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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------------
Form 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): April 10, 1998
AAMES FINANCIAL CORPORATION
(Exact name of Registrant as Specified in Its Charter)
Delaware 0-19604 95-4340340
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
350 South Grand Avenue, 52nd Floor
Los Angeles, California 90071
(Address of Principal Executive Offices)
(213) 210-5000
(Registrant's Telephone Number, Including Area Code)
NA
-------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
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ITEM 5. OTHER EVENTS
On April 10, 1998, Aames Financial Corporation (the "Company") entered
into a Second Amended and Restated Mortgage Loan Warehousing Agreement (the
"Agreement") by and among the Company, Aames Capital Corporation, NationsBank of
Texas, N.A. and the lenders from time to time party thereto. The Agreement
provides for a $300,000,000 warehouse financing facility, with additional
financing available under a bid facility as set forth in the Agreement. A copy
of the Agreement is attached hereto as Exhibit 10.1.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this Current Report on Form 8-K to be
signed on its behalf by the undersigned hereunto duly authorized.
AAMES FINANCIAL CORPORATION
Dated: April 24, 1998 By: /s/ Barbara S. Polsky
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Barbara S. Polsky
Executive Vice President,
General Counsel and
Secretary
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description of Exhibit
- ----------- ----------------------
<S> <C>
10.1 Second Amended and Restated Mortgage Loan
Warehousing Agreement, dated as of April 10, 1998,
by and among Aames Financial Corporation, Aames
Capital Corporation, NationsBank of Texas, N.A. and
the lenders from time to time party thereto
</TABLE>
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EXHIBIT 10.1
SECOND AMENDED AND RESTATED MORTGAGE LOAN WAREHOUSING AGREEMENT
THIS SECOND AMENDED AND RESTATED MORTGAGE LOAN WAREHOUSING
AGREEMENT (the "Agreement") made and dated as of the 10th day of April, 1998,
by and among AAMES CAPITAL CORPORATION, a California corporation (the
"Company"); AAMES FINANCIAL CORPORATION, a Delaware corporation and the sole
shareholder of the Company (the "Parent"); the lenders from time to time party
hereto, together with their respective successors and assigns (each a "Lender
and, collectively, the "Lenders"); and NATIONSBANK OF TEXAS, N.A., a national
banking association ("NationsBank"), as administrative agent for the Lenders
(in such capacity, the "Administrative Agent").
RECITALS
A. Pursuant to that certain Amended and Restated Mortgage Loan
Warehousing Agreement dated as of January 15, 1997 by and among the Company,
the Administrative Agent, and the Lenders party thereto (as amended to date,
the "Existing Credit Agreement"), such Lenders extended credit to the Company
on the terms and subject to the conditions set forth therein.
B. The Company, the Administrative Agent and the Lenders party to
the Existing Credit Agreement desire to amend the Existing Credit Agreement and
the documents, instruments and agreements relating thereto in certain respects
and, for convenience of reference, to restate the Existing Credit Agreement in
its entirety herein.
NOW, THEREFORE, in consideration of the above Recitals and for other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto hereby agree as follows:
AGREEMENT
1. Tranche A Credit Facility (Standard Warehouse Loans).
1(a) Tranche A Lending Limit. On the terms and
subject to the conditions set forth herein, the Lenders severally agree that
they shall from time to time to and including the Maturity Date (as such term
and capitalized terms not otherwise defined herein are defined in Paragraph 17
below) make loans (the "Tranche A Committed Loans" or a "Tranche A Committed
Loan"), pro rata in accordance with their respective Percentage Shares, to the
Company in amounts not to exceed, in the aggregate at any one time outstanding,
the lesser of:
(1) The Aggregate Committed Credit Limit
minus the sum of:
(i) The aggregate dollar amount of
Tranche B Loans and Tranche C Loans outstanding (including all
Tranche B Loans and Tranche C Loans to be funded on the
proposed date of funding of the requested Tranche A Committed
Loans but excluding Tranche C Loans which will be repaid with
proceeds of the requested Tranche A Committed Loans);
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(ii) The aggregate dollar amount of
Tranche A Bid Loans outstanding (excluding Tranche A Bid Loans
which will be repaid with the proceeds of the requested
Tranche A Committed Loans); and
(iii) The L/C Available Amount and
any unrepaid L/C Drawings as of such date; and
(2) The Collateral Value of the
Warehouse Borrowing Base plus any Supplemental Cash Collateral held by
the Administrative Agent, minus the sum of:
(i) The aggregate dollar amount of
all Tranche C Loans outstanding (excluding Tranche C Loans
which will be repaid with proceeds of the requested Tranche A
Committed Loans);
(ii) The aggregate dollar amount of
all Bid Loans outstanding (excluding Bid Loans which will be
repaid with the proceeds of the requested Tranche A Committed
Loans); and
(iii) The L/C Available Amount and
any unrepaid L/C Drawings as of such date.
1(b) Calculation and Payment of Interest. Tranche
A Committed Loans shall bear interest from the date disbursed to but not
including the date of payment calculated on the principal amount of Tranche A
Committed Loans outstanding from time to time hereunder at a per annum rate
equal to, at the option of and as selected by the Company from time to time
(subject to the provisions of Paragraphs (6(c), 6(d) and 6(e) below), the
Applicable Eurodollar Rate for the applicable Interest Period or the daily
average Applicable Effective Fed Funds Rate during the applicable interest
computation period, said interest to be payable as provided more particularly
in Paragraph 6(b) below.
1(c) Payment of Principal. Subject to the
prepayment requirements of Paragraph 7(f) below and the conversion and
continuation provisions of Paragraph 6(c) below, the Company shall pay the
principal amount of each Tranche A Committed Loan being maintained as a
Eurodollar Loan on the last day of the applicable Interest Period and shall pay
the principal amount of each Tranche A Committed Loan being maintained as an
Effective Fed Funds Rate Loan on the Maturity Date.
2. Letter of Credit Facility.
2(a) Letter of Credit. On the terms and subject
to the conditions set forth in the Existing Credit Agreement, NationsBank has
issued its letter of credit (as amended, extended and replaced from time to
time, including, without limitation, pursuant to this Agreement, the "Letter of
Credit") for the account of the Company in favor of Pacific Thrift and Loan
Company, a California corporation, in the amount of $2,500,000.00. Effective
as of the Effective Date and subject to the conditions set forth herein,
NationsBank shall amend the Letter of Credit to extend the stated expiration
date to a date no later than the regularly scheduled Maturity Date hereunder;
provided, however, that the L/C Available Amount of the Letter of Credit as so
amended and extended shall not exceed the least of:
(1) $2,500,000.00;
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(2) The Aggregate Committed Credit Limit
minus the aggregate dollar amount of Tranche A Loans, Tranche B Loans
and Tranche C Loans outstanding and unrepaid L/C Drawings (including
all Loans outstanding plus all Loans to be funded on the Effective
Date but excluding all such Loans which will be repaid by Loans
requested to be funded on the Effective Date); and
(3) The Collateral Value of the
Warehouse Borrowing Base plus any Supplemental Cash Collateral held by
the Administrative Agent, minus the sum of:
(i) The aggregate dollar amount of
all Tranche A Committed Loans and Tranche C Loans outstanding
(including all Loans outstanding plus all Loans to be funded
on the Effective Date but excluding all such Loans which will
be repaid by Loans requested to be funded on the Effective
Date); and
(ii) The aggregate dollar amount of
all Bid Loans outstanding or to be funded on the Effective
Date (excluding all Bid Loans which will be repaid by Loans
requested to be funded on the Effective Date).
As a condition to the amendment and extension of the Letter of Credit, the
Company shall execute and deliver to NationsBank not less than four (4)
Business Days prior to the Effective Date a duly executed Letter of Credit
Application, accompanied by all other documents, instruments and agreements as
NationsBank may require (such Letter of Credit Application and other documents,
instruments and agreements, together with all documents, instruments and
agreements delivered to NationsBank at the time of the original issuance of the
Letter of Credit under the Existing Credit Agreement, being referred to herein
as the "L/C Documents"). Following the Effective Date, the Letter of Credit
may not be extended to a date beyond the then current regularly scheduled
Maturity Date hereunder without the prior written consent of one hundred
percent (100%) of the Lenders.
2(b) Purchase of Participation Interests. Upon
the Effective Date the Lenders shall be automatically deemed to have purchased
an undivided participation interest in the Letter of Credit and in all rights
and obligations relating thereto pro rata in accordance with their respective
Percentage Shares.
2(c) Repayment of L/C Drawings. Any drawing under
the Letter of Credit (a "L/C Drawing") shall be payable in full by the Company:
(1) prior to the occurrence of an Event of Default and acceleration of the
Obligations, on the date NationsBank notifies the Administrative Agent and the
Company (which notice may be telephonic) of such L/C Drawing if such notice is
given prior to 11:30 a.m. (Los Angeles time), or on the next succeeding
Business Day if given after 11:30 a.m. (Los Angeles time), or (2) following the
occurrence of an Event of Default and acceleration of the Obligations, without
demand upon or notice to the Company, on the date of such L/C Drawing. Any L/C
Drawing not paid on the date when due shall accrue interest as provided in
Paragraph 6(k) below, from and including such date to but not including the
date paid in full. The Lenders hereby absolutely and unconditionally
(including, without limitation, following the occurrence of an Event of
Default) agree to purchase and sell among themselves the dollar amount of any
L/C Drawing which is not paid on the date when due by the Company, so that each
unrepaid L/C Drawing shall be held and participated in by the Lenders pro rata
in accordance with their respective Percentage Shares.
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2(d) Absolute Obligation to Repay. The Company's
obligation to repay L/C Drawings shall be absolute, irrevocable and
unconditional under any and all circumstances whatsoever and irrespective of
any set-off, counterclaim or defense to payment which the Company may have or
have had, against NationsBank, the Administrative Agent, any Lender or any
other Person, including, without limitation, any set-off, counterclaim or
defense based upon or arising out of:
(1) Any lack of validity or
enforceability of this Agreement or any of the other Loan Documents;
(2) Any amendment or waiver of or any
consent to departure from the terms of the Letter of Credit;
(3) The existence of any claim, setoff,
defense or other right which the Company or any other Person may have
at any time against any beneficiary or any transferee of the Letter of
Credit (or any Person for whom any such beneficiary or any such
transferee may be acting);
(4) Any allegation that any demand,
statement or any other document presented under the Letter of Credit
is forged, fraudulent, invalid or insufficient in any respect, or that
any statement therein is untrue or inaccurate in any respect
whatsoever or that variations in punctuation, capitalization, spelling
or format were contained in the drafts or any statements presented in
connection with any L/C Drawing;
(5) Any payment by NationsBank under the
Letter of Credit against presentation of a draft or certificate that
does not strictly comply with the terms of the Letter of Credit, or
any payment made by NationsBank under the Letter of Credit to any
Person purporting to be a trustee in bankruptcy, debtor-in-possession,
assignee for the benefit of creditors, liquidator, receiver or other
representative of or successor to any beneficiary or any transferee of
the Letter of Credit, including any arising in connection with any
insolvency proceeding;
(6) Any exchange, release or
non-perfection of any Collateral; or
(7) Any other circumstance or happening
whatsoever, whether or not similar to any of the foregoing, including
any other circumstance that might otherwise constitute a defense
available to, or a discharge of, the Company.
Nothing contained herein shall constitute a waiver of any rights of the Company
against NationsBank arising out of the gross negligence or willful misconduct
of NationsBank in connection with the Letter of Credit.
2(e) Uniform Customs and Practice. The Uniform
Customs and Practice for Documentary Credits as published by the International
Chamber of Commerce most recently at the time of issuance of the Letter of
Credit shall (unless otherwise expressly provided in the Letter of Credit)
apply to the Letter of Credit.
2(f) Relationship to Letter of Credit
Application. In the event of any inconsistency between the terms and
provisions of this Agreement and the terms and provisions of the L/C Documents,
the terms and provisions of this Agreement shall supersede and govern.
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3. Tranche B Credit Facility (Working Capital Loans).
3(a) Tranche B Lending Limit. On the terms and
subject to the conditions set forth herein, the Lenders severally agree that
they shall from time to time to and including the Maturity Date make loans (the
"Tranche B Loans" or a "Tranche B Loan"), pro rata in accordance with their
respective Percentage Shares, to the Company in amounts not to exceed, in the
aggregate at any one time outstanding, the least of:
(1) The Tranche B Credit Limit; and
(2) The Collateral Value of the Working
Capital Borrowing Base; and
(3) The Aggregate Committed Credit Limit
minus the sum of:
(i) The aggregate dollar amount of
Tranche A Committed Loans and Tranche C Loans outstanding
(including all Tranche A Committed Loans and Tranche C Loans
to be funded on the proposed date of funding of the requested
Tranche B Loan but excluding Tranche C Loans which will be
repaid with proceeds of a requested Tranche A Committed Loan
on such date);
(ii) The aggregate dollar amount of
Tranche A Bid Loans outstanding (excluding Tranche A Bid Loans
which will be repaid with the proceeds of a requested Tranche
A Committed Loan on such date); and
(iii) The L/C Available Amount and
any unrepaid L/C Drawings as of such date.
3(b) Calculation and Payment of Interest. Tranche
B Loans shall bear interest from the date disbursed to but not including the
date of payment calculated at a per annum rate equal to, at the option of and
as selected by the Company from time to time (subject to the provisions of
Paragraphs 6(c), 6(d) and 6(e) below), the Applicable Eurodollar Rate for the
applicable Interest Period or the daily average Applicable Effective Fed Funds
Rate during the applicable interest computation period, said interest to be
payable as provided more particularly in Paragraph 6(b) below.
3(c) Payment of Principal. Subject to the
prepayment requirements of Paragraph 7(f) below and the conversion and
continuation provisions of Paragraph 6(c) below, the Company shall pay the
principal amount of each Tranche B Loan being maintained as a Eurodollar Loan
on the last day of the applicable Interest Period and shall pay the principal
amount of each Tranche B Loan being maintained as an Effective Fed Funds Rate
Loan on the Maturity Date.
4. Tranche C Credit Facility (Swing Loans).
4(a) Tranche C Lending Limit. On the terms and
subject to the conditions set forth herein, NationsBank agrees that it shall
from time to time to but not including the Maturity Date make loans (the
"Tranche C Loans" or a "Tranche C Loan") to the Company in amounts not to
exceed, in the aggregate at any one time outstanding, the least of:
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(1) The Tranche C Credit Limit; and
(2) The Aggregate Committed Credit Limit
minus the sum of:
(i) The aggregate dollar amount of
Tranche A Committed Loans and Tranche B Loans outstanding
(including all Tranche A Committed Loans and Tranche B Loans
to be funded on the proposed date of funding of the requested
Tranche C Loan);
(ii) The aggregate dollar amount of
Tranche A Bid Loans outstanding; and
(iii) The L/C Available Amount and
any unrepaid L/C Drawings as of such date; and
(3) The Collateral Value of the
Warehouse Borrowing Base plus any Supplemental Cash Collateral held by
the Administrative Agent, minus the sum of:
(i) The aggregate dollar amount of
all Tranche A Committed Loans outstanding (including all
Tranche A Committed Loans to be funded on the proposed date of
funding of the requested Tranche C Loan);
(ii) The aggregate dollar amount of
all Bid Loans outstanding; and
(iii) The L/C Available Amount and
any unrepaid L/C Drawings as of such date.
4(b) Funding of Tranche C Loans. Upon receipt by
NationsBank, acting in its capacity as Administrative Agent hereunder, of a
Loan And/Or Interest Rate Election Request for a Tranche C Loan, NationsBank,
acting in its capacity as the Tranche C Lender hereunder, shall advance the
amount of the Tranche C Loan or Loans requested for the purpose of funding the
Company's operations on a daily basis without requiring daily fundings from the
applicable Lenders.
4(c) Refunding of Tranche C Loans by Lenders.
Tranche C Loans shall be refunded by the Lenders to NationsBank upon demand of
NationsBank through the Administrative Agent, which demand will be made no more
frequently than once each Business Day and no less frequently than weekly (and,
in any event, on each Wednesday or, if any Wednesday is not a Business Day, the
immediately preceding Business Day); provided, however, that NationsBank shall
not be required to request refundings of Tranche C Loans hereunder in aggregate
amounts of less than $5,000,000.00. All Tranche C Loans shall be automatically
designated as Tranche A Committed Loans on and as of such refunding date. Such
refundings shall be made by the Lenders (including NationsBank) in accordance
with their respective Percentage Shares and shall, thereafter, be reflected as
Tranche A Committed Loans of the Lenders on the books and records of the
Administrative Agent. Subject to Paragraph 4(f) below, the Administrative
Agent shall, upon the occurrence of an Event of Default and acceleration of the
Obligations, request a refunding hereunder of all Tranche C Loans outstanding
as of such date.
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4(d) Calculation and Payment of Interest. Tranche
C Loans shall bear interest from the date disbursed to but not including the
refunding date or the date of payment calculated on the principal amount of
Tranche C Loans outstanding from time to time hereunder during the applicable
interest calculation period at the daily average Applicable Effective Fed Funds
Rate, said interest to be payable as provided more particularly in Paragraph
6(b) below.
4(e) Payment of Principal. Subject to the
prepayment requirements of Paragraph 7(f) and earlier refunding pursuant to
Paragraph 4(c) above, the Company shall pay the principal amount of each
Tranche C Loan on the Maturity Date.
4(f) Absolute Obligation to Refund. It is
expressly acknowledged and agreed by the Lenders and the Company that the
obligation of the Lenders to refund Tranche C Loans shall be absolute and
unconditional and shall be effected by the Lenders upon telephonic request of
the Administrative Agent regardless of whether at the proposed refunding date
there shall exist an Event of Default or Potential Default hereunder; provided,
however, that the obligation of the Lenders to refund Tranche C Loans made by
NationsBank on any date on which NationsBank personnel responsible for
administering the credit facility hereunder had actual knowledge of the
existence of an Event of Default, shall be limited to those Tranche C Loans
made on such date with the consent (which may be telephonic) of one hundred
percent (100%) of the Lenders. In the event for any reason the Lenders shall
be prohibited from refunding their respective ratable portion of Tranche C
Loans as Tranche A Committed Loans as provided herein, then instead of
refunding Tranche C Loans as Tranche A Committed Loans, upon request of
NationsBank and subject to the proviso of the immediately preceding sentence,
each Lender (other than NationsBank) shall purchase and take from NationsBank
an individual participation interest in all Tranche C Loans outstanding
hereunder in the amount of such Lender's Percentage Share thereof.
5. Bid Loans.
5(a) Bid Loan Credit Limit. The Company may from
time to time, on the terms and subject to the conditions set forth herein,
request the Lenders to quote fixed rates at which they would, individually, be
prepared to fund advances to the Company hereunder in a stated dollar amount and
for a stated Bid Loan Interest Period ("Bid Loans"); provided, however, that in
no event shall:
(1) The aggregate dollar amount of Bid
Loans outstanding at any date exceed the least of:
(i) The Bid Loan Credit Limit;
(ii) The Maximum Aggregate Credit
Limit minus the sum of the aggregate dollar amount of Tranche
A Committed Loans, Tranche B Loans and Tranche C Loans
outstanding, the L/C Available Amount and any unrepaid L/C
Drawings; and
(iii) The Collateral Value of the
Warehouse Borrowing Base plus any Supplemental Cash Collateral
held by the Administrative Agent, minus the sum of the
aggregate dollar amount of all Tranche A Committed Loans and
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Tranche C Loans outstanding, the L/C Available Amount and any
unrepaid L/C Drawings; or
(2) The aggregate dollar amount of
Tranche A Bid Loans outstanding at any date exceed $50,000,000.00.
5(b) Procedures for Request for Bid Loans. In the
event the Company desires to request the advance of Bid Loans, it shall deliver
to the Administrative Agent (which delivery may be by facsimile transmission) a
duly executed Bid Loan Request on the third Business Day prior to the proposed
funding date, which Bid Loan Request shall specify:
(1) Whether or not the requested Bid
Loans are Tranche A Bid Loans;
(2) The proposed funding date;
(3) The aggregate principal amount of all
Bid Loans requested to be funded on such date, which amount
shall be not less than $5,000,000.00 or increments of
$1,000,000.00 in excess thereof; and
(4) The Bid Loan Interest Period(s) for
such Bid Loans.
d
The Administrative Agent shall promptly notify each Lender of the contents of
each Bid Loan Request received by it hereunder. In no event shall the Company
deliver a Bid Loan Request to the Administrative Agent within five Business
Days after delivering any other Bid Loan Request.
