any
portion of the Qualified Servicing Portfolio of the Agent's
security interest in the Servicing Contracts and Servicing Rights
(subject to the Investor's rights therein) with respect to
Mortgage Loans included in the Qualified Servicing Portfolio and
which pertain to such Investors, and provide the Administrative
Agent with evidence satisfactory to the Administrative Agent that
such notices have been given, (c) if and when a standard form of
Acknowledgement Agreement satisfactory to the Administrative
Agent is prescribed by GNMA, execute and deliver, and cause GNMA
to execute and deliver, to the Administrative Agent one or more
Acknowledgement Agreements (in said form) relating to GNMA
Servicing Contracts and Servicing Rights with respect to Mortgage
Loans included in the Qualified Servicing Portfolio, and (d)
deliver to the Administrative Agent from time to time such Powers
of Attorney as may be contemplated by any applicable
Acknowledgement Agreement or as may be otherwise requested by the
Administrative Agent to facilitate its exercise of its remedies
under the Servicing and Working Capital Security Agreement with
respect to any portion of the Servicing Portfolio (provided,
however, that the Administrative Agent shall not exercise its
rights under any such Power of Attorney unless and until an Event
of Default occurs).
4.19 Inconsistent Agreements. The Borrower will not
enter into any agreement containing any provision which would be
violated or breached by any borrowing by the Borrower hereunder
or by the performance by the Borrower of its obligations
hereunder or under any document executed pursuant hereto.
4.20 Maintenance of Qualifications. The Borrower will
maintain its status as an FHA-approved mortgagee, as an approved
lender under the VA guarantee program, as an approved servicer of
Mortgage Loans to FNMA and to FHLMC in the FHLMC regions in which
it operates and as an FHA-approved direct endorsement mortgagee,
and its eligibility to issue Mortgage-backed Securities or to
service the Mortgage Loan pools formed with respect to Mortgage-
backed Securities.
4.21 Independence of Covenants. All covenants
hereunder shall be given independent effect so that if a
particular action or condition is not permitted by any of such
covenants, the fact that it would be permitted by an exception
to, or be otherwise within the limitations of, another covenant
shall not avoid the occurrence of a Default or an Event of
Default if such action is taken or condition exists.
SECTION 5. CONDITIONS PRECEDENT.
5.01 Conditions Precedent to Initial Advances. The
obligations of the Lenders to make the initial Advances is
subject to the satisfaction on or before the Effective Date of
all of the following conditions:
(a) The following documents, certificates and
opinion, each in form and substance satisfactory to the
Administrative Agent and its counsel, shall have been
delivered to the Administrative Agent:
(i) the Notes, each duly executed by the
Borrower;
(ii) the Warehousing and Discretionary
Security Agreement and the Servicing and Working
Capital Security Agreement, each duly executed by the
Borrower, together with such financing statements and
other instruments required by the Administrative Agent
and the Collateral and Managing Agent to create,
perfect and/or maintain the security interests granted
under the Warehousing and Discretionary Security
Agreement and the Servicing and Working Capital
Security Agreement;
(iii) a Guaranty and Pledge Agreement,
duly executed by each Guarantor, together with the
original share certificates representing the shares of
the General Partner, and the original certificates (if
any) representing the partnership units or interest of
the Borrower, pledged pursuant to the Guaranty and
Pledge Agreements and stock powers applicable or
comparable instruments of transfer duly executed in
blank by the Guarantors and undated;
(iv) Acknowledgement Agreements in the
forms prescribed by FNMA and FHLMC each executed by the
Borrower;
(v) completed responses to requests for
information or other evidence satisfactory to the
Administrative Agent and the Collateral and Managing
Agent that the financing statements and other
instruments delivered to the Administrative Agent and
the Collateral and Managing Agent pursuant to Sections
5.01(a)(ii) and 5.01(a)(iii) have been filed in all
appropriate filing offices and that such filed
financing statements perfect first priority security
interests in favor of the Administrative Agent and the
Collateral and Managing Agent in the property described
therein;
(vi) copies of the resolutions of the
General Partner, certified by an officer of the General
Partner, authorizing the execution, delivery and
performance of each Loan Document to which the Borrower
is or will be a party and the other matters
contemplated hereby;
(vii) a certificate signed by an
officer of the General Partner certifying as to the
names, incumbency and true signatures of the respective
persons authorized to execute and deliver each Loan
Document to which the Borrower is or will be a party;
(viii) a certificate signed by an
officer of the General Partner certifying to true and
correct copies of the partnership agreement and
certificate of limited partnership of the Borrower, as
amended through the Effective Date;
(ix) evidence satisfactory to the Bank
that the Borrower is in good standing as a limited
partnership under the laws of the State of Delaware;
(x) a copy of the Certificate of
Incorporation of the General Partner certified by the
Secretary of State of Delaware and certificate of good
standing of the of the General Partner from the
Secretary of State of Delaware;
(xi) a copy of the Bylaws of the General
Partner certified by an officer thereof;
(xii) copies of the resolutions of the
general partner of each Guarantor, certified by an
officer of such general partner, authorizing the
execution, delivery and performance of each Loan
Document to which the Guarantors are or will be parties
and the other matters contemplated hereby;
(xiii) certificates signed by an
officer of the general partner of each Guarantor
certifying as to the names, incumbency and true
signatures of the respective persons authorized to
execute and deliver each Loan Document to which such
Guarantor is or will be a party;
(xiv) a certificate signed by an
officer of the general partner of each Guarantor
certifying to true and correct copies of the
partnership agreement and certificate of limited
partnership of such Guarantor, as amended through the
Effective Date;
(xv) evidence satisfactory to the
Administrative Agent that each Guarantor is in good
standing as a limited partnership under the laws of the
State of Delaware;
(xvi) a copy of the Certificate of
Incorporation of the general partner of each Guarantor
certified by the Secretary of State of the jurisdiction
of its incorporation and certificate of good standing
of the of such general partner from such Secretary of
State;
(xvii) a copy of the Bylaws of the general
partner of each Guarantor certified by an officer
thereof;
(xviii) the favorable written
opinion(s) of counsel to the Borrower, addressed to the
Administrative Agent and the Lenders, as to the matters
and effect set forth in Exhibit K, and
(xix) a payoff letter from Chemical
Bank, as Administrative Agent under the Existing
Warehouse Credit Agreement and the Existing Servicing
Credit Agreement, relating to payment of the
Indebtedness referred to in Section 2.01(e), 2.02(h),
2.03(h), and 2.04(e), and agreeing to release any Liens
held by it on the property of the Borrower.
5.02 Conditions Precedent to Each Advance. The
obligations of the Lenders to make each Advance (including the
initial Advances) is subject to the satisfaction of all of the
following additional conditions:
(a) the Administrative Agent and the Lenders
shall have received timely and properly completed notices
under Sections 2.01(b), 2.02(c), 2.03(c) or 2.04(b), as
appropriate;
(b) there shall not have been any Regulatory
Change which would render the transactions contemplated
hereby unlawful;
(c) no Default or Event of Default shall have
occurred and be continuing or will exist upon advancing the
requested Advances; and
(d) all the representations and warranties set
forth in Section 3 hereof, in Section 5 of the Warehousing
and Discretionary Security Agreement and in Section 5 of the
Servicing and Working Capital Security Agreement shall be
true and correct in all material respects as though made on
and as of the Effective Date, the applicable Servicing
Advance Date, Warehousing Advance Date, Working Capital
Advance Date or Discretionary Advance Date, as appropriate;
and
(e) with respect to the making of any requested
Servicing Advances, the Administrative Agent shall have
received such amendments to the Servicing and Working
Capital Security Agreement, any existing Uniform Commercial
Code financing statements and any existing Acknowledgement
Agreements and such additional financing statements and
Acknowledgement Agreements as the Administrative Agent may
request in order to establish, maintain or perfect its
security interest for the benefit of the Lenders in the
portion of the Servicing Portfolio to be acquired with the
proceeds of such Servicing Advances.
SECTION 6. EVENTS OF DEFAULT; REMEDIES.
6.01 Events of Default. The occurrence of any one or
more of the following events shall constitute an Event of
Default:
(a) The Borrower shall fail to make, when due,
whether by maturity, acceleration of maturity, mandatory
payment, mandatory prepayment or otherwise, any payment of
principal of or interest on any Note or any fee or other
amount required to be paid to the Administrative Agent or
the Lenders pursuant to this Agreement or any other Loan
Document, and such failure shall continue for three (3)
Business Days after the date on which such payment is due;
or
(b) Any representation or warranty made by the
Borrower in this Agreement or in any other Loan Document
shall be untrue or misleading in any material respect on the
date as of which the facts set forth are stated or
certified; or
(c) The Borrower shall fail to comply with any
agreement, covenant, condition, provision or term contained
in the Warehousing and Discretionary Security Agreement, the
Servicing and Working Capital Security Agreement or in
Sections 4.02(a) (as to the Borrower), 4.08, 4.09, 4.10,
4.11, 4.12, 4.13, 4.15, 4.16, 4.17, 4.18, 4.19 or 4.20 of
this Agreement; or
(d) (i) Harbourton Financial shall fail to comply
with Section 4.03(a) of its Guaranty and Pledge Agreement;
or (ii) the Borrower or any Guarantor shall fail to comply
with any other agreement, covenant, condition, provision or
term contained in this Agreement or any other Loan Document
(other than those hereinabove set forth in this Section
6.01) and such failure to comply is not remedied within 30
calendar days after the Administrative Agent has given the
Borrower notice of the occurrence thereof; or
(e) Any creditor or representative of any
creditor of the Borrower, any of its Subsidiaries, the
General Partner or any Guarantor shall become entitled to
declare any Indebtedness in the amount of $500,000 or more
owing on any bond, debenture, note or other evidence of
indebtedness for borrowed money to be due and payable prior
to its expressed maturity, whether or not such Indebtedness
is actually declared to be immediately due and payable, or
any such Indebtedness becomes due and payable prior to its
expressed maturity by reason of any default by the Borrower,
any of its Subsidiaries, the General Partner or any
Guarantor in the performance or observance of any obligation
or condition and such default shall not have been
effectively waived or shall not have been cured within any
grace period allowed therefor or any such Indebtedness shall
have become due by its terms and shall not have been
promptly paid or extended; or
(f) The Borrower, any of its Subsidiaries, the
General Partner or any Guarantor shall become insolvent or
shall fail generally to pay its debts as they mature or
shall apply for, shall consent to, or shall acquiesce in,
the appointment of a custodian, trustee or receiver thereof
or for a substantial part of the property thereof; or, in
the absence of such application, consent or acquiescence, a
custodian, trustee or receiver shall be appointed for the
Borrower, any of its Subsidiaries, the General Partner or
any Guarantor or for a substantial part of the property
thereof and such appointment is not vacated within 60 days;
or the Borrower, any of its Subsidiaries, the General
Partner or any Guarantor shall make an assignment for the
benefit of creditors; or
(g) The Borrower, any of its Subsidiaries, the
General Partner or any Guarantor shall be voluntarily or
involuntarily dissolved (except, in the case of its
Subsidiaries, as permitted in Section 4.12 and except that
Western Sunrise may transfer its assets to Harbourton
Financial and/or Harbourton Funding Corporation and
thereafter dissolve) or any bankruptcy, reorganization, debt
arrangement or other proceedings under any bankruptcy or
insolvency law shall have been instituted by or against the
Borrower, any of its Subsidiaries, the General Partner or
any Guarantor and, if instituted against the Borrower, such
Subsidiary, the General Partner or such Guarantor, such
proceedings shall not have been dismissed within 60 days; or
any dissolution or liquidation proceeding shall be
instituted by or against the Borrower, any of its
Subsidiaries, the General Partner or any Guarantor and, if
instituted against the Borrower, any of its Subsidiaries the
General Partner or such Guarantor, shall be consented to or
acquiesced in by the Borrower, such Subsidiary, or such
Guarantor, as appropriate, or shall not have been dismissed
within 60 days, or an order for relief shall have been
entered against the Borrower, such Subsidiary, the General
Partner or such Guarantor; or
(h) There shall be entered against the Borrower,
any of its Subsidiaries, the General Partner or any
Guarantor one or more judgments or decrees in an aggregate
amount at any one time outstanding in excess of $500,000,
excluding those judgments or decrees that shall have been
paid, vacated, discharged, stayed or bonded pending appeal
within 30 days from the entry thereof or with respect to
which (and to the extent that) the Person against which any
such judgment or decree shall have been entered is fully
insured (subject to reasonable deductibles) and with respect
to which the insurer has admitted in writing its liability
for the full amount (other than the deductible portion)
thereof; or
(i) Any execution or attachment shall be issued
whereby any substantial part of the property of the
Borrower, any of its Subsidiaries, the General Partner or
any Guarantor shall be taken or attempted to be taken and
the same shall not have been vacated or stayed within 30
days after the issuance thereof; or
(j) Any Reportable Event or any other fact or
circumstance, which the Required Lenders determine in good
faith constitutes grounds for the termination of any Plan by
the PBGC or for the appointment by an appropriate United
States District Court of a trustee to administer any such
Plan, shall have occurred and be continuing thirty (30) days
after written notice of such determination shall have been
given to the Borrower by the Administrative Agent, or any
Plan shall be terminated within the meaning of Title IV of
ERISA, or a trustee shall be appointed by the appropriate
United States District Court to administer any such Plan, or
the PBGC shall institute proceedings to terminate any Plan
or to appoint a trustee to administer any such Plan and,
upon the occurrence of any of the foregoing, the aggregate
amount of the vested unfunded liability under all such Plans
exceeds $500,000 and such liability is not covered by
insurance, or the Borrower or any ERISA Affiliate shall fail
to make a required contribution to any Plan such that a
statutory tax lien may arise in favor of such Plan; or
(k) any Guarantor shall repudiate or purport to
revoke its obligations under the Guaranty any Pledge
Agreement to which it is party, or any Guaranty and Pledge
Agreement shall cease to be in full force and effect (except
as to Western Sunrise after its assets have been transferred
to Harbourton Financial and/or Harbourton Funding
Corporation and it has dissolved as permitted by Section
6.01(g)) or shall be judicially declared null and void; or
(l) the Guarantors collectively shall cease to
own, directly or indirectly, at least 80% of the total
partnership interest in the Borrower.
