<PAGE> 1
Securities and Exchange Commission
Washington, D.C. 20549
Form 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
for the Quarterly Period ended July 31, 1996
or
[ ] Transition Report Under Section 13 or 15(d) of
the Securities Exchange Act
for the Transition Period From to
------ ------
Commission File Number 333-4837
MCA FINANCIAL CORP.
(Exact name of Registrant
as specified in its charter)
MICHIGAN 38-3014001
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
23999 Northwestern Hwy., Southfield, MI 48075
(Address of principal executive offices)
(810) 358-5555
(Registrant's Telephone Number, including area code)
N/A
(Former Name, Address and Fiscal Year, if changed from last report)
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
YES XX NO
----- ----
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date:
As of July 31, 1996, there were outstanding 500,150 shares of the issuer's
common stock (including shares subject to forfeiture).
<PAGE> 2
MCA FINANCIAL CORP.
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
ASSETS
July 31
1996 January 31
(Unaudited) 1996
----------- -------------
<S> <C> <C>
Cash $ 2,854,664 $ 2,730,408
Land contracts held for resale 9,611,068 11,484,877
Mortgages held for resale 45,554,325 63,306,372
Accounts receivable 7,148,238 9,722,527
Accounts receivable-related parties 8,237,470 8,256,090
Purchased servicing rights, net 34,239,124 27,293,358
Investments 2,492,816 2,492,816
Syndication participations 59,278 67,903
Real estate held for resale 401,023 392,013
Furniture and equipment, net 5,196,365 4,856,330
Deferred charges and other assets 5,007,728 4,587,947
--------------- --------------
$ 120,802,099 $ 135,190,641
=============== ==============
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
LIABILITIES
Notes payable $ 61,508,832 $ 86,597,703
Subordinated debentures 11,647,000 9,174,000
Subordinated notes payable 7,829,529 -
Accounts payable 25,638,182 25,206,687
Accounts payable-related parties 1,961,397 1,693,311
Accrued interest and other expenses 1,425,234 2,058,080
Deferred federal income tax 300,000 300,000
--------------- --------------
110,310,174 125,029,781
--------------- --------------
REDEEMABLE COMMON STOCK 285,567 -
--------------- --------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock
Authorized 3,750,000 shares
No par, stated value $.01 each.
Issued and outstanding, 448,617 shares at
January 31, 1996 and 500,150 shares at
July 31, 1996. 5,001 4,486
Preferred stock (Series A)
Authorized 500,000 shares, $10 stated value.
Issued and outstanding 203,022 shares at
January 31, 1996 and July 31, 1996. 2,030,220 2,030,220
Preferred stock (Series B)
Authorized 750,000 shares, $10 stated value.
Issued and outstanding 336,619 shares at January 31,
1996 and July 31, 1996. 3,366,190 3,366,190
Additional paid-in-capital 3,662,160 3,457,251
Retained earnings 1,142,787 1,302,713
--------------- --------------
10,206,358 10,160,860
--------------- --------------
$ 120,802,099 $ 135,190,641
=============== ==============
</TABLE>
See notes to consolidated financial statements
<PAGE> 3
MCA FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Three Months Six Months Six Months
Ended July 31, Ended July 31, Ended July 31, Ended July 31,
1996 1995 1996 1995
------------- ------------ ------------ -------------
<S> <C> <C> <C> <C>
REVENUES
Gain on sale of land contracts $ 1,044,212 $ 475,636 $ 1,644,316 $ 1,198,842
Gain on sale of real estate 494,797 128,523 846,498 658,828
Gain on sale of real estate-related parties 2,295,779 2,895,801 3,985,779 3,146,440
Gain on bulk sales of servicing rights 1,377,831 1,380,909 3,293,317 2,059,722
Mortgage origination fees 5,495,291 3,752,028 8,707,475 5,876,365
Servicing fees 2,177,996 1,702,181 3,878,915 3,092,027
Interest income 2,253,588 1,423,597 3,914,993 2,252,254
Other income (118,553) 189,203 167,983 414,296
------------ ------------ ------------ -------------
Total revenues 15,020,941 11,947,878 26,439,276 18,698,774
------------ ------------ ------------ -------------
EXPENSES
Payroll 3,798,286 2,896,068 7,525,844 5,624,466
Interest 2,817,347 1,913,384 5,096,157 3,320,637
Commissions 2,104,602 1,458,451 3,771,951 2,351,130
Professional services 517,736 433,884 933,029 725,196
Depreciation 153,432 128,813 303,523 247,572
Amortization 1,178,787 712,817 2,304,496 1,167,731
General and administrative 3,352,324 2,755,440 6,391,373 4,852,206
------------ ------------ ------------ -------------
Total expenses 13,922,514 10,298,857 26,326,373 18,288,938
------------ ------------ ------------ -------------
INCOME <LOSS> BEFORE
FEDERAL INCOME
TAXES 1,098,427 1,649,021 112,903 409,836
Provision (credit) for federal
income taxes 330,000 541,000 30,000 139,000
------------ ------------ ------------ -------------
NET INCOME <LOSS> $ 768,427 $ 1,108,021 $ 82,903 $ 270,836
============ ============ ============ =============
Earning <loss> per share $ 1.58 $ 2.49 $ .18 $ .62
======== ======== ======== =========
Weighted average number of
shares outstanding 485,146 444,292 462,776 434,446
============ ============ ============ =============
</TABLE>
See notes to consolidated financial statements
<PAGE> 4
MCA FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF CHANGES IN COMPONENTS OF STOCKHOLDER'S EQUITY
(Unaudited)
Six Months Ended July 31, 1996 and 1995
<TABLE>
<CAPTION>
COMMON PREFERRED STOCK PREFERRED STOCK ADDITIONAL RETAINED
STOCK SERIES A SERIES B PAID-IN CAPITAL EARNINGS TOTAL
-------- --------------- --------------- --------------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Balance, January 31, 1995 $ 4,049 $ 2,030,220 $ 3,366,190 $ 2,717,030 $ 1,172,823 $ 9,290,312
Net Income - - - - 270,836 270,836
Issuance of Common Stock 394 - - 731,237 - 731,631
Preferred Stock Dividends - - - - (242,802) (242,802)
-------- ------------- ----------- ------------ ----------- ------------
Balance, July 31, 1995 $ 4,443 $ 2,030,220 $ 3,366,190 $ 3,448,267 $ 1,200,857 $ 10,049,977
======== ============= =========== ============ =========== ============
Balance, January 31, 1996 $ 4,486 $ 2,030,220 $ 3,366,190 $ 3,457,251 $ 1,302,713 $ 10,160,860
Net Income - - - - 82,903 82,903
Issuance of Common Stock 515 - - 204,909 - 205,424
Preferred Stock Dividends - - - - (242,829) (242,829)
-------- ------------- ----------- ------------ ----------- ------------
Balance July 31, 1996 $ 5,001 $ 2,030,220 $ 3,366,190 $ 3,662,160 $ 1,142,787 $ 10,206,358
======== ============= =========== ============ =========== ============
</TABLE>
See notes to consolidated financial statements
<PAGE> 5
MCA FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Six Months
Ended July 31 Ended July 31
1996 1995
-------------- ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income (loss) $ 82,903 $ 270,836
Adjustments to reconcile net income (loss) to
net cash used in operating activities:
Depreciation and amortization 2,608,019 1,415,303
Stock award compensation - 131,631
(Increase) decrease in land contracts held for resale 1,873,809 (965,737)
(Increase) decrease in mortgages held for resale 17,752,047 (31,093,018)
(Increase) decrease in accounts receivable 2,779,413 4,729,943
Increase in accounts receivable-related parties 18,620 (308,036)
Increase in deferred charges and other assets (650,762) (1,454,434)
Increase (decrease) in accounts payable 431,495 (4,174,309)
Increase (decrease) in accounts payable-related parties 268,086 (162,556)
Decrease in accrued expenses (632,846) (72,553)
Increase in deferred taxes - -
------------- --------------
Net cash provided by (used in) operating activities 24,530,784 (31,682,930)
------------- --------------
CASH FLOWS USED IN INVESTING
ACTIVITIES:
Proceeds from sales of mortgage servicing rights 10,602,050 4,319,152
Investment in purchased servicing rights (19,335,464) (12,893,504)
Capital expenditures (643,558) (329,292)
Real estate acquisitions (9,010) -
Proceeds from sale of real estate - (1,129,951)
Decrease in partnership investments - 51,977
Decrease in investments in syndications 8,625 -
------------- --------------
Net cash used in investing activities (9,377,357) (9,981,618)
------------- --------------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds from notes payable 449,476,350 214,397,287
Payments on notes payable (474,565,221) (176,775,365)
Proceeds from subordinated notes payable 7,829,529 -
Proceeds from subordinated debentures 2,473,000 2,617,000
Dividends on preferred stock (242,829) (242,802)
------------- --------------
Net cash provided by (used in) financing activities (15,029,171) 39,996,120
------------- --------------
Net increase (decrease) in cash 124,256 (1,668,428)
Cash at beginning of period 2,730,408 2,931,234
------------- --------------
Cash at end of period $ 2,854,664 $ 1,262,806
============= ==============
</TABLE>
See notes to consolidated financial statements
<PAGE> 6
MCA FINANCIAL CORP.
Notes to Consolidated Financial Statements
NOTE 1 - BASIS OF PRESENTATION
The consolidated balance sheet as of July 31, 1996 and the related consolidated
statements of operations, changes in components of stockholders' equity and
cash flows for the three and six months ended July 31, 1996 and 1995 are
unaudited. In the opinion of management, all adjustments necessary for a fair
presentation of such financial statements have been included. Such adjustments
consisted only of normal recurring items. Interim results are not necessarily
indicative of results for a full year.
The financial statements as of July 31, 1996 and for the three and six months
then ended should be read in conjunction with the financial statements and
notes thereto included in the Company's Annual Report on Form 10-K for the year
ended January 31, 1996.
The accounting policies followed by the Company with respect to the unaudited
interim financial statements are consistent with those stated in the 1996 MCA
Financial Corp. Annual Report on Form 10-K.
<PAGE> 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
FINANCIAL CONDITION
The primary financing needs for the Company's mortgage banking activities are
for loan funding activities and the accumulation of mortgage servicing rights.
Loan funding activities are primarily financed through the use of mortgage
warehouse lines of credit with commercial banks. The Company also provides
funding for loans by using a technique known as "table funding", which is
common in the mortgage banking industry. In this case, funds are advanced
directly to the title company for closing from a third party source of funds,
typically another mortgage bank or a financial institution. This technique
avoids the use of the Company's warehouse lines of credit, but proves less
profitable as a result of fees charged by the third party provider of funds.
For the past year, the Company financed approximately 95% of its mortgage
originations using its warehouse lines of credit and approximately 5% with
table funding sources.
The Company currently has a $25 million warehousing line of credit, through MCA
Mortgage, with PNC Mortgage Bank, N.A. This revolving warehousing line of
credit provides financing for funding and originating residential mortgage
loans. Interest on bank borrowings are based on the bank's prime rate.
Mortgage loans held for sale are pledged as collateral. While this line of
credit expired on July 1, 1996, the Company is currently in the process of
renewing this agreement and continues to operate under the terms of the expired
agreement. The Company believes the agreement will be renewed with the terms
remaining materially unchanged. The Company also has a $10 million warehousing
line of credit with Paine Webber Real Estate Securities, Inc. ("Paine Webber").
Interest on these borrowings are based on LIBOR plus 1.5% This facility is
scheduled to expire on November 1, 1996. At July 31, 1996 a total of $28.0
million was outstanding under both of these facilities.
On July 18, 1996 the Company executed a subordinated term loan for $15 million
with the Board of Trustees of the Policemen and Firemen Retirement System of
the City of Detroit ("the Fund"). Under this agreement, up to $5 million is
available for qualifying working capital expenditures related to non-conforming
lending. The balance of the loan is to be collateralized with qualifying
non-conforming loans. In connection with the agreement the Company issued
30,009 shares of redeemable common stock to the Fund, which the Fund has the
option to cause the Company to repurchase on August 1, 2006. Interest only,
calculated at a rate of 10% on the outstanding principal balance, is payable on
a quarterly basis beginning October 1, 1996. Principal payments commence July
1, 2001 and are payable on a quarterly basis thereafter until the agreement
expires on June 30, 2006. At July 31, 1996 $7.8 million was outstanding under
the facility.
The Company also utilizes mortgage loan repurchase agreements with Paine Webber
pursuant to which Paine Webber purchases mortgage loans until such time as the
loans are pooled for resale to an end investor at which time the Company
repurchases such loans. Such agreements provide for interest payments based on
the federal funds rate. These agreements can be terminated on demand.
The Company retains servicing rights on a portion of its loan originations in
order to provide a steady stream of servicing revenues and cash flow in future
years and as a hedge against inflation and rising interest rates. To help
facilitate this strategy, the Company utilizes three funding sources: proceeds
from a $4.9 million offering of debentures (the "1992 Debentures") that was
completed in July 1993, a bank credit facility, which was first made available
to the Company in April 1993 and proceeds from a $10 million best-efforts
offering of debentures (the "1994 Debentures") which commenced in December 1994
and is continuing. As of July 31, 1996 the Company had sold $6,726,000 of
these 1994 Debentures. The 1992 Debentures mature on March 15, 1997 and the
Company expects to sell a portion of the related collateral and use proceeds
from the 1996 Debentures (defined below) to meet this obligation. Each of the
1992 Debentures and the 1994 Debentures, as well as the credit facility, are
collateralized by certain of the Company's servicing rights and rights to
servicing income. The credit facility, which is currently at $28.5 million, is
with Comerica Bank and is enhanced by a stand-by Note Purchase Agreement
between Comerica Bank and the the Fund whereby the Fund has
<PAGE> 8
agreed to provide payment to Comerica Bank upon the occurrance of certain
events of default by the Company. This enhancement permits the Company to
obtain a more favorable interest rate and collateralization terms from the
lending bank. In consideration for the credit enhancement provided, the
Company agreed to pay certain fees to the Fund and provide it with an option to
purchase up to 5% of the Company's outstanding common stock, at 70% of the
public offering price per share, if the Company completes a firm commitment
underwritten sale of its common stock prior to April 30, 2000. At July 31,
1996, $25.6 million was outstanding under the Comerica Bank credit facility.
As in mortgage banking, the Company also has a need to finance loan funding
activities with respect to its land contract syndications until such time as
the loans are packaged and sold to investors. The principal sources of this
financing are two limited partnerships which have been established in order to
provide up to $4 million for this purpose. These partnerships will terminate
in December 1997. The Company is considering several alternatives to extend or
replace these financing sources at the time of their respective terminations.
There is no assurance that the Company will be successful in extending or
replacing these financing sources, however.
The Company also has $2 million available under a $2.5 million credit facility
with a commercial bank which is similar in structure to a mortgage warehouse
line of credit. This portion of the credit facility is used exclusively for
the warehousing of land contracts. The additional $0.5 million is available
for working capital. At July 31, 1996, $2.5 million was outstanding under this
facility.
The Company has $3 million available under two credit facilities with
commercial banks for the acquisition and rehabilitation of residential real
property prior to resale. At July 31, 1996, $1.7 million was outstanding under
these facilities.
On May 31, 1996 the Company filed a Registration Statement with the Securities
and Exchange Commission (the "Commission") in order to register $6,000,000 in
aggregate principal amount of subordinated debentures (the "1996 Debentures").
Interest is payable quarterly at 11%. This offering is a best efforts offering
and was declared effective by the Commission on June 12, 1996. At July 31,
1996 none of these debentures were outstanding.
On September 3 , 1996 the Company closed a $100 million credit facility with
Texas Commerce Bank, N. A. This facility will provide a warehousing line of
credit for the Company's conforming, non-conforming and land contract lending.
Interest payable on these borrowings varies based on the type of loan
warehoused. This line of credit is scheduled to expire September 3, 1997.
During the first six months of fiscal 1997, the Company's operating activities
provided $24.5 million. Of this, $17.8 million and $1.9 million related to
sales of mortgages and land contracts held for resale, respectively and $2.8
million was the result of a decrease in accounts receivable. The Company's net
investing activities used $9.4 million for the six months ended July 31, 1996.
Investments in mortgage servicing rights exceeded sales by $8.7 million.
Financing activities used $15.0 million during the first six months of fiscal
1997. The Company used loan proceeds of $449.5 million to fund mortgage loans
and land contracts and used $474.6 million to paydown notes paybale on mortgage
loans and land contracts sold to and investors. Proceeds from the subordinated
notes payable provided $ 7.8 million. Sales in connection with the Company's
debenture offering that commenced in December 1994 provided $2.5 million.
RESULTS OF OPERATIONS
Overview
The Company earned $82,903 for the six months ending July 31, 1996 as compared
to net income of $270,836 for the six months ended July 31, 1995. While
origination volumes increased significantly in the first half of fiscal 1997 as
compared to fiscal 1996, the increase occurred mainly in conforming
conventional products which have smaller margins than non-conforming products.
Increased payroll and general and administrative expenses were partially offset
by increased sales of real estate and bulk servicing rights.
<PAGE> 9
The Company is continuing to focus on growth in the more profitable
non-conforming mortgage area. The Company has opened three regional lending
centers specializing in these types of mortgages that will service our existing
branch network as they shift more of their production into non-conforming
lending.
Revenues
Overall revenues for the six months ended July 31, 1996 increased 41% to
$26,439,276 as compared to $18,698,774 for the six months ended July 31, 1995.
Gains on sales of land contracts increased 37% from $1,198,842 for the six
months ended July 31, 1995 to $1,644,316 for the six months ended July 31,
1996. The Company believes this resulted from increasing interest rates during
the end of the first quarter and most of the second quarter. Gains on sales of
real estate increased 27% to $4,832,277 from $3,805,268 for the six months
ending July 31, 1996 and 1995 respectively. Additional use of credit
facilities and a general increase in market activity enabled the Company to
sell 440 homes during the six months ended July 31, 1996 as compared to 359
homes in the same period last year. The Company sold servicing rights to $470
million in mortgages in the first half of fiscal 1997 as compared to $729
million in the first half of fiscal 1996. Gains related to these bulk sales,
however, increased to $3,293,317 for the six months ended July 31, 1996 as
compared to $2,059,722 for the six months ended July 31, 1995. This increase
in revenues resulted from a greater proportion of originated servicing sold in
the bulk packages in fiscal 1997 as compared to fiscal 1996. Purchased
servicing sold in bulk has a much higher basis than originated servicing rights
and produces lower net revenues. Origination volumes increased 46%, from $326
million during the first half of fiscal 1996 to $476 million during the first
half of fiscal 1997 and origination fees and gains on sale of mortgages
correspondingly increased 48% from $5,876,365 in the first half of fiscal 1996
to $8,707,475 in the first half of fiscal 1997. Increased volumes primarily
resulted from a greater volume of refinance activity during the first quarter
of fiscal 1997. Servicing fees increased $1,662,739, or 25% from $3,092,027
for the six months ended July 31, 1995 to $3,878,915 for the six months ended
July 31, 1996. This corresponds to the 33% increase in the average size of the
Company's servicing portfolio from $1.5 billion to $2.0 billion during the six
months ended July 31, 1995 and 1996, respectively. Increases in interest
income from $2,252,254 to $3,914,993 for the six months ending July 31 1995 and
1996, respectively, followed the increase in mortgage origination volumes, and
reflected a greater percentage of higher interest rate non-conforming loans
that were outstanding on the Company's warehouse lines during the period.