5(c) Offer Procedures. Upon receipt from the
Administrative Agent of the contents of a Bid Loan Request, any Lender may, in
its sole discretion, elect to offer, on the terms and subject to the conditions
set forth in this Agreement, to make one or more of the requested Bid Loans at
such fixed rates of interest as may be quoted by such Lender in it sole
discretion. Any such offer shall be made by delivery to the Administrative Agent
no later than 9:00 a.m. (Los Angeles time) on the proposed funding date of a
duly executed Bid Loan Offer. Each Bid Loan Offer shall specify:
(1) The maximum dollar amount of Bid
Loans which such Lender is prepared to fund for the requested
Bid Loan Interest Periods, with the amount of each Bid Loan to
be $5,000,000.00 or increments of $1,000,000.00 in excess
thereof (except in the case following the submission of Bid
Loan Offers a lesser amount shall be allocated pro rata among
Lenders as provided in Paragraph 5(d) below); and
(2) The rate or rates of interest at
which such Lender is prepared to make the offered Bid Loans.
The Administrative Agent shall notify the Company no later than 10:00 a.m. (Los
Angeles time) on the proposed funding date of the contents of each Bid Loan
Offer received by it.
5(d) Response Procedures. No later than 10:30 a.m.
(Los Angeles time) on the proposed funding date the Company shall, in its sole
discretion, either:
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(1) Cancel the subject Bid Loan Request
by giving the Administrative Agent telephonic notice to such
effect, which notice the Administrative Agent will promptly
provide to the Lenders; or
(2) Accept one or more of the Bid Loan
Offers by delivery to the Administrative Agent by facsimile
transmission of a duly executed Bid Loan Confirmation setting
forth the amount of the Bid Loans to be made by the Lenders
(such amount not to exceed for any Lender the amount set forth
in the Bid Loan Offer submitted by such Lender or, in the
aggregate, the aggregate dollar amount of the related Bid Loan
Request).
In electing to accept certain Bid Loan Offers, the Company must do so solely on
the basis of the pricing offered for the relevant Bid Loan Interest Period and
no other criteria. If two or more Lenders submit Bid Loan Offers for identical
pricing, the Company shall accept offers from all of such Lenders in amounts
allocated among them pro rata in accordance with the dollar amounts offered by
such Lenders (or as nearly pro rata as shall be practicable after giving effect
to the requirements of Paragraph 5(c)(1) above). In no event may the Company
accept a Bid Loan Offer if after the funding of the Bid Loans thereunder more
than fifteen (15) Bid Loans having different Bid Loan Interest Periods or
interest rates would be outstanding. If the Company elects to accept any Bid
Loan Offer, the Administrative Agent shall notify each Lender thereof no later
than 11:00 a.m. (Los Angeles time) on the proposed funding date. Each Lender
which is to make a Bid Loan shall, on or before 12:00 noon (Los Angeles time)
on the proposed funding date make available to the Administrative Agent the
amount thereof as provided in Paragraph 7(b)(2) below. In the event the
Company rejects some or all Bid Loan Offers solicited in connection with a Bid
Loan Request but nevertheless desires to request an equivalent (or lesser)
dollar amount of Tranche A Committed Loans to be funded by the Lenders on the
date of such rejection, the Company shall so notify the Administrative Agent no
later than 10:30 a.m. (Los Angeles time) on the proposed funding date. The
Administrative Agent shall notify each Lender thereof no later than 11:00 a.m.
(Los Angeles time) on the proposed funding date and, on the terms and subject
to the conditions otherwise applicable to the funding of Tranche A Committed
Loans hereunder, each of the Lenders shall fund its respective Percentage Share
of the requested Tranche A Committed Loans no later than 12:00 noon (Los
Angeles time) on such date. All Tranche A Committed Loans funded in lieu of
Bid Loans as provided herein shall initially be funded as Effective Federal
Funds Rate Loans.
5(e) Calculation and Payment of Interest on Bid
Loans. Interest on Bid Loans shall be calculated at the rates established
pursuant to the related Bid Loan Offer and shall be payable as provided in
Paragraph 6(b) below.
5(f) Principal Repayment. Subject to the prepayment
requirements of Paragraph 7(f) below, each Bid Loan shall be payable in full on
the last day of the applicable Bid Loan Interest Period therefor.
6. Interest Rate and Yield-Related Provisions.
6(a) Initial Rate Applicable to Tranche A
Committed Loans and Tranche B Loans. All Tranche A Committed Loans and Tranche
B Loans shall initially be funded as Effective Fed Funds Rate Loans and,
thereafter, shall be maintained, at the election of the
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Company made from time to time as permitted herein, as Effective Fed Funds Rate
Loans and/or Eurodollar Loans or any combination thereof.
6(b) Payment of Interest and Fees. The
Administrative Agent shall deliver to the Company an interest and fee billing
for each month on or before the third Business Day of the next succeeding
month, which billing shall set forth monthly interest accrued and payable on
Loans and fees payable hereunder to be collected by the Administrative Agent.
On or before the seventh Business Day following receipt of such billing
statement, the Company shall pay to the Administrative Agent for remittance to
the Lenders the full amount of the interest and fee billing set forth on such
billing statement. In addition, the Company shall pay to the Administrative
Agent for remittance to the Lenders interest accruing on Eurodollar Loans on
the last day of the applicable Interest Period.
6(c) Conversion and Continuation.
(1) The Company may elect from time to
time to convert Tranche A Committed Loans and Tranche B Loans
outstanding as Eurodollar Loans to Effective Fed Funds Rate Loans by
giving the Administrative Agent same day notice of such election. Any
conversion of Eurodollar Loans may only be made on the last day of the
applicable Interest Period. The Company may elect from time to time
to convert Tranche A Committed Loans and Tranche B Loans outstanding
as Effective Fed Funds Rate Loans to Eurodollar Loans by giving the
Administrative Agent at least three Eurodollar Business Days' prior
irrevocable notice of such election. All such elections shall be
evidenced by the delivery by the Company to the Administrative Agent
within the required time frame of a duly executed Loan And/Or Interest
Rate Election Request. Upon receipt of a Loan And/Or Interest Rate
Election Request, the Administrative Agent shall promptly notify each
of the Lenders of the Company's elections under such Loan And/Or
Interest Rate Election Request. No Effective Fed Funds Rate Loan
shall be converted into a Eurodollar Loan if an Event of Default or
Potential Default has occurred and is continuing on the date of the
conversion requested by the Company. All or any part of outstanding
Tranche A Committed Loans and Tranche B Loans may be converted as
provided herein; provided, however, that partial conversions shall be
in a principal amount of $5,000,000.00 or whole multiples of
$1,000,000.00 in excess thereof, and in the case of conversions into
Eurodollar Loans, after giving effect thereto the aggregate of the
then number of Eurodollar Loans of each Lender having a different
Interest Period does not exceed ten.
(2) Any Eurodollar Loan may be continued
as such upon the expiration of the Interest Period with respect
thereto by the Company giving the Administrative Agent at least three
Eurodollar Business Days' prior irrevocable notice of such election as
set forth on a duly executed Loan And/Or Interest Rate Election
Request; provided, however, that no Eurodollar Loan may be continued
as such when any Event of Default or Potential Default has occurred
and is continuing, but shall be automatically converted to an
Effective Fed Funds Rate Loan on the last day of the then current
Interest Period applicable thereto, and the Administrative Agent shall
notify the Lenders and the Company promptly that such automatic
conversion will occur. Upon receipt of a Loan And/Or Interest Rate
Election Request, the Administrative Agent shall promptly notify each
of the Lenders of the Company's elections under such Loan And/Or
Interest Rate Election Request. If the Company shall fail to give
notice as provided above, the
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<PAGE> 11
Company shall be deemed to have elected to convert the affected
Eurodollar Loan to an Effective Fed Funds Rate Loan on the last day of
the relevant Interest Period.
6(d) Inability to Determine Rate. In the event
that the Administrative Agent shall have determined (which determination shall
be conclusive and binding upon the Company) that by reason of circumstances
affecting the London interbank eurodollar market adequate and reasonable means
do not exist for ascertaining the Eurodollar Rate for any Interest Period, the
Administrative Agent shall forthwith give facsimile notice of such
determination, confirmed in writing, to each Lender and to the Company. If
such notice is given: (1) any Tranche A Committed Loan or Tranche B Loan that
was to have been converted to a Eurodollar Loan shall be continued as an
Effective Fed Funds Rate Loan, and (2) any outstanding Eurodollar Loan shall be
converted, on the last day of the then current Interest Period with respect
thereto, to an Effective Fed Funds Rate Loan. Until such notice has been
withdrawn by the Administrative Agent, the Company shall not have the right to
convert a Tranche A Committed Loan or Tranche B Loan to a Eurodollar Loan or to
continue a Eurodollar Loan.
6(e) Illegality. Notwithstanding any other
provisions herein, if any law, regulation, treaty or directive, or any change
therein or in the interpretation or application thereof, shall make it unlawful
for any Lender to make or maintain Eurodollar Loans as contemplated by this
Agreement: (1) the commitment of such Lender hereunder to make or to continue
Eurodollar Loans or to convert Effective Fed Funds Rate Loans to Eurodollar
Loans shall forthwith be canceled, and (2) such Lender's Tranche A Committed
Loans and Tranche B Loans then outstanding as Eurodollar Loans, if any, shall
be converted automatically to Effective Fed Funds Rate Loans at the end of
their respective Interest Periods or within such earlier period as is required
by law. In the event of a conversion of any Tranche A Committed Loan or
Tranche B Loan prior to the end of its applicable Interest Period as provided
herein, the Company hereby agrees promptly to pay any Lender affected thereby,
upon demand, the amounts required pursuant to Paragraph 6(h) below, it being
agreed and understood that such conversion shall constitute a prepayment for
all purposes hereof. The provisions hereof shall survive the termination of
this Agreement and payment of the outstanding Loans and all other Obligations.
6(f) Requirements of Law; Increased Costs. In the
event that any applicable law, order, regulation, treaty or directive issued by
any central bank or other Governmental Authority, or in the governmental or
judicial interpretation or application thereof, or compliance by any Lender with
any request or directive (whether or not having the force of law) issued
subsequent to the date hereof by any central bank or other Governmental
Authority:
(1) Does or shall subject any Lender to
any tax of any kind whatsoever with respect to this Agreement or any
Loans made hereunder, or change the basis of taxation of payments to
such Lender of principal, fee, interest or any other amount payable
hereunder (except for a change in the rate of tax on the overall net
income of such Lender);
(2) Does or shall impose, modify or hold
applicable any reserve, capital requirement, special deposit,
compulsory loan or similar requirements against assets held by, or
deposits or other liabilities in or for the account of, advances or
loans by, or other credit extended by, or any other acquisition of
funds by, any office of such Lender which are not otherwise included
in the determination of the Effective Fed Funds Rate or the Eurodollar
Rate; or
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<PAGE> 12
(3) Does or shall impose on such Lender
any other condition;
and the result of any of the foregoing is to increase the cost to such Lender
of making, renewing or maintaining any Loan or to reduce any amount receivable
in respect thereof or to reduce the rate of return on the capital of such
Lender or any Person controlling such Lender, then, in any such case, the
Company shall promptly pay to the Administrative Agent for remittance to such
Lender, upon its written demand made through the Administrative Agent, any
additional amounts necessary to compensate such Lender for such additional cost
or reduced amounts receivable or rate of return as reasonably determined by
such Lender with respect to this Agreement or Loans made hereunder. If a
Lender becomes entitled to claim any additional amounts pursuant to this
Paragraph 6(f), it shall promptly notify the Company through the Administrative
Agent of the event by reason of which it has become so entitled. A certificate
as to any additional amounts payable pursuant to the foregoing sentence
containing the calculation thereof in reasonable detail submitted by a Lender,
through the Administrative Agent, to the Company shall be conclusive in the
absence of manifest error. The provisions hereof shall survive the termination
of this Agreement and payment of the outstanding Loans and all other
Obligations.
6(g) Funding. Each Lender shall be entitled to
fund all or any portion of Loans held by it in any manner it may determine in
its sole discretion, including, without limitation, in the Grand Cayman
inter-bank market, the London inter-bank market and within the United States,
but all calculations and transactions hereunder in respect of Eurodollar Loans
shall be conducted as though all Lenders actually fund all Eurodollar Loans
through the purchase in London of offshore dollar deposits in the amount of the
relevant Eurodollar Loan in maturities corresponding to the applicable Interest
Period.
6(h) Prepayment Premium. In addition to all other
payment obligations hereunder, in the event: (1) any Eurodollar Loan or Bid
Loan is prepaid prior to the last day of the applicable Interest Period or Bid
Loan Interest Period, as applicable, whether following a voluntary prepayment,
mandatory prepayment, application of proceeds from the sale of Collateral or
otherwise, or (2) the Company shall fail to continue or to make a conversion to
a Eurodollar Loan after the Company has given notice thereof as provided in
Paragraph 6(c) above, then the Company shall immediately pay to the Lenders
holding the Loans prepaid or not continued or converted, through the
Administrative Agent, an additional premium sum compensating each Lender for
losses, costs and expenses incurred by such Lender in connection with such
prepayment. The Company acknowledges that such losses, costs and expenses are
difficult to quantify and that, in the case of the prepayment of or failure to
continue or convert to a Eurodollar Loan, the following formula represents a
fair and reasonable estimate of such losses, costs and expenses:
<TABLE>
<S> <C> <C> <C> <C>
Amount [Applicable Eurodollar Rate ] Days Remaining
Being [Eurodollar Rate for such Incre- ] in Interest
Prepaid or [for Increment ment for Days ] x Period
Being x [Being Prepaid - Remaining in ] -------------------
Not Converted [or Not Interest ] 360
or Continued [Converted Period ]
[or Continued (as quoted on the first
Eurodollar Business
Day following Lenders'
receipt of notice thereof)
</TABLE>
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<PAGE> 13
For purposes of calculating the current Eurodollar Rate for the days remaining
in the Interest Period for both the increment being prepaid or not converted or
continued, said current Eurodollar Rate shall be an interest rate interpolated
between Eurodollar Rates quoted for standard calendar periods for subsequent
months' maturities in accordance with normal conventions. The prepayment
premium payable by the Company with respect to any Bid Loan shall be an amount
equal to the losses associated therewith, as internally allocated by the Lender
holding such Bid Loan consistent with its policies and practices in effect from
time to time as such are applied to its borrowers generally.
6(i) Buy-Down Provisions. Notwithstanding anything
contained in this Agreement, the Company and any individual Lender (as used in
this Paragraph 6(i), a "Buy-Down Lender") may notify the Administrative Agent in
writing that the Company and such Buy-Down Lender have entered into a Buy-Down
Agreement with respect to all or a portion of the Loans from time to time
outstanding held by such Buy-Down Lender, and that, pursuant to said Buy-Down
Agreement, the interest otherwise payable by the Company to such Buy-Down Lender
during any interest calculation period shall be reduced based on the amount of
Available Deposits maintained by the Company with such Buy-Down Lender. Prior
to the occurrence of an Event of Default and acceleration of the Obligations,
each Buy-Down Lender shall bill the Company directly for all interest accrued
and payable to such Buy-Down Lender on account of Loans from time to time
outstanding held by such Buy-Down Lender. The Administrative Agent, in
rendering any monthly interest billing pursuant to Paragraph 6(b) above shall
have no obligation to bill any interest payable to a Buy-Down Lender or to
verify the amount of any Available Deposits supporting the pricing of Loans held
by any Buy-Down Lender or the monthly interest amount payable to any Buy-Down
Lender, including without limitation, any deficiency fees or other amounts
payable to such Lender by the Company under the applicable Buy-Down Agreement.
The Company shall pay all interest, and any deficiency fees or other amounts
payable under its Buy-Down Agreement with each Buy-Down Lender, directly to such
Buy-Down Lender within ten (10) calendar days of receipt of a billing statement
from such Buy-Down Lender. Any Buy-Down Lender may elect not to make demand for
the payment of deficiency fees accruing in respect of Available Deposits from
time to time and it is expressly agreed and understood that: (1) any such
deficiency fee shall not, by reason of such failure of such Buy-Down Lender or
otherwise, be deemed to have been waived by such Buy-Down Lender (except as such
waiver is expressly acknowledged in writing by such Buy-Down Lender from time to
time), and (2) all deficiency fees accrued and unpaid hereunder and not so
expressly waived, whether or not previously declared due and owing by any such
Buy-Down Lender, shall automatically be due and payable in full upon the
Maturity Date.
6(j) Fees. The Company shall pay the
following fees:
(1) To the Administrative Agent for the
account of each Lender, a monthly non-usage fee, in arrears, equal (as
calculated for each Lender individually) to the product of: (i)
one-twelfth (1/12) of the Facility Fee Percentage multiplied by (ii)
the excess, if any, of a. such Lender's daily average Percentage Share
of the daily average Aggregate Committed Credit Limit during the month
for which such fee is calculated, over b. such Lender's daily average
dollar amount of Loans (other than Bid Loans) outstanding and of the
L/C Available Amount during such monthly period, such monthly amount
to be billed and to be payable in accordance with the provisions of
Paragraph 6(b) above.
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<PAGE> 14
(2) To NationsBanc Montgomery Securities
LLC and NationsBank, respectively, the "Structure and Arrangement Fee"
and the "Administrative Agency Fee," referred to in that certain Fee
Letter dated February 25, 1998 among the Company and said parties,
such fees to be payable on the Effective Date and such other fees as
may from time to time be agreed by the Company and either of such
Persons in writing.
(3) To the Custodian, fees in such
amounts and payable at such times as the Company and the Custodian may
from time to time agree in writing.
(4) To the Administrative Agent for the
account of each Lender, a monthly non-refundable letter of credit
facility fee, in advance (with the initial such fee to be payable on
the Effective Date and to be pro rated if the Effective Date is not
the first Business Day of a month), equal to the product of: (i)
one-twelfth (1/12) of the L/C Fee Percentage multiplied by (ii) such
Lender's Percentage Share of the L/C Available Amount on the date of
calculation of the monthly letter of credit facility fee, such monthly
amount to be billed and payable in accordance with the provisions of
Paragraph 6(b) above.
(5) To NationsBank, in advance, an
annual, non-refundable letter of credit issuance or extension fee in
such amount as may be agreed to from time to time by the Company in
writing, with the initial such fee to be payable on the Effective Date
(for the period from such date to the then currently scheduled
Maturity Date) and such annual fee to be payable on each anniversary
of such currently scheduled Maturity Date thereafter.
6(k) Post-Maturity Interest. Any Obligations not
paid when due (whether at stated maturity, upon acceleration or otherwise)
shall bear interest from the date due until paid in full at a per annum rate
equal to three percent (3%) above the Effective Fed Funds Rate.
6(l) Computations. All computations of
interest and fees payable hereunder shall be based upon a year of 360 days for
the actual number of days elapsed.
7. Miscellaneous Lending Provisions.
7(a) Use of Proceeds. Other than the initial
Loans funded hereunder on the Effective Date which shall be utilized to pay in
full all Loans and other Obligations outstanding under (and as the terms
"Loans" and "Obligations" are defined in) the Existing Credit Agreement, (1)
the proceeds of all Tranche A Committed Loans, Tranche C Loans and Bid Loans
shall be utilized by the Company solely for the purpose of originating and/or
acquiring and/or refinancing the origination or acquisition of Mortgage Loans
and, in the case of Tranche A Committed Loans and Bid Loans, to repay Tranche C
Loans and L/C Drawings, and (2) the proceeds of all Tranche B Loans shall be
used for the purpose set forth in subparagraph (1) above and, in addition, for
the purpose of funding or refinancing the funding of Servicing Receivables made
by the Company in the ordinary course of the Company's business.
7(b) Request For New Loans; Determination of
Availability; Making of New Loans.
(1) Subject with respect to Bid Loans to
the provisions of Paragraph 5 above, on any Business Day that the
Company desires to borrow hereunder, it shall
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<PAGE> 15
deliver a Loan And/Or Interest Rate Election Request to the
Administrative Agent no later than: (i) in the case of a Tranche A
Committed Loan or a Tranche B Loan, 9:30 a.m. (Los Angeles time), and
(ii) in the case of a Tranche C Loan, 11:30 a.m. (Los Angeles time) on
such date. Except for a request for a Tranche C Loan made after 9:30
a.m. (Los Angeles time) on a given date, only one Loan And/Or Interest
Rate Election Notice per tranche shall be submitted to the
Administrative Agent on any date.
(2) Upon receipt of a Loan And/Or
Interest Rate Election Request or, in the case of a Bid Loan, a Bid
Loan Confirmation, the Administrative Agent shall make a Determination
of Availability with respect to any requested Loans, which
Determination of Availability shall, in the case of a request for
Tranche A Committed Loans, Tranche C Loans and Bid Loans be based upon
information provided to the Administrative Agent by the Custodian
pursuant to Paragraph 6 of the Security Agreement. In the event the
Administrative Agent shall have determined that the Collateral Value
of the Warehouse Borrowing Base or the Collateral Value of the Working
Capital Borrowing Base, as applicable, is sufficient to support the
requested borrowings, the Administrative Agent shall so notify the
Lenders (which notification may be telephonic) no later than 10:30
a.m. (Los Angeles time) on the date of the delivery of such Loan
And/Or Interest Rate Election Request or, in the case of a Bid Loan, a
Bid Loan Confirmation, and each Lender's respective Percentage Share
or, in the case of Bid Loans, the amount of new Loans required to be
funded thereunder. Thereafter, each Lender shall make its Percentage
Share or, in the case of Bid Loans, the amount of the requested Loans
available by wiring such amount in immediately available same day
funds to the Administrative Agent no later than 11:30 a.m. (Los
Angeles time) on the date of such request or, in the case of Bid
Loans, 12:00 noon (Los Angeles time) on the proposed funding date.