6.02 Remedies. If (a) any Event of Default
described in Section 6.01(f) or (g) shall occur with respect
to the Borrower, the General Partner or any Guarantor, the
Commitments shall automatically terminate and the
Obligations shall automatically become immediately due and
payable or (b) any other Event of Default shall occur and be
continuing, then, the Administrative Agent, at the direction
of the requisite Lenders, as set forth in Section 8.05, may
do any or all of the following: (i) declare the Commitments
terminated, whereupon the Commitments shall be terminated,
(ii) declare the Obligations to be forthwith due and
payable, whereupon the Obligations shall immediately become
due and payable, in each case without presentment, demand,
protest or other notice of any kind, all of which are hereby
expressly waived, anything in this Agreement or in any other
Loan Document to the contrary notwithstanding and (iii)
enforce its rights under any one or more of the Loan
Documents.
SECTION 7. THE AGENTS
7.01 Appointment and Authorization. Each Lender
appoints and authorizes each Agent to take such actions as agent
on its behalf and to exercise such powers under this Agreement
and the other Loan Documents as are delegated to such Agent by
the terms hereof and thereof, together with such powers as are
reasonably incidental thereto. Neither the Agents nor any of
their respective directors, officers or employees shall be liable
for any action taken or omitted to be taken by them under or in
connection with this Agreement or the other Loan Documents,
except for their own gross negligence or willful misconduct;
provided, however, that the Agents shall be protected in acting
or refraining from acting upon the instructions of the requisite
Lenders, given pursuant to Section 8.05 or any other applicable
provisions of this Agreement; and provided, further, that the
Agents shall not be required to take any action that exposes them
to personal liability or is contrary to any Loan Document or
applicable law. The Agents shall act as independent contractors
in performing their respective obligations as Agents hereunder
and under the other Loan Documents and nothing herein contained
shall be deemed to create a fiduciary relationship among or
between the Agents, the Borrower or the Lenders.
7.02 Note Holders. The Agents may treat the payee of
any Note as the holder thereof until written notice of transfer
shall have been filed with the Administrative Agent signed by
such payee and in form satisfactory to the Administrative Agent.
7.03 Consultation With Counsel. The Agents may consult
with legal counsel selected by them and shall not be liable for
any action taken or suffered in good faith by it in accordance
with the advice of such counsel.
7.04 Documents. The Agents shall not be under a duty
to examine into or pass upon the validity, effectiveness,
genuineness or value of the Notes, the other Loan Documents or any
other instrument or document furnished pursuant thereto or
thereunder, makes no representation or warranty to any Lender and
shall not be responsible for any representations, warranties or
statements made in connection with this Agreement or any other
Loan Document, and shall be entitled to assume that this Agreement
and the other Loan Documents are valid, effective and genuine and
what they purport to be. The Administrative Agent is authorized
to, and shall, execute and deliver each Loan Document to which it
is a party and shall execute and deliver any and all financing
statements relating to the security interests granted under the
Servicing and Working Capital Security Agreement and such
Acknowledgement Agreements, in form and substance satisfactory to
the Administrative Agent, as may be required to obtain the consent
of any Investor to the grant of a security interest by the
Borrower to the Administrative Agent, for the benefit of the
Lenders, in the Borrower's rights in any Servicing Contract and/or
Servicing Rights, whereupon each provision of such agreements
which is contemplated to be binding upon the Lenders shall be
binding upon the Lenders and each of them. The Collateral and
Managing Agent is authorized to, and shall, execute and deliver
each Loan Document to which it is a party and shall execute and
deliver the Warehousing and Discretionary Security Agreement and
any and all financing statements relating to the security
interests granted under the Warehousing and Discretionary Security
Agreement. The Agents shall not waive, amend or otherwise modify
any provision of this Agreement, the Notes, the Warehousing and
Discretionary Security Agreement, the Servicing and Working
Capital Security Agreement or any other Loan Document, or give any
releases, consents, waivers or subordinations hereunder or
thereunder, or exercise any remedies with respect hereto or
thereto, except as directed to do so by the appropriate Lenders in
accordance with Section 8.05 and except as the authority to do so
is expressly granted to any of them in this Agreement. Without
limiting the generality of the foregoing, each Lender (including
each Lender becoming a party hereto as a Transferee pursuant to
Section 8.06) hereby agrees (i) to benefit under each
Acknowledgement Agreement exclusively by and through the
Administrative Agent, (ii) to authorize the Administrative Agent
or its agent to act exclusively for such Lender with respect to
the Acknowledgement Agreements and the other parties thereto, and
(iii) that all terms of the Acknowledgement Agreements shall be
binding on such Lender as if it had executed the same. The
Lenders acknowledge that: (A) although GNMA has promulgated a
standard form of Acknowledgement Agreement, such form of
Acknowledgement Agreement as constituted on the date of this
Agreement is not satisfactory to the Administrative Agent and will
not be executed by the Administrative Agent; (B) notwithstanding
the fact that such GNMA Acknowledgement Agreement will not be
executed, the Borrower will grant to the Administrative Agent, for
the benefit of the Agents and the Lenders under the Service and
Working Capital Security Agreement, a security interest in the
Borrower's GNMA Servicing Contract and GNMA Servicing Rights; and
(C) such GNMA Servicing Rights will be deemed to be included in
the Qualified Servicing Portfolio.
7.05 Agents and Affiliates. With respect to their
respective Commitments and the Servicing Advances, Warehousing
Advances, Warehousing Swing Line Advances, Working Capital
Advances, Working Capital Swing Line Advances and Discretionary
Advances made by them in their capacities as Lenders, the Agents
shall have the same rights and powers under this Agreement and the
other Loan Documents as any other Lender and may exercise the same
as though they were not Agents, and the Agents and their
respective Affiliates may accept deposits from, lend money to and
generally engage in any kind of business with the Borrower or any
of its Subsidiaries or Affiliate of the Borrower as if they were
not the Agents.
7.06 Action by Agents. The Agents shall be entitled to
use their discretion with respect to exercising or refraining from
exercising any rights which may be vested in them by, or with
respect to taking or refraining from taking any action or actions
which they may be able to take under or in respect of, this
Agreement and the other Loan Documents. The Agents shall incur no
liability under or in respect of this Agreement or any of the
other Loan Documents by acting upon any notice, consent,
certificate, warranty or other paper or instrument believed by
them to be genuine or authentic or to be signed by the proper
party or parties, or with respect to anything which they may do or
refrain from doing in the reasonable exercise of their judgment,
or which may seem to them to be necessary or desirable in the
premises.
7.07 Credit Analysis. Each Lender has made, and shall
continue to make, its own independent investigation or evaluation
of the operations, business, property and condition, financial and
otherwise, of the Borrower, in connection with the making of its
Commitments and has made its own appraisal of the creditworthiness
of the Borrower. Except as may be explicitly provided herein, the
Agents have no duty or responsibility, either initially or on a
continuing basis, to provide any Lender with any credit or other
information with respect to such operations, business, property,
condition or creditworthiness, whether such information comes into
its possession on or before the first Event of Default or at any
time thereafter.
7.08 Notices of Event of Default, etc. In the event
that any Lender shall have acquired actual knowledge of any
Default or Event of Default, such Lender shall promptly give
notice thereof to the Administrative Agent. The Administrative
Agent shall, promptly upon receipt of any such notice provide a
copy thereof to the other Lenders. Upon receipt from any Lender
of a request that the Administrative Agent give notice to the
Borrower of the occurrence of a Default or an Event of Default
under Section 6, the Administrative Agent shall promptly forward
such request to the other Lenders and will take such action and
assert such rights under this Agreement and the other Loan
Documents as the requisite Lenders shall direct in writing in
accordance with Sections 6.02 and 8.05.
7.09 Indemnification. Each Lender agrees to indemnify
each Agent (to the extent not reimbursed by the Borrower), ratably
according to its Pro Rata Share, from and against any and all
liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by or asserted
against such Agent in any way relating to or arising out of this
Agreement or the other Loan Documents or any action taken or
omitted by such Agent under this Agreement or the other Loan
Documents; provided that no Lender shall be liable for any portion
of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements
resulting from such Agent's gross negligence or willful
misconduct. Without limitation of the foregoing, each Lender
agrees to reimburse each Agent promptly upon demand for its Pro
Rata Share (determined under clause (h) of the definition thereof)
of any out-of-pocket expenses (including counsel fees) incurred by
it in connection with the preparation, execution, delivery,
administration, modification, amendment or enforcement (whether
through negotiations, legal proceedings or otherwise) of, or legal
advice in respect of rights or responsibilities under, this
Agreement and the other Loan Documents, to the extent that such
Agent is not reimbursed for such expenses by the Borrower;
provided, that no Lender shall be liable for any portion of any
such expenses resulting from such Agent's gross negligence or
willful misconduct.
7.10 Payments. All payments of principal of the Notes
and all other funds received by the Administrative Agent in
respect of any payments made by the Borrower pursuant to this
Agreement, the Notes or the other Loan Documents, other than
payments of agent fees made to the Administrative Agent under
Section 2.06 and payments under Sections 2.09 and 2.10, and
subject to the effect of Section 8.11, shall be distributed
forthwith by the Administrative Agent (in like currency and funds)
to the Lenders on the date received or deemed received pursuant to
Section 2.07(a), (a) in accordance with Section 2.05(b), in the
case of payments of interest and Balances Deficiency Fees, and (b)
ratably according to each Lender's Pro Rata Share, in the case of
any other payment received by the Administrative Agent.
7.11 Sharing of Payments. If any Lender shall receive
and retain any payment during the persistence of a Default or an
Event of Default, whether by setoff, application of deposit
balance or security, or otherwise, in respect of the Obligations
in excess of such Lender's Pro Rata Share of all payments of the
Obligations, then such Lender shall purchase from the other
Lenders for cash and at face value and without recourse, such
participation in the Obligations held by them as shall be
necessary to cause such excess payment to be shared ratably as
aforesaid with each of them; provided, that if such excess payment
or part thereof is thereafter recovered from such purchasing
Lender, the related purchases from the other Lenders shall be
rescinded ratably and the purchase price restored as to the
portion of such excess payment so recovered, but without interest.
Each Lender agrees to exercise any and all rights of setoff,
counterclaim or bankers' lien which arise in connection with the
Obligations first fully against the Obligations and participations
therein held by such Lender, and only then to any other
Indebtedness of the Borrower to such Lender. The treatment of
payments under this Section 7.11 shall not apply to any agent's
fees payable to the Administrative Agent or the Collateral and
Managing Agent under Section 2.06.
7.12 Advice to Lenders. The Agents shall forward to
the Lenders copies of all notices, financial reports and other
communications received from the Borrower hereunder.
7.13 Successor Agents. An Agent may resign at any time
by giving at least 90 days' prior written notice (or such shorter
period of notice as the Lenders may approve in writing) thereof to
the Lenders and the Borrower. The Required Lenders may remove an
Agent at any time with or without cause by giving at least 90
days' prior written notice (or such shorter period of notice as
such Agent may approve in writing) to such Agent and the Borrower.
Upon any such resignation or removal, the Required Lenders shall
have the right to appoint a successor Agent reasonably acceptable
to the Borrower. If no successor Agent shall have been so
appointed and shall have accepted such appointment within 30 days
after the retiring Agent's giving of notice of its resignation or
the removal of such Agent, then the retiring Agent may, on behalf
of the Lenders, appoint a successor Agent, which shall be a Lender
or a commercial bank organized under the laws of the United States
of America or of any State thereof and having a combined capital
and surplus of at least $500,000,000 and which shall be reasonably
acceptable to the Borrower. Upon the acceptance of any
appointment as an Agent hereunder by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with
all the rights, powers, privileges and duties of the retiring
Agent, and the retiring Agent shall be discharged from its duties
and obligations under this Agreement. After any retiring Agent's
resignation or removal hereunder as Agent, the provisions of this
Section 7 shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was acting as Agent under this
Agreement and any other Loan Document. The Collateral and
Managing Agent may also be removed by the Borrower, and its
successor may be appointed by the Borrower, in accordance with
Section 26 of the Warehousing and Discretionary Security
Agreement, which Section 26 shall control in the event of any
conflict between the provisions thereof and the provisions of this
Section 7.13.
7.14 This Section Not Applicable To Borrower. This
Section 7 is included in this Agreement solely for the purpose of
determining certain rights as between the Agents and the Lenders
and does not create, nor shall it give rise to, any rights in or
obligations on the part of the Borrower (except for the right of
the Borrower to receive the notices provided for in Section 7.13
and the right to approve any successor Agent pursuant to Section
7.13), and all rights and obligations of the Borrower under this
Agreement shall be determined by reference to the provisions of
this Agreement other than this Section 7.