Expenses
Payroll and commissions increased $3,322,199, or 42%, to $11,297,795 from
$7,975,596 for the six months ended July 31, 1996 and 1995, respectively, which
was consistent with overall revenue increases. As a percentage of revenue,
payroll and commissions remained consistent at 43% for these periods. Interest
expense for the six months ending July 31, 1996 was $5,096,157 as compared to
$3,320,637 for the six months ending July 31, 1995. This 53% increase follows
increases in mortgage originations, and reflects increased interest expense
resulting from the issuance of additional 1994 Debentures during the six months
ended July 31, 1996. Amortization expense increased $1,136,765 to $2,304,496
from $1,167,731 for the six months ended July 31, 1996 and 1995, respectively.
This is the result of the increased size of the Company's servicing portfolio
and write-offs of certain deferred charges. Runoff rates of the Company's
servicing portfolio remained constant. General and administrative expenses
were $6,391,373 for the six months ended July 31, 1996 as compared to
$4,852,206 for the six months ended July 31, 1995. The 32% increase was
consistent with the increased production volumes and revenues during the first
half of fiscal 1997. As a percentage of revenue, general and administrative
expenses decreased from 26% in the first half of fiscal 1996 to 24% during the
same period of fiscal 1997. As of July 31, 1996 the Company had mortgage
origination employees in 30 locations as compared to 32 locations at July 31,
1995. As the Company's fiscal 1997 business plan progresses, management will
continually evaluate non-performing offices for possible closure.
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
<PAGE> 10
(a) The Company held its Annual Shareholder's meeting on June 5,
1996.
(b) At the Company's Annual Shareholder's meeting, Keith D.
Pietila and James B. Quinlan were elected as directors for an
additional three-year term. Thomas P. Cronin and Lee P. Wells
continue to serve as directors for the remainder of
their three year terms ending on the date of the Company's
Annual Shareholders meeting in 1997 and Patrick D. Quinlan, D.
Michael Jehle and C. Thompson Wells, Jr. continue to serve as
directors for the remainder of their three terms ending on
the date of the Company's Annual Shareholders meeting in
1998.
(c) There were no matters voted upon at the Company's Annual
Shareholder's meeting other than the election of directors.
Each director received 455,861 votes representing all of the
shares present at the Annual Shareholders meeting. There were
no votes cast against any director.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
The following exhibits are filed with this report:
10.1 Loan and Financing Agreement, dated July 18, 1996, by
and among the Company and its subsidiaries and the
Board of Trustees of the Policemen and Firemen
Retirement System of the City of Detroit.
10.2 Subordinated Promissory Note, dated July 18, 1996, by
and among the Company and its subsidiaries, and the
Board of Trustees of the Policemen and Firemen
Retirement System of the City of Detroit.
10.3 Piggyback Rights Agreement, dated July 18, 1996, by
and among the Company and the Board of Trustees of
the Policemen and Firemen Retirement System of the
City of Detroit.
10.4 Put Agreement, dated July 18, 1996 by and among the
Company and the Board of Trustees of the Policemen
and Firemen Retirement System of the City of Detroit.
10.5 Escrow Agreement, dated July 18, 1996, by and among
the Company and its subsidiaries, the Board of
Trustees of the Policemen and Firemen Retirement
System of the City of Detroit.
10.6 Loan Agreement, dated September 3, 1996 by and among
the Company, MCA Mortgage Corporation, Mortgage
Corporation of America and Texas Commerce Bank
National Association.
27 Financial Data Schedule
(b) Reports on Form 8-K.
The Company was not required to file any current reports on
Form 8-K during the quarter ended July 31, 1996.
<PAGE> 11
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant, has caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
MCA FINANCIAL CORP.
Date: September 16, 1996 By: Patrick D. Quinlan
-------------------------- ----------------------------------
Patrick D. Quinlan,
Chairman and President
(Principal Executive Officer)
Date: September 16, 1996 By: Keith D. Pietila
-------------------------- ----------------------------------
Keith D. Pietila,
Vice President
(Principal Financial and
Accounting Officer)
<PAGE> 12
Exhibit Index
Exhibit
Number Description
------- -----------
10.1 Loan and Financing Agreement, dated July 18, 1996, by
and among the Company and its subsidiaries and the
Board of Trustees of the Policemen and Firemen
Retirement System of the City of Detroit.
10.2 Subordinated Promissory Note, dated July 18, 1996, by
and among the Company and its subsidiaries, and the
Board of Trustees of the Policemen and Firemen
Retirement System of the City of Detroit.
10.3 Piggyback Rights Agreement, dated July 18, 1996, by
and among the Company and the Board of Trustees of
the Policemen and Firemen Retirement System of the
City of Detroit.
10.4 Put Agreement, dated July 18, 1996 by and among the
Company and the Board of Trustees of the Policemen
and Firemen Retirement System of the City of Detroit.
10.5 Escrow Agreement, dated July 18, 1996, by and among
the Company and its subsidiaries, the Board of
Trustees of the Policemen and Firemen Retirement
System of the City of Detroit.
10.6 Loan Agreement, dated September 3, 1996 by and among
the Company, MCA Mortgage Corporation, Mortgage
Corporation of America and Texas Commerce Bank
National Association.
27 Financial Data Schedule
<PAGE> 1
EXHIBIT 10.1
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
LOAN AND FINANCING AGREEMENT
LENDER: THE BOARD OF TRUSTEES OF THE
POLICEMEN AND FIREMEN RETIREMENT
SYSTEM OF THE CITY OF DETROIT
BORROWERS: MCA FINANCIAL CORP.
MCA MORTGAGE CORPORATION
MORTGAGE CORPORATION OF AMERICA
MORTGAGE CORPORATION OF AMERICA, INC.
MCA REALTY CORPORATION
COMPLETE FINANCIAL CORP.
SECURITIES CORPORATION OF AMERICA
TYPE/AMOUNT: SUBORDINATED TERM LOAN ($15,000,000.00)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE> 2
LOAN AND FINANCING AGREEMENT
This Agreement made this 18th day of July, 1996, by and between The Board
of Trustees of the Policemen and Firemen Retirement System of the City of
Detroit, whose address is 908 City-County Building, Detroit, Michigan 48226
(hereinafter referred to as "Lender"), and MCA Financial Corp., a Michigan
corporation, MCA Mortgage Corporation, a Michigan corporation, Mortgage
Corporation of America, a Michigan corporation, Mortgage Corporation of
America, Inc., an Ohio corporation, MCA Realty Corporation, a Michigan
corporation, Complete Financial Corp., a Michigan corporation, and Securities
Corporation of America, a Michigan corporation, whose addresses are set forth
in Section 13 hereof (hereinafter defined and referred to as "Borrowers").
R E C I T A L S:
I.
PRELIMINARY REPRESENTATIONS, WARRANTIES, ACKNOWLEDGMENTS
AND CONFIRMATIONS
The Lender and Borrowers [after giving effect to the Incorporation by
Reference (as hereinafter provided in Section II of these Recitals) of the
Existing Loan Documents (as hereinafter defined and as hereinafter amended)]
are parties to and/or involved in [including, but not by way of limitation as
Affiliates (as defined in the Credit Agreement) (as hereinafter defined), and
are Persons (as defined in the Credit Agreement) included in the Financial
Statements (as defined in the Credit Agreement) ("Financial Statement
Interests")] the Existing Financial Arrangements (as hereinafter defined)
evidenced by the Existing Loan Documents (as hereinafter defined); and
The Borrowers represent, warrant, acknowledge, agree and confirm that the
Lender, the Senior Lenders (as hereinafter defined), and other Persons, rely on
the Financial Statements and Financial Statement Interests, including, but not
by way of limitation, any commercial bank providing a Credit Facility as
contemplated by Section 2.01 of the Credit Agreement; and
The Borrowers represent, warrant, acknowledge, agree and confirm that they
have collective and mutual intertwined,
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interdependent, and common interests and business transactions between and/or
among the Borrowers, including, but not by way of limitation, financial
interests, the Financial Statement Interests evidenced by the Financial
Statements, interests in various assets and properties, and the uses thereof,
and interests in operations (including in the financing, purchase, and
origination of mortgage loans and servicing rights with respect to mortgage
loans, and other related activities), such common interest being further
evidenced by the Financial Statements of the Borrowers (collectively
hereinafter referred to as the "Common Interests"); and
The Borrowers represent, warrant, acknowledge, agree and confirm that the
Borrowers are under Common Control (as defined in the Credit Agreement); and
The Borrowers represent, warrant, acknowledge, agree and confirm that the
nature of said Common Interests and Common Control benefits all the Borrowers
collectively; and
The Borrowers represent, warrant, acknowledge, agree and confirm that they
will be collectively and/or singularly deriving, directly and/or indirectly,
substantial benefits from the Loan (as hereinafter defined) and the
transactions hereinafter contemplated, and the disbursements and uses of the
proceeds of the Loan, directly and/or indirectly, by any one or more of the
Borrowers irrespective of the disbursement to, or use of the proceeds by, any
of the particular Borrowers; and
The Borrowers represent, warrant, acknowledge, agree and confirm that in
consideration of all of the foregoing representations, warranties,
acknowledgments, agreements and confirmations (collectively the "Inducement
Representations"), the Borrowers have received fair and adequate consideration
(collectively the "Consideration"), and have induced the Fund to make the Loan
and enter into this Agreement, and accept the Note (as hereinafter defined).
II.
INCORPORATION BY REFERENCE OF EXISTING LOAN DOCUMENTS
The Lender and Borrowers, by this reference hereby incorporate
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in their entirety (subject to the Section 5 hereof) the Existing Loan Documents
as if the same were fully set forth herein.
III.
LENDING TRANSACTION
Borrowers desire to borrow a certain sum of money from Lender on the terms
and conditions as hereinafter set forth; and
Lender is willing to lend such sum to Borrowers, provided Borrowers comply
with all terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual promises and covenants
hereinafter contained and the Consideration, in reliance on the Recitals and
the representations and warranties hereinafter contained, and subject to the
terms and conditions hereinafter contained, it is hereby agreed between the
parties as follows:
1. DEFINITIONS:
In this Agreement and in the Collateral Documents (unless the context
thereof requires a contrary definition or unless the same shall be defined
therein, in which latter event, the definitions shall be cumulative and not
exclusive), the following words, phrases, and expressions shall have the
respective meanings attributed to them, to be equally applicable to both the
singular and plural forms).
1.1. "AGREEMENT" shall mean this Loan and Financing Agreement, and all
Ramendments, modifications, and extensions thereto, and restatements hereof.
1.2. "AUTHORIZED SIGNATORY" shall mean any Person designated in any
Certified Resolution.
1.3. "BORROWERS" shall mean both:
(a) MCA Financial Corp., a Michigan corporation, MCA Mortgage
Corporation, a Michigan corporation, Mortgage Corporation of America, a
Michigan corporation, Mortgage Corporation of Michigan, Inc., an Ohio
corporation, MCA Realty
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Corporation, a Michigan corporation, Complete Financial Corp., a
Michigan corporation, and Securities Corporation of America, a Michigan
corporation, jointly, jointly and severally, and severally; and/or
(b) any one or more of the corporations named or included in Section
1.3(a).
1.4. "BUSINESS DAYS" shall mean each weekday on which federally chartered
banks located in the State of Michigan are open.
1.5. "CREDIT AGREEMENT" shall mean that certain Credit Enhancement
Umbrella Agreement by and among MCA Financial Corp., MCA Mortgage Corporation,
First America Mortgage Associates, Inc., and The Board of Trustees of the
Policemen and Firemen Retirement System of the City of Detroit, dated April 30,
1993, as the same may be amended, supplemented, or otherwise modified from time
to time in accordance with the terms thereof.
1.6. "CERTIFIED RESOLUTIONS" shall mean any Certified Copy of Corporate
Resolutions of any of the Borrowers, delivered to Lender and Escrow Agent from
time to time, authorizing transactions between and/or among the Lender and
Borrowers, designating the Persons of such Borrower authorized to act for and
on behalf of such Borrower, and containing a certificate of incumbency of such
Persons, together with such other provisions, representations and warranties as
required by Lender.
1.7. "CURE PERIOD" shall mean with respect to an Event of Default
requiring a Notice of Default under Section 11 hereof:
(a) Seven (7) Business Days following the Receipt Date of the Notice
of Default with respect to a Monetary Event of Default; and
(b) Twenty (20) Business Days following the Receipt Date of the
Notice of Default with respect to a Non-Monetary Event of Default.
1.8. "ESCROW ACCOUNT" shall mean the Escrow Account as defined in and
established by the Escrow Agreement.
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1.9. "ESCROW AGREEMENT" shall mean that certain Escrow Agreement among
Borrowers, Lender, and Escrow Agent, dated of even date herewith, including any
amendments, modifications, and extensions thereto, or restatement thereof.
1.10. "ESCROW AGENT" shall mean Sterling Bank & Trust Company, or any
substitute Escrow Agent acting in such capacity pursuant to the Escrow
Agreement.
1.11. "ESCROW FUNDS" shall mean the monies contained in the Escrow
Account, from time to time, including all interest accrued thereon.
1.12. "EVENT OF DEFAULT" shall mean:
(a) a Default as defined in the Credit Agreement; and
(b) the occurrence of any event, act, omission, breach, failure,
violation or other non-observance or non-performance by any of the Borrowers or
any Person, of any covenant, condition, agreement, duty, provision, or
undertaking under this Agreement or any of the Related Documents.
1.13. "EXISTING FINANCIAL ARRANGEMENTS" shall mean the transactions set
forth in the Existing Loan Documents, as the same exist from time to time.
1.14. "EXISTING LOAN DOCUMENTS" shall mean the Credit Agreement, and all
documents and instruments executed in connection therewith, related thereto
and/or to any Credit Enhancement, and/or referenced in any of the foregoing,
now or hereafter existing.
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1.15. "INDEBTEDNESS" shall mean and include:
(a) all indebtedness, obligations and liabilities of the Borrowers
referred to in this Agreement, in any of the Related Documents, or otherwise,
of whatsoever kind, nature and description, primary or secondary, direct,
indirect or contingent, due or to become due, and whether now existing or
hereafter arising and howsoever evidenced or acquired, and whether joint,
several, or joint and several; and
(b) all present and future Money Advances made by Lender or Escrow
gent in connection with this Agreement or the Related Documents, or otherwise,
and whether made at Lender's option or otherwise, and the Loan and Note, now or
hereafter executed or existing in connection herewith, and interest accrued
thereon, from time to time; and
(c) all future advances made by Lender or the Escrow Agent for the
protection, enforcement, or preservation of Lender's rights and interests under
this Agreement or any of the Related Documents, including, but not by way of
limitation, and reasonable attorneys fees and consultants; and
(d) all costs and expenses incurred by Lender or the Escrow Agent in
connection with or arising out of the protection, enforcement or collection of
any of the foregoing, including, without limitation, reasonable attorney(s) and
consultant fee.
1.16. "INSOLVENCY EVENT" shall mean any of the Borrowers becomes
insolvent, is unable to pay its debts as they become due in ordinary course,
makes an assignment for the benefit of creditors, files a voluntary petition
under the United States Bankruptcy Code or any other insolvency or moratorium
statute, or there is filed against any Company an involuntary petition under
any such statute, provided however if such involuntary petition is dismissed
within sixty (60) calendar days after filing, if no other Event of Default or
Matured Event of Default exists, the Matured Event of Default based upon the
Insolvency Event shall no longer be deemed to exist.
1.17. "LENDER'S AUTHORIZED AGENT" shall mean Plante & Moran, L.L.P. or any
Person substituted thereafter by Lender, from
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time to time, upon written notice to Borrowers.
1.18. "LOAN BASE" shall mean an amount which is the lesser of:
(a) Fifteen Million ($15,000,000.00) Dollars, or
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(b) the aggregate of:
(i) the amount of the Escrow Funds (excluding interest); and
(ii) the outstanding Money Advances made for Qualifying
Equipment and Qualifying Working Capital, provided however the amount of Money
Advances made under this Section 1.18(b)(ii) shall not exceed Five Million
($5,000,000.00) Dollars; and
(iii) the amount of the Qualifying Equity.
The Loan Base shall be computed at the option of Lender, as of the First (1st)
Business Day of any calendar month, at the time of any Request For Advance, or
at any other time reasonably selected by the Lender.
1.19. "LOAN" shall mean the Subordinated Term Loan referenced in Section
2 hereof.
1.20. "MATURED EVENT OF DEFAULT" shall mean:
(a) an Event of Default (as defined in the Credit Agreement); and/or
(b) any Event of Default [excluding any Event of Default (as
defined in the Credit Agreement)] which remains uncured in full after:
(i) the lapse of time applicable thereto during which the same
may be performed in accordance with the terms of this Agreement or the Related
Documents;
(ii) the giving of a required Notice of Default and failure to
cure in full within the applicable Cure Period; and/or
(c) a Senior Debt Default; and/or
(d) an Insolvency Event [notwithstanding the provisions of
Section 11.01(g) of the Credit Agreement].
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1.21. "MONETARY EVENT OF DEFAULT" shall mean any Event of Default which
may be cured by the payment of money to Lender or Escrow Agent.
1.22. "MONEY ADVANCE" shall mean a loan or disbursement of money by
Lender or the Escrow Agent, which is part of the Indebtedness.
1.23. "NON-CONFORMING LOAN" shall mean a mortgage loan properly secured by
a perfected lien on real estate with a constructed 1-4 residential dwelling
that is not a Qualifying Origination Loan (as defined in the Credit Agreement).
1.24. "NON-MONETARY EVENT OF DEFAULT" shall mean any Event of Default
which is not a Monetary Event of Default.
1.25. "NOTE" shall mean any of the notes evidencing the Loan, including
any referred to in this Agreement or the Related Documents, now or hereafter
executed by Borrowers, including all renewals, extensions, amendments,
modifications, restatements, roll-overs or substitutions thereof, from time to
time.
1.26. "NOTICE OF DEFAULT" shall mean that written notice of an Event of
Default required to be given by Lender pursuant to Section 11.
1.27. "QUALIFYING EQUIPMENT" shall mean equipment, furniture, fixtures,
and trade fixtures, and software, purchased or leased (provided Borrowers shall
only be entitled to include in a Request for Advance lease payments, as and
when due) with the proceeds of the Loan, as certified to in accordance with any
Request For Advance.
1.28. "QUALIFYING EQUITY" shall mean the Value of Qualifying
Non-Conforming Loans.
1.29. "QUALIFYING NON-CONFORMING LOAN" shall mean a Non-Conforming Loan in
which any of the Borrowers has an interest in, and to the extent of, the Value
thereof.
1.30. "QUALIFYING USES OF PROCEEDS" shall mean Money Advances made by the
Escrow Agent for Qualifying Working Capital,
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Qualifying Equipment and Qualifying Equity.
1.31. "QUALIFYING WORKING CAPITAL" shall mean money used to pay for the
Borrowers' operations directly related and attributable, on a reasonable basis,
to its operations in connection with Non-Conforming Loans as certified in
accordance with any Request for Advance and shall include by way of example,
but not by way of limitation, money paid or payable for the items identified in
Schedule 1.31, and which are currently due or payable, excluding any
prepayments thereof in circumstances where prepayment thereof is not in the
ordinary course of business in connection with such item.
1.32. "RECEIPT DATE" shall mean with respect to a Notice of Default, the
earlier of:
(a) the actual date of receipt by Borrowers; or
(b) three (3) Business Days following the date of delivery by Lender
toany expedited mail delivery service; or
(c) five (5) Business Days following the date of delivery by Lender
to the U.S. Postal Service if mailed by first class postage.
1.33. "RELATED DOCUMENTS" shall mean any and all documents, instruments,
notes, agreements, and written memoranda, referred to in this Agreement or
referred to in any of the foregoing, and simultaneously or hereafter executed
and/or delivered in connection herewith or therewith, and specifically, but not
by way of limitation, those documents identified in Section 6 hereof.