(3) Unless the Administrative Agent
shall have received notice from a Lender prior to a proposed funding
deadline that such Lender will not make available to the
Administrative Agent such Lender's portion of the proposed Loan or
Loans, the Administrative Agent may assume that such Lender has made
such portion available on the proposed funding date in accordance with
this Paragraph 7(b) and the Administrative Agent may, in reliance upon
such assumption, make available to the Company on such date a
corresponding amount. If and to the extent such Lender shall not have
so made such portion available, such Lender and the Company jointly
and severally agree to repay to the Administrative Agent forthwith on
demand such corresponding amount together with interest thereon, for
each day from the date such amount is made available to the Company
until the date such amount is repaid to the Administrative Agent, in
the case of the Company at the interest rate applicable at the time to
the subject Loan or Loans, and in the case of such Lender at the
Effective Fed Funds Rate. If such Lender shall repay to the
Administrative Agent such corresponding amount, such amount so repaid
shall constitute such Lender's applicable Percentage Share of such
Loan or Loans or Bid Loans for all purposes of this Agreement as of
the date such amount is made available to the Company. The failure of
any Lender to make the advances to be made by it as part of any
borrowing shall not relieve any other Lender of its obligation
hereunder to advance its applicable Percentage Share or, in the case
of Bid Loans, the amount thereof, but no Lender shall be responsible
for the failure of any other Lender to make any such advance.
(4) The Administrative Agent shall make
the principal amount of requested Loans approved in accordance with
this Paragraph 7(b) available to the
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<PAGE> 16
Company by wiring such amount in immediately available same day funds
to the Funding Account no later than 11:30 a.m. (Los Angeles time) in
the case of a Tranche A Committed Loan or a Tranche B Loan on the date
of such request or, in the case of a Bid Loan, no later than 12:00
noon (Los Angeles time) on the proposed funding date; provided,
however, that in the event any proceeds of any Tranche A Committed
Loan and/or Tranche C Loan and/or Bid Loan advanced on the same
Business Day, in an aggregate amount greater than $2,500,000.00 and
less than $10,000,000.00, are to be utilized by the Company to
purchase Mortgage Loans from a Person which is not an Affiliate of the
Company or the Parent (such Person, a "Non-Affiliate Seller"), the
Company shall so notify the Administrative Agent in the Loan And/Or
Interest Rate Election Notice and/or Bid Loan Confirmation therefor
and shall provide to the Administrative Agent within one Business Day
of the date such Loan is made, confirmation satisfactory to the
Administrative Agent that the Company has wired the full purchase
price for such Mortgage Loans to the Non-Affiliate Seller; and
provided, further, that in the event any proceeds of any Tranche A
Committed Loan and/or Tranche C Loan and/or Bid Loan advanced on the
same Business Day, in an aggregate amount greater than $10,000,000.00,
are to be utilized by the Company to purchase Mortgage Loans from a
Non-Affiliate Seller, the Company shall so notify the Administrative
Agent in the Loan And/Or Interest Rate Election Notice and/or Bid Loan
Confirmation therefor and shall provide to the Administrative Agent:
(i) evidence satisfactory to the Administrative Agent that upon the
funding of the requested Loan the Company will own such Mortgage Loans
free and clear of any Lien or residual interest of the seller thereof,
which evidence shall include, if so requested by the Administrative
Agent, written confirmation of such fact duly executed by such
Non-Affiliate Seller, and (ii) wiring instruction of such
Non-Affiliate Seller directing the account into which such Loan shall
be funded directly by the Administrative Agent.
(5) Each request for a Tranche A
Committed Loan, a Tranche B Loan or a Tranche C Loan shall be in the
minimum amount of $1,000,000.00.
(6) The Company may elect to convert or
continue Effective Fed Funds Rate Loans and/or Eurodollar Loans
outstanding on any date consistent with the timing requirements set
forth in Paragraph 6(c) above.
7(c) Notes. The obligation of the Company to
repay the Loans (other than Bid Loans) shall be evidenced by notes payable to
the order of each Lender, as applicable, in the forms of those attached hereto
as Exhibit A-1 (the "Tranche A Committed Loans Notes"), Exhibit A-2 (the
"Tranche B Notes") and Exhibit A-3 (the "Tranche C Note"). Bid Loans shall be
evidenced by notes payable to the order of each Lender in the form of that
attached hereto as Exhibit A-4 (the "Bid Loans Notes"). Upon any advance,
conversion or prepayment of a Loan as provided herein, each Lender is hereby
authorized to record the date and amount of each such advance and conversion
made by such Lender, or the date and amount of each such payment or prepayment
of principal of such Loan, the applicable Interest Period, if any, and interest
rate with respect thereto, on the schedules annexed to and constituting a part
of its respective Notes (or by any analogous method any Lender may elect
consistent with its customary practices) and any such recordation shall
constitute prima facie evidence of the accuracy of the information so recorded
absent manifest error. The failure of any Lender to make any such notation
shall not affect in any manner or to any extent the Company's Obligations.
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<PAGE> 17
7(d) Borrowing Base Conformity.
(1) In support of its obligation to
repay Tranche A Committed Loans, Tranche C Loans, Bid Loans and L/C
Drawings, the Company shall cause the Collateral Value of the
Warehouse Borrowing Base plus any Supplemental Cash Collateral held by
the Administrative Agent to be not less than, at any date, the sum of:
(i) The aggregate principal amount
of Tranche A Committed Loans and Tranche C Loans outstanding
on such date (including any such Loans to be funded on such
date but excluding Tranche C Loans which will be repaid with
proceeds of Tranche A Loans to be advanced on such date),
(ii) The aggregate amount of Bid
Loans outstanding on such date (excluding Bid Loans which will
be repaid with the proceeds of Tranche A Committed Loans to be
advanced on such date), and
(iii) The L/C Available Amount and
any unrepaid L/C Drawings as of such date.
(2) In support of its obligation to
repay Tranche B Loans hereunder, the Company shall cause the
Collateral Value of the Working Capital Borrowing Base to be not less
than, at any date, the sum of the aggregate principal amount of
Tranche B Loans outstanding on such date, including any such Loans to
be funded on such date.
(3) The Company shall immediately
prepay, upon telephonic demand by the Administrative Agent: (i)
Tranche A Committed Loans, Tranche C Loans and/or Bid Loans to the
Administrative Agent on behalf of the Lenders, as applicable, on any
day in the amount of any shortfall in the Collateral Value of the
Warehouse Borrowing Base plus Supplemental Cash Collateral held by the
Administrative Agent as determined pursuant to subparagraph (1) above,
said amounts to be allocated as provided in Paragraph 7(g) below, and
(ii) Tranche B Loans to the Administrative Agent on behalf of the
Lenders on any day in the amount of any shortfall in the Collateral
Value of the Working Capital Borrowing Base as determined pursuant to
subparagraph (2) above.
(4) If, but only if, at such time as the
Company shall be required to prepay Loans under subparagraph (3)(i) of
this Paragraph 7(d) there shall not have occurred and be continuing an
Event of Default or Potential Default, in lieu of prepaying the
Tranche A Committed Loans, Tranche C Loans or Bid Loans, the Company
may deliver to the Custodian additional Eligible Mortgage Loans with a
Collateral Value and/or to the Administrative Agent Supplemental Cash
Collateral such that the Company shall be in compliance with the
requirement of subparagraph (1) above.
7(e) Nature and Place of Payments. All payments
made on account of the Obligations shall be made without setoff or counterclaim
in lawful money of the United States of America in immediately available same
day funds, free and clear of and without deduction for any taxes, fees or other
charges of any nature whatsoever imposed by any taxing authority and must be
received by the Administrative Agent by 11:30 a.m. (Los Angeles time) on the
day of payment, it being expressly agreed and understood that if a payment is
received after 11:30 a.m. (Los Angeles time) by the Administrative Agent, such
payment will be considered to have been
17
<PAGE> 18
made on the next succeeding Business Day and interest thereon shall be payable
at the then applicable rate during such extension. Except as otherwise
provided in Paragraph 6(i) above, all payments on account of the Obligations
shall be made to the Administrative Agent through its office located at the
address listed next to its name on the signature pages hereof. If any payment
required to be made by the Company hereunder becomes due and payable on a day
other than a Business Day, the due date thereof shall be extended to the next
succeeding Business Day and interest thereon shall be payable at the then
applicable rate during such extension. All amounts received by the
Administrative Agent on account of the Obligations shall be disbursed by the
Administrative Agent promptly to the Lenders by wire transfer on the date of
receipt if received by the Administrative Agent before 11:30 a.m. (Los Angeles
time) or if received later, by 11:30 a.m. (Los Angeles time) on the next
succeeding Business Day, without further interest payable by the Administrative
Agent.
7(f) Prepayments.
(1) The Company may prepay Effective Fed
Funds Rate Loans in whole or in part at any time and the Company may
prepay Eurodollar Loans and Bid Loans in whole or in part upon three
Business Days' notice to the Administrative Agent.
(2) Loans are subject to mandatory
prepayment pursuant to Paragraph 7(d) above and, in addition, by
application of proceeds of the sale or other disposition of Collateral
as provided in the Security Agreement.
(3) The Company shall pay in connection
with any prepayment hereunder all interest accrued but unpaid on Loans
to which such prepayment is applied (including any prepayment premium
that may be due under Paragraph 6(h) above) concurrently with payment
to the Administrative Agent of any principal amounts.
7(g) Allocation of Payments Received. Prior to
the occurrence of an Event of Default and acceleration of the Obligations or
termination of the commitment of the Lenders to advance Loans hereunder,
principal amounts received by the Administrative Agent shall be allocated first
to repay all outstanding Tranche C Loans and, then, among the Lenders as the
Company may direct to repay Tranche A Committed Loans and/or Tranche B Loans
and/or Bid Loans until all Loans outstanding have been paid in full and,
thereafter, to the Company; provided, however, that any allocation by the
Company to the repayment of any Tranche A Committed Loans or Tranche B Loans
shall be allocated, pro rata, among the Lenders in accordance with their
respective Percentage Shares. Following the occurrence of an Event of Default
and acceleration of the Obligations or termination of the commitment of the
Lenders to advance Loans hereunder, all amounts received by the Administrative
Agent on account of the Obligations shall be disbursed by the Administrative
Agent as follows:
(1) First, to the payment of expenses
incurred by the Administrative Agent and Custodian in the performance
of their duties and enforcement of their rights under the Loan
Documents, including, without limitation, all costs and expenses of
collection, attorneys' fees, court costs and foreclosure expenses;
(2) Then, to the Lenders, pro rata in
accordance with their respective Post-Default Percentage Shares, until
all outstanding Loans and unrepaid L/C Drawings and interest accrued
thereon and all other Obligations have been paid in full, said amounts
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<PAGE> 19
to be allocated first to interest and then, but only after all accrued
interest has been paid in full, to principal of Loans and unrepaid L/C
Drawings;
(3) Then, and if but only if the Letter
of Credit remains outstanding, to the Administrative Agent to hold as
cash collateral for the obligation of the Company to reimburse any
future L/C Drawings as the same may occur and fees which are and will
in the future become payable with respect to the Letter of Credit to
and including the expiration date thereof (the Company, by executing
this Agreement, hereby granting a first priority perfected security
interest to the Administrative Agent for the pari passu benefit of the
Lenders for such purpose); and
(4) Then, to such Persons as may be
legally entitled thereto.
8. Security; Guaranty; Additional Documents.
8(a) Reaffirmation of Security Agreement. As
collateral for the Obligations of the Company under (and as the term
"Obligations" is defined in) the Existing Credit Agreement, the Company
executed and delivered to the Administrative Agent and the Lenders that certain
Security and Collateral Agency Agreement dated as of January 15, 1997 (as
amended, reaffirmed, extended or replaced from time to time, the "Security
Agreement"). The Company hereby confirms that the first priority, perfected
security interest of the Administrative Agent for the benefit of the Lenders
participating in the Existing Credit Agreement shall continue in full force and
effect with respect to all Obligations hereunder. On or before the Effective
Date, the Security Agreement shall be reaffirmed and amended with a
reaffirmation in the form of that attached hereto as Exhibit B (the
"Reaffirmation of Security Agreement"), which Reaffirmation shall reaffirm and
continue the perfection and priority of such security interest of the
Administrative Agent in the Collateral under the Security Agreement.
8(b) Reaffirmation of Guaranty. As support for
the Obligations of the Company under (and as the term "Obligations" is defined
in) the Existing Credit Agreement, the Parent executed and delivered to the
Administrative Agent and the Lenders that certain Credit Guaranty dated as of
January 15, 1997 (as amended, reaffirmed, extended or replaced from time to
time, the "Guaranty"). The Parent hereby confirms the continuing
enforceability and effectiveness of the Guaranty with respect to all
Obligations hereunder. On or before the Effective Date, the Guaranty shall be
reaffirmed with a reaffirmation in the form of that attached hereto as Exhibit
C (the "Reaffirmation of Guaranty").
8(c) Further Documents. Each of the Company and
the Parent agrees to execute and deliver and to cause to be executed and
delivered to the Administrative Agent on behalf of the Lenders from time to
time such confirmatory or supplementary security agreements, financing
statements and other documents, instruments and agreements as the
Administrative Agent may reasonably request, which are in the Administrative
Agent's judgment necessary or desirable to obtain and maintain for the Lenders
and the Administrative Agent the benefit of the Loan Documents and the
Collateral.
9. Conditions to Making of Loans.
9(a) First Loan. As conditions precedent to any
Lender's obligation to fund the first Loan hereunder:
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(1) The Company and the Parent, as
applicable, shall have delivered or shall have had delivered to the
Administrative Agent, in form and substance satisfactory to the
Lenders and their counsel, each of the following (with sufficient
copies for each of the Lenders):
(i) A duly executed copy of this
Agreement;
(ii) A duly executed copy of the
Reaffirmation of Security Agreement;
(iii) Duly executed originals of each
of the Notes;
(iv) A duly executed copy of the
Reaffirmation of Guaranty;
(v) Duly executed copies of all
financing statements and other documents, instruments and
agreements, properly executed, deemed necessary or appropriate
by the Administrative Agent, in its reasonable discretion, to
create and/or continue in favor of the Administrative Agent
for the pari passu benefit of the Lenders a first priority
perfected security interest in and lien upon the Collateral;
(vi) Acknowledgment copies of all
UCC-1 financing statements filed with respect to the
Collateral, accompanied by a search report showing such
financing statements as duly filed and evidencing that the
security interest of the Administrative Agent for the pari
passu benefit of the Lenders in the Collateral is prior to all
security interests of record;
(vii) Certified copies of resolutions
of the Board of Directors of each of the Company and the
Parent approving the execution and delivery of the Loan
Documents, the performance of the Obligations and the
consummation of the transactions contemplated thereby;
(viii) A certificate of the Secretary
or an Assistant Secretary of each of the Company and the
Parent certifying the names and true signatures of the
officers of the Company and the Parent, as applicable,
authorized to sign the Loan Documents;
(ix) An opinion of counsel for the
Company and the Parent, which counsel shall be satisfactory to
the Administrative Agent, in substantially the form of Exhibit
D attached hereto and covering such other matters as the
Administrative Agent may reasonably request;
(x) A copy of the Articles of
Incorporation of the Company and the Certificate of
Incorporation of the Parent, certified by the Secretaries of
State of the State of California and the State of Delaware,
respectively, as of a recent date;
(xi) A copy of the Bylaws of each
of the Company and the
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Parent, certified by the Secretary or an Assistant Secretary
of the Company and the Parent, as applicable, as of the date
of this Agreement as being accurate and complete;
(xii) Certificates of the Secretary
of State of the State of California and the State of Delaware
certifying that each of the Company and the Parent,
respectively, are in good standing as of a recent date;
(xiii) A certificate of an executive
officer of each of the Company and the Parent in the form of
that attached hereto as Exhibit E dated as of the date of this
Agreement;
(xiv) A certificate of a Responsible
Financial Officer of each of the Parent and the Company
demonstrating in detail satisfactory to the Administrative
Agent the Parent's or the Company's compliance, as applicable,
with the financial covenants set forth in Paragraphs 12(i),
12(j), 12(k) and 12(l) below at and as of the last day of
December, 1997; and
(xv) Evidence satisfactory to the
Administrative Agent that upon the funding of the first Loan
hereunder all Obligations outstanding under (and as the term
"Obligations" is defined in) the Existing Credit Agreement
will be paid in full.
(2) All acts and conditions precedent
(including, without limitation, the obtaining of any necessary
regulatory approvals and the making of any required filings,
recordings or registrations) required to be done and performed and to
have happened prior to the execution, delivery and performance of the
Loan Documents and to constitute the same legal, valid and binding
obligations, enforceable in accordance with their respective terms,
shall have been done and performed and shall have happened in due and
strict compliance with all applicable laws.
(3) All documentation, including,
without limitation, documentation for corporate and legal proceedings
in connection with the transactions contemplated by the Loan
Documents, shall be satisfactory in form and substance to the Lenders
and their counsel.
(4) All fees required to be paid
pursuant to Paragraph 6(j) above on the Effective Date and all fees
and expenses of Morrison & Foerster LLP payable by the Company
pursuant to Paragraph 11(g) below for which invoices have been
delivered to the Company prior to or on such date shall have been
paid.
9(b) Ongoing Loans. As conditions precedent to
each Lender's obligation or agreement to make any Loan hereunder (other than
any Tranche A Committed Loan advanced by the Lenders to repay Tranche C Loans),
including the first Loan and including the conversion of any Loan from or into
a Eurodollar Loan or the continuation of any Eurodollar Loan after the end of
the applicable Interest Period, at and as of the date of the funding,
conversion or continuation:
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(1) There shall have been delivered to
the Administrative Agent a Loan And/Or Interest Rate Election Request
or, in the case of a Bid Loan, the Bid Loan Confirmation therefor;
(2) The representations and warranties
of the Company and the Parent contained in the Loan Documents shall be
accurate and complete in all respects as if made on and as of the date
of such funding, conversion or continuance;
(3) There shall not have occurred an
Event of Default or Potential Default;
(4) Following the funding of the
requested Loan: (i) the aggregate principal amount of Loans (other
than Bid Loans) advanced by any Lender will not exceed its respective
Maximum Commitment, (ii) the aggregate principal amount of Loans
(other than Bid Loans which are not Tranche A Bid Loans) outstanding
plus the L/C Available Amount and any unrepaid L/C Drawings will not
exceed the Aggregate Committed Credit Limit and (iii) the aggregate
principal amount of Loans outstanding plus the L/C Available Amount
and any unrepaid L/C Drawings will not exceed a. the applicable
limitations of Paragraphs 1(a), 3(a), 4(a), 5(a) and 7(d) above, and
b. as applicable, the Collateral Value of the Warehouse Borrowing Base
and the Collateral Value of the Working Capital Borrowing Base; and
(5) If the Loan is a Tranche A Loan, a
Tranche C Loan or a Bid Loan, the Required Documents for the Mortgage
Loan(s) being funded or acquired therewith shall have been received by
the Custodian or such Mortgage Loan(s) shall have been identified as
Collateral on a duly executed Collateral Confirmation Agreement.
By delivering a Loan And/Or Interest Rate Election Request or Bid Loan
Confirmation to the Administrative Agent hereunder, the Company shall be deemed
to have represented and warranted the accuracy and completeness of the
statements set forth in subparagraphs (b)(2) through (b)(5) above.
10. Representations and Warranties of the Company and the
Parent.
As an inducement to the Administrative Agent and each Lender
to enter into this Agreement and to make Loans as provided herein, each of the
Company and the Parent severally represents and warrants to the Administrative
Agent and each Lender that:
10(a) Financial Condition. The financial
statements dated the Statement Date and the Interim Date, copies of which have
heretofore been furnished to each Lender, are complete and correct and present
fairly in accordance with GAAP the financial condition of the Parent and its
consolidated Subsidiaries at such dates and the consolidated and consolidating
results of their operations and changes in financial position for the fiscal
periods then ended.
10(b) No Change. Since the Statement Date there
has been no material adverse change in the business, operations, assets or
financial or other condition of the Company, the Parent or the Parent and its
consolidated Subsidiaries taken as a whole.
10(c) Corporate Existence; Compliance with Law.