SECTION 8. MISCELLANEOUS.
8.01 Waiver. No failure on the part of the Agents or
the Lenders to exercise and no delay in exercising, and no course
of dealing with respect to, any right, power or privilege under
this Agreement or any other Loan Document shall operate as a
waiver thereof; nor shall any single or partial exercise of any
right, power or privilege under this Agreement or any other Loan
Document preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The remedies
provided herein and in the other Loan Documents are cumulative and
not exclusive of any remedies provided by law.
8.02 Notices. Except as otherwise specifically
provided for herein, all notices and other communications provided
for herein shall be in writing (including teletransmission
communication) and, unless otherwise required herein or by law,
shall be teletransmitted, mailed or delivered to the intended
recipient at the "Address for Notices" specified below its name on
the signature pages hereof; or, as to either party, at such other
address as shall be designated by such party in a notice to the
other party. All notices and other communications hereunder shall
be effective when transmitted by telex or telecopier, delivered
or, in the case of a mailed notice or notice sent by overnight
courier, upon receipt thereof as conclusively evidenced by the
signed receipt therefor, in each case given or addressed as
aforesaid except that notices to the Administrative Agent under
the provisions of Section 2 shall not be effective until received
by the Administrative Agent.
8.03 Expenses; Indemnification. The Borrower agrees to
pay promptly: (a) the reasonable fees and expenses of Dorsey &
Whitney LLP, special legal counsel to the Administrative Agent and
legal counsel to First Bank in connection with the negotiation,
preparation, approval, execution and delivery of this Agreement;
(b) the reasonable fees and expenses of counsel for the
Administrative Agent in connection with any amendment,
modification or waiver of any of the terms of any Loan Document;
(c) all reasonable costs and expenses of the Administrative Agent
and each Lender (including reasonable counsels' fees) in
connection with the enforcement (whether through negotiations,
legal proceedings or otherwise) of this Agreement, the Notes and
the other Loan Documents; and (d) a fee in the amount of $1,250
payable to each Lender for each amendment to this Agreement or
other Loan Document (counting all amendments made concurrently as
a single amendment) in excess of two made during any period of 365
days. The Borrower hereby agrees to indemnify the Lenders and
their directors, officers, agents and employees from and hold each
of them harmless against any and all losses, liabilities, claims,
damages or expenses incurred by any of them arising out of or by
reason of (i) any investigation, litigation or other proceedings
related to any use made or proposed to be made by the Borrower of
the proceeds of the Servicing Advances, the Warehousing Advances,
the Warehousing Swing Line Advances, the Working Capital Advances,
the Working Capital Swing Line Advances or the Discretionary
Advances or the operations of the Borrower's business, or (ii) any
claim brought against the Administrative Agent or any Lender by
any Investor or other Person relating to the Servicing Contracts
and the Servicing Rights, whether by reason of the indemnity
provisions of any Acknowledgement Agreement or otherwise,
including, without limitation, with respect to clauses (i) and
(ii) above, the reasonable fees and disbursements of counsel
incurred in connection with any such investigation, litigation or
other proceedings (but excluding any such losses, liabilities,
claims, damages or expenses incurred by reason of the gross
negligence or willful misconduct of the Person to be indemnified).
8.04 Confidentiality. Any financial statements of the
Borrower and any other information which an Agent or any Lender
receives from the Borrower and which is designated as proprietary
or confidential at the time of receipt thereof by such Agent or
such Lender shall not be disclosed to any other Person, if such
information is not otherwise in the public domain, other than
(a) to its independent accountants and legal counsel, (b) to
another Lender and its legal counsel, (c) pursuant to statutory or
regulatory requirements, (d) pursuant to any court order or other
legal process or (e) to any participant in or assignee of, or
prospective participant in or assignee of, this Agreement or any
Note, provided that such participant or assignee agrees in writing
to observe the conditions of this Section 8.04.
8.05 Releases, Amendments, Waivers, Consents and
Exercise of Remedies.
(a) By Servicing Lenders. The Required Servicing
Lenders, from time to time by an instrument or instruments in
writing, may, or may direct the Administrative Agent to, amend,
modify, revoke, terminate, waive compliance with, waive any
Default or Event of Default arising from noncompliance with, or
grant any required consent under or with respect to, any of the
terms or provisions of any of the following: (i) the Security
Agreement (but only with respect to Servicing Collateral); (ii)
Section 2.01; (iii) Sections 2.05 and 2.07 (but only with respect
to interest and Balances Deficiency Fees payable under or with
respect to the Servicing Advances and the Servicing Notes); (iv)
Section 3.07 (but only with respect to Servicing Advances); (v)
Sections 4.01(e) and 4.18; (vi) Sections 5.01 and 5.02 (but only
as to Servicing Advances); and (vii) the definitions set forth in
Section 1.01 relating (but only to the extent relating) to the
Sections referred to in clauses (i) through (vi) of this Section
8.05(a); provided, however, that no such amendment, modification,
revocation, waiver or consent shall (A) increase any Servicing
Lender's Servicing Commitment Amount, (B) reduce the amount of the
principal of, or the amount or rate of interest or Balances
Deficiency Fees or other fees payable on or with respect to, any
Servicing Lender's Servicing Advances or Servicing Note, (C)
postpone the date fixed for payment of any principal of, or the
interest or any Balances Deficiency Fees or other fees payable on
or with respect to, any Servicing Lender's Servicing Advances or
Servicing Note, or (D) waive any condition precedent to the making
of Servicing Advances set forth in Section 5 hereof, unless the
same is set forth in a writing signed by such Servicing Lender.
Upon the occurrence of an Event of Default relating to any of the
terms and provisions described in clauses (i) through (vii) of the
preceding sentence, the Required Servicing Lenders, may direct the
Administrative Agent to exercise any or all of the rights and
remedies specified in Section 6.02 and the Servicing and Working
Capital Security Agreement with respect to the Servicing Advances,
the Servicing Notes and the Servicing Collateral, and the
Administrative Agent shall be authorized to rely and act upon any
such directions.
(b) By Warehousing Lenders. The Required Warehousing
Lenders, from time to time by an instrument or instruments in
writing, may, or may direct the Administrative Agent to, amend,
modify, revoke, terminate, waive compliance with, waive any
Default or Event of Default resulting from noncompliance with, or
grant any required Lender consent under or with respect to, any of
the terms or provisions of any of the following: (i) the
Warehousing and Discretionary Security Agreement (but only with
respect to Warehousing Collateral); (ii) Section 2.02; (iii)
Sections 2.05 and 2.07 (but only with respect to interest and
Balances Deficiency Fees payable under or with respect to the
Warehousing Advances and the Warehousing Notes); (iv) Section 3.07
(but only with respect to Warehousing Advances); (v) Section
4.01(d); (vi) Sections 5.01 and 5.02 (but only as to Warehousing
Advances); and (vii) the definitions set forth in Section 1.01
relating (but only to the extent relating) to the Sections
referred to in clauses (i) through (vi) of this Section 8.05(b);
provided, however, that no such amendment, modification,
revocation, waiver or consent shall (A) increase any Warehousing
Lender's Warehousing Commitment Amount, (B) reduce the amount of
the principal of, or the amount or rate of interest or Balances
Deficiency Fees or other fees payable on or with respect to any
Warehousing Lender's Warehousing Advances or Warehousing Note, (C)
postpone the date fixed for payment of any principal of, or the
interest or Balances Deficiency Fees or other fees payable on or
with respect to, any Warehousing Lender's Warehousing Advances or
Warehousing Note, or (D) waive any condition precedent to the
funding of Warehousing Advances set forth in Section 5 hereof,
unless the same is set forth in a writing signed by such
Warehousing Lender; and provided, further, no such amendment,
modification, revocation, termination, waiver or consent shall
reduce the amount of the principal of, or the amount or rate of
interest or Balances Deficiency Fees payable on or with respect
to, any Swing Warehousing Advance, postpone any date fixed for any
payment of principal of, interest on, or Balances Deficiency Fees
payable with respect to, the Swing Warehousing Advances or amend
or modify Section 2.02(b) or 2.02(f) unless the same is set forth
in a writing signed by First Bank. Upon the occurrence of an
Event of Default relating to any of the terms and provisions in
clauses (i) through (vii) of the preceding sentence, the Required
Warehousing Lenders may direct the Administrative Agent and the
Collateral and Managing Agent to exercise any or all of the rights
and remedies specified in Section 6.02 and the Warehousing and
Discretionary Security Agreement with respect to the Warehousing
Commitments, the Warehousing Advances, the Warehousing Notes and
the Warehousing Collateral, and the Administrative Agent and the
Collateral and Managing Agent shall be authorized to rely and act
upon any such directions.
(c) By Working Capital Lenders. The Required Working
Capital Lenders, from time to time by an instrument or instruments
in writing, may, or may direct the Administrative Agent and the
Collateral and Managing Agent to, amend, modify, revoke,
terminate, waive compliance with, waive any Default or Event of
Default resulting from noncompliance with, or grant any required
Lender consent under or with respect to, any of the terms or
provisions of any of the following: (i) the Servicing and Working
Capital Security Agreement and the Warehousing and Discretionary
Security Agreement (but only with respect to Working Capital
Collateral); (ii) Section 2.03; (iii) Sections 2.05 and 2.07 (but
only with respect to interest and Balances Deficiency Fees payable
under or with respect to the Working Capital Advances and the
Working Capital Notes); (iv) Section 3.07 (but only with respect
to Working Capital Advances); (v) Section 5.01 and 5.02 (but only
as to Working Capital Advances); and (vi) the definitions set
forth in Section 1.01 relating (but only to the extent relating)
to the Sections referred to in clauses (i) through (v) of this
Section 8.05(c); provided, however, that no such amendment,
modification, revocation, termination, waiver or consent shall (A)
increase any Working Capital Lender's Working Capital Commitment
Amount, (B) reduce the amount of the principal of, or the amount
or rate of interest or Balances Deficiency Fees or other fees
payable on or with respect to, any Working Capital Lenders'
Working Capital Advances or Working Capital Notes, (C) postpone
the date fixed for payment of any principal of, or the interest or
Balances Deficiency Fees or other fees payable on or with respect
to, any Working Capital Lender's Working Capital Advances or
Working Capital Note, or (D) waive any condition precedent to the
funding of Working Capital Advances set forth in Section 5 hereof,
unless the same is set forth in a writing signed by such Working
Capital Lender. Upon the occurrence of an Event of Default
relating to any of the terms or provisions described in clauses
(i) through (vi) of the preceding sentence, the Required Working
Capital Lenders may direct the Administrative Agent and the
Collateral and Managing Agent to exercise any or all of the rights
and remedies set forth in Section 6.02, the Warehousing and
Discretionary Security Agreement and the Servicing and Working
Capital Security Agreement with respect to the Working Capital
Commitments, the Working Capital Advances, the Working Capital
Notes and the Working Capital Collateral, and the Administrative
Agent and the Collateral and Managing Agent shall be authorized to
rely and act upon any such direction.
(d) By Required Discretionary Lenders. The Required
Discretionary Lenders, from time to time by an instrument or
instruments in writing, may, or may direct the Administrative
Agent and the Collateral and Managing Agent to, amend, modify,
revoke, terminate, waive compliance with, waive any Default or
Event of Default resulting from noncompliance with, or grant any
required Lender consent under or with respect to, any of the terms
or provisions of any of the following: (i) the Warehousing and
Discretionary Security Agreement and the Servicing and Working
Capital Security Agreement (but only with respect to
Discretionary Collateral); (ii) Section 2.04; (iii) Sections 2.05
and 2.07 (but only with respect to interest and Balances
Deficiency Fees payable under or with respect to the Discretionary
Advances and the Discretionary Notes); (iv) Section 3.07 (but
only with respect to Discretionary Advances); (v) Section 5.01 and
5.02 (but only as to Discretionary Advances); and (vi) the
definitions set forth in Section 1.01 relating (but only to the
extent relating) to the Sections referred to in clauses (i)
through (v) of this Section 8.05(c); provided, however, that no
such amendment, modification, revocation, termination, waiver or
consent shall (A) increase any Lender's Discretionary Lending
Limit or obligate it to make Discretionary Advances, (B) reduce
the amount of the principal of, or the amount or rate of interest
or Balances Deficiency Fees or other fees payable on or with
respect to, any Discretionary Lenders' Discretionary Advances or
Discretionary Notes, (C) postpone the date fixed for payment of
any principal of, or the interest or Balances Deficiency Fees or
other fees payable on or with respect to, any Discretionary
Lender's Discretionary Advances or Discretionary Note, or (D)
waive any condition precedent to the funding of Discretionary
Advances set forth in Section 5 hereof, unless the same is set
forth in a writing signed by such Discretionary Lender. Upon the
occurrence of an Event of Default relating to any of the terms or
provisions described in clauses (i) through (vi) of the preceding
sentence, the Required Discretionary Lenders may direct the
Administrative Agent and the Collateral and Managing Agent to
exercise any or all of the rights and remedies set forth in
Section 6.02 and the Servicing and Working Capital Security
Agreement and the Warehousing and Discretionary Security Agreement
with respect to the Discretionary Advances, the Discretionary
Notes and the Discretionary Collateral, and the Administrative
Agent and the Collateral and Managing Agent shall be authorized to
rely and act upon any such direction.