1.34. "REQUEST FOR ADVANCE" shall mean the Request For Advance as defined
in Section 2.2(b)(ii) of this Agreement.
1.35. "REQUIRED ESCROW PRINCIPAL PAYMENTS" shall mean all amounts
outstanding at any time , in excess of the Loan Base, which shall be delivered
to Escrow Agent no later than the close of business on the date each such
excess exists.
1.36. "SENIOR DEBT" shall mean existing or future indebtedness due under
any term loan, revolving credit facility, or
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other financing provided to Borrowers by a Person acceptable to Lender [as
evidenced by a Request for Approval (as required by the Note)], that is not
subordinated to the payment of any other Debt [as defined in Section 1.11(ii)
of the Credit Agreement] for the exclusive purposes of (a) warehousing of
residential mortgage loans pending sale thereof to investors (including
financing new mortgage loans originated or purchased from originators by that
Borrower prior to their sale, or the refinancing of existing mortgage loans],
and (b) the acquisition or retention of Qualifying Servicing Rights (as defined
in the Credit Agreement) by that Borrower, and (c) working capital, and
which is secured by first liens on specified assets of Borrowers related to
that financing.
1.37. "SENIOR DEBT DEFAULT" shall mean the occurrence of any event, act,
omission, failure, violation or other non-observance or non-performance by any
of the Borrowers or any Person, of any covenant, condition, agreement, duty,
provision, or undertaking under the Senior Debt Documents.
1.38. "SENIOR DEBT DOCUMENTS" shall mean any and all documents,
instruments, notes, agreements, and written memoranda, delivered in connection
with, evidencing, and/or securing any Senior Debt, now or hereafter existing.
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1.39. "SENIOR DEBT TO NET WORTH RATIO" shall mean, as of the date of
determination, that ratio, determined by a fraction:
(a) the numerator of which is the aggregate amount of Senior Debt
outstanding; and
(b) the denominator of which is Net Worth (as defined in Section
1.43 of the Credit Agreement) plus the amount then accrued under
Section 3(a)(1) of the Put Agreement referenced in Section 6.3 hereof, to the
extent such amount is reflected in the Financial Statements.
1.40. "SENIOR LENDERS" shall mean the holders of the Senior Debt approved
in accordance with the Note and a Request for Approval as therein set forth.
1.41. "SUBORDINATION AGREEMENTS" shall have the meaning set forth in the
Note.
1.42. "TERMINATION DATE" shall mean June 30, 2006.
1.43. "VALUE" shall mean the dollar denominated amount in accordance with
GAAP (as defined in the Credit Agreement) of the following interests of
Borrowers:
(a) In the case of whole loans purchased and held in inventory by
any of the Borrowers, valued at cost or, in the case of loans originated by any
of the Borrowers, valued in accordance with GAAP (as defined in the Credit
Agreement) and, with respect to whole loans pledged as collateral to a
warehouse credit facility, valued at net of the amount of any borrowings
against such loans according to the terms of that credit facility.F
(b) In the case of securitization, valued at the present value of
excess service fees receivable attributable to securitized originated loans to
the extent permitted by GAAP.
(c) In the case of any non-conforming mortgage securities issued by
any of the Borrowers, valued at an amount equal to cash deposits required to be
set aside by any of the Borrowers as a reserve therefor, plus the principal
amount of such securities retained by a Borrower.
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(d) Servicing rights held separately from the ownership rights with
respect to the mortgages that are security for a Non-Conforming Loan.
(e) Any other non-conforming mortgage asset as approved in writing by
the consultant to the pension fund, and the Lender (if the Lender's Authorized
Agent so requires such approval by the Lender).
2. LOAN COMMITMENT:
Subject to the terms and conditions contained herein, and upon the
condition that no Event of Default shall exist, Lender agrees that it shall
fund the Loan pursuant to the following commitment (hereinafter referred to as
"Subordinated Term Loan Commitment"):
2.1. SUBORDINATED TERM LOAN COMMITMENT:
(a) Commitment: Lender agrees to make a Money Advance to the Escrow
Agent in the amount of Fifteen Million ($15,000,000.00) Dollars to be used
solely for Qualifying Uses of Proceeds, to be repaid in accordance with the
Subordinated Promissory Note (Term Loan) (herein referred to as "Subordinated
Term Loan").
(b) Conditions: Subject to the terms and conditions contained in this
Agreement, and upon the condition that no Event of Default or Matured Event of
Default shall then exist, and further provided all conditions precedent hereto
or thereto have been met in the sole discretion of Lender as of the date
hereof, Lender shall make the Money Advance set forth in Section 2.1.
2.2 PROCEDURE FOR MONEY ADVANCES BY ESCROW AGENT:
(a) Authorization to Escrow Agent: The Escrow Agreement shall provide
that the Escrow Agent is authorized, up to June 30, 2001, to make Money
Advances for Qualifying Uses of Loan Proceeds, from time to time, subject to,
and in accordance with the conditions set forth in Section 2.2 (b) of this
Agreement.
(b) Conditions: The Escrow Agreement shall provide that the Escrow
Agent's obligation to make Money Advances
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is conditioned upon the following:
(i) No Event of Default or Matured Event of Default shall then
exist as determined by Lender's Authorized Agent; and
(ii) Escrow Agent and Lender's Authorized Agent shall have
received a written request for advance ("Request for Advance") at least Five
(5) Business Days prior thereto executed by an Authorized Signatory, which
contains the following:
(1) the amount of the Money Advance requested; and
(2) a certification of an Authorized Signatory of the amount
of each Money Advance requested to be respectively allocated to and used for
Qualifying Equity, Qualifying Equipment and Qualifying Working Capital,
together with all supporting documentation reasonably required by Lender's
Authorized Agent; and
(3) a certification of an Authorized Signatory that no Event
of Default or Matured Event of Default exists, or after giving effect to such
Request For Advance, will be created thereby; and
(4) a certification of an Authorized Signatory [irrespective
of whether a duplication of the matters set forth in 2.2(b)(ii)(3)], that
after giving effect to such Request for Advance, there will be no sums
outstanding in excess of the Loan Base; and
(5) a certification of an Authorized Signatory of the amount
of the Senior Debt then outstanding; and
(6) a certification of an Authorized Signatory [irrespective
of whether a duplication of the matters set forth in 2.2(b)(ii)(3)] that after
giving effect to the Request For Advance, Borrowers will not be in violation of
the Senior Debt To Net Worth Ratio;
(7) a certification of an Authorized Signatory stating the
Value of Qualifying Non-Conforming Loans.
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(iii) the Escrow Agent not having received a written (including
facsimile) notice that Lender or Lender's Authorized Agent does not approve the
Request For Advance.
(c) Borrower may only make a Request For Advance on:
(i) the date of execution hereof; and
(ii) the First (1st) Business Day of each calendar month; and
(iii) the Fifteenth (15th) calendar day of each month, or the next
Business Day thereafter, if the Fifteenth (15th) calendar day is not a Business
Day.
3. DEPOSITS/CREDITS:
Payments received by either the Escrow Agent or Lender shall be deposited
no later than the next Business Day following the day of receipt by the Escrow
Agent or Lender, and shall be credited to Borrowers upon receipt of good U.S.
funds therefore. Such credits however, are conditional upon final payment to
the Lender or Escrow Agent at its own offices in cash or solvent credits of all
items giving rise to the credits, and if any item is not so paid, any credit
given for it shall be reversed, whether or not the item is returned.
4. EVIDENCE OF INDEBTEDNESS:
Notwithstanding Paragraph 2 hereof, Borrowers shall execute a Subordinated
Promissory Note (Term Loan) in the amount of Fifteen Million ($15,000,000.00)
Dollars, evidencing the maximum amount provided for under the Subordinated Term
Loan Commitment, and all renewals, extensions, modifications, rollovers and
substitutions of any of the foregoing, from time to time.
5. INCORPORATION BY REFERENCE:
Pursuant to Section II of the Recitals, the Existing Loan Documents are
incorporated herein by reference as if the same were more fully set forth
herein, subject to the following:
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5.1. GENERAL RULES OF CONSTRUCTION: In incorporating the Existing Loan
Documents, the parties acknowledge and agree as follows:
(a) The Existing Loan Documents shall be deemed incorporated herein,
and continue in full force and effect with respect to this Agreement,
notwithstanding any of the following:
(i) a Default (as defined in the Credit Agreement) or Event of
Default (as defined in the Credit Agreement); or
(ii) the Expiration of Enhancement as set forth in Section 3.01
of the Credit Agreement; or
(iii) the Termination of Agreement as set forth in Section 3.02
of the Credit Agreement.
(b) Nothing contained herein shall be deemed to extend or modify the
Existing Loan Documents with respect to the provisions thereof as they relate
to and govern the Existing Financial Arrangements, but are limited to the
purposes of incorporating the provisions thereof herein solely with respect to
the applicability thereof to the Loan, this Agreement and the Related
Documents.
(c) Any specific reference to the Credit Agreement or Existing Loan
Documents herein made, shall be deemed duplicative and for specificity, and
shall not be deemed inconsistent with Sections 5.1(a) or, 5.1(b) or, 5.2 of
this Agreement.
5.2. SPECIFIC AMENDMENTS TO EXISTING LOAN DOCUMENTS. In incorporating the
Existing Loan Documents, the parties agree to the following amendments to the
Credit Agreement:
(a) Companies (as defined in the Credit Agreement) shall mean the
Borrowers herein.
(b) The Fund (as defined in the Credit Agreement) shall mean the
Lender herein.
6. RELATED DOCUMENTS:
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Borrowers have executed and delivered to Lender, or will execute or have
executed and delivered to Lender, the following documents and containing such
other terms, covenants, agreements, representations, warranties and other
matters as Lender may require, all of which are part of the Related Documents:
6.1. STOCK PURCHASE AGREEMENT: A Stock Purchase Agreement in the form
executed on even date herewith, including all amendments, modifications, and
extensions thereto and restatements thereof.
6.2. PIGGYBACK RIGHTS AGREEMENT: A Piggyback Rights Agreement in the
form executed on even date herewith, including all amendments, modifications,
and extensions thereto and restatements thereof.
6.3. PUT AGREEMENT: A Put Agreement in the form executed on even date
herewith, including all amendments, modifications, and extensions thereto and
restatements thereof.
6.4. ESCROW AGREEMENT: An Escrow Agreement in the form executed on even
date herewith, including all amendments, modifications, and extensions thereto
and restatements thereof.
7. REPRESENTATIONS AND WARRANTIES:
Borrowers, jointly and severally, represent and warrant to Lender as
follows:
7.1. AUTHORIZATION, VALIDITY, AND ENFORCEABILITY OF THIS AGREEMENT: Each
of the Borrowers has the corporate power and authority to execute, deliver and
perform its obligations under this Agreement and the Related Documents. Each
of the Borrowers has taken all necessary corporate action to authorize its
execution, delivery, and performance of this Agreement and the Related
Documents. No consent, approval, or authorization of, or declaration or filing
with, any Public Authority (as defined in the Credit Agreement), and no consent
of any other Person (as defined in the Credit Agreement), is required in
connection with any Borrower's execution, delivery and performance of this
Agreement and the Related Documents, except for those already duly obtained.
This Agreement has been duly executed and delivered by each of the Borrowers,
and the Related Documents have been duly executed and
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delivered by each of the Borrowers (as required), and each constitutes the
legal, valid and binding obligation of the respective Borrowers,
enforceable against it in accordance with its terms, except as the
enforceability thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting the enforcement of
creditors' rights generally or by general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law)
limiting availability of equitable remedies. The execution, delivery, and
performance of this Agreement and the Related Documents do not and will not
conflict with, or constitute a violation or breach of, or constitute a default
under, or result in the creation or imposition of any Lien (as defined in the
Credit Agreement) upon the property of any of the Borrowers by reason of the
terms of (i) any contract, mortgage, Lien, lease, agreement, indenture, or
instrument to which any of the Borrowers is a party of which is binding upon,
it (ii) any Requirements of Law (as defined in the Credit Agreement) applicable
to any of the Borrowers, or (iii) the Articles of Incorporation or By-Laws of
any of the Borrowers, or the Code of Regulations of Mortgage Corporation of
America, Inc.
7.2. ORGANIZATION AND QUALIFICATION: Each of the Borrowers is duly
incorporated and validly existing and in good standing under the laws of the
State of its incorporation and each has all requisite power and authority to
conduct its respective business and to own its respective properties. Each of
the Borrowers is duly qualified and in good standing, and authorized to conduct
business in each of the jurisdictions set forth on Exhibit 7.2 hereto, and
there are no jurisdictions in which any of the Borrowers is not qualified where
the failure to be so qualified could have a material adverse affect on their
respective business, properties or affairs. Each of the Borrowers has all
corporate power to own its properties and conduct its business in the matter
presently conducted and as contemplated by this Agreement.
7.3. SUBSIDIARIES AND AFFILIATES: Exhibit 7.3 is a correct and complete
list of the name and relationship to each of the Borrowers of each and all of
its Subsidiaries (as defined in the Credit Agreement) and other Affiliates (as
defined in the Credit Agreement).
7.4. CAPITALIZATION: The capitalization of each of the
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Borrowers, including all authorized stock or other securities, authorized but
unissued stock or other securities, and the par value thereof, are set forth on
Exhibit 7.4. All outstanding shares of common stock and Preferred Stock (as
defined in the Credit Agreement) are validly issued, fully paid and
non-assessable and have been issued in accordance with all applicable
securities laws. Except as set forth on Schedule 7,4, there are no outstanding
rights to acquire any stock or other securities of any of the Borrowers or
commitments to issue any such rights. The stock or securities of any of the
Borrowers owned by any of the Borrowers are free of liens and encumbrances and
there are no rights to acquire or commitments to dispose of any of such stock
or securities. There are no pre-emptive rights to acquires shares or
securities of any of the Borrowers, and to each Borrowers' actual knowledge,
there are no voting trusts, voting agreements or other agreements among any
shareholders of any of the Borrowers relating to the voting of any stock or
securities of any of the Borrowers' stock. There are no options, warrants or
rights to acquire equity securities of any of the Borrowers except as set forth
on Exhibit 7.4.
7.5. QUALIFYING EQUIPMENT: Each item of Qualifying Equipment, as of the
date of each Request for a Advance with respect thereto, meets the criteria
therefore as herein set forth, except for those set forth.
7.6. QUALIFYING EQUITY: Each item of Qualifying Equity, as of the date of
each Request For Advance with respect thereto, meets the criteria therefore as
herein set forth.
7.7. QUALIFYING NON-CONFORMING LOAN: Each Qualifying Non-Conforming Loan,
as of the date of each Request for Advance with respect thereto, meets the
criteria therefore as herein set forth.
7.8. SENIOR DEBT: No Senior Debt:
(a) shall be incurred, agreed to, or outstanding in excess of the
amount that would result in a violation of the Senior Debt To Net Worth
Ratio; and/or
(b) shall be incurred, agreed to, or outstanding that is not
consented to in writing by Lender; and/or
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(c) shall be incurred or required to be approved while any Event of
Default or Matured Event of Default exists.
7.9. REQUEST FOR ADVANCE: No Request For Advance will be made by
Borrowers that after giving effect thereto:
(a) will result in any sums being outstanding in excess of the Loan
Base; and
(b) is not true and correct.
7.10. PAYMENTS: Borrowers shall make all Required Escrow Principal
Payments to the Escrow Agent, as and when due, and shall make all payments due
under the Note to Lender, as and when due.
7.11. SURVIVAL AND CONTINUATION:
Each of the representations and warranties contained herein, and the
representations and warranties contained in Article 8 of the Credit Agreement
incorporated herein, shall be true and accurate as of the date hereof, except
for (x) Section 8.01 and 8.03 and 8.04 (which are respectively superseded by
7.1., 7.2., 7.3 and 7.4 hereof, and (y) updating any Exhibits and/or
representations otherwise contained in Article 8 of the Credit Agreement (after
giving effect to Section 5 of this Agreement).
8. AFFIRMATIVE COVENANTS:
Borrowers covenant and agree, that so long as any Money Advances are
outstanding and until all Indebtedness due Lender is paid in full, they will.
8.1. PAYMENTS OF PRINCIPAL AND INTEREST ON INDEBTEDNESS: Pay the
principal amount of each Money Advance and accrued interest thereon when due in
accordance with the terms of the Note, whether by acceleration or otherwise,
and have no Money Advances outstanding hereunder contrary to any provisions,
limitations or restrictions hereof, and pay all Indebtedness due Lender no
later than the Termination Date, provided further that any sums due under the
Put Agreement shall survive and continue in full force and effect thereafter in
accordance with the terms of the Put Agreement.
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<PAGE> 22
8.2. PERFORMANCE OF OBLIGATIONS: Perform or cause to be performed, all of
the obligations and covenants of Borrowers or any other Person as required by
this Agreement, the Related Documents, or any other agreement, note or other
document executed between the Lender and any of the Borrowers and/or another
Person, whether now existing or hereafter created, and maintain and take all
action (or not fail to take any action or suffer or permit any omission)
necessary to maintain the representations and warranties made, as true and
accurate.
8.3. INFORMATION: Furnish promptly and in a form satisfactory to Lender,
such information as Lender may reasonably request, from to time, and permit a
representative of Lender access to any of its premises.
8.4. FINANCIAL COVENANTS: Maintain a Senior Debt To Net Worth Ratio not
to exceed the ratios set forth below as of the end of each corresponding Fiscal
Year, and as of the end of each fiscal quarter thereafter until the subsequent
Fiscal Year end:
(a) Ratios:
10 : 1 Fiscal Year end January 31, 1996
10 : 1 Fiscal Year end January 31, 1997
9.5 : 1 Fiscal Year end January 31, 1998
8.5 : 1 Fiscal Year end January 31, 1999
6.5 : 1 Fiscal Year end January 31, 2000
5.5 : 1 Fiscal Year end January 31, 2001
5 : 1 Fiscal Year end January 31, 2002
5 : 1 Fiscal Year end January 31, 2003
4 : 1 Fiscal Year end January 31, 2004
4 : 1 Fiscal Year end January 31, 2005
4 : 1 Fiscal Year end January 31, 2006
(b) Maintain, as of the end of each Fiscal Year of Borrowers, a
minimum Net Worth (as defined in Section 1.43 of the Credit Agreement). The
required minimum Net Worth will not be less than $8,000,000.00 for the Fiscal
Year ending January 31, 1996. For each subsequent Fiscal Year, the minimum
required Net Worth amount will be the sum of the preceding Fiscal Year's
minimum required Net Worth plus an amount equal to Eighty (80%) per of the
Fiscal Year then ended, less any dividends on the Preferred Stock
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<PAGE> 23
(as defined in the Stock Purchase Agreement referenced in Section 6.1 hereof).
8.5. FEES AND EXPENSES:
(a) The Borrowers shall pay to the Lender on demand all reasonable
costs and expenses that the Lender pays or incurs in connection with the
administration, enforcement, and termination of this agreement, including,
without limitation: (i) reasonable fees and expenses (including fees and
disbursements of counsel) for any amendment, supplement, waiver, consent, or
subsequent closing in connection with the transactions contemplated; (iii)
reasonable costs and expenses of consultants and Lender's Authorized Agent
retained by the Lender in connection with the negotiation, execution and
performance of this Agreement or any transaction contemplated hereunder; (iv)
costs and expenses (including fees and disbursements of counsel) paid or
incurred to obtain performance of any Borrowers' obligations hereunder, or to
exercise any rights with respect to any Event of Default. Upon request by the
Borrowers, the Lender will provide supporting documentation within its
possession detailing such costs, fees and expenses.