Each of the Company and Parent: (1) is duly organized, validly existing and in
good standing as a corporation under the
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laws of the States of California and Delaware, respectively, and is qualified
to do business in each jurisdiction where its ownership of property or conduct
of business requires such qualification and where failure to qualify would have
a material adverse effect on the Company, the Parent or their respective
property and/or business or on the ability of the Company to pay or perform the
Obligations or the Parent to pay or perform the Guaranty, (2) has the corporate
power and authority and the legal right to own and operate its property and to
conduct business in the manner in which it does and proposes so to do, and (3)
is in compliance with all Requirements of Law and Contractual Obligations, the
failure to comply with which could have a material adverse effect on the
business, operations, assets or financial or other condition of the Company,
the Parent or the Parent and its consolidated Subsidiaries taken as a whole or
on the Collateral.
10(d) Corporate Power; Authorization; Enforceable
Obligations. Each of the Company and the Parent has the corporate power and
authority and the legal right to execute, deliver and perform the Loan
Documents to which it is a party and to obtain extensions of credit hereunder,
and has taken all necessary corporate action to authorize the execution,
delivery and performance of the Loan Documents, and the borrowing and other
extensions of credit hereunder. The Loan Documents have been duly executed and
delivered on behalf of the Company and the Parent, as applicable, and
constitute legal, valid and binding obligations of the Company and the Parent,
as applicable, enforceable against such Person in accordance with their
respective terms, subject to the effect of applicable bankruptcy and other
similar laws affecting the rights of creditors generally and the effect of
equitable principles whether applied in an action at law or a suit in equity.
10(e) No Legal Bar. The execution, delivery and
performance of the Loan Documents, the borrowing and other extensions of credit
hereunder and the use of the proceeds thereof, will not violate any Requirement
of Law or any Contractual Obligation of the Company or the Parent or create or
result in the creation of any Lien (except the Lien created by the Security
Agreement) on any assets of the Company or the Parent.
10(f) No Material Litigation. Except as disclosed
on Exhibit F hereto, no litigation, investigation or proceeding of or before
any arbitrator, court or Governmental Authority is pending (or, to the
knowledge of the Company or the Parent, threatened) by or against the Parent or
any of its Subsidiaries or against any of such parties' properties or revenues
which is likely to be adversely determined and which, if adversely determined,
is likely to have a material adverse effect on the business, operations,
property or financial or other condition of the Parent or any of its
Subsidiaries or on the Collateral or is likely to have a material adverse
effect on the validity or enforceability of any of the Loan Documents.
10(g) Taxes. The Parent and each of its
Subsidiaries have filed or caused to be filed all tax returns that are required
to be filed and have paid all taxes shown to be due and payable on said returns
or on any assessments made against them or any of their property other than
taxes which are being contested in good faith by appropriate proceedings and as
to which the Parent or applicable Subsidiary has established adequate reserves
in conformity with GAAP.
10(h) Investment Company Act. Neither the Company
nor the Parent is an "investment company" or a company "controlled" by an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
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10(i) Subsidiaries. Attached hereto as Exhibit G
is an accurate and complete list of all presently existing Subsidiaries of the
Parent, their respective jurisdictions of incorporation and the percentage of
their capital stock owned by the Parent or other Subsidiaries. All of the
issued and outstanding shares of capital stock of such Subsidiaries have been
duly authorized and issued and are fully paid and non-assessable.
10(j) Federal Reserve Board Regulations. Neither
the Parent nor any of its Subsidiaries is engaged or will engage, principally
or as one of its important activities, in the business of extending credit for
the purpose of "purchasing" or "carrying" any "margin stock" within the
respective meanings of such terms under Regulation U. No part of the proceeds
of any Loan made hereunder nor the Letter of Credit will be used for
"purchasing" or "carrying" "margin stock" as so defined or for any purpose
which violates, or which would be inconsistent with, the provisions of the
Regulations of the Board of Governors of the Federal Reserve System.
10(k) ERISA. The Parent and each of its
Subsidiaries are in compliance in all respects with the requirements of ERISA
and no Reportable Event has occurred under any Plan maintained by the Parent or
any of its Subsidiaries which is likely to result in the termination of such
Plan for purposes of Title IV of ERISA.
10(l) Assets. The Parent and each of its
Subsidiaries have good and marketable title to all property and assets
reflected in the financial statements referred to in Paragraph 10(a) above,
except property and assets sold or otherwise disposed of in the ordinary course
of business subsequent to the respective dates thereof. Except as reflected in
the financial statements referred to in Paragraph 10(a) above or as permitted
under Paragraph 12(a) below, neither the Parent nor any of its Subsidiaries has
outstanding Liens on any of its properties or assets nor are there any security
agreements to which the Parent or any of its Subsidiaries is a party, or title
retention agreements, whether in the form of leases or otherwise, of any
personal property.
10(m) Securities Acts. Neither the Parent nor any
of its Subsidiaries has issued any unregistered securities in violation of the
registration requirements of Section 5 of the Securities Act of 1933, as
amended (the "Act"), or any other law, and is not violating any rule,
regulation or requirement under the Act or the Securities Exchange Act of 1934,
as amended. The Company is not required to qualify an indenture under the
Trust Indenture Act of 1939, as amended, in connection with its execution and
delivery of the Notes.
10(n) Consents, etc. No consent, approval or
authorization of, or registration, declaration or filing with, any Person is
required on the part of the Company or the Parent in connection with the
execution and delivery of the Loan Documents or the borrowing or any other
extension of credit hereunder (other than filings to perfect the Liens granted
by the Company pursuant to the Security Agreement) or the performance of or
compliance with the terms, provisions and conditions hereof or thereof.
11. Affirmative Covenants. Each of the Company and the
Parent hereby covenants and agrees with the Administrative Agent and each
Lender that, as long as any Obligations remain unpaid (or longer as expressly
provided in Paragraphs 11(g) and 11(j) below) or any Lender has any obligation
to make Loans hereunder, the Company and the Parent shall:
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11(a) Financial Statements. Furnish or cause to be
furnished to the Administrative Agent and each Lender directly:
(1) Within: (i) ninety (90) days after
the last day of each fiscal year of the Parent, consolidated
statements of income and statements of cash flow of the Parent for
such year and a consolidated balance sheet of the Parent as of the end
of such year presented fairly in accordance with GAAP and accompanied
by an unqualified report of a firm of independent certified public
accountants reasonably acceptable to the Administrative Agent, and
(ii) ninety (90) days after the last day of each fiscal year end of
the Company, statements of income and statements of cash flow of the
Company for such year and a balance sheet of the Company as of the end
of such year presented fairly in accordance with GAAP and accompanied
by an unqualified report of a firm of independent certified public
accountants reasonably acceptable to the Administrative Agent;
(2) Within forty-five (45) days after
the last day of each calendar quarter, statements of income of the
Company for such quarter and a balance sheet of the Company as of the
end of such quarter, and statements of income and statements of cash
flow of the Parent for such quarter and a balance sheet of the Parent
as of the end of such quarter;
(3) Within thirty (30) days after the
last day of each calendar month, consolidated statements of income for
such month and a consolidated balance sheet as of the end of such
month of the Parent and its Subsidiaries;
(4) Concurrently with each delivery of
the financial statements referred to in subparagraphs (2) and (3)
above, a certificate of a Responsible Financial Officer of the Parent
or the Company, as applicable, in the form of that attached hereto as
Exhibit H stating that such financial statements are presented fairly
in accordance with GAAP and demonstrating in detail satisfactory to
the Administrative Agent the Parent's or Company's, as applicable,
compliance with the financial covenants set forth in Paragraphs 12(i),
12(j), 12(k) and 12(l) below as of and at the date of such financial
statements;
(5) As soon as is available any written
report pertaining to material items in respect of the internal control
matters of the Parent submitted to the Parent by its independent
accountants in connection with each annual or interim special audit of
the financial condition of the Parent made by such independent public
accountants; and
(6) Copies of all proxy statements,
financial statements, and reports which the Parent sends to its
stockholders, and copies of all regular, periodic and special reports,
and all registration statements under the Act which the Parent files
with the Securities and Exchange Commission or any Governmental
Authority which may be substituted therefor, or with any national
securities exchange; provided, however, that there shall not be
required to be delivered hereunder such copies for any Lender of
prospectuses relating to future series of offerings under registration
statements filed under Rule 415 of the Act or other items which such
Lender has indicated in writing to the Parent from time to time need
not be delivered to such Lender.
11(b) Certificates; Reports; Other Information.
Furnish or cause to be furnished to the Administrative Agent for distribution
to the Lenders:
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(1) At such times as the Administrative
Agent may reasonably request, a Warehouse Borrowing Base Certificate
and a Working Capital Borrowing Base Certificate, dated in each case
as of the close of business of the Company on the immediately
preceding Business Day, and in the case of a Warehouse Borrowing Base
Certificate, current as of 8:30 a.m. on the date of delivery with
respect to Eligible Mortgage Loans submitted under a Collateral
Confirmation Agreement;
(2) Within forty-five (45) days after
the last day of each calendar quarter, management reports providing
detailed information regarding interest only strip and reserve account
balances and related cash receipt information, information relating to
prepayment and credit losses, REO inventory status and loss
projections, and assumptions regarding quarterly securitizations and
gains on sales;
(3) At the applicable times specified on
Exhibit I attached hereto, the additional reports described on said
Exhibit I; and
(4) Promptly, such additional financial
and other information, including, without limitation, financial
statements of the Company, the Parent, any Subsidiary of the Company
or the Parent or any Approved Investor, and information regarding the
Collateral as any Lender, through the Administrative Agent, may from
time to time reasonably request, including, without limitation, such
information as is necessary for any Lender to participate out any of
its interests in the Loans or the Letter of Credit hereunder or to
enable other financial institutions to become signatories hereto.
11(c) Payment of Indebtedness. Pay, discharge or
otherwise satisfy at or before maturity or before it becomes delinquent,
defaulted or accelerated, as the case may be, all its Indebtedness (including
taxes), except (1) Indebtedness (other than the Obligations) in an aggregate
amount not to exceed $5,000,000.00, or (2) Indebtedness being contested in good
faith and for which provision is made to the satisfaction of the Administrative
Agent for the payment thereof in the event the Company or the Parent, as
applicable, is found to be obligated to pay such Indebtedness and which
Indebtedness is thereupon promptly paid by the Company or the Parent, as
applicable.
11(d) Maintenance of Existence and Properties.
Maintain its corporate existence and obtain and maintain all rights,
privileges, licenses, approvals, franchises, properties and assets necessary or
desirable in the normal conduct of its business and comply with all Contractual
Obligations and Requirements of Law.
11(e) Inspection of Property; Books and Records;
Audits.
(1) Keep proper books of record and
account in which full, true and correct entries in conformity with
GAAP and all Requirements of Law shall be made of all dealings and
transactions in relation to its business and activities; and
(2) Permit representatives of the
Administrative Agent or any Lender to: (i) visit and inspect any of
its properties and examine and make abstracts from any of its books
and records at any reasonable time and as often as may reasonably be
desired by the Administrative Agent or any Lender, (ii) discuss the
business, operations, properties and financial and other condition of
the Parent and its Subsidiaries with officers
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and employees of such parties, and with their independent certified
public accountants, and (iii) conduct periodic operational audits of
the Company's business and/or operations.
11(f) Notices. Promptly give written notice to the
Administrative Agent and each Lender directly of:
(1) The occurrence of any Potential
Default or Event of Default;
(2) Any litigation or proceeding
affecting the Parent or any of its Subsidiaries or the Collateral
which could have a material adverse effect on the Collateral or the
business, operations, property, or financial or other condition of the
Parent or any of its Subsidiaries, or could have a material adverse
effect on the validity or enforceability of any of the Loan Documents;
(3) A material adverse change in the
business, operations, property or financial or other condition of the
Parent or any of its Subsidiaries;
(4) Any change in the chief executive
officer of the Company;
(5) The incurrence by the Company or the
Parent of any obligation in connection with any derivatives
transaction outside of the normal course of business of the Company or
the Parent;
(6) Any event or anticipated event,
including, without limitation, the unavailability of pool insurance or
other forms of credit enhancement, which the Company or the Parent
anticipates is likely to adversely affect the timely planned issuance
of any Mortgage-Backed Security which would have been supported by
Mortgage Loans owned by the Company; and
(7) Receipt by the Company of written
notice from any Person that any pooling and servicing contract under
which the Company acts as servicer has been or may in the future be
terminated as a result of the occurrence of any event of default under
such pooling and servicing contract or otherwise "for cause" pursuant
to the terms of such pooling and servicing contract.
11(g) Expenses. Pay all reasonable out-of-pocket
costs and expenses (including fees and disbursements of counsel) of: (1) the
Administrative Agent incident to the preparation, negotiation and
administration of the Loan Documents and the protection of the rights of the
Lenders and the Administrative Agent under the Loan Documents, and (2) the
Administrative Agent and each of the Lenders incident to the enforcement of
payment of the Obligations, whether by judicial proceedings or otherwise,
including, without limitation, in connection with bankruptcy, insolvency,
liquidation, reorganization, moratorium or other similar proceedings involving
the Company or a "workout" of the Obligations. The obligations of the Company
and the Parent under this Paragraph 11(g) shall be effective and enforceable
whether or not any Loan is advanced by any Lender hereunder and shall survive
payment of all other Obligations.
11(h) Loan Documents. Comply with and observe all
terms and conditions of the Loan Documents.
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11(i) Insurance. Obtain and maintain insurance
with responsible companies in such amounts and against such risks as are
usually carried by corporations engaged in similar businesses similarly
situated, including, without limitation, errors and omissions coverage and
fidelity coverage, and furnish the Administrative Agent on request full
information as to all such insurance.
11(j) Indemnification. Indemnify, defend and hold
harmless the Administrative Agent and each Lender (each, an "Indemnified
Party") from and against any and all claims, obligations, penalties, actions,
suits, judgments, reasonable costs and disbursements, losses, liabilities and
damages (including, without limitation, reasonable attorneys' fees) of any kind
whatsoever (collectively and severally, "Claims") which may at any time be
imposed on, assessed against or incurred by such Indemnified Party in any way
relating to or arising out of the Loan Documents or the transactions
contemplated thereby or any action reasonably taken or omitted to be taken by
such Indemnified Party in connection with the foregoing; provided, however,
that neither the Company nor the Parent shall be liable for any portion of any
Claims arising out of or resulting from the gross negligence or willful
misconduct of such Indemnified Party. Each Indemnified Party agrees that it
will promptly notify the Parent of any claim, action or suit asserted or
commenced against it and that the Parent may assume the defense thereof with
counsel reasonably satisfactory to such Indemnified Party at the Parent's sole
expense, that such Indemnified Party will cooperate with the Parent on such
defense, and that such Indemnified Party will not settle any such claim, action
or suit without the consent of the Parent; provided, however, that in the event
such Indemnified Party is not reasonably satisfied with such defense, such
Indemnified Party may assume such defense with counsel satisfactory to such
Indemnified Party at the Parent's sole expense. The indemnification
obligations of the Company and the Parent under this Paragraph 11(j) shall
survive termination of this Agreement and payment in full of the Obligations.
11(k) Collateral Custodian. Utilize the same
financial institution as "custodian" or "collateral agent" for all of its
credit facilities secured by Mortgage Loans owned by the Company or the Parent.
11(l) Shipment of Collateral. Direct the
Custodian to ship Mortgage Loans included in the Warehouse Borrowing Base only
to Approved Investors.
12. Negative Covenants. Each of the Company and the
Parent hereby agrees that, as long as any Obligations remain unpaid or any
Lender has any obligation to make Loans hereunder, neither the Company nor the
Parent shall, nor shall the Company or the Parent permit any Subsidiary of the
Company or the Parent to, at any time, directly or indirectly:
12(a) Liens. Create, incur, assume or suffer to
exist, any Lien upon the Collateral except as contemplated by the Security
Agreement or create, incur, assume or suffer to exist any Lien upon any of its
other property and assets (including servicing rights) except:
(1) Liens or charges for current taxes,
assessments or other governmental charges which are not delinquent or
which remain payable without penalty, or the validity of which are
contested in good faith by appropriate proceedings upon stay of
execution of the enforcement thereof, provided the Company or the
Parent, as applicable, shall have set aside on its books and shall
maintain adequate reserves for the payment of same in conformity with
GAAP;
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(2) Liens, deposits or pledges made to
secure statutory obligations, surety or appeal bonds, or bonds for the
release of attachments or for stay of execution, or to secure the
performance of bids, tenders, contracts (other than for the payment of
borrowed money), leases or for purposes of like general nature in the
ordinary course of the Company's or the Parent's business;
(3) Purchase money security interests
for property hereafter acquired, conditional sale agreements, or other
title retention agreements, with respect to property hereafter
acquired; provided, however, that no such security interest or
agreement shall affect any servicing rights or extend to any property
other than the property acquired; and
(4) Liens securing Permitted Secured
Debt.
12(b) Indebtedness. Create, incur, assume or
suffer to exist, or otherwise become or be liable in respect of, any
Indebtedness except:
(1) The Obligations;
(2) Indebtedness reflected in the
financial statements referred to in Paragraph 10(a) above;
(3) Trade debt incurred in the ordinary
course of business;
(4) Indebtedness secured by Liens
permitted under Paragraph 12(a) above;
(5) Capitalized Lease Obligations in an
aggregate amount not to exceed at any one time outstanding
$10,000,000.00;
(6) Unsecured Indebtedness consisting of
direct borrowings from independent third parties incurred in the
ordinary course of business, including Indebtedness incurred pursuant
to public debt offerings; and
(7) Permitted Secured Debt and Permitted
Guaranties.
12(c) Consolidation and Merger. Liquidate or
dissolve, or enter into any consolidation, merger, partnership, joint venture,
syndicate or other combination unless: (1) the Company and the Parent remain as
separate surviving corporations following any such consolidation, merger,
partnership, joint venture, syndicate or other combination by either the
Company or the Parent, respectively, (2) the fair market value of the total
assets of the other Person party to such consolidation, merger, partnership,
joint venture, syndicate or other combination when combined with the fair
market value of the total assets acquired through any other consolidation,
merger, partnership, joint venture syndicate or other combination after the
date hereof, does not exceed twenty percent (20%) of the total assets of the
Parent (determined in accordance with GAAP on a consolidated basis) immediately
prior to the proposed effective date of such consolidation, merger,
partnership, joint venture, syndicate or other combination, and (3) no
Potential Default or Event of Default exists immediately prior to, or will
occur as a result of, such consolidation, merger, partnership, joint venture,
syndicate or other combination.
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12(d) Acquisitions. Purchase or acquire or incur
liability for the purchase or acquisition of any or all of the assets or
business of any Person if the fair market value of assets being acquired when
combined with the fair market value of all assets similarly acquired after the
Effective Date, exceeds twenty percent (20%) of total assets of the Parent
(determined in accordance with GAAP on a consolidated basis) immediately prior
to the proposed effective date of such acquisition.
12(e) Payment of Dividends. Declare or pay any
dividends upon any shares of the Parent's stock now or hereafter outstanding,
except dividends payable in the capital stock of the Parent, or make any
distribution of assets to its stockholders as such, whether in cash, property
or securities if upon the payment thereof there would exist an Event of
Default or Potential Default.
12(f) Purchase or Retirement of Stock. In the case
of the Parent, from and after the date of this Agreement, acquire, purchase,
redeem or retire any shares of its capital stock now or hereafter outstanding;
provided, however, that as long as both before and following the consummation
of such acquisition, purchase, redemption or retirement there does not exist an
Event of Default or Potential Default, the Parent may enter into such
transactions in an aggregate fair market dollar amount not to exceed
$5,000,000.00.
12(g) Investments; Advances. Make or commit to
make any advance, loan or extension of credit (other than Mortgage Loans and
reimbursable servicing advances made in the ordinary course of the Company's or
such Subsidiary's business) or capital contribution to, or purchase any stock,
bonds, notes, debentures or other securities of, or make any other investment
in, any Person if such investment, advance or commitment to advance, when
combined with all other such investments, advances and commitments to advance,
exceeds twenty percent (20%) of the total equity of the Parent (determined in
accordance with GAAP on a consolidated basis) immediately prior to the proposed
effective date of such investment, advance or commitment to advance.
12(h) Sale of Assets. Sell, lease, assign,
transfer or otherwise dispose of any of its assets (other than obsolete or worn
out property), whether now owned or hereafter acquired, other than in the
ordinary course of business and at fair market value.
12(i) Leverage. Permit at the last day of any
calendar month the Leverage Ratio of the Parent and its consolidated
Subsidiaries to exceed 5.00:1.00.
12(j) Minimum Net Worth. Permit at the last day of
any calendar quarter:
(1) The Parent's consolidated net worth,
determined in accordance with GAAP, to be less than the sum of: (i)
the greater of (A) ninety percent (90%) of net worth, determined in
accordance with GAAP, as of the last day of the fiscal quarter ended
December 31, 1997, or (B) $265,000,000.00, plus (ii) seventy-five
percent (75%) of net income (if positive), determined in accordance
with GAAP, during each calendar quarter after December 31, 1997, plus
(iii) seventy-five percent (75%) of contributions to equity of the
Parent made at any time after December 31, 1997, or
(2) The Company's net worth, determined in
accordance with GAAP to be less than the sum of: (i) the greater of
(A) seventy percent (70%) of net worth,
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determined in accordance with GAAP, as of the last day of the fiscal
quarter ended December 31, 1997, or (B) $45,000,000.00, plus (ii)
seventy-five percent (75%) of net income (if positive), determined in
accordance with GAAP, during each calendar quarter after December 31,
1997, plus (iii) seventy-five percent (75%) of contributions to equity
of the Company made at any time after December 31, 1997.