(e) By Required Lenders. The Required Lenders, from
time to time by an instrument or instruments in writing, may,
and/or may direct the Administrative Agent to, amend, modify,
revoke, terminate, waive compliance with, waive any Default or
Event of Default arising from noncompliance with, or grant any
required Lender consent under or with respect to, any terms or
provisions of this Agreement or the other Loan Documents other
than those specifically identified in Sections 8.05(a), 8.05(b),
8.05(c) and 8.05(d). Upon the occurrence of an Event of Default
relating to any of the terms or provisions of this Agreement or
the other Loan Documents other than those specifically identified
in Sections 8.05(a), 8.05(b). 8.05(c) and 8.05(d), the Required
Lenders may direct the Administrative Agent and the Collateral and
Managing Agent to exercise any or all of the rights and remedies
set forth in Section 6.02 and in the other Loan Documents, and the
Administrative Agent and the Collateral and Managing Agent shall
be authorized to rely and act upon any such direction.
(f) Limitations on Amendments, Waivers, Etc.
Notwithstanding any of the foregoing, no amendment, modification,
revocation, termination, waiver or consent made or granted
pursuant to Sections 8.05(a), 8.05(b), 8.05(c). 8.05(d) or 8.05(e)
shall:
(i) affect the rights or duties of any Agent
unless the same is set forth in a writing signed by such
Agent;
(ii) release or subordinate any Servicing
Collateral, Warehousing Collateral, Working Capital
Collateral or Discretionary Collateral, include as Servicing
Collateral, Warehousing Collateral, Working Capital
Collateral or Discretionary Collateral, as the case may be,
any collateral that is also collateral included in the
description of any other type of collateral under this
Agreement (i.e., Servicing Collateral, Warehousing
Collateral, Working Capital Collateral and/or Discretionary
Collateral, as the case may be), or change the definitions of
the terms "Required Lenders," "Required Working Capital
Lenders," "Required Servicing Lenders," "Required
Warehousing Lenders" or "Required Discretionary Lenders" or
the provisions of this Section 8.05 unless the same is set
forth in a writing signed by all the Lenders.
Upon the making or the granting of any such amendment,
modification, revocation, termination, waiver or consent, the
Borrower shall promptly provide copies of the writing or writings
containing the same to the Administrative Agent and to each Lender
not otherwise a party thereto.
8.06 Binding Effect; Assignments and Participations;
Transferees. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors
and assigns, except that the Borrower may not assign its rights or
delegate its obligations hereunder or under any other Borrower
Loan Document without the prior written consent of all the
Lenders. Each Lender may at any time sell, assign, transfer,
grant participations in, or otherwise dispose of any portion of
its Commitments and/or Advances (each such interest so disposed of
being herein called a "Transferred Interest") to other financial
institutions ("Transferees"); provided, however, that a Lender may
dispose of a Transferred Interest only (a) in minimum amounts of
$10,000,000, with respect to the assignment of a portion of a
Lender's Commitment, (b) with the consent of the Agent and the
Borrower (which consent shall not, in either case, be unreasonably
withheld, and provided that the consent of the Borrower shall not
be required if an Event of Default has occurred which is
continuing) and (c) upon payment to the Agent by the parties to
such disposition of a processing and recording fee in the amount
of $2,500 for each party; provided, however, that the conditions
set forth in clauses (b) and (c) of this sentence shall not apply
to a disposition which consists only of the sale of a
participation interest. The Borrower agrees that each Transferee
shall be entitled to the benefits of Sections 209, 2.10 and 9.2
with respect to its Transferred Interest and that each Transferee
may exercise any and all rights of banker's Lien, setoff and
counterclaim as if such Transferee were a direct lender to the
Borrower. In addition, any Lender may pledge any portion of its
Notes for security purposes to any Federal Reserve Bank. If any
Lender makes any assignment to a Transferee, then upon notice to
the Borrower such Transferee, to the extent of such assignment
(unless otherwise provided therein), shall become a "Lender"
hereunder and shall have all the rights and obligations of such
Lender hereunder and such Lender shall be released from its duties
and obligations under this Agreement to the extent of such
assignment. Notwithstanding the sale by any Lender of any
participation hereunder, (a) no participant shall be deemed to be
or have the rights and obligations of a Lender hereunder except
that any participant shall have a right of setoff under Section
2.08 as if it were such Lender and the amount of its participation
were owing directly to such participant by the Borrower and (b)
such Lender shall not in connection with selling any such
participation condition such Lender's rights in connection with
consenting to amendments or granting waivers concerning any matter
under any Loan Document upon obtaining the consent of such
participant other than on matters relating to (i) any reduction in
the amount of any principal of, or the amount of or rate of
interest on, any Note or Advance in which such participation is
sold, (ii) any postponement of the date fixed for any payment of
principal of or interest on any Note or Advance in which such
participation is sold, (iii) the release or subordination of any
material portion of any collateral other than pursuant to the
terms of any Loan Document or (iv) the release of the Guaranty and
Pledge Agreements.
8.07 Severability of Provisions. Whenever possible,
each provision of this Agreement, the Notes and the other Loan
Documents and any other statement, instrument or transaction
contemplated hereby or thereby or relating hereto or thereto shall
be interpreted in such manner as to be effective and valid under
applicable law, but, if any provision of this Agreement, the
Notes, the other Loan Documents or any other statement, instrument
or transaction contemplated hereby or thereby or relating hereto
or thereto shall be held to be prohibited or invalid in any
jurisdiction under such applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the
remaining provisions of this Agreement, the Notes, the other Loan
Documents and any other statement, instrument or transaction
contemplated hereby or thereby or relating hereto or thereto and
shall not affect the enforceability of such provision in any other
jurisdiction.
8.08 Survival. The obligations of the Borrower under
Sections 2.09, 2.10 and 8.03 shall survive the repayment of the
Obligations and the termination of the Commitments.
8.09 Execution Counterparts. This Agreement may be
executed in any number of counterparts, all of which taken
together shall constitute one and the same instrument and each of
the parties hereto may execute this Agreement by signing any such
counterpart.
8.10 Governing Law; Waiver of Trial by Jury; Consent to
Jurisdiction. THIS AGREEMENT, THE NOTES AND THE OTHER LOAN
DOCUMENTS SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE INTERNAL LAW, AND NOT THE LAW OF CONFLICTS, OF THE STATE OF
MINNESOTA, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO ANY
BANK, INCLUDING, WITHOUT LIMITATION, NATIONAL BANKS. EACH OF THE
PARTIES HERETO HEREBY, TO THE FULLEST EXTENT PERMITTED BY LAW,
WAIVES TRIAL BY JURY IN ANY ACTION BROUGHT UNDER OR IN CONNECTION
WITH ANY OF THE LOAN DOCUMENTS. THE COMPANY HEREBY IRREVOCABLY
SUBMITS, TO THE FULLEST EXTENT PERMITTED BY LAW, TO THE NON-
EXCLUSIVE JURISDICTION OF ANY MINNESOTA STATE OR FEDERAL COURT
SITTING IN HENNEPIN OR RAMSEY COUNTIES, STATE OF MINNESOTA, FOR
ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT, THE NOTES AND THE OTHER LOAN DOCUMENTS, AND THE COMPANY
HEREBY IRREVOCABLY AGREES, TO THE FULLEST EXTENT PERMITTED BY LAW,
THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE
HEARD AND DETERMINED IN SUCH MINNESOTA STATE COURT OR, TO THE
EXTENT PERMITTED BY LAW, IN SUCH FEDERAL COURT. THE COMPANY
HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY
EFFECTIVELY DO SO, THE DEFENSE OF AN INCONVENIENT FORUM TO THE
MAINTENANCE OF ANY SUCH ACTION OR PROCEEDING.
8.11 Highest Lawful Rate. Anything herein to the
contrary notwithstanding, the obligations of the Borrower on the
Notes shall be subject to the limitation that payments of interest
shall not be required, for any period for which interest is
computed hereunder, to the extent that contracting for or receipt
thereof would be contrary to provisions of any law applicable to
the Lenders limiting the highest rate of interest which may be
lawfully contracted for, charged or received by the Lenders.
8.12 Entire Agreement. THIS AGREEMENT AND THE OTHER
LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES
HERETO AND THERETO AS TO THE SUBJECTS HEREOF AND THEREOF, AND MAY
NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES HERETO. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above
written.
HARBOURTON MORTGAGE CO., L.P.
By Harbourton Funding Corporation, its
general partner
By
Its
Address for Notices:
2530 South Parker Road
Suite 500
Aurora, Colorado 80014
Attention: Paul Szymanski
Telephone: 303/745-3661
Telecopier: 303/338-2289
FIRST BANK NATIONAL ASSOCIATION,
as a Lender and as Administrative Agent
By
Its
Address for Notices:
Mortgage Banking Services Division
First Bank Place - MPFP0801
601 Second Avenue South
Minneapolis, Minnesota 55402-4302
Attention: Kathlyn K. Slater
Telephone: 612/973-0622
Telecopier: 612/973-0826
TEXAS COMMERCE BANK NATIONAL
ASSOCIATION, as Collateral and Managing Agent and as a
Lender
By
Its
Address for Notices:
707 Travis,
6th Floor North
Houston, Texas 77002
Attention: William J. Clark, Jr.
Telephone: 713/216-7702
Telecopier: 713/216-2082
THE BANK OF NEW YORK, as a Lender and
as an Administrative Co-Agent
By
Its
Address for Notices:
Mortgage Banking Division
One Wall Street, Seventeenth Floor
New York, New York 10286
Attention: Cynthia Crites
Telephone: 212/635-6467
Telecopier: 212/635-6468
RESIDENTIAL FUNDING CORPORATION,
as a Lender and as an Administrative
Co-Agent
By
Its
Address for Notices:
1646 N. California Boulevard
Suite 400
Walnut Creek, California 94596
Attention: Cindy Schellenberg
Telephone: 510/935-0614
Telecopier: 510/935-6424
BANK ONE, TEXAS, NATIONAL
ASSOCIATION, as a Lender and as an
Administrative Co-Agent
By
Its
Address for Notices:
1717 Main Street, Fourth Floor
Dallas, Texas 75214
Attention: Brian Hilberth
Telephone: 214/290-3162
Telecopier: 214/290-2054
GUARANTY FEDERAL BANK, F.S.B.
By
Its
Address for Notices:
8333 Douglas Avenue
Dallas, Texas 75225
Attention: Abbie Tidmore
Telephone: 214/360-2829
Telecopier: 214/360-1660
COMERICA BANK
By
Its
Address for Notices:
500 Woodward Avenue, MC3256
Detroit, Michigan 48226
Attention: Donald Heath
Telephone: 313/222-5740
Telecopier: 313/222-9295
PNC BANK KENTUCKY
By
Its
Address for Notices:
500 West Jefferson Street, Suite 1200
Louisville, Kentucky 40202
Attention: Sloane Graf
Telephone: 502/581-4607
Telecopier: 502/581-3919
TABLE OF CONTENTS
SECTION 1. DEFINITIONS AND ACCOUNTING TERMS. 1
1.01 Certain Defined Terms. 1
1.02 Accounting Terms. 23
1.03 Computation of Time Periods. 24
1.04 Other Definitional Terms. 24
SECTION 2. THE CREDIT FACILITIES. 24
2.01 The Servicing Facility. 24
2.02 The Warehousing Facility and Warehousing Swing
Line Facility. 28
2.03 The Working Capital Facility. 35
2.04 The Discretionary Facility. 44
2.05 Interest on the Notes; Balances Deficiency Fees;
Continuations and Conversions; Designated Fixed
Rate Borrowings. 47
2.06 Administrative Agent's and Collateral and
Managing Agent's
Fees. 51
2.07 Payments and Computations. 51
2.08 Setoff. 52
2.09 Increased Capital Requirements. 52
2.10 Provisions Relating to Floating Eurodollar Rate
Borrowings, Fixed Rate Borrowings and Designated
Fixed Rate Borrowings. 53
SECTION 3. REPRESENTATIONS AND WARRANTIES. 55
3.01 Formation, Powers, Good Standing and
Subsidiaries. 55
3.02 Authorization; No Conflict; Governmental
Consents; Binding Effect. 56
3.03 Financial Condition 57
3.04 Title to Property; Liens. 57
3.05 Litigation; Adverse Facts. 57
3.06 Other Agreements; Performance. 58
3.07 Use of Proceeds. 58
3.08 Taxes. 59
3.09 ERISA. 59
3.10 Governmental Regulation. 60
3.11 Indebtedness. 60
3.12 No Material Adverse Event. 60
3.13 Licenses and Permits. 60
3.14 Guarantees. 60
3.15 GNMA, FHA, VA, FNMA and FHLMC Eligibility of the
Borrower. 60
3.16 Accuracy and Completeness of Information. 61
SECTION 4. COVENANTS OF THE COMPANY. 61
4.01 Financial Statements and Other Reports. 61
4.02 Existence. 65
4.03 Compliance with Laws, Taxes, etc. 65
4.04 ERISA. 66
4.05 Assets and Insurance. 66
4.06 Inspection, Visitation, etc. 66
4.07 Further Assurances. 66
4.08 Indebtedness. 66
4.09 Liens. 68
4.10 Investments. 69
4.11 Guarantees. 70
4.12 Restriction on Fundamental Changes. 71
4.13 Restricted Payments. 72
4.14 Net Worth 72
4.15 Leverage Ratio. 72
4.16 Debt Service Coverage Ratio. 72
4.17 Servicing Portfolio. 72
4.18 Investor Consents. 72
4.19 Inconsistent Agreements. 73
4.20 Maintenance of Qualifications. 73
4.21 Independence of Covenants. 73
SECTION 5. CONDITIONS PRECEDENT. 73
5.01 Conditions Precedent to Initial Advances 73
5.02 Conditions Precedent to Each Advance 76
SECTION 6. EVENTS OF DEFAULT; REMEDIES. 77
6.01 Events of Default. 77
6.02 Remedies. 79
SECTION 7. THE AGENTS 80
7.01 Appointment and Authorization. 80
7.02 Note Holders. 80
7.03 Consultation With Counsel. 80
7.04 Documents. 80
7.05 Agents and Affiliates. 81
7.06 Action by Agents. 82
7.07 Credit Analysis. 82
7.08 Notices of Event of Default, etc. 82
7.09 Indemnification. 82
7.10 Payments. 83
7.11 Sharing of Payments. 83
7.12 Advice to Lenders. 83
7.13 Successor Agents. 84
7.14 This Section Not Applicable To Borrower. 84
SECTION 8. MISCELLANEOUS. 84
8.01 Waiver. 84
8.02 Notices. 85
8.03 Expenses; Indemnification. 85
8.04 Confidentiality. 86
8.05 Releases, Amendments, Waivers, Consents and
Exercise of Remedies. 86
8.07 Severability of Provisions. 91
8.08 Survival. 91
8.09 Execution Counterparts. 91
8.10 Governing Law; Waiver of Trial by Jury; Consent
to Jurisdiction. 91
8.11 Highest Lawful Rate. 92
8.12 Entire Agreement. 92
Draft - 7/29/96
CREDIT AGREEMENT
by and among
HARBOURTON MORTGAGE CO., L.P.,
THE LENDERS PARTY HERETO,
FIRST BANK NATIONAL ASSOCIATION, as Administrative Agent,
THE BANK OF NEW YORK, RESIDENTIAL FUNDING CORPORATION AND
BANK ONE, TEXAS NATIONAL ASSOCIATION,
as Administrative Co-Agents
and
TEXAS COMMERCE BANK NATIONAL ASSOCIATION, as Collateral and
Managing Agent
Dated as of July 30, 1996
-6-
-7-
EXHIBIT A TO
CREDIT
AGREEMENT
[On Borrower Letterhead]
[Date]
To: First Bank National Association, as Administrative
Agent First Bank Place
601 Second Avenue South
Minneapolis, Minnesota 55402-4302
Attention: Mortgage
Banking Services
Division
MPFP0801
Texas Commerce Bank National Association,
as Collateral and Managing Agent
800 West Green Road
Suite 200
Houston, Texas 77252
Attention: Susan Lum
and the Agents and Lenders
party to the Credit Agreement
hereinafter described
Re: Borrowing Base
Certificate
Ladies/Gentlemen:
This Borrowing Base Certificate is
submitted to you pursuant to Section 4.01(d)(i) of
the Credit Agreement dated as of July 30, 1996 (as
said Agreement may be amended, supplemented or
restated from time to time, the "Credit Agreement")
among Harbourton Mortgage Co., L.P. (the "Borrower"),
the Lenders party thereto, First Bank National
Association as Administrative Agent, certain
Administrative Co-Agents and Texas Commerce Bank
National Association as Collateral and Managing
Agent. Each capitalized term used herein has the
meaning ascribed to that term in the Credit
Agreement.