(b) As used herein, the costs for the Lender's Authorized Agent
incurred by the Lender to monitor the Borrowers' compliance with this Agreement,
in the absence of an Event of Default, are referred to as "Routine Expenses."
These shall include but not be limited to review of financial statements, review
of certificates delivered hereunder, and review of ongoing compliance by the
Borrowers with the requirements of this Agreement. The fees expenses
attributable to Routine Expenses with respect to which the Borrowers are
required to reimburse or pay the Lender hereunder shall not exceed [which
include, and are not in addition to, Routine Expenses due under the Credit
Agreement so long as the Credit Agreement exists, and thereafter the following
provisions of this Section 8.5(b) shall apply] (1) $52,500.00 for Borrowers'
fiscal year ending January 31, 1987, 1998 and 1999, (2) $54,600.00 for
Borrowers' fiscal year ending January 2000, (3) $56,800.00 for Borrowers' fiscal
year ending January 31, 2001, (4) $59,100.00 for Borrowers' fiscal year ending
January 31, 2002, (5) $61,500.00 for Borrowers' fiscal year ending January 31,
2003, (6) $64,000.00 for Borrowers' fiscal year ending January 31, 2004, (7)
$66,600.00 for Borrowers' fiscal year ending
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<PAGE> 24
January 31, 2005, (8) $69,300.00 for Borrowers' fiscal year ending January 31,
2006, and 9) $72,100.00 for Borrowers' fiscal year ending January 31, 2007. In
the event the Credit Agreement Lender's Authorized Agent is replaced, the
amounts set forth above will be subject re reasonable redetermination by the
then existing Lender's Authorized Agent. Expenses related to investigations of
Event of Default and analysis of requests for exceptions to or waivers of
covenants are expressly excluded from the definition of "Routine Expenses." The
foregoing shall be subject to any other provisions of this Agreement
specifically relating to the payment of costs and expenses.
(c) The obligation of the Borrowers to make payments to the Lender
pursuant to this Section 8.5 shall survive the termination of this Agreement,
until the earlier of (i) the occurrence of a Public Offering (as defined in the
Put Agreement attached as Exhibit "C"), or (ii) the repurchase by MCA financial
Corp. of the shares (as defined in the Put Agreement) pursuant to the
provisions of the Put Agreement, provided that costs and expenses described in
clauses (ii) and (iii) of Section 8.5 (a) shall be paid by any Company to the
Fund only to the extent incurred prior to termination. After such termination,
Lender's Authorized Agent shall be entitled to reasonable fees and expenses for
services provided thereafter.
8.6. RELATED PARTY ACCOUNTS RECEIVABLE RESTRICTION: Reduce related party
accounts receivable (as reflected in the balance sheet line item captioned
"Accounts Receivable - Related Parties" less the amount of related party
accounts payable identified in Note 8 - Related Party Transactions" of the
Financial Statements of Borrowers (as required by Section 10.12 of the Credit
Agreement) to an amount which is no more than Thirty (30%) percent of total
Stockholders' Equity [as reflected in the total of the balance sheet section
captioned "Stockholders' Equity" [provided however in calculating Stockholder's
Equity, there shall be evidenced in liabilities the amount then accrued under
Section 3(a) (1) of the Put Agreement)], by July 31, 2001 as calculated taking
the most current Financial Statements available at that time, and will maintain
related party accounts receivable (as referenced herein) at an amount which is
no more than Thirty (30%) percent of total Stockholders' Equity (as referenced
and calculated herein) thereafter.
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<PAGE> 25
9. NEGATIVE COVENANTS:
Borrowers covenant and agree, that so long as any Money Advances are
outstanding, and until all Indebtedness due Lender is paid in full, they will
not:
9.1. EVENT OF DEFAULT: Permit any Event of Default or Matured Event of
Default to occur.
9.2. DISPOSITION OF NON-CONFORMING LOANS: Voluntarily or involuntarily
dispose of any Qualifying Non-Conforming Loan without simultaneous payment to
the Escrow Agent of the Required Escrow Principal Payments.
9.3. DEFAULT IN PAYMENT: Default in any payment of the principal of or
interest on any Indebtedness to Lender when and as the same shall have become
due and payable, whether at maturity, by acceleration or otherwise, which
Default shall remain uncured for a period of Five (5) Business Days, whether
such Indebtedness is now existing or hereafter created.
9.4. TRANSACTION WITH AFFILIATES: Permit the consolidated net income of
RIMCO Corporation and its subsidiaries (collectively "RIMCO") to exceed Fifty
Thousand and 00/100 ($50,000.00) Dollars in any Fiscal Year, provided further
that all such excess shall be for the benefit of Borrowers, received by
Borrowers, and reflected in the Financial Statements of Borrowers.
9.5. LAND CONTRACT INVENTORY: Permit their land contract inventory
(reflected in the balance sheet line item captioned "Land Contracts Held for
Resale", of the Financial statements of Borrowers (as required by Section 10.12
of the Credit Agreement) to include more than One Million ($1,000,000.00)
Dollars of land contracts related to property located outside of the state of
Michigan until July 31, 1999. Commencing with each Fiscal Year thereafter, the
One Million ($1,000,000.00) Dollar limitation shall be increased or decreased
by the percentage change in Stockholders' Equity for the most recent Fiscal
Year then ended (as referenced in Section 8.6 hereof).
10. BOOKS/RECORDS/FINANCIAL REPORTS/CERTIFICATES:
Borrowers covenant and agree, that so long as any Money
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<PAGE> 26
Advances are outstanding, and until all Indebtedness due Lender is paid in
full, they will keep proper books of accounts in a manner satisfactory to
Lender; and:
10.1. FINANCIAL STATEMENTS: Borrowers shall deliver to Lender, the
Financial Statements (as required by Section 10.12 of the Credit Agreement
excluding the last sentence thereof), together with a Supplemental Schedule
report specifically setting forth the Value of Qualifying Non-Conforming Loans
("Supplemental Schedule"), which Supplemental Schedule shall be true and
accurate in all material respects.
10.2. MONTHLY REPORTS: Borrowers shall deliver to Lender, no later than
Twenty (20) Business Days after the end of each month, the following certified
to by the President or Chief Executive Officer or Chief Financial Officer of
Borrowers:
(a) Use of proceeds schedule.
(b) Income Statements for each of the operating entities
(unconsolidated) in a format which is consistent with the Financial Reports
herein required.
(c) Activity reports consisting of summaries of loan applications
and closing activity by product type and location.
(d) Balances outstanding on all Senior Debt.
10.3. OFFICER'S CERTIFICATES: Borrower shall deliver to Lender with each
set of Financial Statements delivered pursuant to Sections 10.1 and 10.6, a
certificate signed by the President, or the chief executive or chief financial
officer, respectively of the Borrowers and RIMCO (if not the President),
setting forth:
(a) the information (including detailed calculations) required in
order to establish whether the Borrowers were in compliance with the
requirements set forth in Section 8.4 of this Agreement during and as of the
end of the period covered by the Financial Statements then being furnished; and
(b) that the signers have reviewed all of the relevant terms of this
Agreement and have made, or have caused to
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<PAGE> 27
be made, under their supervision, a review of the transactions and conditions
of the Borrowers from the beginning of the accounting period covered by the
Financial Statements being delivered therewith to the date of the
certificate, and that such review has not disclosed the existence during such
period of any Event of Default.e
10.4. ACCOUNTANT'S CERTIFICATES: Borrowers shall deliver to Lender with
each set of Financial Statements delivered pursuant to Sections 10.1 (relating
solely to the annual audited Financial Statements), a certificate of the
accountants preparing such Financial Statements, stating that:
(a) they have reviewed this Agreement and stating further, whether,
in making their examination in connection with such report, such accountants
have become aware of any condition or event (compliance with which is subject
to verification by accountants in the course of normal auditing procedures)
which is an Event of Default, specifying the nature and period of existence
thereof; and
(b) such Financial Statements fairly present the financial condition
and the results of operations of the Borrowers as of the end of and for such
period and have been prepared in accordance with GAAP and that the examination
of such accountants in connection with such report has been made in accordance
with generally accepted auditing standards, and accordingly included such
tests of the accounting records and such other auditing procedures as were
considered necessary in the circumstances; and
(c) the Supplemental Schedule(s) were, and are true, in all material
respects.
10.5. INSPECTION OF BOOKS AND RECORDS: Borrowers and RIMCO (as defined in
Section 9.4) authorize Lender and/or Lender's Authorized Agent to inspect and
confirm Borrowers' (and any other subsidiaries of any of the Borrowers) and
RIMCO's books, records and papers while in the custody of Borrowers or RIMCO,
or under the custody and control of others, and Lender and/or Lender's
Authorized Agent shall have the right to make copies and abstracts thereof,
during business hours and upon Three (3) Business Days prior notice. The
Borrowers and RIMCO shall also permit the Lender or Lender's Authorized Agent
to discuss the affairs, finances and
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<PAGE> 28
accounts of the Borrowers and RIMCO with each of their respective directors,
officers, employees and independent auditors without restriction, and do hereby
authorize, grant permission to and agree to instruct such persons to respond
fully and without restriction to the Lender's reasonable inquiries and release
such information and documentation as the Lender may reasonable request.
The information so obtained may be disclosed by the Lender to its advisors,
representatives, and Lender's Authorized Agent, but shall not be used for
purposes not properly related to this Agreement and shall not otherwise be
disclosed by the Lender, its advisors, representatives, or Lender's Authorized
Agent, except as required by law or to enforce the Lender's rights under this
Agreement or any of the Related Documents.
10.6. RIMCO FINANCIAL STATEMENTS: RIMCO shall deliver to Lender, financial
statements of RIMCO, prepared by management of RIMCO in accordance with GAAP,
at the time the Financial Statements required by Section 10.1 hereof are
required to be delivered.
11. NOTICE OF DEFAULT:
11.1. REQUIRED NOTICE OF DEFAULT: Lender shall be required to give
Borrowers a Notice of Default with respect to any Event of Default except as
provided in Section 11.2, and Borrowers shall be allowed to cure such Event of
Default within the applicable Cure Period.
11.2. NO REQUIRED NOTICE OF DEFAULT: Lender shall not be required to give
Borrower a Notice of Default with respect to:
(a) any Event of Default arising out of the Borrowers' failure to
notify and/or report to Lender, those matters herein required; and
(b) any Event of Default arising from any Borrowers' breach of any
representations or warranties; and
(c) any Matured Event of Default that exists as a result of either
(i) a Senior Lender Default; or (ii) an Insolvency Event.
11.3. COMMERCIALLY REASONABLE: Borrowers agree that the Cure Periods
shall respectively constitute commercially reasonable
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notice.
12. REMEDIES IN EVENT OF DEFAULT:
If a Matured Event of Default exists, or if Lender shall in good faith
believe that the prospect of prompt payment of any Indebtedness due Lender, in
full, as and when due, or the full performance of any of the Borrowers'
obligations, is or may be impaired, the Lender shall have the following rights
and remedies, provided further that the rights and remedies contained herein or
otherwise available shall be cumulative and not exclusive, but in all events
the same are subject to the Subordination Agreements, and Lender shall have the
right, subject to the Subordination Agreements, to exercise any and all other
rights and remedies which may be available, whether contained in this
Agreement, the Related Documents, the Existing Loan Documents, or available by
virtue of law, or contained in any other instruments or agreements between the
Lender and any of the Borrowers and/or any other Person, including under the
Existing Loan Documents, and any such action by Lender shall not serve to
release or discharge any other rights of Lender in connection with this
transaction. The Subordination Agreements shall in no way be deemed to impair
or modify the rights of the Fund under the Existing Loan Documents.
12.1. ACCELERATION: All Indebtedness shall accelerate without notice or
demand, and immediately be due and payable, without presentation, notice or
demand, notwithstanding the maturity or due date therein to the contrary, all
of which are expressly waived by the Borrowers.
12.2. WAIVERS: To the extent permitted by applicable law, the Borrowers
agree to waive and do hereby absolutely and irrevocably waive and relinquish
the benefits and advantages of any valuation, stay, appraisement, extension or
redemption laws now or hereafter existing which, but for this provision, might
be applicable to any sale made under any judgment, order or decree of any
court, or otherwise, based on the Note contemplated hereby, or on any claim for
interest on such Note.
12.3. APPOINTMENT OF RECEIVER: Lender shall be entitled, to the extent
provided by law, to the appointment of a receiver of the business and premises
of Borrowers, and of the rents and
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profits derived therefrom. This appointment shall be in addition to any other
rights, relief or remedies afforded Lender. Such receiver, in addition to any
other rights to which he shall be entitled, shall be authorized to sell any and
all property of the Borrower for the benefit of Lender pursuant to provisions
of Michigan law and the Uniform Commercial Code of Michigan. In the event of
any deficiency, Borrowers shall remain liable therefor.
12.4. INJUNCTIONS: Borrowers acknowledge that upon the occurrence of a
Matured Event of Default, no remedy at law will provide adequate relief to
Lender; therefore, Borrowers agree that Lender shall be entitled to temporary
and permanent injunctive, or other equitable relief in any such case without
proving actual damages, it being acknowledged that the nature of Borrowers'
business dictates such relief is necessary in order to preserve the rights of
the Lender.
12.5. EXPENSES: Borrowers shall pay to Lender, on demand, any and all
expenses, including reasonable attorneys' fees and legal expenses, and outside
consultants' fees reasonably incurred or paid by Lender in connection with the
Agreement and any of the Related Documents, including the preparation or
amendment thereof, or in connection with protecting or enforcing its rights
under this Agreement, the Related Documents or pursuant to any other document
or agreement. Lender shall not be required to proceed against any other
party, or pursue any other right or remedy hereunder, or under any other
instrument or agreement, but all such rights and remedies shall be cumulative
and in addition to all other rights and remedies of Lender.
12.6. ENFORCEMENT OF RIGHTS: Lender shall be entitled to enforce its
rights hereunder and to avail itself of said other rights or remedies
simultaneously or successively, in such order and priority as Lender shall
determine, and all such rights and remedies shall continue in full force and
effect until all Indebtedness of the Borrowers shall be satisfied in full, and
no one or more of such actions shall be deemed an election of remedies.
13. NOTICES:
Except as otherwise provided herein, all notices, demands
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and requests that any party is required or elects to give to the other shall be
in writing, or by a telecommunications device capable of creating a written
record, and any such notice shall become effective (a) upon personal delivery
thereof, including, but not limited to, delivery by overnight mail and courier
service, (b) Three (3) calendar days after it shall have been mailed by United
States mail, first class, certified or registered, with postage prepaid, or (c)
in the case of notice by such a telecommunications
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<PAGE> 32
device, when properly transmitted, in each case addressed to the party to be
notified as follows:
IF TO LENDER: Board of Trustees of the Policemen
and Firemen Retirement System of
the City of Detroit
908 City-County Building
Detroit, Michigan 48226
Attn: Nicholas Degal, Assistant
Administrator Supervisor
Telecopy No.: (313) 224-3522
WITH A COPY TO: Couzens, Lansky, Fealk, Ellis,
Roeder & Lazar, P.C.
33533 West 12 Mile Road, Suite 150
Farmington Hills, Michigan 48331-5645
Attn: Donald A. Wagner, Esq.
Telecopy No.: (810) 489-4156
WITH A COPY TO: Ronald Zajac, Esq.
243 W. Fort Street, Suite 480
Detroit, Michigan 48226
Telecopy No.: (313) 961-6559
WITH A COPY TO
LENDER'S AUTHORIZED
AGENT: Plante & Moran, L.L.P.
27400 Northwestern Highway
P.O. Box 307
Southfield, Michigan 48034-0307
Attn: Jon Woods
Telecopy No.: (810) 352-0018
IF TO BORROWERS: c/o MCA Financial Corp.
23999 Northwestern Highway, Suite 230
Southfield, Michigan 48074
Attn: Patrick D. Quinlan, Chairman
Telecopy No.: (810) 358-7507
WITH A COPY TO: Butzel Long
150 West Jefferson, Suite 900
Detroit, Michigan 48226-4430
Attn: Justin G. Klimko, Esq.
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<PAGE> 33
Telecopy No.: (313) 225-7080
or to such other address as each party may designate for itself by like notice.
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<PAGE> 34
14. TERMINATION:
Lender may terminate this Agreement and its obligations hereunder upon the
occurrence of a Matured Event of Default. Provided this Agreement shall not
have been terminated earlier because of a Matured Event of Default, this
Agreement terminates on the Termination Date. All of the Borrowers'
obligations, duties, promises, covenants, representations or warranties under
this Agreement and the Borrowers or others' obligations, duties, promises,
covenants, representations or warranties under the Related Documents, shall
continue and remain in full force and effect after the Termination Date until
the Indebtedness is paid in full, provided further that the Related Documents
and the provisions thereof, described in Sections 6.1, 6.2, and 6.3 shall in
all events survive thereafter, in accordance with their respective terms. In
the event the Indebtedness is paid in full without the existence of a Matured
Event of Default, then the Related Documents described in Sections 6.1, 6.2,
and 6.3, together with all provisions of this Agreement except Sections 2,3,4,
7.5, 7.6, 7.7, 7.8, 7.9, 7.10, 7.11, 8.1., 8.3., 8.4., 9.2., 9.3., 10.2, 10.5,
12.1, 12.3 and 15 shall survive and remain in full force and effect.
Upon termination, and subject to the Subordination Agreements, the
Indebtedness, the Note and Money Advances, and all other obligations due Lender
from Borrowers, shall then be immediately due and payable, notwithstanding any
Maturity Date or Due Date to the contrary, plus the interest accrued thereon
until payment in full.
15. CONDITIONS PRECEDENT TO ADVANCE:
15.1. CONDITIONS PRECEDENT TO INITIAL MONEY ADVANCES: The obligation of
the Lender to make the initial Money Advance to the Escrow Agent is subject to
all the conditions and requirements of this Agreement and delivery of the
following required documents or other action, all of which are conditions
precedent:
(a) Corporate Status: A Certificate of Good Standing of Borrowers
certified by the State of Michigan (and in the case of Mortgage Corporation of
America, Inc., the State of Ohio), and any other State in which they conduct
business, to the
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<PAGE> 35
effect that the Borrowers are authorized to do business within said
jurisdiction.
(b) Resolutions: Certified Copies of Corporate Resolutions of
Borrowers authorizing the consummation of the transactions contemplated hereby
and providing for the execution of a written direction of payment if proceeds
are to be paid to a Person other than Borrowers.
(c) Certified Documents: A true copy, as of the date of execution
hereof, of the Articles of Incorporation, By-Laws (and the Code of Regulations
with respect to Mortgage Corporation of America, Inc.) and Shareholder List of
the Borrowers (except for the holders of the Preferred Stock of MCA Financial
Corp.), including all amendments to the foregoing, certified to by the
Secretary of the Borrowers.
(d) Opinion of Borrower's Counsel: The opinion of counsel for the
Borrowers, dated as of the date of the closing, satisfactory in form and
substance to Lender's designated counsel.
(e) Schedules/Exhibits: The Schedules and Exhibits required by this
Agreement.
(f) Stock Certificates: Delivery of the stock certificate(s)
evidencing ownership of the Stock required by the Stock Purchase Agreement.
(g) Related Documents: Execution and delivery of the Related
Documents.
16. MISCELLANEOUS:
16.1. BINDING EFFECT: This Agreement and the Related Documents shall be
binding upon and shall inure to the benefit of the Borrowers and Lender, and
their respective successors and assigns, provided that the foregoing shall not
authorize any assignment by any of the Borrowers of their rights or duties
hereunder, which assignment, in whole or in part, by any of the Borrowers shall
not be permissible.