12(k) Minimum Profitability. Permit at the end of
any calendar quarter the Parent's consolidated net income, determined in
accordance with GAAP, for such calendar quarter and the immediately preceding
calendar quarter, taken together, to be less than $1.00.
12(l) Non-Warehouse Debt. Permit at the end of any
calendar quarter the Non-Warehouse Debt Ratio of the Parent and its
consolidated Subsidiaries to exceed 1.25:1.00.
12(m) Modification of Policies and Procedures.
Make any material change in (1) its underwriting policies and procedures which
would, due to reduced standards of creditworthiness for potential Obligors or
reduced standards of approval for Property securing a Mortgage Loan, result in
the expansion of the pool of potential Obligors on Mortgage Loans originated or
purchased by the Company or such Subsidiary, or (2) its hedging policies
relating to Eligible Mortgage Loans, as such are in effect on the Effective
Date; provided, however, that the Administrative Agent shall promptly convey to
each Lender any written request by the Company, any Subsidiary or the Parent to
change such policies and procedures, and the requested change shall
automatically be deemed to be approved fifteen (15) Business Days following the
date the Administrative Agent distributes such request unless during such
fifteen day period the Administrative Agent receives written rejection of the
requested change in policies and procedures from any Lender stating the basis
of such rejection.
12(n) Subsidiaries. Create or permit the creation
of any Subsidiary not in existence as of the Effective Date; provided, however,
that the Administrative Agent shall promptly convey to each Lender any written
request by the Company or the Parent to create a new Subsidiary (which request
shall include an explanation of the business reason for creation of such
Subsidiary), and such request shall automatically be deemed to be approved
fifteen (15) Business Days following the date the Administrative Agent
distributes such request unless during such fifteen day period the
Administrative Agent receives written rejection of the request to create a new
Subsidiary from any Lender stating the basis of such rejection.
12(o) Transactions with Affiliates. Purchase,
acquire or lease any property from, or sell, transfer or lease any property to,
lend or advance any money to, borrow any money from, guarantee any obligation
of, acquire any stock, obligations or securities of, or enter into any
management or similar fee arrangement with, any Affiliate, other than on an
arms-length basis upon terms and conditions comparable to those that could be
reached with a third party.
13. Events of Default. Upon the occurrence of any of the
following events (an "Event of Default"):
13(a) The Company shall fail to pay any Obligation
on the date when due (or, with respect to monthly interest and fees due
pursuant to Paragraph 6(b) above, within two (2) Business Days of the date when
due); or
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13(b) Any representation or warranty made or deemed
made by the Company or the Parent in any Loan Document or in connection with
any Loan Document shall be inaccurate or incomplete in any respect on or as of
the date made or deemed made, except representations and warranties made or
deemed made that a Mortgage Loan is an Eligible Mortgage Loan, it being the
intention of the parties that the inaccuracy or incompleteness of any such
representation or warranty will disqualify such Mortgage Loan as an "Eligible
Mortgage Loan" hereunder and such Mortgage Loan shall be excluded from the
calculation of the Collateral Value of the Warehouse Borrowing Base; or
13(c) The Company or the Parent shall fail to
maintain its corporate existence or shall default in the observance or
performance of any covenant or agreement contained in Paragraph 12 above or in
the Security Agreement; or
13(d) The Company or the Parent shall fail to
observe or perform any other term or provision contained in the Loan Documents
to which it is a party and such failure shall continue for thirty (30) days; or
13(e) The Parent or any of its Subsidiaries shall
default in any payment of principal of or interest on any Indebtedness (other
than the Obligations) in an aggregate amount in excess of $5,000,000.00 or any
other event shall occur, the effect of which other event is to permit such
Indebtedness to be declared or otherwise to become due prior to its stated
maturity; or
13(f) (1) The Parent or any of its Subsidiaries
shall commence any case, proceeding or other action (i) under any existing or
future law of any jurisdiction, domestic or foreign, relating to bankruptcy,
insolvency, reorganization or relief of debtors, seeking to have an order for
relief entered with respect to it, or seeking to adjudicate it a bankrupt or
insolvent, or seeking reorganization, arrangement, adjustment, winding-up,
liquidation, dissolution, composition or other relief with respect to it or its
debts, or (ii) seeking appointment of a receiver, trustee, custodian or other
similar official for it or for all or any substantial part of its assets, or
the Parent or any of its Subsidiaries shall make a general assignment for the
benefit of its creditors; or (2) there shall be commenced against the Parent or
any of its Subsidiaries any case, proceeding or other action of a nature
referred to in clause (1) above which (i) results in the entry of an order for
relief or any such adjudication or appointment, or (ii) remains undismissed,
undischarged or unbonded for a period of sixty (60) days; or (3) there shall be
commenced against the Parent or any of its Subsidiaries any case, proceeding or
other action seeking issuance of a warrant of attachment, execution, distraint
or similar process against all or substantially all of its assets which results
in the entry of an order for any such relief which shall not have been vacated,
discharged, stayed, satisfied or bonded pending appeal within sixty (60) days
from the entry thereof; or (4) the Parent or any of its Subsidiaries shall take
any action in furtherance of, or indicating its consent to, approval of, or
acquiescence in (other than in connection with a final settlement), any of the
acts set forth in clauses (1), (2) or (3) above; or (5) the Parent or any of
its Subsidiaries shall generally not, or shall be unable to, or shall admit in
writing its inability to, pay its debts as they become due; or
13(g) (1) Any Person shall engage in any
"prohibited transaction" (as defined in Section 406 of ERISA or Section 4975 of
the Code) involving any Plan, (2) any "accumulated funding deficiency" (as
defined in Section 302 of ERISA), whether or nor waived, shall exist with
respect to any Plan, (3) a Reportable Event shall occur with respect to, or
proceedings shall commence to have a trustee appointed, or a trustee shall be
appointed, to
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administer or to terminate, any Single Employer Plan, which Reportable Event or
institution of proceedings is, in the reasonable opinion of the Administrative
Agent, likely to result in the termination of such Plan for purposes of Title
IV of ERISA, and, in the case of a Reportable Event, the continuance of such
Reportable Event unremedied for ten days after notice of such Reportable Event
pursuant to Section 4043(a), (c) or (d) of ERISA is given or the continuance of
such proceedings for ten days after commencement thereof, as the case may be,
(4) any Single Employer Plan shall terminate for purposes of Title IV of ERISA,
(5) any withdrawal liability to a Multiemployer Plan shall be incurred by the
Parent or any of its Subsidiaries or (6) any other event or condition shall
occur or exist; and in each case in clauses (1) through (6) above, such event
or condition, together with all other such events or conditions, if any, is
likely to subject the Parent or any of its Subsidiaries to any tax, penalty or
other liabilities in the aggregate material in relation to the business,
operations, property or financial or other condition of the Parent or any of
its Subsidiaries; or
13(h) One or more judgments or decrees shall be
entered against the Company or any of its Subsidiaries in an aggregate amount
in excess of $2,000,000.00, and all such judgments or decrees shall not have
been vacated, discharged, stayed, satisfied or bonded pending appeal within
sixty (60) days from the entry thereof; or
13(i) The Parent shall fail to observe or perform
any covenant or agreement contained in the Guaranty or shall attempt to rescind
or revoke the Guaranty, with respect to future transactions or otherwise; or
13(j) The Parent shall cease to own one hundred
percent (100%) of the outstanding capital stock of the Company; or
13(k) Any Person shall acquire more than
twenty-five percent (25%) of the voting common stock of the Parent; or the
majority of the directors of the Parent shall consist of directors who were not
recommended or elected by the Parent's Board of Directors;
THEN,
(1) Automatically upon the occurrence of an Event of
Default under Paragraph 13(f) above,
(2) At the option of any Lender upon the occurrence of an
Event of Default under Paragraph 13(a) above and/or Paragraph 13(c)
above (but only with respect to a covenant contained in Paragraphs
12(i), 12(j), 12(k) and/or 12(l) above), and
(3) In all other cases, at the option of the Majority
Lenders,
each Lender's obligation to make Loans hereunder shall terminate and/or the
principal balance of outstanding Loans and interest accrued but unpaid thereon
and the aggregate contingent liability of the Company to reimburse NationsBank
and the Lenders for future L/C Drawings with respect to the Letter of Credit
and all other Obligations shall become immediately due and payable, without
demand upon or presentment to the Company, which are expressly waived by the
Company.
14. The Administrative Agent.
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14(a) Appointment. Each Lender hereby irrevocably
designates and appoints the Administrative Agent as the agent of such Lender
under the Loan Documents and such Lender hereby irrevocably authorizes the
Administrative Agent, as the agent of such Lender, to take such action on its
behalf under the provisions of the Loan Documents and to exercise such powers
and perform such duties as are expressly delegated to the Administrative Agent
by the terms of the Loan Documents, together with such other powers as are
reasonably incidental thereto. Notwithstanding any provision to the contrary
elsewhere in the Loan Documents, the Administrative Agent shall not have any
duties or responsibilities, except those expressly set forth herein or therein,
or any fiduciary relationship with any Lender, and no implied covenants,
functions, responsibilities, duties, obligations or liabilities shall be read
into the Loan Documents or otherwise exist against the Administrative Agent.
14(b) Delegation of Duties. The Administrative
Agent may execute any of its duties under the Loan Documents by or through
agents or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Administrative Agent
shall be responsible for the negligence or misconduct of any agents or
attorneys-in-fact selected by it with reasonable care.
14(c) Exculpatory Provisions. Neither the
Administrative Agent nor any of its officers, directors, employees, agents,
attorneys-in-fact or Affiliates shall be (1) liable for any action lawfully
taken or omitted to be taken by it or such Person under or in connection with
the Loan Documents (except for its or such Person's own gross negligence or
willful misconduct), or (2) responsible in any manner to any of the Lenders for
any recitals, statements, representations or warranties made by the Company or
any officer thereof contained in the Loan Documents or in any certificate,
report, statement or other document referred to or provided for in, or received
by the Administrative Agent under or in connection with, the Loan Documents or
for the value, validity, effectiveness, genuineness, enforceability or
sufficiency of the Loan Documents or for any failure of the Company to perform
its obligations hereunder. The Administrative Agent shall be under no
obligation to any Lender to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, the Loan
Documents or to inspect the properties, books or records of the Company.
14(d) Reliance by Administrative Agent. The
Administrative Agent shall be entitled to rely, and shall be fully protected in
relying, upon any note, writing, resolution, notice, consent, certification,
affidavit, letter, cablegram, telegram, telecopy, telex or teletype message,
statement, order or other document or conversation reasonably believed by it to
be genuine and correct and to have been signed, sent or made by the proper
Person or Persons and upon advice and statements of legal counsel (including,
without limitation, counsel to the Company), independent accountants and other
experts selected by the Administrative Agent. The Administrative Agent may
deem and treat the payee of any note as the owner thereof for all purposes. As
to the Lenders: (1) the Administrative Agent shall be fully justified in
failing or refusing to take any action under the Loan Documents unless it shall
first receive such advice or concurrence of the Majority Lenders or all of the
Lenders, as appropriate, or it shall first be indemnified to its satisfaction
by the Lenders ratably in accordance with their respective Percentage Shares
against any and all liability and expense which may be incurred by it by reason
of taking or continuing to take any action (except for liabilities and expenses
resulting from the Administrative Agent's gross negligence or willful
misconduct), and (2) the Administrative Agent shall in all cases be fully
protected in acting, or in refraining from acting, under the Loan Documents in
accordance with a request of the Majority Lenders or all of the Lenders, as
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appropriate, and such request and any action taken or failure to act pursuant
thereto shall be binding upon all the Lenders.
14(e) Notice of Default. The Administrative Agent
shall not be deemed to have knowledge or notice of the occurrence of any
Potential Default or Event of Default hereunder unless the Administrative Agent
has received notice from a Lender or the Company referring to the Loan
Documents, describing such Potential Default or Event of Default and stating
that such notice is a "notice of default." In the event that the
Administrative Agent receives such a notice, the Administrative Agent shall
give notice thereof to the Lenders. Subject to Paragraph 16(b) below, the
Administrative Agent shall take such action with respect to such Potential
Default or Event of Default as shall be reasonably directed by the Majority
Lenders (or any Lender with respect to an Event of Default under Paragraphs
13(a) or 13(c) above (but only with respect to a covenant contained in
Paragraphs 12(i), 12(j), 12(k) and/or 12(l) above)), provided that, unless and
until the Administrative Agent shall have received such directions, the
Administrative Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Potential Default or
Event of Default as it shall deem advisable in the best interest of the
Lenders.
14(f) Non-Reliance on Administrative Agent or Other
Lenders. Each Lender expressly acknowledges that neither the Administrative
Agent nor any of its officers, directors, employees, agents, attorneys-in-fact
or Affiliates has made any representations or warranties to it and that no act
by the Administrative Agent hereafter taken, including any review of the
affairs of the Company, shall be deemed to constitute any representation or
warranty by the Administrative Agent to any Lender. Each Lender represents to
the Administrative Agent that it has, independently and without reliance upon
the Administrative Agent or any other Lender, and based on such documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, operations, property, financial and other
condition and creditworthiness of the Company and the Parent and made its own
decision to make its Loans hereunder and enter into this Agreement. Each
Lender also represents that it will, independently and without reliance upon
the Administrative Agent or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action under
this Agreement, and to make such investigation as it deems necessary to inform
itself as to the business, operations, property, financial and other condition
and creditworthiness of the Company and the Parent. Except for notices,
reports and other documents expressly required to be furnished to the Lenders
by the Administrative Agent hereunder, the Administrative Agent shall have no
duty or responsibility to provide any Lender with any credit or other
information concerning the business, operations, property, financial and other
condition or creditworthiness of the Company or the Parent which may come into
the possession of the Administrative Agent or any of its officers, directors,
employees, agents, attorneys-in-fact or Affiliates.
14(g) Back-Up Indemnification. The Lenders agree
to indemnify the Administrative Agent in its capacity as such (to the extent
not reimbursed by the Company or the Parent and without limiting the obligation
of the Company and the Parent to do so), ratably according to the respective
amounts of their Percentage Shares, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind whatsoever which may at any time
(including without limitation at any time following the payment of the
Obligations) be imposed on, incurred by or asserted against the Administrative
Agent in any way relating to or arising out of the Loan Documents or any
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<PAGE> 36
documents contemplated by or referred to herein or the transactions
contemplated hereby or any action taken or omitted by the Administrative Agent
under or in connection with any of the foregoing; provided that no Lender shall
be liable for the payment of any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from the Administrative Agent's gross negligence or
willful misconduct. The agreements in this subsection shall survive the
payment of the Obligations.
14(h) Administrative Agent in Its Individual
Capacity. The Administrative Agent and its Affiliates may make loans to,
accept deposits from and generally engage in any kind of business with the
Company or the Parent as though the Administrative Agent were not the
Administrative Agent hereunder. With respect to such loans made or renewed by
it and any Note issued to it, the Administrative Agent shall have the same
rights and powers under the Loan Documents as any Lender and may exercise the
same as though it were not the Administrative Agent, and the terms "Lender" and
"Lenders" shall include the Administrative Agent in its individual capacity.
14(i) Successor Administrative Agent. The
Administrative Agent may resign as Administrative Agent under the Loan
Documents upon ninety (90) days' notice to the Lenders and agrees that it will
so resign in the event it ceases to hold any Percentage Share of the
Obligations. If the Administrative Agent shall resign, then the Majority
Lenders shall appoint from among the Lenders a successor agent or, if the
Majority Lenders are unable to agree on the appointment of a successor agent,
the retiring Administrative Agent shall appoint a successor agent for the
Lenders (which successor agent, assuming that there does not exist a Potential
Default or Event of Default, shall be subject to approval by the Company, which
approval shall not be unreasonably withheld), whereupon such successor agent
shall succeed to the rights, powers and duties of the retiring Administrative
Agent, and the term "Administrative Agent" shall mean such successor agent
effective upon its appointment, and the former Administrative Agent's rights,
powers and duties as Administrative Agent shall be terminated, without any
other or further act or deed on the part of such former Administrative Agent or
any of the parties to this Agreement or any of the Loan Documents or successors
thereto. After any retiring Administrative Agent's resignation hereunder as
Administrative Agent, the provisions of this Paragraph 12 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was
Administrative Agent under the Loan Documents.
15. Additional Lenders; Assignments and Participations;
Increases in Availability.
15(a) Addition of New Lender.
(1) Subject to the limitation on the
Maximum Aggregate Credit Limit, the Company or any Lender may at any
time propose that one or more financial institutions (each, an
"Applicant Financial Institution") become an additional Lender
hereunder. At such time, the Company or such Lender, as applicable,
shall notify the other parties hereto, including the Administrative
Agent, of the identity of such Applicant Financial Institution and
such Applicant Financial Institution's proposed Maximum Commitment.
The addition of any Applicant Financial Institution shall be subject
to:
(i) If such Applicant Financial
Institution is proposed for inclusion as a Lender hereunder by
an existing Lender, the prior written consent of
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the Company and the Administrative Agent, and if such
Applicant Financial Institution is proposed for inclusion as a
Lender hereunder by the Company, the prior written consent of
the Administrative Agent, none of which consents shall be
unreasonably withheld and which, if given, shall be given in
writing to the other parties hereto no later than the tenth
day following receipt by the Company of a written request for
the inclusion of such Applicant Financial Institution as a
Lender hereunder; and
(ii) Delivery of each of the items
and the occurrence of each of the events described in
subparagraph (2) below.
(2) Assuming delivery of the consent of
the Company and/or the Administrative Agent as required pursuant to
subparagraph (1)(i) above, the Administrative Agent, the Company and,
if such Applicant Financial Institution will be acquiring a portion of
an existing Lender's Maximum Commitment by way of assignment from such
existing Lender, such existing Lender, shall mutually agree on the
Adjustment Date on which such Applicant Financial Institution shall
become a party hereto and a Lender hereunder. On such Adjustment
Date:
(i) The Administrative Agent shall
deliver to the Company and each of the Lenders a replacement
Commitment Schedule to be effective as of such Adjustment
Date, reflecting the Aggregate Committed Credit Limit and the
Lenders' respective Maximum Commitments and Percentage Shares.
(ii) No later than 11:30 a.m. (Los
Angeles time) on such Adjustment Date, such Applicant
Financial Institution shall pay to the Administrative Agent an
amount equal to such Applicant Financial Institution's
Percentage Share of Tranche A Committed Loans and Tranche B
Loans outstanding. If such Applicant Financial Institution is
acquiring a portion of an existing Lender's Maximum Commitment
by way of assignment from such existing Lender, the
Administrative Agent shall thereupon remit to such existing
Lender the full amount of such funds. If such Applicant
Financial Institution is not acquiring from any existing
Lender, the Administrative Agent shall thereupon allocate such
funds to the existing Lenders such that after such allocation
the Lenders shall hold the Obligations in accordance with the
replacement Commitment Schedule. Following such Adjustment
Date, fees and interest accrued on the Obligations to but not
including such Adjustment Date shall be payable to the Lenders
in accordance with their respective Percentage Shares prior to
such Adjustment Date before giving effect to the readjustment
thereof pursuant to the Commitment Schedule provided by the
Administrative Agent on such Adjustment Date.
(iii) If such Applicant Financial
Institution is acquiring a portion of an existing Lender's
Commitment and Percentage Share by way of assignment from such
existing Lender, the Administrative Agent, the Company, the
assigning Lender and the Applicant Financial Institution shall
execute and deliver an Assignment Agreement, or if such
Applicant Financial Institution is becoming a Lender hereunder
as a result of an increase in the Aggregate Committed Credit
Limit, the Administrative Agent, the Company and the Applicant
Financial Institution shall execute and deliver an Additional
Lender Agreement, either of
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which Assignment Agreement or Additional Lender Agreement
shall constitute an amendment to this Agreement and the other
Loan Documents to the extent necessary to reflect the
inclusion of the Applicant Financial Institution as a Lender
hereunder.
(iv) The Company shall execute and
deliver to such Applicant Financial Institution a Tranche A
Note and a Tranche B Note.
(v) The Applicant Financial
Institution shall pay to the Administrative Agent a
registration fee of $3,500.00.
Subject to the requirements described above, on the Adjustment Date
the Applicant Financial Institution shall become a party hereto and a
Lender hereunder and shall be entitled to all rights, benefits and
privileges accorded a Lender under the Loan Documents and shall be
subject to all obligations of a Lender under the Loan Documents.