The Borrower and the undersigned officer
hereby certify to the Agents and the Lenders as
follows:
(1) The undersigned is authorized to submit
this Borrowing Base Certificate on behalf of the
Borrower.
(2) As of the close of business on ____________,
19__:
I. Mandatory Servicing Prepayment
(a) Aggregate
principal amount
outstanding under Servicing Notes
$__________
(b) Qualified Servicing Portfolio Value
as of most recent Qualified Servicing
Portfolio Valuation Date (i.e., 65% of
fair market value thereof)
$__________
(c) Mandatory Servicing
Prepayment due ((a) -
(b)):
$__________
II. Warehousing
Borrowing Base
(a) Warehousing Borrowing Base Computation. The
Warehousing Borrowing Base was computed as follows:
(i) Calculation of Collateral
Value for Home Equity
Loans:
(A) Collateral Value
before adjustment $
(B) less 5% adjustment (
)
(C) Net Collateral Value
$
(ii) Calculation of
Collateral Value for All
Other Pledged
Warehousing Loans:
(A) Collateral
Value before
adjustment
$
(B) less 2%
adjustment
( )
(C) Net
Collateral Value $
(iii) Total Warehousing
Collateral
Value ((i)(C) +
(ii)(C))
$
(viii) Warehousing
Loan Sublimits:
(A) Collateral
Value of all
Wet Funded
Loans $
Maximum
Allowable (30%
of aggregate
Warehousing
Commitment
Amounts) $
(B) Collateral
Value of all
Nonconformin
g
Conventional
Mortgage
Loans $
Maximum
Allowable
(25% of
aggregate
Warehousing
Commitment
Amounts) $
(C) Collateral Value
of all Warehousing
Loans Pledged more
than 120 days $
Maximum Allowable $20,000,000
(D) Collateral
Value of all
Home Equity Loans
$_________
Maximum Allowable (2%
of aggregate
Warehousing
Commitment Amounts)
$
(b) Pledged Warehousing Loans in Default,
Not Eligible or Not Marketable. The
Pledged Warehousing Loans which had
been in default for 30 days or more, which have
ceased to be Eligible Pledged Warehousing Loans
or which were not marketable were as follows:
(i) In default (30 days) $
(ii) Ceased to be Eligible $
(iii) Not marketable* $
* Does not qualify for delivery into a Firm Take-
Out
Commitment or a Standby Take-Out Commitment.
Said Pledged Warehousing Loans are more
specifically
described in Schedule 1 attached hereto.
(c) Outstanding Warehousing Note
Balances. The aggregate principal amount
outstanding under the Warehousing
Notes was $__________.
III. Working Capital Borrowing Base
(a) Working Capital Borrowing Base
Computation. The Working Capital Borrowing Base
was computed as follows:
(i) Eligible Pledged Investment
Loans
(A) Aggregate unpaid
principal balance of Eligible
Pledged
Investment Loans before
adjustment per attached
Schedule 2 $
(B) less 20%
adjustment
( )
(C) Net Collateral
Value
$
Maximum Allowable
$5,000,000
(ii) Eligible P&I Payment
Receivables
(A) Aggregate amount of
Eligible
P&I Payment Receivables
$
(B) less 5%
adjustment
( )
(C) Net Collateral
Value
$
Maximum Allowable
$15,000,000 (iii) Eligible T&I
Payment Receivables
(A) Aggregate amount of
Eligible
T&I Payment Receivables
$
(B) less 10%
adjustment
( )
(C) Net Collateral
Value
$
Maximum Allowable (under
both (iii) and (iv))
$25,000,000
(iv) Eligible Foreclosure
Payment Receivables
(A) Aggregate amount of
Eligible
P&I Payment Receivables
$
(B) less 10% adjustment
( )
(C) Net Collateral Value
$
Maximum Allowable (under
both (iii) and (iv))
$25,000,000
(v) Total Working Capital Collateral
Value ((i)(C) + (ii)(C) +
(iii)(C) + (iv)(C))
$
(b) Outstanding Working Capital Note
Balances. The aggregate principal amount
outstanding under the Working Capital Notes was
$__________.
IV. Discretionary Borrowing Base
(a) Discretionary Borrowing Base
Computation. The Discretionary Borrowing Base was
computed as follows:
(i) Eligible Pledged Committed Whole
Loans
(A) Aggregate unpaid
principal
balance of Eligible Pledged
Committed Whole Loans
before adjustment per
attached Schedule 3
$
(B) less 1%
adjustment
( )
(C) Net
Collateral Value
$
(ii) Eligible Pledged
Gestation Loans
(A) Aggregate
unpaid principal
balance of Eligible
Pledged Gestation
Loans before
adjustment per
attached Schedule
4 $
(B) less 1%
adjustment
( )
(C) Net
Collateral Value
$
(iii) Eligible Pledged
Gestation Securities
(A) Aggregate unpaid
principal balance of
Eligible Pledged
Gestation Securities before adjustment
per attached Schedule 5 $
(B) less 1% adjustment
( )
(C) Net Collateral Value $
(iv) Total Discretionary Collateral
Value ((i)(C) + (ii)(C) + (iii)(C))
$
(b) Outstanding Discretionary Note Balances. The
aggregate principal amount outstanding under the
Discretionary Notes was $__________.
The foregoing certifications are made and delivered this
day of , 199_.
HARBOURTON MORTGAGE CO., L.P.
By Harbourton Funding
Corporation, its general
partner
By _________________
_____
Its
Schedule 1 to Borrowing
Base Certificate
(Prepared as of close of business on
,
199 )
A. Pledged Warehousing Loans in Default for 30 Days or More
Name of Pri Days
Loan No. Mortgagor ncipal in
Balance Default
B. Pledged Warehousing Loans No Longer Eligible
Pledged Warehousing Loans
Name of Principal
Loan No. Mortgagor Balance
C. Pledged Warehousing Loans Not Marketable
Name of Principal
Loan No. Mortgagor Balance
Schedule 2 to Borrowing
Base Certificate
(Prepared as of close of business on
,
199 )
Eligible Pledged Investment Loans
Name of Principal
Loan No. Mortgagor Balance
Schedule 3 to Borrowing
Base Certificate
(Prepared as of close of business on
,
199 )
Eligible Pledged Committed Whole Loans
Name of Principal
Loan No. Mortgagor Balance
Schedule 4 to Borrowing
Base Certificate
(Prepared as of close of business on
,
199 )
Eligible Pledged Gestation Loans
Name of Principal
Loan No. Mortgagor Balance
Schedule 5 to Borrowing
Base Certificate
(Prepared as of close of business on
,
199 )
Eligible Pledged Gestation Securities
EXHIBIT B TO
CREDIT
AGREEMENT
[On Borrower Letterhead]
[Date]
To: First Bank National Association, as Administrative
Agent First Bank Place
601 Second Avenue South
Minneapolis, Minnesota 55402-4302
Attention: Mortgage
Banking Services
Division
MPFP0801
and the Agents and Lenders party to the
Credit Agreement hereinafter described
Re: Compliance Certificate
Ladies/Gentlemen:
This Compliance Certificate is submitted to
you pursuant to Section 4.01(c) of the Credit
Agreement dated as of July 30, 1996 (as said
Agreement may be amended, supplemented or restated
from time to time, the "Credit Agreement") among
Harbourton Mortgage Co., L.P. (the "Borrower"), the
Lenders party thereto, First Bank National
Association as Administrative Agent, certain
Administrative Co-Agents and Texas Commerce Bank
National Association as Collateral and Managing
Agent. Each capitalized term used herein has the
meaning ascribed to that term in the Credit
Agreement.
The Borrower and the undersigned officer
hereby certify to the Agents and the Lenders as
follows:
(1) The undersigned is the duly
elected chief financial officer (or deputy
thereof) of the General Partner of the Borrower
and is authorized to submit this Compliance
Certificate on behalf of the Borrower.
(2) The undersigned has reviewed the
terms of the Credit Agreement and has made, or
has caused to be made under the undersigned's
supervision, a detailed review of the
transactions and conditions of the Borrower
during the accounting period(s) covered by
Attachment 1 hereto.
(3) The examinations described in
paragraph (2) did not disclose, and the
undersigned and the Borrower have no knowledge,
whether arising out of such examinations or
otherwise, of the existence of any condition or
event which constitutes a Default or an Event of
Default (as such terms are defined in the Credit
Agreement) during or at the end of the
accounting period(s) covered by Attachment 1
hereto or as of the date of this Compliance
Certificate, except as described below and/or in
a separate attachment to this Compliance
Certificate [describing the exceptions in
detail, the nature of the condition or event,
the period during which it has existed and the
action which Company has taken, is taking, or
proposes to take with respect to each such
condition or event]:
.
(4) The computations set forth in
Attachment 1 hereto are true and correct as of
the date and for the accounting period(s)
specified therein.
The foregoing certifications, together with the
computations set forth in Attachment No. 1 hereto
and the financial statements delivered with this
Certificate in support hereof, are made and
delivered this __ day of ___________, 19__.
HARBOURTON
MORTGAGE CO., L.P. By
Harbourton Funding
Corporation, its
general partner
By
Its Chief
Financial Officer
Attachment No. 1
to Compliance Certificate
(Terms defined in the Credit Agreement are
used herein as defined therein and Section
references used herein refer to the Sections of the
Credit Agreement.)