16.2. DELAY/WAIVER: No delay or failure of Lender in exercising any
right, remedy, power or privilege hereunder shall affect such right, remedy,
power or privilege, nor shall any single or partial exercise thereof preclude
the exercise of any other right, remedy, power or privilege. No delay or
failure of Lender at any time to demand strict adherence to the terms of this
Agreement shall be deemed to constitute a course of conduct inconsistent with
the Lender's right at any time, before or after
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<PAGE> 36
any Event of Default, to demand strict adherence to the terms of this Agreement
or the Related Documents.
16.3. INCORPORATION BY REFERENCE: The Related Documents are incorporated
herein by reference, and in the event any provision thereof is inconsistent
with the provisions of this Agreement, then this Agreement shall be deemed
paramount unless the rights and remedies of the Lender would be adversely
affected or diminished thereby, provided however the Related Documents
described in Section 6.1, 6.2, 6.3 and 6.4 shall in all events survive, and
remain in full force and effect in accordance with their respective terms,
after the Termination Date or other expiration or termination of this
Agreement.
16.4. APPLICABLE LAW: This Agreement and the Related Documents shall be
interpreted, and the rights of the parties hereunder shall be determined, under
the laws of the State of Michigan.
16.5. SURVIVAL: Subject to Section 14, hereof, all representations and
warranties contained herein, in the Related Documents, or in writing by the
Borrowers in connection herewith shall survive the execution and delivery of
this Agreement.
16.6. FURTHER ASSURANCES: Borrowers, from time to time, upon written
request of Lender, will make, execute, acknowledge and deliver all such further
and additional instruments and take all such further action as may be
reasonably required, to carry out the intent and purpose of this Agreement and
the Related Documents and to provide for the payment of the Loan, Note, and
Money Advances, according to the intent and purpose herein and therein
expressed.
16.7. HOLD HARMLESS/INDEMNITY: Borrowers hereby assume responsibility and
liability for, and hereby holds harmless and indemnify Lender from and against,
any and all, by way of example but without limitation, liabilities, demands,
obligations, injuries, costs, damages (direct, indirect or consequential),
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<PAGE> 37
awards, loss of interest, principal, or any portion of the Indebtedness,
charges, expenses, payments of monies and reasonable attorney fees, incurred or
suffered, directly or indirectly, by Lender and/or asserted against Lender by
any Person whatsoever, including Borrowers, arising out of this Agreement, or
the Related Documents, or the relationship herein set forth or the exercise of
any right or remedy or the exercise of any right in connection therewith, for
which Lender may be liable, for any reason whatsoever, except to the extent
(on a comparative basis) the above are related to the gross negligence of
Lender.
16.8. COMPLETE AGREEMENT: This Agreement and the Related Documents
(subject to the Incorporation by Reference) incorporate and/or contain the
entire agreement of the parties hereto and none of the parties shall be bound
by anything not expressed in writing.
16.9. INVALIDITY: Should any part, term or provision of this Agreement or
the Existing Loan Documents be by the courts decided to be illegal or in
conflict with any law of the State of Michigan, the validity of the remaining
portion or provisions of the Agreement and the Existing Loan Documents shall
not be affected thereby.
16.10. AMENDMENT: This Agreement, the Existing Loan Documents and the
Related Documents may only be amended, modified or extended by written
instrument executed by Lender and Borrowers.
16.11. DUPLICATE ORIGINALS: Two or more duplicate originals of this
Agreement may be signed by the parties, each of which shall be an original but
all of which together shall constitute one and the same instrument.
16.12. TIME OF ESSENCE: Time shall be of the essence of this Agreement.
16.13. AUTHORIZED AGENT AUTHORITY: Lender has appointed the Lender's
Authorized Agent as its agent to act for and on behalf of Lender in connection
with this Agreement and the Related Documents. Any approval, consent or other
matters which require the action of the Lender may be exercised by the Lender's
Authorized Agent. Notwithstanding the agency designation, the Lender's
Authorized Agent is an independent contractor, and the Lender's Authorized
Agent may elect, from time to time, not to act
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<PAGE> 38
for the Lender unless the Lender has been specifically consulted.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the
day and year first appearing above.
LENDER: BORROWERS:
------ ---------
The Board of Trustees of the MCA Financial Corp.
Policemen and Firemen
Retirement System of the City
of Detroit By:_____________________________
Its:__________________________
By:__________________________
Its:______________________
and
By:__________________________ MCA Mortgage Corporation
By: ____________________________
Its:______________________
Its: ______________________
Mortgage Corporation of America
By: ____________________________
Its: ______________________
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<PAGE> 39
Mortgage Corporation of America,
Inc.
By:___________________________
Its:______________________
MCA Realty Corporation
By:___________________________
Its:______________________
Complete Financial Corp.
By:___________________________
Its:______________________
Securities Corporation of
America
By:___________________________
Its:______________________
The undersigned executes this Agreement solely for the purposes of
evidencing its consent to be bound by the provisions of Sections 9.4., 10.5.,
and 10.6.
RIMCO Financial Corporation
By:___________________________
Its:______________________
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<PAGE> 40
SCHEDULE 1.31
QUALIFYING WORKING CAPITAL
1. Salaries and commissions
2. Payroll taxes
3. Fringe benefits
4. Rent
5. Utilities
6. Repairs and maintenance
7. Equipment leases
8. Telephone
9. Postage and shipping
10. Office supplies
11. Travel
12. Entertainment
13. Advertising and promotion
14. Professional fees
15. Interest expenses
16. Broker fees
17. Origination/closing fees
18. Insurance
19. Training
20. Taxes
21. Auto expense
22. Dues, subscriptions and licenses
<PAGE> 1
EXHIBIT 10.2
________________________________________________________________
________________________________________________________________
SUBORDINATED PROMISSORY NOTE
(TERM LOAN)
DELIVERED TO: THE BOARD OF TRUSTEES
OF THE POLICEMEN
AND FIREMEN RETIREMENT SYSTEM OF THE
CITY OF DETROIT
BY: MCA FINANCIAL CORP.
MCA MORTGAGE CORPORATION
MORTGAGE CORPORATION OF AMERICA
MORTGAGE CORPORATION OF AMERICA,
INC.
MCA REALTY CORPORATION
COMPLETE FINANCIAL CORP.
SECURITIES CORPORATION OF
AMERICA
DATE: JULY 18, 1996
________________________________________________________________
________________________________________________________________
<PAGE> 2
SUBORDINATED PROMISSORY NOTE
(TERM LOAN)
PRINCIPAL AMOUNT: FARMINGTON HILLS, MICHIGAN
$15,000,000.00
DUE DATE: JUNE 30, 2006 DATED: JULY 18, 1996
FOR VALUE RECEIVED, the undersigned (hereinafter referred to as
"Borrowers"), jointly and severally promise to pay to the order of The Board of
Trustees of the Policemen and Firemen Retirement System of the City of Detroit
(hereinafter referred to as "Lender") at its offices located at 908 City-County
Building, Detroit, Michigan 48221, or at such other place as Lender may
designate in writing, the principal sum of Fifteen Million and No/100
($15,000,000.00) Dollars, or such lesser sum as has been advanced by Lender,
plus interest as hereinafter provided, in lawful money of the United States,
due Lender by Borrowers. This Subordinated Promissory Note (Term Loan)
("Note") is executed and delivered pursuant to a Loan and Financing Agreement
between Lender and Borrowers dated of even date herewith, including all
amendments, modifications, alterations, and extensions thereto, and
restatements thereof ("Loan Agreement") and all terms defined in the Loan
Agreement and used herein shall have the meaning ascribed to them in the Loan
Agreement.
1. INTEREST:
The unpaid principal balance outstanding from time to time
under this Note shall bear interest on a basis of a year of 360 days for the
actual number of days elapsed in a month, at a per annum rate of Ten (10.00%)
percent (the "Effective Interest Rate"). For the purposes hereof, the Escrow
Funds shall not be a credit against the principal balance outstanding under
this Note.
2. PAYMENTS:
This Note shall be repaid by (x) quarterly installments of
interest only, commencing on the First (1st) Business Day of July, 1996, and
continuing on the First (1st) Business Day of each October, January, April and
July (each hereinafter referred to as a "Quarterly Payment Date") ("Stipulated
Quarterly Interest Payments"), which shall be paid to Lender, and (y) Required
Escrow Principal Payments (as and when due under the Loan Agreement),
<PAGE> 3
until the First (1st) Business Day in the month of July, 2001 (hereinafter
referred to as "Amortization Commencement Date"), which shall be paid to Escrow
Agent. Commencing on the Amortization Commencement Date, this Note shall be
repaid by consecutive equal quarterly installments of principal and interest
paid to Lender (such payments first applied to interest accrued hereunder and
the balance, if any, to principal) and continuing on each Quarterly Payment
Date thereafter, until the Due Date of this Note, in an amount sufficient to
amortize and pay in full the principal balance outstanding on the Amortization
Commencement Date, together with interest at the Effective Interest Rate, by
the Due Date of this Note ("Stipulated Quarterly Principal and Interest
Payments"). On the Due Date, the unpaid principal balance and all accrued
interest thereon shall be due and payable in full.
3. METHOD OF PAYMENT:
Any payment made by mail will be deemed tendered and received
only upon actual receipt at the address of Lender or Escrow Agent designated
for such payment whether or not Lender has authorized payment by mail or any
other manner. Borrowers hereby expressly assume all risk of loss or liability
resulting from non-delivery or delay in delivery of any payment transmitted by
mail or in any other manner.
4. NON-WAIVER:
No delay or failure of Lender in exercising any right, remedy,
power or privilege hereunder shall affect such right, remedy, power or
privilege, nor shall any single or partial exercise thereof preclude the
exercise of any other right, remedy, power or privilege. No delay or failure
of Lender at any time to demand strict adherence to the terms of this Note
shall be deemed to constitute a course of conduct inconsistent with the
Lender's right at any time, before or after any Event of Default, to demand
strict adherence to the terms of this Note.
5. PREPAYMENT:
Borrowers may prepay this Note, in whole but not in part, at
anytime, in accordance with the following:
(a) Borrowers shall give to Lender and each Senior
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<PAGE> 4
Lender, Twenty (20) Business Days prior written notice of the prepayment date
("Prepayment Date"); and
(b) On the Prepayment Date, Borrowers tender to Lender in
good U.S. Funds, the total amount of the Indebtedness, plus a prepayment fee
("Prepayment Fee") calculated in accordance with the following:
-3-
<PAGE> 5
Prepayment Date Prepayment Fee
[Occurring in the Calculated by applying
following the following
period(s)] percentage(s) to the
Principal Balance
outstanding on
the Prepayment Date]
July 1, 1996 - June 30, 1997 5%
July 1, 1997 - June 30, 1998 4%
July 1, 1998 - June 30, 1999 3%
July 1, 1999 - June 30, 2000 2%
July 1, 2000 - June 30, 2001 1%
July 1, 2001 - June 30, 2002 1%
July 1, 2002 - June 30, 2003 1%
July 1, 2003 - June 30, 2004 1%
July 1, 2004 - June 30, 2005 1%
July 1, 2005 - June 30, 2006 1%
(c) In addition to the foregoing, and in order to avoid
Borrower's evasion of the Prepayment Fee, the Prepayment Fee shall be
calculated and be due and payable, whether or not any prepayments are made,
upon the date of acceleration of the Indebtedness following the occurrence of a
Matured Event of Default.
(d) Required Escrow Principal Payments shall not be
deemed a prepayment.
6. MAXIMUM RATE OF INTEREST:
Nothing herein contained, nor any transaction relating
thereto, or hereto, shall be construed or so operate as to require the
Borrowers to pay, or be charged, interest at a greater rate than the maximum
allowed by the applicable law relating to this Note. Should any interest or
other charges, charged, paid or payable by the Borrowers in connection with
this Note, or any other document delivered in connection herewith, result in
the charging, compensation, payment or earning of interest in excess of the
maximum allowed by the applicable law as aforesaid, then any and all such
excess shall be and the same is hereby waived by the
-4-
<PAGE> 6
holder, and any and all such excess paid shall be automatically credited
against and in reduction of the principal due under this Note. If Lender shall
reasonably determine that the Effective Interest Rate (together with all other
charges or payments related hereto that may be deemed interest) stipulated
under this Note is, or may be, usurious or otherwise limited by law, the unpaid
balance of this Note, with accrued interest at the highest rate then permitted
to be charged by stipulation in writing between Lender and Borrowers, at the
option of Lender, shall immediately become due and payable.
7. ACCELERATION/COSTS OF COLLECTION/DEFAULT RATE/LATE CHARGES:
Upon the occurrence of a Matured Event of Default as set forth
in the Loan Agreement and acceleration by Lender, the entire unpaid principal
balance and all accrued interest shall be immediately due and payable, together
with (to the extent permitted under applicable law) the reasonable costs,
attorney's fees, and outside consultants' fees reasonably incurred by Lender in
collecting or enforcing payment, and all other portions of the Indebtedness.
During any period of an Event of Default as defined in the Loan Agreement, the
outstanding principal amount hereof shall bear interest at a rate which is
equal to an additional Five (5%) percent per annum. If any required
installment is not paid within Seven (7) Business Days from the date same is
due, then, at the option of Lender, in addition to all other sums due
hereunder, a late charge of not more than Three Cents ($.03) for each Dollar
of the installment so overdue may be charged.
8. ESCROW FUNDS:
Borrowers by execution hereof, and Senior Lenders by execution
of a Counterpart of the Senior Lender Approval hereinafter provided for, hereby
acknowledge; that (x) the Escrow Agreement is solely for the benefit of Lender
in disbursing and collecting funds, and (y) the Escrow Agent is solely the
agent of Lender, and (z) all Escrow Funds are the sole and exclusive property
of Lender, and Borrowers and Senior Lenders shall have no right, title or
interest in any of the Escrow Funds, or any claim for any of the foregoing with
respect to the Escrow Funds, provided however, that any sums delivered to the
Escrow Agent by Borrowers that are in excess of Required Escrow Principal
Payments at the
-5-
<PAGE> 7
time of delivery ("Excess Escrow Payments") shall be returned by Escrow Agent
(to the extent the amount of such Excess Escrow Payments are in the Escrow
Account) to Borrowers, provided Escrow Agent shall have received written demand
of any Senior Lender within One Hundred Eighty (180) calendar days of the date
of receipt of such Excess Escrow Payments.
9. APPLICATION OF PAYMENTS:
Acceptance by Lender of any payment in an amount less than the
amount then due shall be deemed an acceptance on account only, and the failure
to pay the entire amount then due shall be and continue to be an Event of
Default, and at any time thereafter and until the entire amount then due has
been paid, and if such Event of Default becomes a Matured Event of Default,
Lender shall be entitled to exercise all rights conferred upon it by this
instrument upon occurrence of a Matured Event of Default.
10. WAIVERS:
Borrowers hereby waive presentment for payment, demand, notice
of non-payment (except such notice, if any, as required under the Loan
Agreement), notice of protest and protest of this Note, diligence in collection
or bringing suit. The liability of Borrowers shall be absolute and
unconditional, without regard to the liability of any other party hereto.
Notwithstanding the foregoing if an Event of Default or Matured Event of
Default occurs [other than (x) an Insolvency Event, or (y) a Senior Lender
Default], Lender shall give Thirty (30) calendar days prior written notice to
the Senior Lenders before Lender (a) accelerates the Indebtedness, and (b)
exercise or enforces its rights under the Loan Agreement or Put Agreement. In
all events the Senior Lender, Borrowers and Lender, agree that upon an
Insolvency Event, or acceleration of any Senior Debt, the Indebtedness
evidenced by the Note, and the Purchase Price under the Put Agreement due
Lender from MCA Financial Corp. shall be accelerated, due and payable, without
notice by Lender to Senior Lenders or Borrowers, provided however,
notwithstanding such acceleration, and the rights incident thereto, the
Indebtedness (which includes the Purchase Price under the Put Agreement due
Lender from MCA Financial Corp.) shall not be paid until the Senior Debt is
paid in full.
11. ADDITIONAL TERMS/INCORPORATION:
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<PAGE> 8
This Note is executed pursuant to the Loan Agreement and the
Related Documents therein described. Reference is hereby made to said Loan
Agreement and Related Documents for additional terms relating to the
transaction giving rise to this Note, the security given for this Note and
additional terms and conditions under which this Note matures or accelerates.
12. SUBORDINATION AGREEMENTS:
Notwithstanding anything herein contained, this Note and the
payments due thereunder [excluding any Escrow Funds, (but subject to Section 8
of this Note)], are hereby expressly subordinated to the Senior Debt (as
hereinafter defined), in accordance with, and subject to the following
("Subordination Agreements"):
A. All payments due hereunder from the Borrowers shall
be paid in accordance with the terms hereof, until Lender has received a
written notice from any Senior Lender (as hereinafter defined) that a Senior
Debt Default exists, at which time no payments under the Note (including the
payment of the Purchase Price under the Put Agreement due Lender from MCA
Financial Corp.) may be paid by Borrowers nor collected or demanded by Lender,
provided further however, that any sums delivered to Lender by Borrowers,
whether or not a Senior Debt Default exists, that are in excess of Stipulated
Quarterly Interest Payments or Stipulated Quarterly Principal and Interest
Payments ("Excess Stipulated Payments") shall be returned to Borrowers,
provided Lender shall have received written demand of any Senior Lender within
One Hundred Eighty (180) calendar days of the receipt of such Excess Stipulated
Payments.
B. In the event the Senior Debt Default set forth in
Section 12 A above is cured or no longer exists, the Senior Lender sending the
notice of the Senior Debt Default shall promptly notify Lender and Lender's
Authorized Agent by facsimile at (810) 352-0018, Attn: Jon Woods (or as such
notification may be changed by Lender from time to time), and the payments so
deferred as a result of Section 12 A shall be paid within Two (2) Business Days
of such notice and payments thereafter due hereunder shall be made and continue
until Section 12 A is thereafter complied with. In the event a Senior Debt
Default continues, this Note and the payments
-7-
<PAGE> 9
due hereunder shall continue to be subordinated to the full payment of the
Senior Debt to which the Senior Debt Default applies. Any sums received by
Lender in violation of these Subordination Agreements after notice of a Senior
Debt Default as herein required shall be paid over to the Senior Lenders, and
until so paid shall be held by Lender in trust for the benefit of the Senior
Lenders.
C. The amount of the Senior Debt owed to a Senior Lender
to which this Note and the payments due thereunder is subordinated, shall not
exceed the amount of such Senior Debt outstanding in accordance with each
Request For Approval applicable thereto.
D. All Senior Debt shall rank pari passu, but the same
shall not be deemed inconsistent with the other provisions hereof.
E. Lender shall give the Senior Lenders a copy of any
notice to any of the Borrowers, which sets forth a Matured Event of Default (as
defined in the Loan Agreement).
13. DEFINITIONS:
For purposes of this Note, the following terms shall have the
following meanings:
(1) "Authorized Agent" shall mean Plante & Moran,
L.L.P. or any substitute thereof designated by Lender in writing to Borrowers,
from time to time.
(2) "Escrow Account" shall mean the Escrow
Account as defined in and established by the Escrow Agreement.
(3) "Escrow Agreement" shall mean that certain
Escrow Agreement among Borrowers, Lender, and Escrow Agent.
(4) "Escrow Agent" shall mean Sterling Bank
&Trust, FSB, or any substitute thereof, from time to time, in accordance with
the provisions of the Escrow Agreement.
(5) "Escrow Funds" shall mean the monies
contained in the Escrow Account, from time to time, including all interest
accrued thereon.