15(b) Assignments Among Existing Lenders. Any
Lender may at any time agree to assign a portion of such Lender's Maximum
Commitment and Percentage Share to an existing Lender (a "Transferee Lender").
In such event, such Lender and the Transferee Lender shall so notify the
Administrative Agent and the Company of the Adjustment Date on which such
assignment is to be effective. On such Adjustment Date:
(1) The Company shall deliver to the
Administrative Agent, and each of the Lenders a Commitment Schedule to
be effective as of such Adjustment Date, reflecting the Aggregate
Committed Credit Limit and the Lenders' respective Maximum Commitments
and Percentage Shares.
(2) The Administrative Agent, the
Company, the assigning Lender and the Transferee Lender shall execute
and deliver an Assignment Agreement, which shall constitute an
amendment to this Agreement and the other Loan Documents to the extent
necessary to reflect such transfer.
(3) No later than 12:30 p.m. (Los
Angeles time) on such Adjustment Date, the Transferee Lender shall pay
to the Administrative Agent an amount equal to such Transferee
Lender's Percentage Share of Tranche A Committed Loans and Tranche B
Loans outstanding in excess of such Transferee Lender's previous
Percentage Share thereof. The Administrative Agent shall thereupon
remit to the transferring Lender the amount thereof.
15(c) Minimum Loan Commitment. Notwithstanding
anything to the contrary contained herein, the inclusion of any Applicant
Financial Institution as a Lender hereunder pursuant to Paragraph 15(a) above
and the assignment by an existing Lender of a portion of such Lender's Maximum
Commitment to a Transferee Lender pursuant to Paragraph 15(b) above shall be
subject to the following restrictions:
(1) If an Applicant Financial
Institution is acquiring a portion of an existing Lender's Maximum
Commitment by way of an assignment from such existing Lender, then
such assignment of Maximum Commitment must be in the minimum amount of
$10,000,000.00 (or if in a higher amount, in integral multiples of
$1,000,000.00 in
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excess thereof) and such existing Lender must continue to hold a
Maximum Commitment of not less than $10,000,000.00 following the
consummation of the contemplated assignment;
(2) If an existing Lender is assigning a
portion of its Maximum Commitment to a Transferee Lender, such
assignment of Maximum Commitment is in the minimum amount of
$10,000,000.00 (or if in a higher amount, in integral multiples of
$1,000,000.00 in excess thereof) and such existing Lender shall
continue to hold a Maximum Commitment of not less than $10,000,000.00
following the consummation of the contemplated assignment.
15(d) Sub-Participations by Lenders. Any Lender
may at any time sell participating interests in any of the Obligations held by
such Lender and its Maximum Commitment hereunder; provided, however, that:
(1) No participation contemplated by
this Paragraph 15(d) shall relieve such Lender from its obligations
hereunder or under any other Loan Document;
(2) Such Lender shall remain solely
responsible for the performance of such obligations;
(3) The Company, the Administrative
Agent, and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under the Loan Documents; and
(4) Such Lender shall not enter into
participation agreements with any participants involving the sale of a
participation interest in less than $10,000,0000.00 of such Lender's
Maximum Commitment for each $20,000,000.00 of Maximum Commitment held
by such Lender.
15(e) Federal Reserve Bank. Notwithstanding the
provisions of Paragraphs 15(a) and 15(b) above, any Lender may at any time
pledge or assign all or any portion of such Lender's rights under this
Agreement and the other Loan Documents to a Federal Reserve Bank.
15(f) Increases in Availability. From time to time
the Company and any Lender (an "Increasing Lender") may agree, with the prior
written consent of the Administrative Agent, to permanently or temporarily
increase such Lender's Maximum Commitment and Percentage Share, the dollar
amount of any such increase to be, subject to the Maximum Aggregate Credit
Limit limitation, in the minimum dollar amount of $10,000,000.00 and integral
multiples of $5,000,000.00 in excess thereof. The Company and the Increasing
Lender shall agree on the Adjustment Date for said increase and, if the
increase is a temporary rather than permanent increase, the date on which said
increase shall terminate (the "Temporary Increase Termination Date"). The
Company shall deliver to the Administrative Agent and each of the Lenders a
Commitment Schedule to be effective as of such Adjustment Date, and the Lenders
shall purchase and sell among themselves Loans in amounts necessary to effect
the new Percentage Shares as of such Adjustment Date. On the Temporary
Increase Termination Date the aggregate amount of such Increasing Lender's
Percentage Share of outstanding Tranche A Committed Loans and Tranche B Loans
held by the Increasing Lender in excess of its Maximum Commitment after
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giving effect to the termination of the subject increase shall, if but only if
at such Temporary Increase Termination Date there does not exist an Event of
Default, be payable in full. If at the Temporary Increase Termination Date
there exists an Event of Default, the temporary increase of the Increasing
Lender shall continue in effect and, unless otherwise agreed by one hundred
percent (100%) of the Lenders, shall be treated thereafter as a permanent
increase in said Increasing Lender's Maximum Commitment.
16. Miscellaneous Provisions.
16(a) No Assignment. Neither the Company nor the
Parent may assign its rights or obligations under this Agreement or the other
Loan Documents without the prior written consent of one hundred percent (100%)
of the Administrative Agent and the Lenders. Any purported assignment in
violation of this Paragraph 16(a) shall automatically be deemed null and void.
Subject to the foregoing, all provisions contained in this Agreement and the
other Loan Documents or any document or agreement referred to herein or
relating hereto shall inure to the benefit of each Lender, its successors and
assigns, and shall be binding upon the Company, the Parent and their respective
successors and assigns.
16(b) Amendment. Neither this Agreement nor any
other Loan Document may be amended or terms or provisions hereof or thereof
waived unless such amendment or waiver is in writing and signed by the Majority
Lenders, the Administrative Agent, the Company and the Parent; provided,
however, that without the prior written consent of one hundred percent (100%)
of the Lenders, no amendment or waiver shall: (1) waive or amend any term or
provision of Paragraphs 12(i), 12(j), 12(k) or 12(l) above or the definitions
of "Eligible Mortgage Loan," "Eligible Seasoned Mortgage Loan," "Eligible
Servicing Receivable," "Collateral Value of the Warehouse Borrowing Base" or
"Collateral Value of the Working Capital Borrowing Base," (2) reduce the
principal of, or rate of interest on, the Loans, or the fees payable pursuant
to Paragraph 6(j) above, or extend the payment dates for such principal,
interest or fees, (3) release any Collateral or the Guaranty other than as
expressly permitted under the Guaranty or the other Loan Documents, (4) modify
the Tranche B Credit Limit or the Tranche C Credit Limit or the definition of
"Aggregate Committed Credit Limit" or "Maximum Aggregate Credit Limit," (5)
modify any Lender's Percentage Share (except as a result of the increase by a
Lender of such Lender's Maximum Commitment as permitted hereunder), (6) modify
the definition of "Majority Lenders," (7) extend the Maturity Date or (8) amend
this Paragraph 16(b) or any provision of this Agreement which by its terms
requires the consent or approval of one hundred percent (100%) of the Lenders.
16(c) Cumulative Rights; No Waiver. The rights,
powers and remedies of the Administrative Agent and the Lenders hereunder and
under the other Loan Documents are cumulative and in addition to all rights,
power and remedies provided under any and all agreements among the Company, the
Parent and the Administrative Agent and the Lenders relating hereto and
thereto, at law, in equity or otherwise. Any delay or failure by the
Administrative Agent and the Lenders to exercise any right, power or remedy
shall not constitute a waiver thereof by the Administrative Agent and the
Lenders, and no single or partial exercise by the Administrative Agent and the
Lenders of any right, power or remedy shall preclude any other or further
exercise thereof or any exercise of any other rights, powers or remedies.
16(d) Entire Agreement. This Agreement and the
other Loan Documents and the documents and agreements referred to herein embody
the entire agreement and
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understanding between the parties hereto and supersede all prior agreements and
understandings relating to the subject matter hereof and thereof.
16(e) Survival. All representations, warranties,
covenants and agreements contained in this Agreement and the other Loan
Documents on the part of the Company and the Parent shall survive the
termination of this Agreement and shall be effective until the Obligations are
paid and performed in full or longer as expressly provided herein.
16(f) Notices. All notices given by any party to
the others to be given under the Loan Documents shall be in writing (including
facsimile transmission) unless otherwise provided for herein, delivered
personally or by depositing the same in the United States mail, registered,
with postage prepaid, addressed to the party at the address set forth on
Schedule I attached hereto. Any party may change the address to which notices
are to be sent by notice of such change to each other party given as provided
herein. Such notices shall be effective on the date received or, if mailed, on
the third Business Day following the date mailed.
16(g) Governing Law. This Agreement and the other
Loan Documents shall be governed by and construed in accordance with the laws
of the State of California without giving effect to choice of law rules.
16(h) Counterparts. This Agreement and the other
Loan Documents may be executed in any number of counterparts, all of which
together shall constitute one agreement.
16(i) Sharing of Payments. Subject to the
provisions of Paragraph 7(g) above, if any Lender shall receive and retain any
payment, whether by setoff, application of deposit balance or security, or
otherwise, in respect of the Obligations in excess of such Lender's Percentage
Share or, as applicable, Post-Default Percentage Share, 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 first fully against the Obligations held by such Lender, and only
then to any other Indebtedness of the Company to such Lender.
16(j) Waiver of Jury Trial. EACH OF THE PARTIES
HERETO WAIVES ITS RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER
LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY IN ANY
ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE
PARTIES AGAINST ANY OTHER PARTY, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT
CLAIMS, OR OTHERWISE. EACH OF THE PARTIES HERETO AGREES THAT ANY SUCH CLAIM OR
CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT
LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT
TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS PARAGRAPH 16(j) AS TO ANY
ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO
CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT
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<PAGE> 42
OR ANY OTHER LOAN DOCUMENT OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER
SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
16(k) Limitation on Interest. The Lenders, the
Company, the Parent and the other parties to the Loan Documents intend to
contract in strict compliance with applicable usury law from time to time in
effect. In furtherance thereof, such Persons stipulate and agree that none of
the terms and provisions contained in the Loan Documents shall ever be
construed to create a contract to pay, for the use, forbearance or detention of
money, interest in excess of the maximum amount of interest permitted to be
charged by applicable law from time to time.
17. Definitions. For purposes of this Agreement, the
terms set forth below shall have the following meanings:
"Act" shall have the meaning given such term in Paragraph 10(m)
above._
"Additional Lender Agreement" shall mean an agreement in the
form of that attached hereto as Exhibit J.
"Additional Required Documents" shall mean with respect to any
Mortgage Loan those documents described on Exhibit K attached hereto.
"Adjusted Net Worth" shall mean on a consolidated basis for
the Parent at any date an amount equal to: (a) Net Worth (as defined under
GAAP), minus (b) goodwill, plus (c) Subordinated Debt so long as there does not
exist an Event of Default with respect to such Subordinated Debt.
"Adjustment Date" shall mean that date as of which an
Applicant Financial Institution becomes a "Lender" or an existing Lender takes
a portion of another existing Lender's Maximum Commitment and Percentage Share,
as provided more particularly in this Agreement.
"Administrative Agent" shall have the meaning given such term
in the introductory paragraph hereof.
"Affiliate" shall mean, as to any Person, any other Person
directly or indirectly controlling, controlled by or under direct or indirect
common control with, such Person. "Control" as used herein means the power to
direct the management and policies of such Person.
"Aggregate Committed Credit Limit" shall mean at any date the
sum of the Maximum Commitments of the Lenders as the same may be increased or
decreased from time to time as permitted hereunder, with the "Aggregate
Committed Credit Limit" on the Initial Funding Date being $300,000,000.00;
provided, however, that in no event shall the Aggregate Committed Credit Limit
be increased to an amount in excess of the then current Maximum Aggregate
Credit Limit.
"Agreement" shall mean this Agreement, as the same may be
amended, extended or replaced from time to time.
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<PAGE> 43
"Applicable Effective Fed Funds Rate" shall mean on any day
the Effective Fed Funds Rate on such day plus the Applicable Fed Funds Spread.
"Applicable Eurodollar Rate" shall mean, with respect to any
Eurodollar Loan for the Interest Period applicable to such Eurodollar Loan, the
rate per annum (rounded upward, if necessary, to the next higher 1/32 of one
percent) calculated as of the first day of such Interest Period in accordance
with the following formula:
Applicable Eurodollar Rate = ER + AES
------------
1-ERP
where
ER = Eurodollar Rate
ERP = Eurodollar Reserve Percentage
AES = Applicable Eurodollar Spread
"Applicable Eurodollar Spread" shall mean on any day that
percentage determined based upon the Leverage Ratio as reported in the most
recent financial statements required to be delivered by the Parent prior to the
date of determination (with any resulting change in the Applicable Eurodollar
Spread being effective as of the date such financial statements are required to
be delivered pursuant to the terms of this Agreement) in accordance with the
following:
<TABLE>
<CAPTION>
Tranche B Loan
Tranche A Committed Loan and Tranche Applicable Eurodollar
Leverage Ratio C Loan Applicable Eurodollar Spread Spread
------
<S> <C> <C>
Less than or equal to 0.80% 1.35%
1.75:1.00
Greater than 1.75:1.00 but 0.925% 1.475%
less than or equal to
3.50:1.00
Greater than 3.50:1.00 1.125% 1.675%
</TABLE>
"Applicable Fed Funds Spread" shall mean on any day that
percentage determined based upon the Leverage Ratio as reported in the most
recent financial statements required to be delivered by the Parent prior to the
date of determination (with any resulting change in the Applicable Fed Funds
Spread being effective as of the date such financial statements are required to
be delivered pursuant to the terms of this Agreement) in accordance with the
following schedule:
<TABLE>
<CAPTION>
Tranche B Loan
Tranche A Committed Loan and Tranche Applicable Fed Funds
Leverage Ratio C Loan Applicable Fed Funds Spread Spread
------
<S> <C> <C>
Less than or equal to 1.05% 1.60%
1.75:1.00
</TABLE>
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<TABLE>
<S> <C> <C>
Greater than 1.75:1.00 but 1.175% 1.725%
less than or equal to
3.50:1.00
Greater than 3.50:1.00 1.375% 1.925%
</TABLE>
"Applicant Financial Institution" shall have the meaning given
such term in Paragraph 15(a)(1) above.
"Approved Alternative Product Investor" shall mean any
financial institution pre-approved in writing by one hundred percent (100%) of
the Lenders to purchase Eligible Alternative Product Mortgage Loans included in
the Warehouse Borrowing Base (with the schedule of Approved Alternative Product
Investors as of the Effective Date attached hereto as Schedule III), and which
approval has not been revoked by any Lender in its sole discretion, any such
revocation notice to be given no later than ten (10) days prior to its intended
effective date, after which date no additional commitments shall be made by the
Company to ship Eligible Alternative Product Mortgage Loans from the Warehouse
Borrowing Base to the financial institution whose approved status has been so
revoked; provided, however, that following the Effective Date the
Administrative Agent shall promptly notify each Lender in writing of any
request by the Company to add a new institution as an Approved Alternative
Product Investor hereunder, and such institution shall automatically be deemed
to be an Approved Alternative Product Investor five (5) Business Days following
the date of such notice unless during such five-Business-Day period the
Administrative Agent receives a written rejection of the Company's request from
any Lender (it being understood and agreed that notwithstanding such automatic
approval, any Lender may at any time in its sole discretion revoke any
institution's status as an "Approved Alternative Product Investor" upon notice
to be given no later than ten (10) days prior to its intended effective date,
after which date no additional commitments shall be made by the Company to ship
Eligible Alternative Product Mortgage Loans from the Warehouse Borrowing Base
to the financial institution whose approved status has been so revoked).
"Approved Investor" shall mean any financial institution
pre-approved in writing by one hundred percent (100%) of the Lenders to
purchase Mortgage Loans included in the Warehouse Borrowing Base or
Mortgage-Backed Securities supported by Mortgage Loans which have been included
in the Warehouse Borrowing Base (with the schedule of Approved Investors as of
the Effective Date attached hereto as Schedule II), and which approval has not
been revoked by any Lender in its sole discretion, any such revocation notice
to be given no later than ten (10) days prior to its intended effective date,
after which date no additional commitments shall be made by the Company to ship
Mortgage Loans from the Warehouse Borrowing Base to the financial institution
whose approved status has been so revoked; provided, however, that following
the Effective Date the Administrative Agent shall promptly notify each Lender
in writing of any request by the Company to add a new institution as an
Approved Investor hereunder, and such institution shall automatically be deemed
to be an Approved Investor five (5) Business Days following the date of such
notice unless during such five-Business-Day period the Administrative Agent
receives a written rejection of the Company's request from any Lender (it being
understood and agreed that notwithstanding such automatic approval, any Lender
may at any time in its sole discretion revoke any institution's status as an
"Approved Investor" upon notice to be given no later than ten (10) days prior
to its intended effective date, after which date no additional commitments
shall be made by the Company to ship Mortgage Loans from the
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<PAGE> 45
Warehouse Borrowing Base to the financial institution whose approved status has
been so revoked).
"Assignment Agreement" shall mean an agreement in the form of
that attached hereto as Exhibit L.
"Available Deposits" shall mean those free collected balances
maintained in accounts in the name of the Company (or held by the Company in
trust for third parties) with a Lender (after deducting float and balances
required by such Lender under its normal practices to compensate such Lender
for the maintenance of such accounts and taking into consideration reserve
requirements applicable to such accounts) and which balances are not included
in determining "Available Deposits" under any other credit arrangements between
such Lender and the Company.
"Average Total Liabilities" shall mean for any calendar month
the sum of (a) average consolidated funded Indebtedness of the Parent for such
month, plus (b) all other consolidated liabilities of the Parent, determined in
accordance with GAAP, as of the last day of such month; provided, however, that
for purposes of this definition of "Average Total Liabilities," the terms
"Indebtedness" and "liabilities" shall in no event include any Subordinated
Debt so long as there does not exist a default with respect to such
Subordinated Debt.
"Basic Information" shall mean with respect to any Bulk
Acquisition Mortgage Loan the Company's loan number therefor, a flag
identifying such Mortgage Loan as a Bulk Acquisition Mortgage Loan, the
acquisition price therefor, the original principal balance, the current unpaid
principal balance, the date of the underlying promissory note, and the current
paid-to-date.
"Bid Loan" shall have the meaning given such term in Paragraph
5(a) above.
"Bid Loan Confirmation" shall mean a confirmation in the form
of that attached hereto as Exhibit M.
"Bid Loan Credit Limit" shall mean the sum of: (a)
$50,000,000.00, plus (b) (1) the Maximum Aggregate Credit Limit at such date
minus (2) the Aggregate Committed Credit Limit at such date.
"Bid Loan Interest Period" shall mean with respect to any Bid
Loan, the period commencing on the date advanced and ending no later than
ninety (90) days thereafter, as designated in the related Bid Loan
Confirmation; provided, however, that any Bid Loan Interest Period which would
end on a day which is not a Business Day shall be extended to the next
succeeding Business Day and no Bid Loan Interest Period shall extend beyond the
regularly scheduled Maturity Date.
"Bid Loans Note" shall have the meaning given such term in
Paragraph 7(c) above.
"Bid Loan Offer" shall mean an offer in the form of that
attached hereto as Exhibit N.
"Bid Loan Request" shall mean a request in the form of that
attached hereto as Exhibit O.
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<PAGE> 46
"Bulk Acquisition Mortgage Loan" shall mean a Mortgage Loan
acquired by the Company from a Non-Affiliate Seller in connection with a bulk
acquisition of Mortgage Loans for a purchase price to be advanced on the same
Business Day in excess of $10,000,000.00.
"Business Day" shall mean any day other than a Saturday, a
Sunday or a day on which banks in Los Angeles, California, Dallas, Texas, or
New York, New York are authorized or obligated to close their regular banking
business.
"Buy-Down Agreement" shall mean a written agreement between
the Company and a Lender setting forth the terms and conditions under which
such Lender has agreed to credit against interest otherwise payable to such
Lender on account of Loans outstanding hereunder certain amounts calculated
based upon Available Deposits maintained by the Company with such Lender.
"Capitalized Lease Obligations" of any Person shall mean the
obligations of such Person to pay rent or other amounts under any lease of (or
other arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP
and, for the purposes of this Agreement, the amount of such obligations at any
time shall be the capitalized amount thereof at such time determined in
accordance with GAAP.
"Collateral" shall mean, collectively and severally, the
personal property collateral described as such in the Security Agreement.
"Collateral Confirmation Agreement" shall mean an agreement in
the form of that attached hereto as Exhibit P.