The following computations are made as of the
Borrower's close of business on _________, 199_:
1. Borrower's Net Worth
(determined monthly)
(a) Borrower's Net Worth:
$
(b) Minimum Borrower's Net Worth required by
Section 4.14:
$30,000,000
2. Leverage Ratio
(determined monthly)
(a) Total Liabilities: $
minus
(b) Permitted Subdebt: ($_______)
minus
(c) Indebtedness under
Discretionary Notes: ($_______)
(d) Remainder of 2(a) - 2(b) - 2(c):
$________
(e) Borrower's Adjusted
Tangible Net Worth: $________
(f) Harbourton Financial's
Adjusted
Tangible Net Worth:
$________
less
(g) Borrower's
Adjusted Tangible
Net Worth:
($________)
(h) Remainder of
2(f) -
2(g): $________
(i) 50% of 2(h): $________
(j) Sum of 2(e) and 2(i):
$________
(k) Leverage Ratio (2(d)/2(j)):
____ to 1
(l) Maximum Leverage Ratio permitted
by Section 4.15: 10.0 to
1.0
3. Debt Service Coverage Ratio
(determined fiscal quarterly after
Servicing Conversion Date)
(a) Calculation of Cash Flow for
last two fiscal quarters:
(i) net income: $
plus
(ii) noncash expenses: $________
minus
(iii) noncash income: ($________)
plus
(iv) 90% of capitalized amount
(not to exceed market) of
Originated Servicing Rights: $________
plus
(v) interest expense on Servicing
Notes:
$________
(vi) Cash Flow (sum of (i)
through (vi)): $
(b) Calculation of debt service:
(i) interest expense on Servicing
Notes:
$________
plus
(ii) aggregate Mandatory
Principal
Payments on Servicing Notes: $________
(iii) debt service (sum of (i)
and (ii)): $_______
(c) Debt Service Coverage Ratio
(3(a)(vi) to 3(b)(iii)):
to 1.0
(b) Minimum Debt Service Coverage
required by Section 4.16:
1.2 to 1.0
4. Servicing Portfolio.
(a) Aggregate principal amount of Mortgage
Loans included in Servicing
Portfolio $
(b) Minimum amount required by
Section 4.17 $3,000,000,000
EXHIBIT C
TO CREDIT
AGREEMENT
[On Borrower Letterhead]
[Date]
To: First Bank National Association, as Administrative
Agent First Bank Place
601 Second Avenue South
Minneapolis, Minnesota 55402-4302
Attention: Mortgage
Banking Services
Division
MPFP0801
and the Agents and Lenders party to the
Credit Agreement hereinafter described
Re: Confirmation
Ladies/Gentlemen:
This Confirmation is submitted to you
pursuant to the Credit Agreement dated as of July 30,
1996 (as said Agreement may be amended, supplemented
or restated from time to time, the "Credit
Agreement") among Harbourton Mortgage Co., L.P. (the
"Borrower"), the Lenders party thereto, First Bank
National Association as Administrative Agent, certain
Administrative CoAgents and Texas Commerce Bank
National Association as Collateral and Managing
Agent. Each capitalized term used herein has the
meaning ascribed to that term in the Credit
Agreement.
The Borrower and the undersigned hereby
confirm and certify to the Agents and the Lenders as
follows:
1. The undersigned is authorized to submit
this Confirmation on behalf of the Borrower.
2. On ,
19__, the
Borrower (a) requested the Agent to make Servicing
Advances, Warehousing Advances (or a Warehousing
Swing Line Advance), Working Capital Advances (or a
Working Capital Swing Line Advance) or Discretionary
Advances in the aggregate principal amount of $ , (b)
made principal payments
in the aggregate amount of $ ,
or (c)
converted outstanding Borrowings to outstanding
Borrowings of another type,* as follows:
* For purposes of this Confirmation, Borrowings
being
converted shall be described as principal
payments, and the new Borrowings into which such
Borrowings are being converted shall be
described as new Advances.
Servicing Facility
Floating EurodollarDesignated
Base Rate Rate Fixed RateFixed
Rate
Payment
_______
Net Amount
Outstanding
_______
Interest Rate % %
_ % _______%
Warehousing Facility
Floating
EurodollarDesignated
Base Rate Rate Fixed
RateFixed Rate
Advance
_______
Payment
_______
Net Amount
Outstanding
_______
Interest Rate % %
_ % _______%
Working Capital Facility
Floating
EurodollarDesignated
Base Rate Rate Fixed
RateFixed Rate
Advance
_______
Payment
_______
Net Amount
Outstanding
_______
Interest Rate % %
_ % _______%
Discretionary Facility
Floating Eurodollar
Base Rate Rate
Advance
Payment
Net Amount
Outstanding
Interest Rate % %
3. In connection with any requested
Servicing Advances, please disburse $
as follows [include wire instructions]:
4. In connection with any requested
Warehousing Advances or Warehousing Swing Line
Advance, please disburse
$ as follows [include wire
instructions]:
5. In connection with any Working Capital
Advances or Working Capital Swing Line Advance,
please disburse $________ as follows [include wire
instructions]:
Attached hereto as Attachment 1 is a listing of all
Investment Loan Advances, P&I Advances, T&I Advances
and Foreclosure Advances to be funded by such Working
Capital Advances.
6. In connection with any Discretionary
Advances, please disburse $________ as follows
[include wire instructions]:
Attached hereto as Attachment 2 is a listing of all
Tranche 1 Advances, Tranche 2 Advances and Tranche 3
Advances to be funded by such Discretionary Advances.
7. In
connection with any requested Advance: (a) no
Default or Event of Default has occurred or will
exist upon the completion of any requested Advance;
(b) the representations and warranties contained in
Section 3 of the Credit Agreement, in Section 5 of
the Warehousing and Discretionary Security Agreement
in Section 5 of the Servicing and Working Capital
Security Agreement are true and correct in all
material respects with the same force and effect as
if made on and as of the date hereof; (c) after
giving effect to the Servicing Advances requested
herein the sum of the outstanding principal balances
of the Servicing Notes will not exceed the Qualified
Servicing Portfolio Value; (d) after giving effect to
the Warehousing Advances or Warehousing Swing Line
Advance requested herein the sum of the outstanding
principal balances of the Warehousing Notes will not
exceed the Warehousing Borrowing Base; (e) after
giving effect to the Working Capital Advances or
Working Capital Swing Line Advance requested herein
the sum of the outstanding principal balances of the
Working Capital Notes will not exceed the Working
Capital Borrowing Base; and (f) after giving effect
to the Discretionary Advances the sum of the
outstanding principal balances of the Discretionary
Notes will not exceed the Discretionary Collateral
Value.
Very truly yours,
HARBOURTON MORTGAGE CO., L.P.
By Harbourton Funding Corporation,
its general partner
By
Its
Attachment 1
to
Confirmation
P&I Payments
(a) (b) (c) (d) (e)
Loan No.
Mortgagor
Name
P&I
Payment
P&I
Payment
Receivable
90% of (d)
Totals:
$________
$_________
$_________
Attachment 2
to
Confirmation
Tranche 1 Advances
-2-
-1-
EXHIBIT D
TO CREDIT
AGREEMENT
FORMULAS
FOR
DETERMINING COLLATERAL VALUE
FOR BORROWING BASES
I. Warehousing Collateral Value
The "Warehousing Collateral Value" of Eligible
Pledged
Warehousing Loans and any other collateral
constituting Warehousing Collateral shall be
determined as follows:
A. Eligible Pledged Warehousing
Loans
1. Subject to paragraphs I.A.2 and I.A.3 below,
the Warehousing Collateral Value of an Eligible
Pledged Warehousing Loan, at the time of any
determination thereof, shall be an amount equal to
the least of
(a) the unpaid principal balance of such
Eligible Pledged Mortgage Loan,
(b) 98% (95% if a Home Equity Loan) of the
Origination Price or the Acquisition Price, as
the case may be, of such Eligible Pledged
Warehousing Loan, and
(c) 98% (95% if a Home Equity Loan) of the
weighted average purchase price under the Firm
Take-Out Commitments or Standby Take-Out
Commitments under which such Eligible Pledged
Warehousing Loan is eligible to be sold, as
described in the most recent Inventory/Pipeline
Report provided by the Borrower in accordance
with Section 4.01 of the Credit Agreement.
2. Notwithstanding paragraph I.A.1 above:
(a) the maximum aggregate Warehousing
Collateral Value that may be assigned to
Eligible Pledged Warehousing Loans that are Wet
Funded Loans shall be an amount equal to 30% of
the aggregate of the Warehousing Commitment
Amounts;
(b) the maximum Warehousing Collateral
Value that may be assigned to any single
Eligible Pledged Warehousing Loan that is a
Nonconforming Conventional Mortgage Loan shall
be $1,500,000, and the maximum aggregate
Warehousing Collateral Value that may be
assigned to all Eligible Pledged Warehousing
Loans that are Nonconforming Conventional
Mortgage Loans shall be an amount equal to 25%
of the aggregate of the Warehousing Commitment
Amounts;
(c) the maximum aggregate Warehousing
Collateral Value that may be assigned to
Eligible Pledged Warehousing Loans that have
been Pledged as Warehousing Collateral more than
120 days shall be $20,000,000; and
(d) the maximum aggregate Warehousing
Collateral Value that may be assigned to
Eligible Pledged Warehousing Loans that are Home
Equity Loans shall be an amount equal to 2% of
the aggregate of the Warehousing Commitment
Amounts.
3. Notwithstanding paragraphs I.A.1 and I.A.2
above, an Eligible Pledged Warehousing Loan will
cease to have Warehousing Collateral Value if any of
the following events occur with respect thereto:
(a) in the case of an Eligible Pledged
Warehousing Loan which is other than a Home
Equity Loan, 210 days elapse from the date on
which such Eligible Pledged Warehousing Loan was
Pledged as Warehousing Collateral (Eligible
Pledged Warehousing Loans that have been Pledged
as Warehousing Collateral for more than 120 days
but less than 210 days are subject to the
sublimit set forth in paragraph I.A.2(c) above);
(b) in the case of an Eligible Pledged
Warehousing Loan which is a Home Equity Loan, 60
days elapse from the date on which such Eligible
Pledged Warehousing Loan was Pledged as
Warehousing Collateral;
(c) 45 days elapse from the date an
Eligible Pledged Mortgage Loan was
delivered to an Investor for examination and
purchase and such Eligible Pledged Warehousing
Loan has not been returned to the Collateral and
Managing Agent;
(d) 21 days elapse from the date a Warehousing
Collateral document relating to such Eligible
Pledged Warehousing Loan was delivered to the
Borrower for correction or completion and such
corrected or completed Warehousing Collateral
document has not been returned to the Collateral
and Managing Agent;
(e) in the case of an Eligible Pledged
Warehousing Loan which is a Wet Funded Loan,
seven (7) Business Days elapse from the date an
Agreement to Pledge and a Collateral
Identification Letter with respect to such Wet
Funded Loan were executed by the Borrower and
the Mortgage Note and other instruments and
documents required by paragraph 2 of said
Collateral Identification Letter have not been
received by the Collateral and Managing Agent;
(f) any payment required to be made under
an Eligible Pledged Warehousing Loan is not paid
when due and remains unpaid 30 days;
(g) such Eligible Pledged Warehousing Loan
ceases to be an Eligible Pledged Warehousing
Loan; or
(h) the Collateral and Managing Agent
notifies the Borrower that in the reasonable
opinion of the Collateral and Managing Agent
such Eligible Pledged Warehousing Loan is not
marketable and should not be given Warehousing
Collateral Value hereunder.
The Borrower shall provide the Collateral and
Managing Agent with a certified schedule at least
once each calendar month of all the Eligible Pledged
Warehousing Loans in respect of which the event
described in clauses (f), (g) and (h) of this
paragraph I.A.3 has occurred. Notwithstanding any of
the foregoing, (a) a Pledged Warehousing Loan shall
remain a part of the Warehousing Collateral Pledged
under the Warehousing and Discretionary Security
Agreement until it is released by the Collateral and
Managing Agent pursuant to Section 10.04 thereof,
irrespective of any determination that such Pledged
Warehousing Loan is not, or has ceased to be, an
Eligible Pledged Warehousing Loan or that it does not
have, or has ceased to have, Warehousing Collateral
Value, and (b) an Eligible Pledged Warehousing Loan
which has
been delivered to an Investor for inclusion in a pool
of Mortgage Loans backing a Related Mortgage-backed
Security pursuant to Section 10.03 of the
Warehousing and Discretionary Security
Agreement shall remain a part of the Warehousing
Collateral Pledged under the Warehousing and
Discretionary Security Agreement and, to the extent
provided in paragraphs I.A and I.B above, subject to
paragraph I.A.2 above and this paragraph I.A.3, shall
retain its Warehousing Collateral Value until it is
released pursuant to Section 10.04 of the Warehousing
and Discretionary Security Agreement.
B. Other Warehousing Collateral
The Warehousing Collateral Value of any other
collateral
("Other Warehousing Collateral") offered by the
Borrower and accepted as Warehousing Collateral by
the Warehousing Lenders in their sole and absolute
discretion shall be such amount of Warehousing
Collateral Value (if any) as the Warehousing Lenders
may assign to such Other Warehousing Collateral in
their sole and absolute discretion.
II. Working Capital Collateral Value
The "Working Capital Collateral Value" of
Eligible Pledged Investment Loans, Eligible P&I
Payment Receivables, Eligible T&I Payment
Receivables, Eligible Foreclosure Payment Receivables
and any other collateral constituting Working Capital
Collateral shall be determined as follows:
A. Eligible Pledged Investment
Loans
1. Subject to paragraphs II.A.2 and II.A.3 below,
the
Working Capital Collateral Value of an Eligible
Pledged Investment Loan, at the time of any
determination thereof, shall be an amount equal to
80% of the unpaid principal balance of such Eligible
Pledged Investment Loan.
2. Notwithstanding paragraph II.A.1 above, the
maximum aggregate Working Capital Collateral Value
that may be assigned to Eligible Pledged Investment
Loans shall be $5,000,000.
3. Notwithstanding paragraphs II.A.1 and II.A
.2 above, an Eligible Pledged Investment Loan will
cease to have Working Capital Collateral Value if any
of the following events occur with respect thereto:
(a) 360 days elapse from the date on which
such Eligible Pledged Investment Loan was
Pledged as Working Capital Collateral;
(b) 21 days elapse from the date a Working
Capital Collateral document relating to such
Eligible Pledged Investment Loan was delivered
to the Borrower for correction or completion and
such corrected or completed Working Capital
Collateral document has not been returned to the
Administrative Agent; or
(c) such Eligible Pledged Investment Loan
ceases to be an Eligible Pledged Investment
Loan.