-8-
<PAGE> 10
(6) "Insolvency Event" shall mean any of the
Borrowers becomes insolvent, is unable to pay its debts as they become due in
the ordinary course, makes an assignment for the benefit of creditors, files a
voluntary petition under the United States Bankruptcy Code or any other
insolvency or moratorium statute, or there is filed against any Company an
involuntary petition under any such statute, provided however if such
involuntary petition is dismissed within sixty (60) calendar days after filing,
if no other Event of Default or Matured Event of Default exists, the Matured
Event of Default based upon the Insolvency Event shall no longer be deemed to
exist.
(7) "Senior Debt" shall mean indebtedness,
including principal, interest, fees and other amounts [subject to Section 4 of
the Request For Approval (in the form attached hereto)], due under any term
loan, revolving credit facility, or other financing provided to Borrowers by a
commercial bank lender acceptable to, and approved by, Lender [such acceptance
and approval to be evidenced by a Senior Lender Approval (in the form attached
hereto)], that is not subordinated to the payment of any other Debt [as defined
in Section 1.11(ii) of the Credit Agreement] for the exclusive purposes of (a)
warehousing of residential mortgage loans pending sale thereof to investors
(including financing new mortgage loans originated or purchased for originators
by that Borrower prior to their sale, or the refinancing of existing mortgage
loans), and (b) the acquisition or retention of Qualifying Servicing Rights (as
defined in the Credit Agreement) by that Borrower, and (c) working capital.
(8) "Senior Debt Default" shall mean the
occurrence of any event, act, omission, failure, violation or other non-
observance or non-performance by any of the Borrowers or any Person, of any
covenant, condition, agreement, duty, provision, or undertaking under the
Senior Debt Documents.
(9) "Senior Debt Documents" shall mean any and
all documents, instruments, notes, agreements, and written memoranda, delivered
in connection with, evidencing, and/or securing any Senior Debt, now or
hereafter existing.
(10) "Senior Debt To Net Worth Ratio" shall mean
that ratio determined by a fraction:
-9-
<PAGE> 11
(a) the numerator of which is the
aggregate principal amount of Senior Debt outstanding; and
(b) the denominator of which is Net
Worth (as defined in Section 1.43 of the Credit Agreement), plus the
amount then accrued under Section 3(a) (1) of the Put Agreement referenced in
the Loan Agreement.
(11) "Senior Lenders" shall mean the holders of
the Senior Debt, who:
(a) have been approved by Lender (or by
Lender's Authorized Agent) by the execution of a Senior Lender Approval in the
form attached hereto) after receipt by Lender of a Request For Approval in the
form attached hereto; and
(b) have been authorized by the Senior
Lender Approval to receive delivery of a true copy of this Note; and
(c) have returned to Lender an executed
Counterpart (in the form attached hereto) of the Request For Approval.
MCA Financial Corp.
By:__________________________
Its:______________________
MCA Mortgage Corporation
By:__________________________
Its:______________________
Mortgage Corporation of America
By:__________________________
Its:______________________
Mortgage Corporation of America, Inc.
By:__________________________
Its:______________________
-10-
<PAGE> 12
Mortgage Corporation of America,
Inc.
By:_____________________________
Its:_________________________
-11-
<PAGE> 13
MCA Realty Corporation
By:____________________________
Its:______________________
Complete Financial Corp.
By:____________________________
Its:_______________________
Securities Corporation of
America
By:____________________________
Its:_______________________
Tax I.D. No. (MCA Financial Corp.)
38-3014001
Tax I.D. No. (MCA Mortgage Corporation)
38-2613174
Tax I.D. No. (Mortgage Corporation of America)
38-2509529
Tax I.D. No. (Mortgage Corporation of America, Inc.)
31-1371271
Tax I.D. No. (MCA Realty Corporation)
38-3114291
Tax I.D. No. (Complete Financial Corp.)
38-2566524
Tax I.D. No. (Securities Corporation of America)
38-3109309
-12-
<PAGE> 14
REQUEST FOR APPROVAL
The undersigned Borrowers and Senior Lender hereby request approval of
the following Senior Lender and Senior Debt; and (x) certify, represent,
warrant and covenant that the information and documents submitted herewith in
Section 1, 2 and 3 are true and accurate, and (y) agree (except where
separately started as to the Senior Lender or Borrowers) to the provisions of
Section 4, 5, 6 and 7. Terms defined in the Subordinated Promissory Note (Term
Loan) dated July 18, 1996, as amended, modified, extended, or restated from
time to time ("Note") have the same meanings when used herein, unless otherwise
defined herein.
1. Name of Senior Lender:
2. Terms and Conditions of Senior Debt:
A. Type of Senior Debt:
B. Maximum Principal Amount of Senior Debt that may be
outstanding (including any formulas):
C. Interest Rate of Senior Debt:
D. Use of Proceeds of Senior Debt:
E. Expiration/Termination/Due Date of Senior Debt:
3. Copies of Senior Debt Documents:
The undersigned hereby certify that attached hereto are true
and accurate copies of the Senior Debt Documents.
4. Amendment/Modification/Waivers:
The Senior Lender and Borrowers hereby certify, represent,
warrant and covenant that no amendments, modifications, or
waivers of any terms, conditions, covenants, agreements,
duties, provisions, or undertakings under the Senior Debt
Document will be made
-13-
<PAGE> 15
without Lender's written consent, and no waiver of any breach,
failure, violation, or other non-observance or non-
performance under the Senior Debt Documents will be made
without Lender's written consent, in any such case that
results in an increase of the amount of the Senior Debt to
which the Indebtedness is subordinated. The Lender's consent
shall not be unreasonably withheld. In the event of any such
increase, the provisions of Section 12C of the Subordinated
Promissory Note (Term Loan) shall apply.
5. Notice of Senior Debt Default:
The Senior Lender hereby certifies, represents, warrants and
covenants that it will deliver to Lender, a copy of any notice
to any of the Borrowers, which sets forth a Senior Debt
Default, provided further the failure to deliver such notice
shall not affect the Subordination Agreements.
6. Senior Debt to Net Worth Ratio:
The Borrowers hereby certify, represent, warrant and covenant,
that if this Request For Approval is approved, that after
giving effect thereto, there will not be, on the date of
execution of the Counterpart, (x) any violation of the Senior
Debt to Net Worth Ratio, or (y) any Senior Lender Default.
7. Defaults:
The Borrowers hereby certify, represent, warrant and covenant
that if this Request For Approval is approved, that after
giving effect thereto, on the date of the execution of a
Counterpart, that no Event of Default exists or will be
created thereby.
This Request for Approval is delivered in connection with the Note.
This Request for Approval is executed on ______________, but effective as of
the date of delivery of a Counterpart.
Senior Lender: MCA Financial Corp.
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<PAGE> 16
___________________________ By:_____________________________
___________________________ Its:______________________
___________________________
MCA Mortgage Corporation
By:________________________
Its:______________________
Mortgage Corporation of America
By:_____________________________
Its:______________________
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<PAGE> 17
Mortgage Corporation of America, Inc.
By:_____________________________
Its:_______________________
MCA Realty Corporation
By:______________________________
Its:_______________________
Complete Financial Corp.
By:______________________________
Its:_______________________
Securities Corporation of America
By:______________________________
Its:_______________________
SENIOR LENDER APPROVAL
The undersigned Authorized Agent of Lender hereby:
1. Approves the Senior Lender and Senior Debt in reliance on the
foregoing, provided however (x) a breach by the Borrowers of
Section 6 and 7 shall not affect the rights of the Senior
Lender under the Subordination Agreements, and (y) a breach by
Senior Lender of Section 4 or Section 5 shall be limited to
the effect as therein provided.
2. Authorizes a true copy of the Subordinated Promissory Note
(Term Loan) to be delivered to Senior Lender.
3. Agrees that the Subordination Agreements contained in the
Subordinated Promissory Note (Term Loan) shall be in effect
with respect to the Senior Debt and Senior Lender herein
referenced, subject to Sections 3 and 4 above,
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<PAGE> 18
upon receipt by the undersigned Authorized Agent of an executed Counterpart
hereof.
The Board of Trustees of the
Policemen and Firemen Retirement
System of the City of Detroit
By: Plante & Moran, L.L.P.
Its: Authorized Agent
By:______________________
Its:__________________
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<PAGE> 19
COUNTERPART
The undersigned Senior Lender agrees to the Subordination Agreements
contained in the Subordinated Promissory Note (Term Loan), subject to the
matters set forth in the Request For Approval and specifically, without
limiting the generality of the foregoing, certifies, represents, warrants and
covenants that as of the Date hereof, the undersigned has not delivered a
Notice of Senior Debt Default.
Date: ____________________ ___________________________
___________________________
___________________________
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<PAGE> 1
EXHIBIT 10.3
________________________________________________________________________________
________________________________________________________________________________
PIGGYBACK RIGHTS AGREEMENT
DELIVERED TO: THE BOARD OF TRUSTEES OF THE
POLICEMEN AND FIREMEN RETIREMENT
SYSTEM OF THE CITY OF DETROIT
BY: MCA FINANCIAL CORP.
DATE: JULY 18, 1996
________________________________________________________________________________
________________________________________________________________________________
<PAGE> 2
PIGGYBACK RIGHTS AGREEMENT
THIS AGREEMENT is made this July 18, 1996, between MCA Financial Corp., a
Michigan corporation (the "Company"), and The Board of Trustees of The
Policemen and Firemen Retirement System of The City of Detroit (the "Fund").
RECITALS
A. Simultaneously with the execution and delivery hereof, the Company and
the Fund are executing and delivering a Stock Purchase Agreement [dated of even
date herewith (together with all amendments, modifications, and extensions
thereto, and restatements thereof) is hereinafter referred to as "Stock
Purchase Agreement"] and Put Agreement [dated of even date herewith (together
with all amendments, modifications, and extensions thereto, and restatements
thereof) is hereinafter referred to as "Put Agreement"].
B. Pursuant to the Stock Purchase Agreement, the Company is delivering to
the Fund the Existing Shares (as defined in the Stock Purchase Agreement)
evidenced by the Stock Certificate No. 177, and is obligated to deliver the
Additional Shares (as defined in the Stock Purchase Agreement).
C. The execution and delivery of this Agreement is incident to the
execution and delivery of the Stock Purchase Agreement and Put Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
1. CERTAIN DEFINITIONS. As used in this Agreement, the following terms
shall have the following respective meanings:
(a) "AGREEMENT" shall mean this Agreement, and all amendments,
modifications and extensions thereto, and restatements thereof, from time
to time, in accordance with the terms hereof.
<PAGE> 3
(b) "COMMISSION" shall mean the Securities and Exchange Commission
or any other federal agency at the time administering the Securities Act.
(c) "COMPANY" shall mean MCA Financial Corp., a Michigan
corporation.
(d) "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934,
as the same has been or shall be amended.
(e) "FUND" shall mean The Board of Trustees of the Policemen and
Firemen Retirement System of the City of Detroit.
(f) "INDEMNIFIED PARTY" shall mean a party entitled to
indemnification under Section 5 of this Agreement.
(g) "INDEMNIFYING PARTY" shall mean the party required to provide
indemnification under Section 5 of this Agreement.
(h) "IPO NOTICE" shall mean a written notice delivered by the
Company to the Fund (a) notifying the Fund that the Company proposes to
make an offering of its Common Stock which it anticipates will satisfy
all of the criteria to constitute a Public Offering; (b) specifying the
proposed commencement date of such offering; (c) identifying the managing
underwriter(s) proposed to be engaged; (d) specifying the range of the
anticipated offering price per share; (e) specifying the number of shares
of the Company's Common Stock (including the number subject to issuance
upon the exercise of outstanding options, warrants or other rights to
purchase shares of the Company's Common Stock) outstanding on the date of
the notice; (f) specifying, if determined, the number of shares, or the
range of numbers of shares, of the Company's Common Stock anticipated to
be offered in such offering; and (g) specifying the number of Shares
which the Fund would be entitled to sell in connection with such Public
Offering.
(i) "PUBLIC OFFERING" shall have the meaning set forth in the Put
Agreement.
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<PAGE> 4
(j) "PUT AGREEMENT" shall mean the Put Agreement between the Company
and the Fund dated of even date herewith, and all amendments,
modifications and extensions thereto, and statements thereof, from time
to time.
(k) "OTHER SHAREHOLDERS" shall mean, collectively, officers or
directors of the Company or any of the subsidiaries who own common stock
of the Company or other holders of the Company common stock who are
entitled, by contract with the Company, to have their common stock
included in a registration of the Company securities.
(l) The terms "REGISTER", "REGISTERED" and "REGISTRATION" shall
refer to a registration effected by preparing and filing a registration
statement in compliance with the Securities Act and applicable rules and
regulations thereunder, and the declaration or ordering of the
effectiveness of such registration statement.
(m) "REGISTRATION EXPENSES" shall mean all expenses incurred by the
Company in compliance with Sections 2 and 3, including, without
limitation, all registration and filing fees, printing expenses, fees and
disbursements of counsel for the Company, blue sky fees and expenses, the
fees and disbursements of counsel to the Fund in connection with the
registration of the Shares and the expense of any special audits incident
to or required by any such registration (but excluding the compensation
of regular employees of the Company, which shall be paid in any event by
the Company).
(n) "SECURITIES ACT" shall mean the Securities Act of 1933, as the
same has been or shall be amended.
(o) "SELLING EXPENSES" shall mean all underwriting discounts and
selling commissions applicable to the sale of securities registered.
(p) "SHARES" shall mean the Shares as defined in the Stock Purchase
Agreement.
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<PAGE> 5
(q) "STOCK PURCHASE AGREEMENT" shall mean the Stock Purchase
Agreement between the Company and the Fund dated of even date herewith,
and all amendments, modifications, and extensions thereto, and
restatements thereof, from time to time.
2. PIGGYBACK RIGHT.
(a) INCLUSION IN OFFERING. If at any time prior to August 1, 2006,
the Company shall determine to register any of its securities either for
its own account or the account of a security holder or holders, other
than a registration relating solely to employee benefit plans, a
registration relating solely to a Commission Rule 145 transaction, or a
registration on any registration form which does not include
substantially the same information as would be required to be included
in a registration statement covering the sale of the Shares, the Company
will:
(i) promptly give to the Fund written notice thereof (which
shall include a list of the jurisdictions in which the Company
intends to attempt to qualify such securities under the applicable
blue sky or other state securities laws and such other information
as the Fund may require including projected Registration Expenses
and Selling Expenses); and
(ii) include in such registration (and any related
qualification under blue sky laws or other compliance) and in any
underwriting involved therein all the Shares specified in a written
request or requests made by the Fund within Thirty (30) Business
Days after receipt of the written notice from the Company described
in Section 2(a)(i) above.
(b) UNDERWRITING. If the registration of which the Company gives
notice is for a registered public offering involving an underwriting, the
Company shall so advise the Fund as a part of the written notice given
pursuant to Section 2(a)(i). In such event the right of the Fund to
registration pursuant to this Section 2 shall be conditioned upon the
Fund's participation in such underwriting and the inclusion of the Shares
in the underwriting. The Fund shall (together
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<PAGE> 6
with the Company and any Other Shareholders distributing their securities
through such underwriting) enter into an underwriting agreement in
customary form with the underwriter or underwriters selected for the
underwriting by the Company. Notwithstanding any other provision of this
Section 2, if the underwriter advises the Company and the Fund in writing
that marketing factors require a limitation on the number of shares to be
underwritten, the underwriter may limit, on a pro-rata basis based upon
the number of shares the Company, the Other Shareholders and the Fund
proposed to include in the registration and underwriting, the number of
securities of the Company, the Other Shareholders and the Fund, to be
included in the registration and underwriting. The Company shall so
advise the Fund and all other holders of securities requesting
registration, and the securities entitled to be included in the
registration and underwriting shall be allocated pro-rata. If the Fund
disapproves of the terms of any such underwriting, including the amount
of securities to be included in the registration after giving effect to
the foregoing sentence, the Fund may elect to withdraw therefrom by
written notice to the Company and the underwriter, the amount of Shares
it so designates, and the remaining shares shall be included in such
underwriting. Any Shares or other securities excluded or withdrawn from
such underwriting shall be withdrawn from such registration, and the
allocation (if any) shall be adjusted accordingly.
(c) WITHDRAWAL OR DELAY OF REGISTRATION. The provisions of Sections
2(a) and (b) notwithstanding, if, at any time after giving written notice
of its intention to register any securities and prior to the effective
date of the registration statement filed in connection with such
registration, the Company shall determine for any reason not to register
or to delay registration of such securities, the Company may, at its
election, give written notice of such determination to the Fund and,
thereupon, (i) in the case of a determination not to register, shall be
relieved of its obligation to register any Shares in connection with such
registration (but not from its obligation, if any, to pay Registration
Expenses in connection therewith), without prejudice, however, to the
right of the Fund, if applicable, to the right of the Fund to include
Shares in a subsequent registration and (ii) in the case of a
determination to delay
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<PAGE> 7
registering, shall be permitted to delay registering any Shares,
for the same period as the delay in registering such other securities.
3. EXPENSES OF REGISTRATION. All Registration Expenses incurred in
connection with any registration, qualification or compliance pursuant to this
Agreement shall be borne by the Company, and all Selling Expenses shall be
borne by the holders of the securities so registered (including the Company, to
the extent securities are offered for its account) pro rata on the basis of the
gross sales proceeds received by them in the offering.
4. REGISTRATION PROCEDURES. In the case of any registration effected by
the Company pursuant to this Agreement, the Company will keep the Fund advised
in writing as to the initiation of each registration and as to the completion
thereof. At its expense, the Company will:
(a) except for offerings pursuant to Rule 415 or successors thereto
under the Securities Act, keep such registration effective for a period
of one hundred twenty (120) days or until the Fund has completed the
distribution described in the registration statement relating thereto,
whichever first occurs;
(b) furnish such number of prospectuses (including preliminary
prospectuses conforming to the requirements of the Securities Act and
rules and regulations thereunder) and other documents incident thereto
as the Fund from time to time may reasonably request;
(c) to the extent requested, furnish to the underwriter, in an
underwritten offering, or to the Fund, in a non-underwritten offering,
(i) a signed opinion of the Company's counsel, and (ii) "comfort" letters
signed by the Company's independent public accountants who have examined
and reported on the Company's financial statements included in the
registration statement, to the extent permitted by the American Institute
of Certified Public Accountants, covering the same matters with respect
to the registration statement (and prospectus included therein) and with
respect to the events subsequent to the date of the financial statements,
as are customarily covered in opinions of counsel and in
-6-
<PAGE> 8
accountants' "comfort" letters delivered to the underwriters in
underwritten public offerings of securities; and
(d) notify the Fund, at any time when a prospectus relating to
Shares covered by a registration statement is required to be delivered
under the Securities Act, of the happening of any event as a result of
which the prospectus included in such registration statement includes an
untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading in the light of circumstances then existing.