"Collateral Value of the Warehouse Borrowing Base" shall mean,
at any date the aggregate amount calculated with respect to each Eligible
Mortgage Loan included in the Warehouse Borrowing Base at such date as follows:
(a) Unless such Eligible Mortgage Loan is an
Eligible Alternative Product Mortgage Loan, during the first one hundred eighty
(180) days such Eligible Mortgage Loan is included in the Warehouse Borrowing
Base: (1) if such Eligible Mortgage Loan was originated by the Company, the
lesser of: (i) one hundred percent (100%) of the outstanding principal balance
thereof, and (ii) ninety-eight percent (98%) of the Fair Market Value thereof,
or (2) if such Eligible Mortgage Loan was acquired, rather than originated, by
the Company, the least of: (i) one hundred percent (100%) of the outstanding
principal balance thereof, (ii) if the acquisition price was less than the
outstanding principal balance, ninety-eight percent (98%) of the acquisition
price therefor, and (iii) ninety-eight percent (98%) of the Fair Market Value
thereof;
(b) Unless such Eligible Mortgage Loan is an
Eligible Alternative Product Mortgage Loan, on each day following the 180th day
such Eligible Mortgage Loan is included in the Warehouse Borrowing Base,
seventy-five percent (75%) of the lesser of: (1) the outstanding principal
balance thereof, and (2) the Fair Market Value thereof.
(c) If such Eligible Mortgage Loan is an Eligible
Alternative Product Mortgage Loan, on each day such Eligible Alternative
Product Mortgage Loan is included in the Warehouse Borrowing Base, the least of
(1) ninety percent (90%) of the appraised value of the
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<PAGE> 47
related Property, (2) ninety percent (90%) of the Fair Market Value thereof,
and (3) ninety percent (90%) of any related Take-Out Commitment.
"Collateral Value of the Working Capital Borrowing Base" shall
mean eighty percent (80%) of the aggregate dollar amount of Eligible Servicing
Receivables included in the Working Capital Borrowing Base at such date.
"Commitment Schedule" shall mean a schedule setting forth the
current Aggregate Committed Credit Limit, Tranche B Credit Limit, Tranche C
Credit Limit and, for each Lender, such Lender's Maximum Commitment and
Percentage Share, as such schedule may be modified from time to time consistent
with the Loan Documents, with the initial Commitment Schedule being attached
hereto as Schedule IV.
"Commonly Controlled Entity" of a Person shall mean a Person,
whether or not incorporated, which is under common control with such Person
within the meaning of Section 414(c) of the Internal Revenue Code.
"Contractual Obligation" as to any Person shall mean any
provision of any security issued by such Person or of any agreement, instrument
or undertaking to which such Person is a party or by which it or any of its
property is bound.
"Custodian" shall mean such Person which may be designated as
such in accordance with the terms of the Security Agreement, with the initial
Custodian being Bankers Trust Company of California, N.A.
"Determination of Availability" shall mean a determination
made by the Administrative Agent upon receipt by the Administrative Agent of a
request for a Loan or Loans hereunder that upon the funding of such Loan or
Loans the Company will be in compliance with the requirements of Paragraphs
7(d)(1) and 7(d)(2) above.
"Effective Date" shall mean the date on which each of the
conditions set forth in Paragraph 9(a) above are satisfied and the first Loan
is funded.
"Effective Fed Funds Rate" shall mean for any day, the
weighted average of the rates on overnight Federal Funds transactions with
members of the Federal Reserve System arranged by Federal Funds brokers, as
published for such day (or, if such day is not a Business Day, for the next
preceding Business Day) by the Federal Reserve Bank of New York or, if such
rate is not so published for any day that is a Business Day, the average of
quotations for such day on such transactions received by the Administrative
Agent from three Federal Funds brokers of recognized standing selected by the
Administrative Agent.
"Effective Fed Funds Rate Loans" shall mean all Tranche C
Loans and such Tranche A Committed Loans and Tranche B Loans as are being
maintained at a rate of interest based on the Effective Fed Funds Rate.
"Eligible Alternative Product Mortgage Loan" shall mean a
Mortgage Loan with respect to which each of the following statements shall be
accurate and complete (and the Company by including said Mortgage Loan in any
computation of the Collateral Value of the Warehouse Borrowing Base shall be
deemed to so represent and warrant to the Administrative Agent and the Lenders
at and as of the date of such computation):
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<PAGE> 48
(a) Said Mortgage Loan is an Eligible Mortgage Loan.
(b) The program and the underwriting guidelines
under which said Mortgage Loan is originated are as set forth under Exhibit V
hereto or have otherwise been approved by the Majority Lenders.
(c) The date of the underlying promissory note shall
be no earlier than sixty (60) days prior to the date that said Mortgage Loan is
first included in the Warehouse Borrowing Base.
(d) Said Mortgage Loan has not been included in the
Warehouse Borrowing Base for more than ninety (90) days.
(e) Said Mortgage Loan does not have a
Loan-to-Value Ratio greater than one hundred twenty-five percent (125%).
(f) No payment under said Mortgage Loan is more
than thirty (30) days past due the payment due date set forth in the underlying
promissory note and deed of trust (or mortgage).
(g) Said Mortgage Loan has a FICO score of not
less than 640.
(h) The Collateral Value of the Warehouse
Borrowing Base attributable to said Mortgage Loan, when added to the Collateral
Value of the Warehouse Borrowing Base attributable to all other Eligible
Alternative Product Mortgage Loans included in the computation of the
Collateral Value of the Warehouse Borrowing Base, does not exceed ten percent
(10%) of the Aggregate Committed Credit Limit.
"Eligible Mortgage Loan" shall mean a Mortgage Loan with
respect to which each of the following statements shall be accurate and
complete (and the Company by including said Mortgage Loan in any computation of
the Collateral Value of the Warehouse Borrowing Base shall be deemed to so
represent and warrant to the Administrative Agent and the Lenders at and as of
the date of such computation):
(a) Said Mortgage Loan is a binding and valid
obligation of the Obligor thereon, in full force and effect and enforceable in
accordance with its terms.
(b) Said Mortgage Loan is genuine in all respects
as appearing on its face and as represented in the books and records of the
Company, and all information set forth therein is true and correct.
(c) Said Mortgage Loan is free of any default of
any party thereto (including the Company) (other than as permitted under
subparagraph (d) below), counterclaims, offsets and defenses and from any
rescission, cancellation or avoidance, and all right thereof, whether by
operation of law or otherwise.
(d) No payment under said Mortgage Loan is more
than sixty (60) days past due the payment due date set forth in the underlying
promissory note and deed of trust (or mortgage); provided, however, that in the
event any payment under said Mortgage Loan is more than thirty (30) days past
due the payment due date set forth in the underlying promissory note the
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<PAGE> 49
Collateral Value of said Mortgage Loan when added to the Collateral Value of
all other Mortgage Loans included in the Warehouse Borrowing Base which are
similarly delinquent does not exceed twenty percent (20%) of the Aggregate
Committed Credit Limit.
(e) Said Mortgage Loan contains the entire
agreement of the parties thereto with respect to the subject matter thereof,
has not been modified or amended in any respect and is free of concessions or
understandings with the Obligor thereon of any kind not expressed in writing
therein.
(f) Said Mortgage Loan is in all respects as
required by and in accordance with all applicable laws and regulations
governing the same, including, without limitation, the federal Consumer Credit
Protection Act and the regulations promulgated thereunder and all applicable
usury laws and restrictions, and all notices, disclosures and other statements
or information required by law or regulation to be given, and any other act
required by law or regulation to be performed, in connection with said Mortgage
Loan have been given and performed as required.
(g) All advance payments and other deposits on
said Mortgage Loan have been paid in cash, and no part of said sums has been
loaned, directly or indirectly, by the Company to the Obligor thereon and,
other than as disclosed to the Administrative Agent in writing, there have been
no prepayments on said Mortgage Loan.
(h) At all times said Mortgage Loan will be free
and clear of all Liens, except in favor of the Administrative Agent and the
Lenders.
(i) The Property covered by said Mortgage Loan is
insured against loss or damage by fire and all other hazards normally included
within standard extended coverage in accordance with the provisions of said
Mortgage Loan with the Company named as a loss payee thereon.
(j) The Property covered by said Mortgage Loan is
free and clear of all Liens except in favor of the Company subject only to (1)
the Lien of current real property taxes and assessments not yet due and
payable; (2) covenants, conditions and restrictions, rights of way, easements
and other matters of the public record, as of the date of recording, as are
acceptable to mortgage lending institutions generally and specifically referred
to in a lender's title insurance policy delivered to the originator of said
Mortgage Loan and (i) referred to or otherwise considered in the appraisal made
for the originator of said Mortgage Loan or (ii) which do not materially
adversely affect the appraised value of such Property as set forth in such
appraisal; (3) other matters to which like properties are commonly subject
which do not materially interfere with the benefits of the security intended to
be provided by said Mortgage Loan or the use, enjoyment, value or marketability
of the related Property; and (4) a prior first or second priority Lien to the
extent permitted pursuant to subparagraph (s) below.
(k) If said Mortgage Loan has been withdrawn from
the possession of the Custodian on terms and subject to conditions set forth in
the Security Agreement:
(1) If said Mortgage Loan was withdrawn by
the Company for purposes of correcting clerical or other non-
substantive documentation problems, the promissory note and other
documents relating to said Mortgage Loan were returned to the
Custodian within
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<PAGE> 50
ten (10) Business Days from the date of withdrawal and the Collateral
Value of said Mortgage Loan when added to the Collateral Value of all
other Mortgage Loans included in the Warehouse Borrowing Base which
have been similarly withdrawn does not exceed two percent (2%) of the
Aggregate Committed Credit Limit; and
(2) If said Mortgage Loan was shipped by the
Custodian pursuant to Paragraph 7(b)(1), 7(b)(2) or 7(b)(3) of the
Security Agreement, the full amount required to be paid on account
thereof (as set forth on the schedule attached to the related
transmittal letter) has been received into the Settlement Account (or
said Mortgage Loan has been returned to the Custodian) within the
required number of days (as set forth in the related transmittal
letter) from the date of shipment by the Custodian.
(l) The date of the underlying promissory note is
no earlier than ninety (90) days prior to the date said Mortgage Loan is first
included in the Warehouse Borrowing Base, unless said Mortgage Loan is an
Eligible Seasoned Mortgage Loan; provided, however, that if said Mortgage Loan
is an Eligible Seasoned Mortgage Loan, the Collateral Value of said Mortgage
Loan when added to the Collateral Value of all other Eligible Seasoned Mortgage
Loans included in the Warehouse Borrowing Base does not exceed fifty percent
(50%) of the Aggregate Committed Credit Limit.
(m) The improvements on the related Property
consist of a completed one-to-four family residence (and as to which there are
no commercial operations, other than in the nature of an in-home office,
conducted on such Property) or a unit in a condominium or planned unit
development.
(n) The Required Documents for said Mortgage Loan
have been delivered to the Custodian prior to the inclusion of said Mortgage
Loan in the Warehouse Borrowing Base (or, if such items have not been delivered
to the Custodian, the Custodian has received a Collateral Confirmation
Agreement, including a complete Mortgage Loan Schedule, relating to said
Mortgage Loan on or prior to the date said Mortgage Loan is first included in
the Warehouse Borrowing Base and the Required Documents are received by the
Custodian within seven (7) Business Days after said Mortgage Loan is first
included in the Warehouse Borrowing Base and the Collateral Value of said
Mortgage Loan when added to the Collateral Value of all other Mortgage Loans
for which the Custodian has not received the Required Documents does not exceed
forty percent (40%) of the Aggregate Committed Credit Limit; provided, however,
that if said Mortgage Loan is a Bulk Acquisition Mortgage Loan, the Mortgage
Loan Schedule accompanying the Collateral Confirmation Agreement initially
delivered to the Custodian with respect thereto need only include the Basic
Information for such Mortgage Loan until the third Business Day following the
date such Mortgage Loan is first included in the Warehouse Borrowing Base at
which date the balance of the information required to be included on the
Mortgage Loan Schedule shall have been supplied to the Custodian.
(o) If so requested by the Administrative Agent,
the Additional Required Documents for said Mortgage Loan have been delivered to
the Custodian.
(p) Said Mortgage Loan is not subject to any
servicing arrangement with any Person other than the Company or a subservicer
servicing said Mortgage Loan on behalf of the Company, nor are any servicing
rights relating to said Mortgage Loan subject to any Lien or negative pledge in
favor of any Person.
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<PAGE> 51
(q) Unless said Mortgage Loan is an Eligible
Alternative Product Mortgage Loan, said Mortgage Loan does not have a
Loan-to-Value Ratio greater than ninety percent (90%).
(r) Said Mortgage Loan has not been included in
the Warehouse Borrowing Base for more than three hundred sixty (360) days;
provided, however, that if said Mortgage Loan has been included in the
Warehouse Borrowing Base for more than one hundred eighty (180) days, the
Collateral Value of said Mortgage Loan when added to the Collateral Value of
all other Mortgage Loans included in the Warehouse Borrowing Base for more than
one hundred eighty (180) days does not exceed twenty percent (20%) of the
Aggregate Committed Credit Limit; and, provided further, that if said Mortgage
Loan is an Eligible Seasoned Mortgage Loan, said Mortgage Loan has not been
included in the Warehouse Borrowing Base for more than two hundred ten (210)
days and, if said Mortgage Loan has been included in the Warehouse Borrowing
Base for more than one hundred twenty (120) days, the Collateral Value of said
Mortgage Loan when added to the Collateral Value of all other Eligible Seasoned
Mortgage Loans included in the Warehouse Borrowing Base for more than one
hundred twenty (120) days does not exceed fifteen percent (15%) of the
Aggregate Committed Credit Limit.
(s) The promissory note evidencing said Mortgage
Loan is secured by a first, second or third priority Lien on the related
Property; provided, however, that if said Mortgage Loan is not an Eligible
Alternative Product Mortgage Loan and such promissory note is secured by a
third priority Lien on the related Property, the Collateral Value of said
Mortgage Loan when added to the Collateral Value of all other Mortgage Loans
(other than any Eligible Alternative Product Mortgage Loans) included in the
Warehouse Borrowing Base which are secured by third priority Liens does not
exceed five percent (5%) of the Aggregate Committed Credit Limit; and provided,
further, that if said Mortgage Loan is an Eligible Alternative Product Mortgage
Loan and such promissory note is secured by a third priority Lien on the
related Property, the Collateral Value of said Mortgage Loan when added to the
Collateral Value of all other Eligible Alternative Product Mortgage Loans
included in the Warehouse Borrowing Base which are secured by third priority
Liens does not exceed $5,000,000.00.
(t) The proceeds of said Mortgage Loan have been
fully disbursed and there is no obligation on the part of the Company to make
further advances thereunder. Any and all requirements as to completion of any
improvements and as to disbursements of any escrow funds therefor either have
been complied with or are not yet required to be complied with but will be
complied with as and when required. All costs, fees and expenses incurred in
making or closing or recording said Mortgage Loan were paid.
(u) Said Mortgage Loan is covered by a lender's
title insurance policy (issued in standard form by a title insurance company
authorized to transact business in the state where the related Property is
located) in an amount at least equal to the original principal balance of the
promissory note evidencing said Mortgage Loan insuring the mortgagee's interest
under said Mortgage Loan as the holder of a first, second or third Lien of
record on the related Property, as appropriate (subject only to such exceptions
as are generally acceptable to home equity mortgage lending institutions, and
such other exceptions to which similar properties are commonly subject and
which do not individually, or in the aggregate, materially and adversely affect
the benefits of the security intended to be provided by said Mortgage Loan).
(v) The Property relating to said Mortgage Loan
is undamaged by waste, fire, earthquake or earth movement, windstorm, flood,
tornado or other casualty so as to affect
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<PAGE> 52
adversely the value of such Property as security for said Mortgage Loan or the
use for which the premises were intended, such Property is in good repair and
no condemnation proceeding has been commenced against such Property.
(w) The Obligor on said Mortgage Loan has not
notified the Company, and the Company has no knowledge, of any relief requested
or allowed to such Obligor under the Soldiers' and Sailors' Civil Relief Act of
1940.
(x) Unless said Mortgage Loan is an Eligible
Alternative Product Mortgage Loan, the underwriting guidelines under which said
Mortgage Loan is originated are as set forth under Exhibit U hereto or have
otherwise been approved by the Majority Lenders.
In determining the eligibility of any Mortgage Loan any of the requirements for
eligibility (other than the requirements contained in subparagraphs (h), (i)
and (m) above) may be waived by the Administrative Agent; provided, however,
that any Mortgage Loan which is accepted by the Administrative Agent pursuant
to such a waiver (an "Eligible Waiver Mortgage Loan") shall cease to be an
Eligible Mortgage Loan upon notice of the retraction of such waiver given to
the Company by the Administrative Agent unless at the time of giving such
notice the deficiency which originally required such waiver has been cured;
and, provided further, that the Collateral Value of such Mortgage Loan when
added to the Collateral Value of all other Mortgage Loans included in the
Warehouse Borrowing Base as Eligible Mortgage Loans pursuant to a waiver
hereunder shall not exceed two percent (2%) of the Aggregate Committed Credit
Limit at any date.
"Eligible Seasoned Mortgage Loan" shall mean an Eligible
Mortgage Loan purchased or originated by the Company as to which the date of
the underlying promissory note is more than ninety but not more than three
hundred sixty (360) days prior to the date such Eligible Mortgage Loan was
first included in the calculation of the Collateral Value of the Warehouse
Borrowing Base.
"Eligible Servicing Receivable" shall mean a Servicing
Receivable with respect to which each of the following statements shall be
accurate and complete (and the Company by including such Servicing Receivable
in any computation of the Collateral Value of the Working Capital Borrowing
Base shall be deemed to so represent and warrant to the Administrative Agent
and the Lenders):
(a) The servicing contract under which such
Servicing Receivable arose is in full force and effect and is free of any
default of the Company and there does not exist any fact or circumstance that
would entitle the investor thereunder to terminate said servicing contract.
(b) No Person has a Lien or other interest or
claim on any right, title or interest of the Company under the servicing
contract under which such Servicing Receivable arose or on any right of the
Company to payment thereunder.
(c) Such Servicing Receivable arose in connection
with a servicing advance made by or a servicing fee owed to the Company,
whether on account of principal or interest, property taxes or property
insurance or otherwise, consistent with all terms and conditions of the
related servicing contract and is free of any counterclaim, right of appeal
or defense to payment.
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(d) The assignment by the Company of its right to
payment of such Servicing Receivable does not violate any Requirement of Law
or Contractual Obligation or require the giving of notice to or obtaining the
consent of any Person, including, without limitation, the investor party to
the related servicing contract.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as the same may from time to time be supplemented or amended.
"Eurodollar Business Day" shall mean a Business Day upon which
commercial banks in London, England are open for domestic and international
business.
"Eurodollar Loans" shall mean Tranche A Committed Loans and
Tranche B Loans at such time as they are made and/or being maintained at a rate
of interest based upon the Eurodollar Rate.
"Eurodollar Rate" shall mean, with respect to any Eurodollar
Loan for the Interest Period applicable to such Eurodollar Loan, the arithmetic
average as determined by the Administrative Agent of the rates at which
deposits in immediately available U.S. dollars in an amount equal to the amount
of such Eurodollar Loan having a maturity approximately equal to such Interest
Period are offered to four (4) reference banks to be selected by the
Administrative Agent in the London interbank market, at approximately 11:00
a.m. (London time) two Eurodollar Business Days prior to the first day of such
Interest Period.
"Eurodollar Reserve Percentage" shall mean with respect to an
Interest Period for a Eurodollar Loan, the maximum aggregate reserve
requirement (including all basic, supplemental, marginal and other reserves and
taking into account any transitional adjustments) which is imposed under
Regulation D on eurocurrency liabilities.
"Event of Default" shall have the meaning given such term in
Paragraph 13 above.
"Existing Credit Agreement" shall have the meaning given such
term in Recital A above.
"Facility Fee Percentage" shall mean that percentage
determined based upon the Leverage Ratio as reported in the most recent
financial statements required to be delivered by the Parent prior to the date
of calculation of the monthly facility fee payable pursuant to Paragraph
6(j)(1) above (with any resulting change in the Facility Fee Percentage being
effective as of the date such financial statements are required to be delivered
pursuant to the terms of this Agreement) in accordance with the following
schedule:
<TABLE>
<CAPTION>
Leverage Ratio Facility Fee Percentage
-------------- -----------------------
<S> <C>
Less than or equal to 1.75:1.00 0.20%
Greater than 1.75:1.00 but less 0.25%
than or equal to 3.50:1.00
Greater than 3.50:1.00 0.30%
</TABLE>
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<PAGE> 54
"Fair Market Value" shall mean at any date with respect to any
Eligible Mortgage Loan, the fair market value of such Eligible Mortgage Loan on
a whole-loan basis as of such date as determined by the Administrative Agent in
its reasonable business judgment in conformity with standard industry practice
for valuing similar Mortgage Loans.
"Funding Account" shall mean Account No. 049918969 maintained
in the Company's name alone with Sanwa Bank California.
"GAAP" shall mean generally accepted accounting principles in
the United States of America in effect from time to time.
"Governmental Authority" shall mean any nation or government,
any state or other political subdivision thereof, or any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Guaranty" shall have the meaning given such term in Paragraph
8(b) above.