B. Eligible P&I Payment Receivables
1. Subject to paragraphs II.B.2 and II.B.3 below,
the
Working Capital Collateral Value of any Eligible P&I
Payment Receivable at any time shall be 95% of the
amount thereof (after
deducting any payments made thereon).
2. Notwithstanding paragraph II.B.1 above, the
maximum aggregate Working Capital Collateral Value
that may be assigned to Eligible P&I Payment
Receivables shall be $15,000,000.
3. Notwithstanding paragraphs II.B.1 and II.B.2
above, an Eligible P&I Payment Receivable will cease
to have Working Capital Collateral Value if such
Eligible P&I Payment Receivable ceases to be an
Eligible P&I Payment Receivable.
C. Eligible T&I Payment Receivables and Eligible
Foreclosure Payment
Receivables
1. Subject to paragraphs II.C.2 and II.C.3 below,
the
Working Capital Collateral Value of any Eligible T&I
Payment Receivable or Eligible Foreclosure Payment
Receivable at any time shall be 90% of the amount
thereof (after deducting any payments made thereon).
2. Notwithstanding paragraph II.C.1 above, the
maximum aggregate Working Capital Collateral Value
that may be assigned to Eligible T&I Payment
Receivables and Eligible Foreclosure Payment
Receivables, taken together, shall be $25,000,000.
3. Notwithstanding paragraphs II.C.1 and II.C.2
above, an Eligible T&I Payment Receivable will cease
to have Working Capital Collateral Value if such
Eligible T&I Payment Receivable ceases to be an
Eligible T&I Payment Receivable, and an Eligible
Foreclosure Payment Receivable will cease to have
Working Capital Collateral Value if such Eligible
Foreclosure Payment Receivable ceases to be an
Eligible Foreclosure Payment Receivable.
D. Other Working Capital
Collateral.
The Working Capital Collateral Value of any
other collateral ("Other Working Capital Collateral")
offered by the Borrower and accepted as Working
Capital Collateral by the Working Capital Lenders in
their sole and absolute discretion shall be such
amount of Working Capital Collateral Value (if any)
as the Working Capital Lenders may assign to such
Other Working Capital Collateral in their sole and
absolute discretion.
III. Discretionary Collateral Value
The "Discretionary Collateral Value" of
Eligible Pledged Committed Whole Loans, Eligible
Pledged Gestation Loans, Eligible Pledged Gestation
Securities and any other collateral constituting
Discretionary Collateral shall be determined as
follows:
A. Eligible Pledged Committed Whole Loans,
Eligible Pledged Gestation
Loans
and Eligible Pledged Gestation Securities
1. Subject to paragraphs III.A .2 and III.A .3
below, the Discretionary Collateral Value of an
Eligible Pledged Committed Whole Loan, Eligible
Pledged Gestation Loan or Eligible Pledged Gestation
Security, at the time of any determination thereof,
shall be an amount equal to 99% of the purchase price
therefor under the Firm Take-Out Commitment
applicable thereto.
2. Notwithstanding paragraph III.A .1 above,
the maximum aggregate Discretionary Collateral Value
that may be assigned to
Eligible Pledged Committed Whole Loans, Eligible
Pledged Gestation Loans and Eligible Pledged
Gestation Securities, taken together, shall be
$75,000,000.
3. Notwithstanding paragraphs III.A .1 and
III.A .2 above, an Eligible Pledged Committed Whole
Loan, Eligible Pledged Gestation Loan or Eligible
Pledged Gestation Security will cease to have
Discretionary Collateral Value if any of the
following events occur with respect thereto:
(a) 10 days elapse from the date on which
any such Eligible Pledged Committed Whole Loan
was Pledged as Discretionary Collateral;
(b) 10 days elapse from the date on which
any such Eligible Pledged Gestation Loan was
Pledged as Discretionary Collateral;
(c) 10 days elapse from the date on which
any such Eligible Pledged Gestation Security was
Pledged as Discretionary Collateral; or
(d) such Eligible Pledged Committed Whole
Loan, Eligible Gestation Loan or Eligible
Pledged Gestation Security ceases to be an
Eligible Pledged Committed Whole Loan, Eligible
Pledged Gestation Loan or Eligible Pledged
Gestation Security, as the case may be.
B. Other Discretionary
Collateral
The Discretionary Collateral Value of any other
collateral ("Other Discretionary Collateral") offered
by the Borrower and accepted as Discretionary
Collateral by the Discretionary Lenders in their sole
and absolute discretion shall be such amount of
Discretionary Collateral Value (if any) as the
Discretionary Lenders may assign to such Other
Discretionary Collateral in their sole and absolute
discretion.
III. Definitions.
Capitalized terms used not otherwise defined in
this Exhibit, shall have the meanings ascribed
thereto in the Credit Agreement, the Warehousing and
Discretionary Security Agreement or the Servicing and
Working Capital Security Agreement, as the case may
be, unless the context otherwise requires. In
addition, the following terms shall have the
following respective meanings:
"Acquisition Date": with respect to a Mortgage
Loan that is purchased by the Borrower, the date of
the assignment assigning such Mortgage Loan to the
Borrower.
"Acquisition Price": with respect to a Mortgage
Loan that is purchased by the Borrower, the actual
out-of-pocket cost to the Borrower incurred in
connection with the purchase of such Mortgage Loan by
the Borrower.
"Appraised Value": with respect to an interest
in real estate, the then current fair market value
thereof as of a recent date satisfactory to the
Agent, as determined by the FHA or the VA, if
applicable, or, if there is no such determination,
then as determined in accordance with accepted
methods of appraising by a qualified appraiser who is
a member of the American Institute of Real Estate
Appraisers or other group of professional appraisers.
"Conforming Conventional Mortgage Loan": a
Conventional Mortgage Loan that is eligible for
purchase by FNMA or FHLMC.
"Conventional Mortgage Loan": a Mortgage Loan
secured by a First Mortgage on improved real estate
that (a) is in an amount not in excess of eighty
percent (80%) of the Appraised Value of such real
estate unless the amount of such Mortgage Loan in
excess of eighty percent (80%) of such Appraised
Value is insured against credit losses by an insurer
approved by FHLMC or FNMA and (b) satisfies FHLMC's
or FNMA's underwriting standards.
"Conversion Date": with respect to an
adjustable rate Mortgage Loan that has been converted
to a fixed rate Mortgage Loan, the date of the
allonge, amendment, modification agreement or other
document converting the interest rate thereunder from
an adjustable rate to a fixed rate.
"Eligible Foreclosure Payment Receivable": a
Foreclosure Payment Receivable in which the
Administrative Agent has a perfected first priority
security interest for the benefit of the Lenders.
"Eligible P&I Payment Receivable": a P&I
Payment Receivable in which the Administrative Agent
has a perfected first priority security interest for
the benefit of the Lenders.
"Eligible Pledged Committed Whole Loan": a
Pledged Committed Whole Loan in which the Collateral
and Managing Agent has a perfected first priority
security interest for the benefit of the Banks.
"Eligible Pledged Gestation Loan": a Pledged
Gestation Loan in which the Collateral and Managing
Agent has a perfected first priority security
interest for the benefit of the Lenders.
"Eligible Pledged Investment Loan": a Pledged
Investment Loan in which the Administrative Agent has
a perfected first priority security interest for the
benefit of the Lenders.
"Eligible Pledged Warehousing Loan": a Pledged
Warehousing Loan: (a) the entire interest in which
is owned (or, in the case of a Wet Funded Loan, will
be owned upon the closing thereof) by the Borrower,
(b) which is an FHA Mortgage Loan, a VA Mortgage
Loan, a Conforming Conventional Mortgage Loan, a
Nonconforming Conventional Mortgage Loan, a
Nonconforming Mortgage Loan or a Home Equity Loan
covering a completed residential property, (c) which
qualifies for purchase under an existing Firm Take-
Out Commitment or Standby Take-Out Commitment, (d)
the Origination Date of which, and, in the case of an
adjustable rate Mortgage Loan which has been
converted to a fixed rate Mortgage Loan, the
Conversion Date of which is less than 60 days prior
to the date on which such Pledged Warehousing Loan
was Pledged, in the case of a Pledged Warehousing
Loan which is a Home Equity Loan, or less than 120
days prior to the date on which such Pledged
Warehousing Loan was Pledged, in the case of any
other Pledged Warehousing Loan, and (e) in which the
Collateral and Managing Agent has a perfected first
priority security interest for the benefit of the
Lenders.
"Eligible Pledged Gestation Security": a
Pledged Gestation Security in which the Collateral
and Managing Agent has a perfected first priority
security interest for the benefit of the Lenders.
"Eligible T&I Payment Receivable": a T&I
Payment Receivable in which the Administrative Agent
has a perfected first priority security interest for
the benefit of the Lenders.
"FHA Mortgage Loan": a Mortgage Loan secured by
a First Mortgage that is insured by, or is eligible
to be insured by and is covered by a binding
commitment of, the FHA pursuant to the provisions of
the National Housing Act, as amended.
"Firm Take-Out Commitment": a commitment from
an Investor to purchase from the Borrower within a
specified time period a Mortgage Loan or Mortgage
Loans, under which commitment the Borrower is
obligated to sell said Mortgage Loan or Mortgage
Loans.
"First Mortgage": a Mortgage that is subject to
no prior or superior mortgage, deed of trust or other
security deed in the land and interests in real
property covered by such Mortgage.
"Home Equity Loan": a Mortgage Loan which is a
revolving line of credit or a close-ended loan and is
secured by a First Mortgage or a Second Mortgage, the
current unpaid principal balance of which as adjusted
from time to time does not exceed $300,000, and the
loan-to-value-ratio of which (and all other Mortgage
Loans encumbering the same property) does not exceed
95%.
"Nonconforming Conventional Mortgage Loan": a
Conventional Mortgage Loan that (a) is in an amount
in excess of the maximum amount eligible for purchase
by FHLMC or FNMA and (b) otherwise satisfies FHLMC's
or FNMA's underwriting standards.
"Nonconforming Mortgage Loan": a Mortgage Loan
that (a) is secured by a First Mortgage, (b) does not
conform to the eligibility requirements of FNMA or
FHLMC with respect to the credit rating of the
mortgagor, and (c) is underwritten and approved by an
Investor prior to funding.
"Origination Date": with respect to a Mortgage
Loan, the earlier of the date of the Mortgage
securing such Mortgage Loan or the date of the
Mortgage Note evidencing such Mortgage Loan.
"Origination Price": with respect to a Mortgage
Loan originated by the Borrower, the unpaid principal
amount of such Mortgage Loan less all discounts
collected by the Borrower in connection with such
Mortgage Loan.
"Pledged": means, with respect any Mortgage
Loan, that the Mortgage Note and other documents
relating thereto have been delivered to the Agent in
accordance with Section 4.01 or Section 4.02 of the
Warehousing and Discretionary Security Agreement.
"Second Mortgage": a Mortgage that is subject
to a First Mortgage but is subject to no other prior
or superior mortgage, deed of trust or other security
deed in the land and interests in real property
covered by such Mortgage.
"Standby Take-Out Commitment": a commitment
from an Investor to purchase from the Borrower within
a specified time period a Mortgage Loan or Mortgage
Loans, under which commitment the Borrower has the
right, but is not obligated, to sell said Mortgage
Loan or Mortgage Loans.
"Wet Funded Loan": a Pledged Warehousing Loan
that has been closed and funded under an Agreement to
Pledge pursuant to Section 4.01 of the Warehousing
and Discretionary Security Agreement and for which
the applicable Mortgage Note and other instruments
and documents required to be delivered to the Agent
under the applicable Collateral Identification Letter
have not been received by the Collateral and Managing
Agent.
"VA Mortgage Loan": a Mortgage Loan secured by
a First Mortgage that is guaranteed by, or is
eligible to be guaranteed by and is covered by a
binding commitment to guarantee of, the VA pursuant
to the provisions of the Servicemen's Readjustment
Act of 1944, as amended.
EXHIBIT
E TO CREDIT
AGREEMENT
Servicing Commitment Amounts, Warehousing
Commitment Amounts, Working Capital
Commitment Amounts and Discretionary Lending Limits
($ in Millions)
Lender Servicing Warehous Discreti Working Total
ing onary Capital
First
Bank
National 12.00 55.00 13.75 8.00 88.75
Associat
ion
Texas
Commerce
Bank
National
Associat 12.00 55.00 13.75 8.00 88.75
ion
The Bank
of New
York 9.00 40.00 10.00 5.00 64.00
Resident
ial
Funding
Corporat 9.00 40.00 10.00 5.00 64.00
ion
Bank
One,
Texas,
National 9.00 40.00 10.00 5.00 64.00
Associat
ion
Guaranty
Federal
Bank, 9.00 24.00 6.00 5.00 44.00
F.S.B.