5. INDEMNIFICATION.
(a) BY THE COMPANY. The Company will indemnify the Fund and its
officers, directors, trustees, members and agents, and each underwriter,
if any, and each person who controls any underwriter of the Shares,
against all claims, expenses, losses, damages and liabilities (or actions
in respect thereof) arising out of or based on any untrue statement (or
alleged untrue statement) of a material fact contained in any preliminary
or final prospectus, offering circular or other document (including any
related registration statement, notification or the like) incident to any
registration, qualification or compliance, or based on any omission (or
alleged omission) to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, or
any violation (or alleged violation) by the Company of the Securities
Act, any state securities law or any rule or regulation thereunder
applicable to the Company or relating to action or inaction required of
the Company in connection with any such registration, qualification or
compliance, and will reimburse the Fund, each of its officers, directors,
trustees, members and agents, each such underwriter and each person who
controls any such underwriter, for any legal and any other expenses
reasonably incurred in connection with investigating, defending or
settling (except as provided below) any such claim, loss, damage,
liability or action, except to the extent that any such claim, loss,
damage, liability or expense arises out of or is based on (i) any untrue
statement or omission made in reliance on and in conformity with written
information
-7-
<PAGE> 9
furnished to the Company by the Fund or underwriter and expressly
for use therein or (ii) any failure of the Fund or an underwriter to
deliver timely a copy of a final prospectus; provided, that the Company
shall have no obligation to indemnify any underwriter or controlling
person thereof if (x) the person asserting the claim with respect to
which indemnification is sought acquired the securities on which such
claim is based from such underwriter, (y) the claim is based on an
alleged untrue statement or material omission made in connection with
such sale, and (z) the underwriter failed to send or deliver to the
claimant, at or prior to the time that written confirmation of the sale
was sent or delivered, a copy of a prospectus (as same may have been
amended or supplemented), if any then existed, which corrected such
alleged misstatement or omission.
(b) BY THE FUND.
The Fund will indemnify the Company, each of its directors, officers and
agents and each underwriter, if any, of the Company's securities
covered by such a registration statement, each person who controls the
Company or such underwriter within the meaning of the Securities Act and
the rules and regulations thereunder, each Other Shareholder and each of
their officers, directors and partners, and each person controlling such
Other Shareholder, against all claims, expenses, losses, damages and
liabilities (or actions in respect thereof) arising out of or based on
any untrue statement (or alleged untrue statement) of a material fact
contained in any such registration statement, preliminary or final
prospectus, offering circular or other document, or any omission (or
alleged omission) to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and
will reimburse the Company and such Other Shareholders, directors,
officers, partners, persons, underwriters or control persons for any
legal or any other expenses reasonably incurred in connection with
investigating, defending or settling (except as provided below) any such
claim, loss, damage, liability or action, in each case to the extent, but
only to the extent, that such untrue statement (or alleged untrue
statement) or omission (or alleged omission) is made in such registration
statement, prospectus, offering circular or other document in reliance
upon and in conformity with written information furnished to the Company
by the Fund expressly for use therein; provided,
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<PAGE> 10
however, the obligation of the Fund hereunder shall be limited to an
amount equal to the proceeds received by the Fund from the Shares sold
in such registration; provided further, that the Fund shall have no
obligation to indemnify any underwriter or controlling person thereof if
(i) the person asserting the claim with respect to which indemnification
is sought acquired the securities on which such claim is based from such
underwriter, (ii) the claim is based on an alleged untrue statement or
material omission made in connection with such sale and (iii) the
underwriter failed to send or deliver to the claimant, at or prior to the
time that written confirmation of the sale was sent or delivered, a copy
of a prospectus (as same may have been amended or supplemented), if any
then existed, which corrected such alleged misstatement or omission.
(c) PROCEDURES. Each Indemnified Party shall give notice to the
Indemnifying Party promptly after such Indemnified Party has actual
knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or
any litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or any
litigation resulting therefrom, shall be approved by the Indemnified
Party (whose approval shall not unreasonably be withheld), and the
Indemnified Party may participate in such defense at such party's
expense. The failure of any Indemnified Party to give notice as provided
herein shall not relieve the Indemnifying Party of its obligations under
this Section 5 except to the extent the omission results in a failure of
actual notice to the Indemnifying Party and such Indemnifying Party is
materially prejudiced or damaged in its ability to defend such claim as a
result of the failure to give notice. No Indemnifying Party, in the
defense of any such claim or litigation, shall, except with the consent
of each Indemnified Party, consent to entry of any judgment or enter into
any settlement which does not include as an unconditional term thereof
the giving by the claimant or plaintiff to such Indemnified Party of a
release from all liability in respect to such claim or litigation. No
Indemnified Party shall settle any claim, action or proceeding with
respect to which indemnification is sought without the written consent of
the Indemnifying Party. Each Indemnified
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<PAGE> 11
Party shall furnish such information regarding itself or the claim in
question as an Indemnifying Party may reasonably request in writing and
as shall be reasonably required in connection with defense of such claim
and litigation resulting therefrom.
(d) FROM OTHER SHAREHOLDERS. The Company agrees that, to the extent
that it shall grant to any Other Shareholders the right to have the
Company securities held by them included in any registration of the
Company's securities, or to require the Company to register their
securities, it shall require as a condition to such grant that such Other
Shareholders agree to indemnify the Company and the Fund with respect to
any registration of their securities on terms substantially identical to
that provided by the Fund hereunder.
6. INFORMATION FROM THE FUND. The Fund shall furnish to the Company such
information regarding the Fund, the Shares and the distribution proposed by the
Fund as the Company may reasonably request in writing and as shall be
reasonably required in connection with any registration, qualification or
compliance referred to in this Agreement.
7. RULE 144 REPORTING. With a view to making available the benefits of
certain rules and regulations of the Commission which may permit the sale of
the Shares to the public without registration, the Company agrees to:
(a) make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act, at all times
from and after ten (10) days following the effective date of the first
registration statement under the Securities Act filed by the Company for
an offering of its securities to the public; and
(b) file with the Commission in a timely manner all reports and
other documents required of the Company under the Securities Act and the
Exchange Act at any time after it has become subject to such reporting
requirements.
(c) furnish the Fund upon request (i) a written statement as to the
status of its compliance during the
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<PAGE> 12
previous 12 months with the reporting requirements of Section 13 or
Section 15(d) of the Securities Exchange Act of 1934 and (ii) copies of
the most recent annual report on Form 10-K and quarterly report on Form
10-Q and such other documents and reports filed by the Company as the
Fund may request for the purpose of enabling it to utilize available
rules or regulation permitting the sale, disposition or transfer of the
Shares without registration under applicable securities laws.
8. TRANSFER OR ASSIGNMENT OF REGISTRATION RIGHTS. (a) The right to cause
the Company to register Shares granted under Section 2 and the other rights
granted the Fund hereunder may be transferred or assigned by the Fund to one or
more transferees or assignees of the Shares, provided that the Company is given
written notice by the Fund at the time of or within a reasonable time after
said transfer or assignment, stating the name and address of each transferee or
assignee and identifying the number of Shares with respect to which such
registration rights are being transferred or assigned, and provided further
that the transferee or assignee of such rights assumes the obligations of the
Fund under this Agreement. Notwithstanding the foregoing, the Company shall
have no obligation to recognize any assignment of Shares by the Fund, nor to
cause Shares to be transferred on its books or records, unless such transfer is
made in accordance with the registration or qualification requirements of the
Securities Act and all applicable blue sky or other state securities laws or
pursuant to available exemptions therefrom (as evidenced by an opinion of
counsel satisfactory in form and substance to counsel for the Company).
9. LIMITATIONS ON SUBSEQUENT RIGHTS. From and after the date hereof, the
Company shall not, without the prior written consent of the Fund, grant to any
other person any demand or piggyback registration right if (a) such right would
give the holder thereof a preferential right, when compared to the rights of
the Fund hereunder, to have the Company securities included in a registration
statement or (b) compliance therewith would conflict with the provisions
hereof.
10. "MARKET STAND-OFF" AGREEMENT. The Fund agrees, if requested by the
Company and an underwriter of common stock (or other securities) of the
Company, not to sell or otherwise transfer or dispose of any Shares (or other
securities) of the Company held by it during the ninety (90) day period
following the effective
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<PAGE> 13
date of the registration statement for the Public Offering, or such
longer period (not to exceed 270 days from the effective date) to which
holder of not less than 2/3 of the shares of the Company common stock
outstanding immediately prior to such effective date (including but not
limited to all directors and executive officers of the Company, or any
subsidiaries and all holders of 5% or more of the shares outstanding
prior to the Public Offering) have agreed.
11. MISCELLANEOUS.
(a) GOVERNING LAW. This Agreement shall be governed, and the rights
and liabilities of the parties hereto determined in all respects, under
the laws of the State of Michigan.
(b) REMEDIES. Any person having rights under any provision of this
Agreement will be entitled to enforce such rights specifically, to
recover damages caused by reason of any breach of any provision of this
Agreement and to exercise all other rights granted by law.
(c) AMENDMENTS AND WAIVERS. Except as otherwise provided herein,
the provisions of this Agreement may be amended only by written agreement
signed by the party against whom enforcement thereof is sought. Absent
such written agreement, the Company may take any action herein
prohibited, or omit to perform any act herein required to be performed by
it, only if the Company has obtained the written consent or waiver of the
Fund.
(d) SUCCESSORS AND ASSIGNS. All covenants and agreements in this
Agreement by or on behalf of any of the parties hereto will bind and
inure to the benefit of the respective successors and assigns of the
parties hereto. The Company may not assign its rights or obligations
hereunder without the prior written consent of the Fund.
(e) NOTICES. Except as otherwise provided herein, all notices,
demands and requests that any party is required or elects to give to the
other shall be in writing, or by a telecommunications device capable of
creating a written record, and any such notice shall become effective (a)
upon
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<PAGE> 14
personal delivery thereof, including, but not limited to, delivery
by overnight mail and courier service, (b) Three (3) calendar days after
it shall have been mailed by United States mail, first class, certified
or registered, with postage prepaid, or (c) in the case of notice by such
a telecommunications device, when properly transmitted, in each case
addressed to the party to be notified as follows:
IF TO FUND: Board of Trustees of the Policemen
and Firemen Retirement System of
the City of Detroit
908 City-County Building
Detroit, Michigan 48226
Attn: Nicholas Degal, Assistant
Administrator Supervisor
Telecopy No.: (313) 224-3522
WITH A COPY TO: Couzens, Lansky, Fealk, Ellis,
Roeder & Lazar, P.C.
33533 West 12 Mile Road, Suite 150
Farmington Hills, Michigan 48331-5645
Attn: Donald A. Wagner, Esq.
Telecopy No.: (810) 489-4156
WITH A COPY TO: Ronald Zajac, Esq.
243 W. Fort Street, Suite 480
Detroit, Michigan 48226
Telecopy No.: (313) 961-6559
WITH A COPY TO
LENDER'S AUTHORIZED
AGENT: Plante & Moran, L.L.P.
27400 Northwestern Highway
P.O. Box 307
Southfield, Michigan 48034-0307
Attn: Jon Woods
Telecopy No.: (810) 352-0018
IF TO COMPANY: MCA Financial Corp.
23999 Northwestern Highway, Suite 230
Southfield, Michigan 48074
Attn: Patrick D. Quinlan, Chairman
Telecopy No.: (810) 358-7507
WITH A COPY TO: Butzel Long
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<PAGE> 15
150 West Jefferson, Suite 900
Detroit, Michigan 48226-4430
Attn: Justin G. Klimko, Esq.
Telecopy No.: (313) 225-7080
or to such other address as each party may designate for itself by like notice.
(f) ENTIRE AGREEMENT. This Agreement, together with the Stock
Purchase Agreement and Put Agreement represent the entire agreement of
the parties hereto and supersedes all prior oral or written agreements,
negotiations, understandings or arrangements related to the subject
matter hereof.
(g) CAPTIONS. The captions contained in this Agreement are for
convenience only, are without substantive meaning and should not be
construed to modify, enlarge, or restrict any provision.
(h) COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which
together shall constitute one instrument.
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<PAGE> 16
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first written.
MCA FINANCIAL CORP.
a Michigan corporation
By:______________________________
Its:________________________
THE BOARD OF TRUSTEES OF THE
POLICEMEN AND FIREMEN RETIREMENT
SYSTEM OF THE CITY OF DETROIT
By:_____________________________
Its:____________________________
- and -
By:_____________________________
Its:____________________________
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<PAGE> 1
EXHIBIT 10.4
________________________________________________________________________________
________________________________________________________________________________
PUT AGREEMENT
DELIVERED TO: THE BOARD OF TRUSTEES
OF THE POLICEMEN
AND FIREMEN RETIREMENT SYSTEM OF THE
CITY OF DETROIT
BY: MCA FINANCIAL CORP.
DATE: JULY 18, 1996
________________________________________________________________________________
________________________________________________________________________________
<PAGE> 2
PUT AGREEMENT
THIS PUT AGREEMENT (hereinafter, together with all amendments and
modifications, and extensions hereto, and restatements thereof is hereinafter
referred to as "Agreement") dated this 18th day of July, 1996 by and between
MCA Financial Corp., a Michigan corporation (hereinafter referred to as the
"Company"), with an address at 23999 Northwestern Highway, Suite 230,
Southfield, Michigan 48075, and The Board of Trustees of the Policemen and
Firemen Retirement System of the City of Detroit (hereinafter referred to as
the "Fund"), with an address at 908 City-County Building, Detroit, Michigan
48226.
WHEREAS, the Company and the Fund, have entered into a Stock Purchase
Agreement dated of even date herewith pursuant to which, among other things,
the Fund acquired the Existing Shares (as therein defined), and the rights to
acquire the Additional Shares (as therein defined).
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows:
1. DEFINITIONS:
In this Agreement, the following words, phrases, and
expressions shall have the respective meanings attributed to them:
1.1. "BOOK VALUE" shall mean the book value of the Company
reflected on the Financial Statements referenced herein, including market value
of assets not included in such Financial Statements.
1.2. "CLOSING DATE" shall mean the date no later than the
Thirtieth (30th) calendar day after the date of delivery of a Put Notice.
1.3. "COMMON STOCK" shall have the meaning set forth in
the Stock Purchase Agreement.
1.4. "EARNINGS" shall mean net income of the Company
excluding interest expense and federal income taxes, as determined by the
Applicable Financial Statements, provided however in determining the amount of
the interest expense so excluded,
<PAGE> 3
interest expense directly attributable to warehoused loans and land contracts
may be offset by interest earned on such loans and land contracts, but the
amount of such offset may not exceed the total interest expense directly
attributable to warehoused loans and land contracts.
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<PAGE> 4
1.5. "FINANCIAL STATEMENTS" shall mean the Company's
consolidated (with all subsidiaries now or hereafter existing) balance sheet as
of a specified date, and related statements of income, cash flows and changes
in stockholders equity for the period then ended, prepared in accordance with
GAAP.
1.6. "FISCAL YEAR" shall mean the Company's, fiscal year
for financial accounting purposes, each of which ends on January 31.
1.7. "FULLY DILUTED BASIS" shall mean Fully Diluted Basis
(as defined in the Stock Purchase Agreement)
1.8. "GAAP" shall mean at any particular time, generally
accepted accounting principles as in effect at such time, applied on a
consistent basis with past practices commencing with the Financial Statements
ending as of the Fiscal Year ended January 31, 1996.
1.9. INTENTIONALLY OMITTED
1.10. "OPENING DAY BOOK VALUE" shall mean Two Hundred
Eighty-Five Thousand Eight Hundred Sixty-Seven ($285,867.00) Dollars.
1.11. "PUBLIC OFFERING" shall mean a firm commitment
underwritten sale to the public by the Company pursuant to an effective
registration statement under the Securities Act of 1933, (a) of a number of
shares of its Common Stock which, when added to any other outstanding shares of
Common Stock then eligible for public trading without registration or other
restriction under the Securities Act, constitute at least 30% of the number of
shares of Common Stock outstanding, on a Fully-Diluted Basis, after completion
of such offering, and (b) for an aggregate offering price (before payment of
underwriters, or brokers, commissions or discounts and the expenses of the
offering) which, when added to the aggregate offering price received by the
Company from all other offerings of its Common Stock pursuant to effective
Securities Act registration statements, equals not less than $10 million.
1.12. "PERSON" shall mean any individual, sole
proprietorship, general or limited partnership, joint venture,
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<PAGE> 5
trust, unincorporated organization, association, corporation, public authority,
or any other entity.
1.13. "PREFERRED STOCK" shall have the meaning set forth in
the Stock Purchase Agreement.
1.14. "PURCHASE PRICE" shall mean the greatest sum
determined in accordance with Section 3 of this Agreement.
1.15. "PUT DATE" shall mean:
(a) August 1, 2006; or
(b) the date of a Matured Event of Default, [as defined
in a Loan and Financing Agreement among the Company, MCA Mortgage Corporation,
Mortgage Corporation of America, Mortgage Corporation of America, Inc., MCA
Realty Corporation, Complete Financial Corp. and Securities Corporation of
America (as Borrowers) and the Fund (as Lender) dated of even date herewith, as
the same may be amended, modified, extended, or restated, from time to time].
1.16. "PUT NOTICE" shall mean a written notice from the
Fund to the Company demanding that the Company purchase all the Shares on the
Closing Date for the Purchase Price.
1.17. "SHARES" shall have the meaning set forth in the
Stock Purchase Agreement.
1.18. "STOCK PURCHASE AGREEMENT" shall mean that Stock
Purchase Agreement between the Company and the Fund dated of even date
herewith, and all amendments, modifications and extensions thereto, and
restatements thereof, from time to time.
2. PUT PROVISIONS:
Provided that no Public Offering has previously been
consummated, the Fund may deliver a Put Notice to the Company at any time
beginning on any Put Date and ending on the thirtieth (30th) day thereafter,
and the Company shall purchase the Shares on the Closing Date, for the Purchase
Price.
3. PURCHASE PRICE:
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<PAGE> 6
(a) CALCULATION OF PURCHASE PRICE:
The Purchase Price shall be calculated in one of the
following manners, as designated by the Fund:
(1) The Opening Day Book Value per share plus
Fifteen (15%) percent per annum of the Opening Day Book Value, compounded
annually, but annualized and determined monthly with respect to the number of
months in the Fiscal Year of the Closing Date; or
(2) Book value per share as reflected in, at the
option of the Fund, the Financial Statements (i) for the most recent Fiscal
Year ending prior to the Put Date, or (ii) the most recent fiscal quarter
ending prior to the Put Date; or
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<PAGE> 7
(3) Six (6) times the per share value of the greater
of the following:
(i) Earnings reflected in, at the option
of the Fund, the Financial Statements, (x) for the most recent Fiscal Year
ending prior to the Put Date, or (y) the Four (4) most recent fiscal quarters
ending prior to the Put Date; or
(ii) The average of Earnings reflected,
at the option of the Fund, in the Financial Statements (x) for the most recent
Three (3) full Fiscal Years ending prior to the Put Date, or (y) the Twelve
(12) most recent fiscal quarters ending prior to the Put Date.
(b) ADDITIONAL PURCHASE PRICE:
In the event the Purchase Price is determined under
Section 3(a) (1) (2), or (3), and there is a Public Offering within One Hundred
Eighty (180) calendar days from August 1, 2006, then the Company shall pay to
the Fund the additional sum (if any) equal to (a) the amount by which the per
share offering price on the date of the Public Offering exceeds the per share
Purchase Price theretofore paid, multiplied by (b) the number of shares
purchased by the Company from the Fund.
4. COVENANTS:
The Company covenants that:
(a) FISCAL YEAR:
The Company and its subsidiaries will maintain a
Twelve (12) month Fiscal Year ending on January 31st of each year.
(b) BOOKS AND RECORDS:
The Company and its subsidiaries shall keep true
books of record and account in accordance with GAAP and in which full, true and
correct entries in accordance with sound accounting practice will be made of
all income, expenses, dealings and transactions in relation to their business
activities.
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<PAGE> 8
(c) DELIVERY OF FINANCIAL STATEMENTS:
The Company shall deliver to the Fund and its
Authorized Agent [as set forth in Section 5(a) hereof], as soon as practicable
and in any event within One Hundred Twenty (120) calendar days after the close
of each Fiscal Year of the Company commencing with the Fiscal Year ending
January 31, 1997, consolidated (with all subsidiaries) audited Financial
Statements prepared in accordance with GAAP, all in reasonable detail and with
an unqualified opinion expressed by independent public accountants selected by
the Company.