"Increasing Lender" shall have the meaning given such term in
Paragraph 15(f) above.
"Indebtedness" of any Person shall mean all items of
indebtedness which, in accordance with GAAP and practices, would be included in
determining liabilities as shown on the liability side of a statement of
condition of such Person as of the date as of which indebtedness is to be
determined, including, without limitation, all obligations for money borrowed
and Capitalized Lease Obligations, and shall also include all indebtedness and
liabilities of others assumed or guaranteed by such Person or in respect of
which such Person is secondarily or contingently liable (other than by
endorsement of instruments in the course of collection) whether by reason of
any agreement to acquire such indebtedness or to supply or advance sums or
otherwise.
"Initial Funding Date" shall mean the date on which the
initial Loan or Loans requested by the Company hereunder are funded by the
Lenders pursuant to the terms hereof.
"Intercreditor And Joint Shipment Agreement" shall mean an
agreement in the form of that attached hereto as Exhibit Q to be executed and
delivered by the Administrative Agent, the Custodian and any other lender
providing the Company with a credit facility secured by Mortgage Loans owned by
the Company.
"Interest Period" shall mean, with respect to any Eurodollar
Loan, the period commencing on the date advanced and ending one, two or three
months thereafter, as designated in the related Loan And/Or Interest Rate
Election Request; provided, however, that (a) any Interest Period which would
otherwise end on a day which is not a Eurodollar Business Day shall be extended
to the next succeeding Eurodollar Business Day unless by such extension it
would fall in another calendar month, in which case such Interest Period shall
end on the immediately preceding Eurodollar Business Day; (b) any Interest
Period applicable to a Eurodollar Loan which begins on a day for which there is
no numerically corresponding day in the calendar month during which such
Interest Period is to end shall, subject to the provisions of clause (a) above,
end on the last day of such calendar month; and (c) no such Interest Period
shall extend beyond the regularly scheduled Maturity Date.
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<PAGE> 55
"Interim Date" shall mean December 31, 1997.
"L/C Available Amount" shall mean at any date the dollar
amount available for drawing under the Letter of Credit at such date.
"L/C Documents" shall have the meaning given such term in
Paragraph 2(a) above.
"L/C Drawing" shall have the meaning given such term in
Paragraph 2(c) above.
"L/C Fee Percentage" shall mean that percentage determined
based upon the Leverage Ratio as reported in the most recent financial
statements required to be delivered by the Parent prior to the date of
calculation of the monthly letter of credit facility fee payable pursuant to
Paragraph 6(j)(4) above (with any resulting change in the L/C Fee Percentage
being effective as of the date such financial statements are required to be
delivered pursuant to the terms of this Agreement) in accordance with the
following schedule:
<TABLE>
<CAPTION>
Leverage Ratio L/C Fee Percentage
-------------- ------------------
<S> <C>
Less than or equal to 1.75:1.00 0.80%
Greater than 1.75:1.00 but less 0.925%
than or equal to 3.50:1.00
Greater than 3.50:1.00 1.125%
</TABLE>
"Letter of Credit" shall have the meaning given such term in
Paragraph 2(a) above.
"Letter of Credit Application" shall mean the standard form
written application for the issuance, amendment or extension of a letter of
credit utilized by NationsBank in connection with the issuance or extension of
letters of credit in the nature of the Letter of Credit.
"Lenders" shall have the meaning given such term in the
introductory paragraph of this Agreement.
"Leverage Ratio" shall mean at any date the ratio at the last
day of the immediately preceding calendar month of Average Total Liabilities to
Adjusted Net Worth.
"Lien" shall mean any security interest, mortgage, pledge,
lien, claim on property, charge or encumbrance (including any conditional sale
or other title retention agreement), any lease in the nature thereof, and the
filing of or agreement to give any financing statement under the Uniform
Commercial Code of any jurisdiction.
"Loan Documents" shall mean this Agreement, the Security
Agreement, the Notes, the Guaranty, the Letter of Credit, the Letter of Credit
Application, the L/C Documents and each other document, instrument or agreement
executed by the Company in connection herewith or therewith, as any of the same
may be amended, extended or replaced from time to time.
"Loan And/Or Interest Rate Election Request" shall mean a
written request in the form of Exhibit R attached hereto.
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<PAGE> 56
"Loans" shall mean, collectively and severally, Tranche A
Committed Loans, Tranche B Loans, Tranche C Loans and Bid Loans.
"Loan-to-Value Ratio" shall mean, with respect to any Mortgage
Loan, the ratio of the principal amount of such Mortgage Loan outstanding at
the origination thereof (plus, in the case of a Mortgage Loan secured by a
second or third priority deed of trust (or mortgage), the principal amount
outstanding under the first and second (if applicable) Mortgage Loan affecting
the related Property) divided by the lesser of (a) the most recent selling
price of the related Property, and (b) the appraised value of the related
Property.
"Majority Lenders" shall mean: (a) prior to the occurrence
and continuance of an Event of Default, the Lenders holding not less than
sixty-six and two-thirds percent (66.667%) of the Percentage Shares, and (b)
following the occurrence and during the continuance of an Event of Default, the
Lenders holding not less than sixty-six and two-thirds percent (66.667%) of the
Post-Default Percentage Shares.
"Maturity Date" shall mean the earlier of: (a) April 8, 1999,
as such date may be extended from time to time in writing by one hundred
percent (100%) of the Lenders, in their sole discretion, and (b) the date the
Lenders terminate their obligation to make further Loans hereunder pursuant to
Paragraph 13 above.
"Maximum Aggregate Credit Limit" shall mean $400,000,000.00 as
such amount may be increased or decreased from time to time by written
agreement of the Administrative Agent, the Company and one hundred percent
(100%) of the Lenders.
"Maximum Commitment" shall mean, with respect to any Lender on
any date, the dollar amount specified as such Lender's "Maximum Commitment" on
the current Commitment Schedule as such amount may be increased by written
agreement of the Company and any Lender (subject to the limitation on the
Maximum Aggregate Credit Limit), or decreased by written agreement of the
Administrative Agent, the Company, and one hundred percent (100%) of the
Lenders, with each Lender's initial Maximum Commitment set forth on Schedule
III hereto.
"Mortgage-Backed Security" shall mean any security (including,
without limitation, a participation certificate) that represents an interest in
a pool of mortgages, deeds of trusts or other instruments creating a Lien on
Property which is improved by a completed single family dwelling (one-to-four
family units) or a unit in a condominium or planned unit development.
"Mortgage Loan" shall mean a residential real estate secured
loan (including 1-4 family unit, condominium and planned unit development),
including, without limitation: (a) a promissory note and related deed of trust
(or mortgage) and/or security agreement; (b) all guaranties and insurance
policies, including, without limitation, all mortgage and title insurance
policies and all fire and extended coverage insurance policies and rights of
the Company to return premiums or payments with respect thereto; and (c) all
right, title and interest of the Company in the Property covered by said deed
of trust (or mortgage).
"Mortgage Loan Schedule" shall have the meaning given such
term in Paragraph 5 of the Security Agreement.
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<PAGE> 57
"Multiemployer Plan" as to any Person shall mean a Plan of
such Person which is a multiemployer plan as defined in Section 4001(a)(3) of
ERISA.
"Non-Affiliate Seller" shall have the meaning given such term
in Paragraph 7(b)(4) above.
"Non-Warehouse Debt Ratio" shall mean, with respect to the
Parent and its Subsidiaries on a consolidated basis, on any date the ratio at
the last day of the immediately preceding calendar quarter of consolidated
funded Indebtedness (including Subordinated Debt), minus one hundred percent
(100%) of the value, according to the Parent's balance sheet at such date, of
all Mortgage Loans held for sale, minus eighty percent (80%) of the dollar
amount of all accounts receivable shown on the Parent's balance sheet at such
date (but excluding all accounts receivable as to which any Affiliate or any
Subsidiary of the Parent is the account party), to consolidated net worth (as
defined under GAAP).
"Notes" shall mean, collectively and severally, the Tranche A
Committed Loans Notes, the Tranche B Notes, the Tranche C Note and the Bid
Loans Notes.
"Obligations" shall mean any and all debts, obligations and
liabilities of the Company to the Administrative Agent and the Lenders (whether
now existing or hereafter arising, voluntary or involuntary, whether or not
jointly owed with others, direct or indirect, absolute or contingent,
liquidated or unliquidated, and whether or not from time to time decreased or
extinguished and later increased, created or incurred), arising out of or
related to the Loan Documents.
"Obligor" shall mean the Person or Persons obligated to pay
the Indebtedness which is the subject of a Mortgage Loan.
"Parent" shall have the meaning given such term in the
introductory paragraph of this Agreement.
"Percentage Share" shall mean at any date for any Lender that
percentage which such Lender's Maximum Commitment bears to the Aggregate
Committed Credit Limit, as set forth on the most recent Commitment Schedule,
with the initial Percentage Shares of the Lenders being set forth on Schedule
IV attached hereto.
"Permitted Guaranties" shall mean those guaranties executed by
the Company and the Parent covering Indebtedness of Affiliates which
Indebtedness is included in the calculation of Average Total Liabilities for
purposes of computing the Leverage Ratio pursuant to Paragraph 12(i) above.
"Permitted Secured Debt" shall mean that Indebtedness
described as "Permitted Secured Debt" on Exhibit S attached hereto.
"Person" shall mean any corporation, natural person, firm,
joint venture, partnership, limited liability company, trust, unincorporated
organization or Governmental Authority.
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"Plan" shall mean, as to any Person, any pension plan that is
covered by Title IV of ERISA and in respect of which such Person or a Commonly
Controlled Entity of such Person is an "employer" as defined in Section 3(5) of
ERISA.
"Post-Default Percentage Share" shall mean for any Lender that
percentage which (a) the principal dollar amount of Loans outstanding held by
such Lender plus such Lender's Percentage Share of unrepaid L/C Drawings plus
such Lender's Percentage Share of the contingent liability with respect to the
L/C Available Amount, bears to (b) the aggregate principal dollar amount of all
Loans outstanding and unrepaid L/C Drawings plus the L/C Available Amount.
"Potential Default" shall mean an event which but for the
lapse of time or the giving of notice, or both, would constitute an Event of
Default.
"Proceeds" shall mean whatever is receivable or received when
Collateral or proceeds are sold, collected, exchanged or otherwise disposed of,
whether such disposition is voluntary or involuntary, and includes, without
limitation, all rights to payment, including return premiums, with respect to
any insurance relating thereto.
"Property" shall mean the real property, including the
improvements thereon, and the personal property (tangible and intangible) which
are encumbered pursuant to a Mortgage Loan.
"Reaffirmation of Guaranty" shall have the meaning given such
term in Paragraph 8(b) above.
"Reaffirmation of Security Agreement" shall have the meaning
given such term in Paragraph 8(a) above.
"Regulation D" shall mean Regulation D of the Board of
Governors of the Federal Reserve System from time to time in effect and shall
include any successor or other regulation of said Board of Governors relating
to reserve requirements applicable to member banks of the Federal Reserve
System.
"Regulation U" shall mean Regulation U of the Board of
Governors of the Federal Reserve System (12 C.F.R. Section 221), as the same
may from time to time be amended, supplemented or superseded.
"Reportable Event" shall mean a reportable event as defined in
Title IV of ERISA, except actions of general applicability by the Secretary of
Labor under Section 110 of ERISA.
"Required Documents" shall mean those documents described on
Exhibit T attached hereto.
"Requirements of Law" shall mean, as to any Person, the
Articles or Certificate of Incorporation and ByLaws or other organizational or
governing documents of such Person, and any law, treaty, rule or regulation, or
a final and binding determination of an arbitrator or a determination of a
court or other Governmental Authority, in each case applicable to or binding
upon such Person or any of its property or to which such Person or any of its
property is subject.
"Responsible Financial Officer" shall mean as to any Person
the chief financial officer, senior vice president-finance, vice
president-finance or assistant vice president-finance of such Person, with any
Person executing and delivering any certificate hereunder on behalf of the
Company or the Parent which is required to be executed and delivered by a
"Responsible Financial Officer" being acknowledged by the Company and the
Parent as being a Person actively involved
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<PAGE> 59
with and knowledgeable with respect to all financial matters affecting the
Company and the Parent, as applicable.
"Security Agreement" shall have the meaning given such term in
Paragraph 8(a) above.
"Servicing Receivable" shall mean the right of the Company to
reimbursement for an advance made by or a fee owed to the Company in the
ordinary course of the Company's business in its capacity as servicer of
Mortgage Loans owned by a Person that is not an Affiliate of the Company under
(a) a servicing agreement covering a pool of Mortgage Loans originated or
purchased by the Company and securing or otherwise supporting a Mortgage-Backed
Security, or (b) a servicing agreement with a private investor provided that
the Administrative Agent has reviewed and approved the form of such servicing
agreement prior to inclusion of the related Servicing Receivable in the Working
Capital Borrowing Base.
"Servicing Rights" shall mean all now existing and hereafter
arising rights of the Company or any Subsidiary of the Parent to service,
collect and administer Mortgage Loans owned by a Person that is not an
Affiliate of the Company under servicing agreements between such Person and the
Company or such Subsidiary.
"Settlement Account" shall mean Account No. 19070 maintained
in the Company's name alone with the Custodian at its office listed on the
signature pages of the Security Agreement.
"Single Employer Plan" shall mean as to any Person any Plan of
such Person which is not a Multiemployer Plan.
"Statement Date" shall mean June 30, 1997.
"Subordinated Debt" shall mean Indebtedness expressly
subordinated to the Obligations in the manner and to the extent required by the
Lenders pursuant to written subordination agreements satisfactory in form and
substance to the Lenders.
"Subsidiary" shall mean, with respect to any Person, any
corporation more than fifty percent (50%) of the stock of which having by the
terms thereof ordinary voting power to elect the board of directors, managers
or trustees of such corporation shall, at the time as of which any
determination is being made, be owned by such Person, either directly or
through Subsidiaries of such Person (irrespective of whether or not at such
time stock of any other class or classes of such corporation shall have or
might have voting power by reason of the happening of any contingency);
provided, however, that in no event shall the term "Subsidiary" as it relates
to the Company include any special purpose entity formed solely for the purpose
of issuing Mortgage-Backed Securities supported by Mortgage Loans originated or
acquired by the Company and transferred to such special purpose entity in
support of such Mortgage-Backed Securities.
"Supplemental Cash Collateral" shall mean cash delivered to
and held by NationsBank for the pro rata, pari passu benefit of the Lenders as
additional collateral security for the Obligations and in which NationsBank for
the pro rata pari passu benefit of the Lenders has been granted and has a first
priority, perfected security interest.
"Take-Out Commitment" with respect to any Mortgage Loan shall
mean a bona fide current, unused and unexpired forward sale whole loan
commitment or forward sale Mortgage-Backed Security commitment issued by an
Approved Investor or Approved Alternative Product Investor in favor of and held
by the Company, and any related delivery commitments, if applicable, under
which said Approved Investor or Approved Alternative Product Investor agrees,
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<PAGE> 60
prior to the expiration thereof, upon the satisfaction of certain terms and
conditions therein, to provide for the purchase of such Mortgage Loan or
related Mortgage-Backed Security or to purchase such Mortgage Loan or related
Mortgage-Backed Security at a specified price, which commitment is not subject
to any term or condition which is not customary in commitments of like nature
or which, in the reasonably anticipated course of events, cannot be fully
complied with prior to the expiration thereof.
"Tranche A Bid Loan" shall mean a Bid Loan designated as such
in the Bid Loan Request therefor.
"Tranche A Committed Loan" shall have the meaning given such
term in Paragraph 1(a) above.
"Tranche A Loans" shall mean, collectively, all Tranche A Bid
Loans and all Tranche A Committed Loans.
"Tranche A Committed Loans Note" shall have the meaning given
such term in Paragraph 7(c) above.
"Tranche B Credit Limit" shall mean twenty percent (20%) of
the Aggregate Committed Credit Limit, as such amount may be increased or
decreased by written agreement of the Administrative Agent, the Company and one
hundred percent (100%) of the Lenders.
"Tranche B Loan" shall have the meaning given such term in
Paragraph 3(a) above.
"Tranche B Note" shall have the meaning given such term in
Paragraph 7(c) above.
"Tranche C Credit Limit" shall mean ten percent (10%) of the
Aggregate Committed Credit Limit, as such amount may be increased or decreased
by written agreement of the Administrative Agent, the Company and one hundred
percent (100%) of the Lenders.
"Tranche C Loan" shall have the meaning given such term in
Paragraph 4(a) above.
"Tranche C Note" shall have the meaning given such term in
Paragraph 7(c) above.
"Transferee Lender" shall have the meaning given such term in
Paragraph 15(b) above.
"Warehouse Borrowing Base" shall mean at any date all Eligible
Mortgage Loans in which the Administrative Agent holds for the benefit of the
Lenders a first priority perfected security interest at such date.
"Warehouse Borrowing Base Certificate" shall mean a
certificate in form and detail acceptable to the Administrative Agent.
"Working Capital Borrowing Base" shall mean at any date all
Eligible Servicing Receivables in which the Administrative Agent holds for the
benefit of the Lenders a first priority perfected security interest at such
date.
"Working Capital Borrowing Base Certificate" shall mean a
certificate in form acceptable to the Administrative Agent setting forth in
detail satisfactory to the Administrative Agent the Collateral Value of the
Working Capital Borrowing Base as of the date of such certificate.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the day and year first above written.
AAMES CAPITAL CORPORATION,
a California corporation
By /s/ Mark E. Elbaum
------------------
Name Mark E. Elbaum
Title Senior Vice President/Finance
AAMES FINANCIAL CORPORATION,
a Delaware corporation
By /s/ Mark E. Elbaum
------------------
Name Mark E. Elbaum
Title Senior Vice President/Finance
NATIONSBANK OF TEXAS, N.A., as the
Administrative Agent and a Lender
By /s/ Carolyn M. Warren
---------------------
Name Carolyn M. Warren
Title Senior Vice President
GUARANTY FEDERAL BANK FSB,
as a Lender
By /s/ Sean A. Tobias
------------------
Name Sean A. Tobias
Title Vice President
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COMERICA BANK-CALIFORNIA, as a Lender
By /s/ David R. Chirchill
----------------------
Name David R. Chirchill
Title Corporate Banking Officer
THE BANK OF NEW YORK, as a Lender
By /s/ Robert W. Pierson
---------------------
Name Robert W. Pierson
Title Vice President
THE FIRST NATIONAL BANK OF CHICAGO, as a
Lender
By /s/ Mary T. Sun-Soley
---------------------
Name Mary T. Sun-Soley
Title Vice President
SANWA BANK CALIFORNIA, as a Lender
By /s/ Judith M. Bresnen
---------------------
Name Judith M. Bresnen
Title Vice President
U.S. BANK NATIONAL ASSOCIATION, as a
Lender
By /s/ Edwin D. Jenkins
--------------------
Name Edwin D. Jenkins
Title Vice President
62
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FIRST UNION NATIONAL BANK, as a Lender
By /s/ C. L. Simms
---------------
Name C. L. Simms
Title Vice President
NATEXIS BANQUE, as a Lender
By /s/ Stephen B. Shea
-------------------
Name Stephen B. Shea
Title Vice President
THE SUMITOMO BANK, LIMITED, as a Lender
By /s/ Goro Hirai
-------------
Name Goro Hirai
Title Joint General Manager
63
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LIST OF SCHEDULES AND EXHIBITS
Schedule I Schedule of Addresses for Notice Purposes
Schedule II Initial Schedule of Approved Investors
Schedule III Initial Schedule of Approved Alternative Product Investors
Schedule IV Initial Commitment Schedule
Exhibit A-1 Form of Tranche A Committed Loans Note
Exhibit A-2 Form of Tranche B Note
Exhibit A-3 Form of Tranche C Note
Exhibit A-4 Form of Bid Loans Note
Exhibit B Form of Reaffirmation of Security Agreement
Exhibit C Form of Reaffirmation of Guaranty
Exhibit D Form of Legal Opinion of Counsel for the Company and
the Parent
Exhibit E Form of Officer's Certificate
Exhibit F Litigation Schedule
Exhibit G Schedule of Subsidiaries
Exhibit H Form of Covenant Compliance Certificate
Exhibit I Schedule of Additional Reports
Exhibit J Form of Additional Lender Agreement
Exhibit K Schedule of Additional Required Documents
Exhibit L Form of Assignment Agreement
Exhibit M Form of Bid Loan Confirmation
Exhibit N Form of Bid Loan Offer
Exhibit O Form of Bid Loan Request
Exhibit P Form of Collateral Confirmation Agreement
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Exhibit Q Form of Intercreditor and Joint Shipment Agreement
Exhibit R Form of Loan And/Or Interest Rate Election Request
Exhibit S Schedule of Permitted Secured Debt
Exhibit T Schedule of Required Documents
Exhibit U Underwriting Guidelines for Eligible Mortgage Loans
Exhibit V Underwriting Guidelines for Eligible Alternative
Product Mortgage Loans
65