Comerica
Bank 7.50 24.00 6.00 4.50 42.00
PNC Bank
Kentucky 7.50 22.00 5.50 4.50 39.50
TOTAL 75.00 300.00 75.00 45.00 495.00
EXHIBIT F TO CREDIT AGREEMENT
Initially Approved Investors
[TO COME FROM COMPANY, SUBJECT
TO APPROVAL OF FIRST BANK AND TCB]
EXHIBIT
G TO CREDIT
AGREEMENT
PROMISSORY NOTE
(Servicing Note)
July 30,
1996 Minneapolis,
Minnesota
FOR VALUE RECEIVED, HARBOURTON MORTGAGE CO., L.P.,
a Delaware limited partnership (the "Borrower"), hereby
promises to pay to the order of
________________________________________________________
(the "Lender"), at the main office of the Administrative
Agent (as such term and each other capitalized term used
herein are defined in the Credit Agreement hereinafter
referred to) at First Bank Place, 601 Second Avenue South,
Minneapolis, Minnesota 554024302, or at such other office as
may be designated in writing by the Lender, in lawful money
of the United States of America in Immediately Available
Funds, the aggregate unpaid principal amount of all
Servicing Advances made by the Lender to the Borrower
pursuant to a Credit Agreement dated as of July 30, 1996
among the Borrower, certain Lenders (including the Lender),
First Bank National Association as Administrative Agent,
certain Administrative Co-Agents and Texas Commerce Bank
National Association as Collateral and Managing Agent (as
the same may be amended, modified or restated from time to
time, the "Credit Agreement") and to pay interest from the
date hereof on the unpaid principal balance thereof at the
times and at the rate or rates per annum provided for in the
Credit Agreement. Principal of this note is payable at the
times and in the amounts provided for in the Credit
Agreement.
This note is one of the Servicing Notes referred
to in the Credit Agreement. This note is subject to
mandatory and voluntary prepayment and its maturity is
subject to acceleration, in each case upon the terms
provided in the Credit Agreement. This note is secured by
certain collateral referred to in the Credit Agreement.
The Borrower hereby waives diligence, presentment,
demand, protest, and notice (except such notice as may be
required under the Loan Documents) of any kind whatsoever.
The nonexercise by the Agents or the Lender of any of their
rights hereunder or under the other Loan Documents shall not
constitute a waiver thereof in any subsequent instance.
This note is entitled to the benefit of the
Warehousing and Discretionary Security Agreement, the
Servicing and Working Capital Security Agreement and the
other Loan Documents.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH, THE INTERNAL LAW, AND NOT THE LAW OF
CONFLICTS, OF THE STATE OF MINNESOTA, BUT GIVING EFFECT TO
FEDERAL LAWS APPLICABLE TO NATIONAL BANKS. In the event of
default hereunder, the Borrower agrees to pay all costs and
expenses of collection, including reasonable attorneys'
fees.
[Notwithstanding the foregoing paragraphs and all
other provisions of this note and the Credit Agreement, none
of the
terms and provisions of this note or the Credit Agreement
shall ever be construed to create a contract to pay to the
Lender, for the use, forbearance or detention of money,
interest in excess of the maximum amount of interest
permitted to be charged by the Lender to the undersigned
under applicable state or federal law from time to time in
effect, and
the undersigned shall never be required to pay interest in
excess of such maximum amount. If, for any reason interest
is paid hereon in excess of such maximum amount (whether as
a result of the payment of this note prior to its maturity
or otherwise), then promptly upon any determination that
such excess has been paid the Lender will, at its option,
either refund such excess to the undersigned or apply such
excess to the principal owing hereunder.]/1
HARBOURTON MORTGAGE
CO., L.P.,
By Harbourton Funding Corporation, its
general partner
By
Its
_______________________________
1/ This paragraph shall be included only in the Servicing
Notes
of Servicing Lenders whose principal offices are in the
State of Texas
EXHIBIT
H TO CREDIT
AGREEMENT
PROMISSORY NOTE
(Warehousing Note)
July 30,
1996 Minneapolis,
Minnesota
FOR VALUE RECEIVED, HARBOURTON MORTGAGE CO., L.P.,
a Delaware limited partnership (the "Borrower"), hereby
promises to pay to the order of
_____________________________________________________ (the
"Lender"), at the main office of the Administrative Agent
(as such term and each other capitalized term used herein
are defined in the Credit Agreement hereinafter referred to)
at First Bank Place, 601 Second Avenue South, Minneapolis,
Minnesota 554024302, or at such other office as may be
designated in writing by the Lender, in lawful money of the
United States of America in Immediately Available Funds, the
aggregate unpaid principal amount of all Warehousing
Advances [and Warehousing Swing Line Advances]/1
_______________________________
/ This language will appear only in the Warehousing Note
of First Bank National Association. made by the Lender
to the Borrower pursuant to a Credit Agreement dated
as of July 30, 1996 among the Borrower, certain Lenders
(including the Lender), First Bank National Association
as Administrative Agent, certain Administrative Co-
Agents and Texas Commerce Bank National Association as
Collateral and Managing Agent (as the same may be
amended, supplemented, restated or otherwise modified
from time to time, the "Credit Agreement") and to pay
interest from the date hereof on the unpaid principal
balance thereof at the times and at the rate or rates
per annum provided for in the Credit Agreement.
Principal of this note is payable at the times and in
the amounts provided for in the Credit Agreement.
This note is one of the Warehousing Notes referred
to in the Credit Agreement. This note is subject to
mandatory and voluntary prepayment and its maturity is
subject to acceleration, in each case upon the terms
provided in the Credit Agreement. This note is secured
by certain collateral referred to in the Credit
Agreement.
The Borrower hereby waives diligence, presentment,
demand, protest, and notice (except such notice as may
be required under the Loan Documents) of any kind
whatsoever. The nonexercise by the Agents or the Lender
of any of their rights hereunder or under the other
Loan Documents shall not constitute a waiver thereof in
any subsequent instance.
This note is entitled to the benefit of the
Warehousing and Discretionary Security Agreement, the
Servicing and Working Capital Security Agreement and
the other Loan Documents.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH, THE INTERNAL LAW, AND NOT THE LAW OF
CONFLICTS, OF THE STATE OF MINNESOTA, BUT GIVING EFFECT
TO
FEDERAL LAWS APPLICABLE TO NATIONAL BANKS. In the event of default
hereunder, the Borrower agrees to pay all costs and expenses of
collection, including reasonable attorneys' fees.
[Notwithstanding the foregoing paragraphs and all other
provisions of this note and the Credit Agreement, none of the terms
and provisions of this note or the Credit Agreement shall ever be
construed to create a contract to pay to the Lender, for the use,
forbearance or detention of money, interest in excess of the
maximum amount of interest permitted to be charged by the Lender to
the undersigned under applicable state or federal law from time to
time in effect, and
the undersigned shall never be required to pay interest in
excess of such maximum amount. If, for any reason interest
is paid hereon in excess of such maximum amount (whether as
a result
of the payment of this note prior to its maturity or
otherwise), then promptly upon any determination that such
excess has been paid the Lender will, at its option, either
refund such excess to the undersigned or apply such excess
to the principal owing hereunder.]/
HARBOURTON MORTGAGE CO., L.P.,
By Harbourton Funding Corporation, its
general partner
By
Its
EXHIBIT
I TO CREDIT
AGREEMENT
PROMISSORY NOTE
(Working Capital Note)
July 30,
1996 Minneapolis,
Minnesota
FOR VALUE RECEIVED, HARBOURTON MORTGAGE CO., L.P.,
a Delaware limited partnership (the "Borrower"), hereby
promises to pay to the order of
_____________________________________________________ (the
"Lender"), at the main office of the Administrative Agent
(as such term and each other capitalized term used herein
are defined in the Credit Agreement hereinafter referred to)
at First Bank Place, 601 Second Avenue South, Minneapolis,
Minnesota 554024302, or at such other office as may be
designated in writing by the Lender, in lawful money of the
United States of America in Immediately Available Funds, the
aggregate unpaid principal amount of all Working Capital
Advances [and Working Capital Swing Line Advances]/1
_______________________________
/ This language will appear only in the Working Capital
Note
of First Bank National Association. made by the Lender
to the Borrower pursuant to a Credit Agreement dated
as of July 30, 1996 among the Borrower, certain Lenders
(including the Lender), First Bank National Association
as Administrative Agent, certain Administrative Co-
Agents and Texas Commerce Bank National Association as
Collateral and Managing Agent (as the same may be
amended, supplemented, restated or otherwise modified
from time to time, the "Credit Agreement") and to pay
interest from the date hereof on the unpaid principal
balance thereof at the times and at the rate or rates
per annum provided for in the Credit Agreement.
Principal of this note is payable at the times and in
the amounts provided for in the Credit Agreement.
This note is one of the Working Capital Notes
referred to in the Credit Agreement. This note is
subject to mandatory and voluntary prepayment and its
maturity is subject to acceleration, in each case upon
the terms provided in the Credit Agreement. This note
is secured by certain collateral referred to in the
Credit Agreement.
The Borrower hereby waives diligence, presentment,
demand, protest, and notice (except such notice as may
be required under the Loan Documents) of any kind
whatsoever. The nonexercise by the Agents or the Lender
of any of their rights hereunder or under the other
Loan Documents shall not constitute a waiver thereof in
any subsequent instance.
This note is entitled to the benefit of the
Warehousing and Discretionary Security Agreement, the
Servicing and Working Capital Security Agreement and
the other Loan Documents.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH, THE INTERNAL LAW, AND NOT THE LAW OF
CONFLICTS, OF THE STATE OF MINNESOTA, BUT GIVING EFFECT
TO
FEDERAL LAWS APPLICABLE TO NATIONAL BANKS. In the event of
default hereunder, the Borrower agrees to pay all costs and
expenses of collection, including reasonable attorneys'
fees.
[Notwithstanding the foregoing paragraphs and all other
provisions of this note and the Credit Agreement, none of
the terms and provisions of this note or the Credit
Agreement shall ever be construed to create a contract to
pay to the Lender, for the use, forbearance or detention of
money, interest in excess of the maximum amount of interest
permitted to be charged by the Lender to the undersigned
under applicable state or federal law from time to time in
effect, and
the undersigned shall never be required to pay interest in
excess of such maximum amount. If, for any reason interest
is paid hereon in excess of such maximum amount (whether as a
result
of the payment of this note prior to its maturity or
otherwise), then promptly upon any determination that such
excess has been paid the Lender will, at its option, either
refund such excess to the undersigned or apply such excess to
the principal owing hereunder.]/
HARBOURTON MORTGAGE CO., L.P.,
By Harbourton Funding Corporation, its
general partner
By
Its
EXHIBIT J TO CREDIT
AGREEMENT
PROMISSORY NOTE
(Discretionary Note)
July 30, 1996
Minneapolis,
Minnesota
FOR VALUE RECEIVED, HARBOURTON MORTGAGE CO., L.P.,
a Delaware limited partnership (the "Borrower"), hereby
promises to pay to the order of
________________________________________________________ (the
"Lender"), at the main office of the Administrative Agent (as
such term and each other capitalized term used herein are
defined in the Credit Agreement hereinafter referred to) at
First Bank Place, 601 Second Avenue South, Minneapolis,
Minnesota 554024302, or at such other office as may be
designated in writing by the Lender, in lawful money of the
United States of America in Immediately Available Funds, the
aggregate unpaid principal amount of all Discretionary
Advances made by the Lender to the Borrower pursuant to a
Credit Agreement dated as of July 30, 1996 among the
Borrower, certain Lenders (including the Lender), First Bank
National Association as Administrative Agent, certain
Administrative Co-Agents and Texas Commerce Bank National
Association as Collateral and Managing Agent (as the same
may be amended, modified or restated from time to time, the
"Credit Agreement") and to pay interest from the date hereof
on the unpaid principal balance thereof at the times and at
the rate or rates per annum provided for in the Credit
Agreement. Principal of this note is payable at the times
and in the amounts provided for in the Credit Agreement.
This note is one of the Discretionary Notes
referred to in the Credit Agreement. This note is subject to
mandatory and voluntary prepayment and its maturity is
subject to acceleration, in each case upon the terms provided
in the Credit Agreement. This note is secured by certain
collateral referred to in the Credit Agreement.
The Borrower hereby waives diligence, presentment,
demand, protest, and notice (except such notice as may be
required under the Loan Documents) of any kind whatsoever.
The nonexercise by the Agents or the Lender of any of their
rights hereunder or under the other Loan Documents shall not
constitute a waiver thereof in any subsequent instance.
This note is entitled to the benefit of the
Warehousing and Discretionary Security Agreement, the
Servicing and Working Capital Security Agreement and the
other Loan Documents.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH, THE INTERNAL LAW, AND NOT THE LAW OF
CONFLICTS, OF THE STATE OF MINNESOTA, BUT GIVING EFFECT TO
FEDERAL LAWS APPLICABLE TO NATIONAL BANKS. In the event of
default hereunder, the Borrower agrees to pay all costs and
expenses of collection, including reasonable attorneys' fees.
[Notwithstanding the foregoing paragraphs and all
other provisions of this note and the Credit Agreement, none
of the
terms and provisions of this note or the Credit Agreement
shall ever be construed to create a contract to pay to the
Lender, for the use, forbearance or detention of money,
interest in excess of the maximum amount of interest
permitted to be charged by the Lender to the undersigned
under applicable state or federal law from time to time in
effect, and
the undersigned shall never be required to pay interest in
excess of such maximum amount. If, for any reason interest
is paid hereon in excess of such maximum amount (whether as a
result of the payment of this note prior to its maturity or
otherwise), then promptly upon any determination that such
excess has been paid the Lender will, at its option, either
refund such excess to the undersigned or apply such excess to
the principal owing hereunder.]/1
HARBOURTON MORTGAGE
CO., L.P.,
By Harbourton Funding Corporation, its
general partner
By
Its
_______________________________
1/ This paragraph shall be included only in the
Discretionary
Notes of Discretionary Lenders whose principal offices
are in the State of Texas