(d) DELIVERY OF CALCULATION OF PURCHASE PRICE:
Commencing with the Fiscal Year ending January 31,
1997, and each year thereafter, the Company shall deliver to the Fund, together
with the Financial Statements required by Section 4 (c) hereof, a calculation
as of such Fiscal Year end of the Purchase Price for the alternatives set forth
in Section 3 (a) (1), (2) and (3) hereof, which calculations shall be certified
as correct by the Chief Financial Officer of the Company.
(e) INDEPENDENT PUBLIC ACCOUNTANTS:
The Company will retain independent public
accountants of recognized national or regional standing who shall certify the
Financial Statements.
5. MISCELLANEOUS. Except as otherwise provided herein, all
notices, demands and requests that any party is required or elects to give to
the other shall be in writing, or by a telecommunications device capable of
creating a written record, and any such notice shall become effective (a) upon
personal delivery thereof, including, but not limited to, delivery by overnight
mail and courier service, (b) Three (3) calendar days after it shall have been
mailed by United States mail, first class, certified or registered, with
postage prepaid, or (c) in the case of notice by such a telecommunications
device, when properly transmitted, in each case addressed to the party to be
notified as follows:
IF TO FUND: Board of Trustees of the Policemen
and Firemen Retirement System of
the City of Detroit
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<PAGE> 9
908 City-County Building
Detroit, Michigan 48226
Attn: Nicholas Degal, Assistant
Administrator Supervisor
Telecopy No.: (313) 224-3522
WITH A COPY TO: Couzens, Lansky, Fealk, Ellis,
Roeder & Lazar, P.C.
33533 West 12 Mile Road, Suite 150
Farmington Hills, Michigan 48331-5645
Attn: Donald A. Wagner, Esq.
Telecopy No.: (810) 489-4156
WITH A COPY TO: Ronald Zajac, Esq.
243 W. Fort Street, Suite 480
Detroit, Michigan 48226
Telecopy No.: (313) 961-6559
WITH A COPY TO
LENDER'S AUTHORIZED
AGENT: Plante & Moran, L.L.P.
27400 Northwestern Highway
P.O. Box 307
Southfield, Michigan 48034-0307
Attn: Jon Woods
Telecopy No.: (810) 352-0018
IF TO COMPANY: MCA Financial Corp.
23999 Northwestern Highway, Suite 230
Southfield, Michigan 48074
Attn: Patrick D. Quinlan, Chairman
Telecopy No.: (810) 358-7507
WITH A COPY TO: Butzel Long
150 West Jefferson, Suite 900
Detroit, Michigan 48226-4430
Attn: Justin G. Klimko, Esq.
Telecopy No.: (313) 225-7080
or to such other address as each party may designate for itself by like notice.
(B) ENTIRE AGREEMENT. This Agreement supersedes all
-8-
<PAGE> 10
prior discussions and agreements between the parties with respect to the
subject matter hereof, and contains the sole and entire agreement between the
parties hereto with respect to the subject matter hereof.
(c) AMENDMENT. This Agreement may be amended, supplemented or
modified only by a written instrument (which may be executed in any number of
counterparts) duly executed by or on behalf of the parties.
(d) WAIVER. Any term or condition of this Agreement may be waived
at any time by the party that is entitled to the benefit thereof, but not such
waiver shall be effective unless set forth in a written instrument duly
executed by or on behalf of the party waiving such term or condition. No waiver
by either party of any term or condition of this Agreement, in any one or more
instances, shall be deemed to be or construed as a waiver of the same term or
condition of this Agreement on any future occasion.
(e) NO THIRD PARTY BENEFICIARY. The terms and provisions of this
Agreement are intended solely for the benefit of each party hereto and their
respective successors or permitted assigns, and it is not the intention of the
parties to confer third-party beneficiary rights upon any other person or
entity.
-9-
<PAGE> 11
(f) NO ASSIGNMENT; BINDING EFFECT. Neither this Agreement nor any
right, interest or obligation hereunder may be assigned or transferred by the
Company. Subject to the first sentence of this paragraph, this Agreement is
binding upon, inures to the benefit of and is enforceable by the parties hereto
and their respective successors and permitted assigns. The stock certificate
evidencing the Share shall bear a legend to the effect that it is subject to
the rights and obligations set forth in this Agreement.
(g) HEADINGS. The headings used in this Agreement have been
inserted for convenience of reference only and do not define or limit the
provisions hereof.
(h) INVALID PROVISIONS. If any provision of this Agreement is
held to be illegal, invalid or unenforceable under any present or future law,
(a) such provision will be fully severable, (b) this Agreement will be
construed and enforced as if such illegal, invalid or unenforceable provision
had never comprised a part hereof, (c) the remaining provision of this
Agreement will remain in full force and effect and will not be affected by the
illegal, invalid or unenforceable provision or by its severance herefrom.
(i) REMEDIES. Except as otherwise expressly provided for herein,
no remedy conferred by any of the specific provisions of this Agreement is
intended to be exclusive of any other remedy, and each and every remedy shall
be cumulative and shall be in addition to every other remedy given hereunder or
now or hereafter existing at law or in equity or by statute or otherwise. The
election of any one or more remedies by either party hereto shall not
constitute a waiver by any such party of the right to pursue any other
available remedies.
(j) DAMAGES. Damages in the event of breach of this Agreement by
a party hereto would be difficult, if not impossible, to ascertain, and it is
therefore agreed that each party hereto, in addition to and without limiting
any other remedy or right it may have, will have the right to an injunction or
other equitable relief in any court of competent jurisdiction, enjoining any
such breach, and enforcing specifically the terms and provisions hereof and
each of the Company and the Fund hereby waives any and all
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<PAGE> 12
defenses it may have on the ground of lack of jurisdiction or competence of the
court to grant such an injunction or other equitable relief. The existence of
this right will not preclude any such person from pursuing any other rights and
remedies at law or in equity which such person may have.
(k) GOVERNING LAW. This Agreement shall be governed by
and construed in accordance with the laws of the State of Michigan, without
regard to choice of law principles which may require application of the laws of
any other jurdisdiction.
(l) COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which will be deemed an original, but all of
which together will constitute one and the same instrument.
(m) TERMINATION. This Agreement shall terminate upon the
first to occur of (i) August 31, 2006, unless a Put Notice shall have been
previously delivered in accordance with the provisions of this Agreement, or
(ii) the closing date of a Public Offering, or (iii) the Closing Date
hereunder.
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officer of each party hereto as of the date
first above written.
COMPANY:
MCA Financial Corp.
By:__________________________
Its:______________________
"FUND"
The Board of Trustees of the
Policemen and Firemen
Retirement System of the City
of Detroit
By:__________________________
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<PAGE> 13
Its:______________________
-and-
By:__________________________
Its:______________________
-12-
<PAGE> 1
EXHIBIT 10.5
________________________________________________________________________________
________________________________________________________________________________
ESCROW AGREEMENT
DELIVERED TO: STERLING BANK AND TRUST COMPANY
BY: MCA FINANCIAL CORP.
MCA MORTGAGE CORPORATION
MORTGAGE CORPORATION OF AMERICA
MORTGAGE CORPORATION OF AMERICA,
INC.
MCA REALTY CORPORATION
COMPLETE FINANCIAL CORP.
SECURITIES CORPORATION OF
AMERICA
- AND-
THE BOARD OF TRUSTEES OF THE
POLICEMEN AND FIREMEN RETIREMENT
SYSTEM OF THE CITY OF DETROIT
DATE: JULY 18, 1996
________________________________________________________________________________
________________________________________________________________________________
<PAGE> 2
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (including all amendments, modifications and
extension thereto, and restatements thereof, is hereinafter referred to as
"Agreement") is made this 18th day of July, 1996, by and among MCA Financial
Corp., MCA Mortgage Corporation, Mortgage Corporation of America, Mortgage
Corporation of America, Inc., MCA Realty Corporation, Complete Financial Corp.,
Securities Corporation of America ("Borrowers"), The Board of Trustees of the
Policemen and Firemen Retirement System of the City of Detroit ("Lender") and
Sterling Bank and Trust, FSB ("Escrow Agent").
W I T N E S S E T H:
WHEREAS, Borrowers and Lender have entered into that certain Loan and
Financing Agreement dated of even date herewith ("Loan Agreement"), whereby
Lender has agreed to loan to Borrowers $15,000,000.00 (the "Loan Amount") for
the purposes set forth in the Loan Agreement; and
WHEREAS, pursuant to the Loan Agreement, Lender will advance to Escrow
Agent the Loan Amount; and
WHEREAS, any term defined in the Loan Agreement shall have the same
meaning when used herein, unless otherwise defined herein;
NOW, THEREFORE, in consideration of the performance of the covenants
contained herein, Borrowers, Lender and Escrow Agent hereby agree as follows:
1. DUTIES OF ESCROW AGENT:
A. Lender herewith deposits with Escrow Agent the Loan Amount, the receipt
of which is hereby acknowledged.
B. Escrow Agent shall establish an interest bearing Escrow Account
("Escrow Account") into which shall be deposited the Loan Amount, together with
payments received by Escrow Agent from any of the Borrowers, from time to time,
which payments shall be deposited no later than the next Business Day after
receipt thereof, and which Escrow Account shall further contain interest
accrued thereon, from time to time (until disbursed to Borrowers or Lender as
herein required) (collectively the "Escrow Funds"). Escrow Agent shall
deliver, no later than the Fifth (5th) Business
<PAGE> 3
Day of each month, to Lender's Authorized Agent and Borrowers, as of the First
(1st) Business Day of each month, a monthly transaction and investment
report showing an itemization of receipts and disbursements of the Escrow
Funds, interest earned thereon, the balance of the Escrow Funds in the Escrow
Account as of the date of such report, and such other information as Lender or
Lender's Authorized Agent may reasonably require and that reasonably obtainable
by Escrow Agent, provided further that the reasonable costs incurred by Escrow
Agent associated therewith shall be paid by Borrowers.
C. Escrow Agent shall invest the Escrow Funds in such interest bearing
investments, from time to time, as directed by Borrowers, and approved by
Lender's Authorized Agent, such approval not to be unreasonably withheld.
Neither Lender nor Lender's Authorized Agent shall have any responsibility or
liability for any such investments (including the rate of interest earned
thereon, from time to time). Escrow Agent shall endeavor in good faith to
abide by Borrowers' directions regarding the interest bearing investments, but
shall not be or become liable to Borrowers or any other party unless it is
demonstrated that Escrow Agent willfully acted contrary to Borrowers'
directions or was grossly negligent in carrying out such directions. Escrow
Agent shall not be or become liable to Borrowers or any other party if the
interest bearing investments directed by Borrowers allow for liquidation
according to a schedule inconsistent with any of Borrowers' Requests for
Advances.
D. Escrow Agent shall make each Money Advance in response to a Request for
Advance from Borrowers. Borrowers shall submit Requests for Advances no more
often than once in any trailing Two (2) week period, and no more often than
twice in any calendar month.
(i) To make a Request for Advance, Borrowers shall notify Escrow Agent of
the amount of the Money Advance requested.
(ii) Simultaneously with notice to Escrow Agent noted in D(i), Borrowers
shall convey to Lender's Authorized Agent the Request for Advance sent to
Escrow Agent, together with each of the following items:
(1) the Amount of the Money Advance requested; and
-2-
<PAGE> 4
and
(2) a certification by an Authorized signatory of the amount of the
requested Money Advance which will be allocated to and used for Qualifying
Equity, Qualifying Equipment and Qualifying Working Capital, together with
all supporting documentation reasonably required by Lender's Authorized Agent;
and
(3) a certification by an Authorized Signatory that no Event of Default or
Matured Event of Default exists, or after giving effect to such Request for
Advance, will be created thereby; and
(4) a certification by an Authorized Signatory [irrespective of whether a
duplication of matters set forth in D (ii)(3)] that after giving effect to such
Request for Advance, there will be no sums outstanding in excess of the Loan
Base; and
-3-
<PAGE> 5
(5) a certification by an Authorized Signatory of the
amount of the Senior Debt then outstanding; and
(6) a certification by an Authorized Signatory
[irrespective of whether a duplication of matters set forth in D(ii)(3)] that
after giving effect to the Request for Advance, Borrowers will not be in
violation of the Senior Debt To Net Worth Ratio; and
(7) a certification by an Authorized Signatory stating
the Value of Qualifying Non-Conforming Loans.
(iii) Upon receipt of the Request for Advance, Escrow Agent shall notify
Lender and Lender's Authorized Agent of the effective date [which shall be the
close of business on the Fifth (5th) Business Day following the receipt date of
the Request for Advance ("Effective Date")]. If Escrow Agent has not received
written notice (which may be by facsimile) of Lender's or Lender's Authorized
Agent's disapproval of the Request for Advance prior to the Effective Date, the
Request for Advance shall be honored on the next Business Day following the
Effective Date.
E. Notwithstanding anything herein contained, or the amount of the Escrow
Funds then existing, Borrowers shall make all payments due under the Note to
the Lender. Accrued interest on the investments received by Escrow Agent
between payment due dates as set forth in (or under) the Note shall be held in
the Escrow Account. On each such payment due date, Escrow Agent shall deliver
to Borrowers all interest on the investments received since the next previous
payment due date.
2. AGREEMENT SUPPLEMENTAL:
As between Lender and Borrowers, this Agreement is supplementary to, and
not in lieu of, the provisions of the Loan Agreement, and in the event of any
conflict between the provisions hereof and any provision of the Loan Agreement,
the provisions of the Loan Agreement shall be controlling.
3. AUTHORIZED AGENT:
Lender hereby notifies Borrowers and Escrow Agent that
-4-
<PAGE> 6
the Lender's Authorized Agent is Plante & Moran, L.L.P., who is authorized to
act for and on behalf of Lender in connection with this Agreement. Lender may
substitute any other person or entity, from time to time, upon written notice
to Borrowers and Escrow Agent, who shall then be the Lender's Authorized Agent.
Notwithstanding the Agency designation, the Lender's Authorized Agent is an
independent contractor, and the Lender's Authorized Agent may elect, from time
to time, not to act for the Lender unless the Lender has been specifically
consulted.
4. NOTICE:
Except as otherwise provided herein, all notices, demands and requests
that any party is required or elects to give to the other shall be in writing,
or by a telecommunications device capable of creating a written record, and any
such notice shall become effective [other than a Request For Advance which
shall be effective as provided in Section 1 D(iii)] (a) upon personal delivery
thereof, including, but not limited to, delivery by overnight mail and courier
service, (b) Three (3) calendar days after it shall have been mailed by United
States mail, first class, certified or registered, with postage prepaid, or (c)
in the case of notice by such a telecommunications device, when properly
transmitted, in each case addressed to the party to be notified as follows:
IF TO LENDER: Board of Trustees of the Policemen
and Firemen Retirement System of
the City of Detroit
908 City-County Building
Detroit, Michigan 48226
Attn: Nicholas Degal, Assistant
Administrator Supervisor
Telecopy No.: (313) 224-3522
WITH A COPY TO: Couzens, Lansky, Fealk, Ellis,
Roeder & Lazar, P.C.
33533 West 12 Mile Road, Suite 150
Farmington Hills, Michigan 48331-5645
Attn: Donald A. Wagner, Esq.
Telecopy No.: (810) 489-4156
WITH A COPY TO: Ronald Zajac, Esq.
-5-
<PAGE> 7
243 W. Fort Street, Suite 480
Detroit, Michigan 48226
Telecopy No.: (313) 961-6559
WITH A COPY TO
LENDER'S AUTHORIZED
AGENT: Plante & Moran, L.L.P.
27400 Northwestern Highway
P.O. Box 307
Southfield, Michigan 48034-0307
Attn: Jon Woods
Telecopy No.: (810) 352-0018
IF TO BORROWERS: c/o MCA Financial Corp.
23999 Northwestern Highway, Suite 230
Southfield, Michigan 48074
Attn: Patrick D. Quinlan, Chairman
Telecopy No.: (810) 358-7507
WITH A COPY TO: Butzel Long
150 West Jefferson, Suite 900
Detroit, Michigan 48226-4430
Attn: Justin G. Klimko, Esq.
Telecopy No.: (313) 225-7080
IF TO ESCROW AGENT: Sterling Bank and Trust, FSB
One Towne Square, 17th Floor
Southfield, Michigan 48076
Attn: M. Richard Olson
Telecopy No.: (810) 351-3491
or to such other address as each party may designate for itself by like notice.
5. DUTIES, DISPUTES, AND RESIGNATIONS:
A. Escrow Agent shall have no duties or responsibilities other than those
expressly set forth in this Agreement. Escrow Agent shall have no duty to
enforce any obligation of any person (other than Escrow Agent) to make any
payment or delivery or to direct or enforce any obligation of any person to
perform any other act. Escrow Agent will have no liability to anyone by reason
of any failure on the part of any party (other than Escrow Agent) to
-6-
<PAGE> 8
perform such party's obligations under any agreement, instrument, or document
pertaining to (or contemplated in) the Loan Agreement or the Note. Except for
this Agreement and the instructions to Escrow Agent as provided in this
Agreement, Escrow Agent will not be obligated to recognize any agreement
between any or all of the parties, notwithstanding that it may have knowledge
thereof.
B. Escrow Agent may rely upon any written notice, request, waiver,
consent, certificate, receipt, authorization, power of attorney, or other
instrument or document which Escrow
Agent in good faith believes to be genuine and to be what it purports to be.
C. In the event of any disagreement between the parties hereto resulting
in conflicting instructions to, or adverse claims or demands upon, Escrow Agent
with respect to the matters herein set forth, the Escrow Agent may refuse to
comply with any such instruction, claim or demand so long as such disagreement
shall continue, and in so refusing Escrow Agent shall not release the Escrow
Funds. Escrow Agent shall not be or become liable in any way for its failure
or refusal to comply with any such conflicting instructions or adverse claims
or demands, and it shall be entitled to continue to refrain from acting until
such conflicting instructions or adverse claims or demands (i) shall have been
resolved by agreement among Lender and Borrowers and it shall have been
resolved by agreement among Lender and Borrowers an it shall have been resolved
by agreement among Lender and Borrowers and it shall have been notified in
writing thereof by the Lender and Borrowers, or (ii) shall have finally been
determined in a court of competent jurisdiction.
D. Escrow Agent may, in its sole discretion, resign by giving Thirty (30)
days written notice thereof to the parties hereto, and Lender or Lender's
Authorized Agent may, by giving Thirty (30) days written notice, replace Escrow
Agent. In either of such event, Lender or Lender's Authorized Agent shall
furnish to Escrow Agent written instructions for disposition of the Escrow
Funds. If Escrow Agent shall not have received such written instructions
within the Thirty (30) day period, Escrow Agent may petition any court of
competent jurisdiction for the appointment of a successor Escrow Agent and,
Escrow Agent upon such appointment, deliver the Escrow Funds to such successor.
-7-
<PAGE> 9
6. INDEMNIFICATION, REIMBURSEMENT:
A. Borrowers, jointly and severally, shall indemnify and hold harmless
Escrow Agent from and against any fees, costs, expenses, claims, damages or
losses (including reasonable counsel and/or attorney fees and disbursements)
suffered by Escrow Agent in connection with any claim or demand which in any
way, directly or indirectly, arises out of or relates to this Agreement, the
services of Escrow Agent hereunder, or the filing by Escrow Agent of any action
related to this Agreement, other than as a result of Escrow Agent's negligence
or willful misconduct.
B. Escrow Agent shall be entitled to reimbursement from Borrowers for
out-of-pocket expenses paid or incurred by it in the administration of its
duties hereunder, including, but not limited to, all reasonable counsel,
attorney, advisor, and agent fees and disbursements and all taxes or other
governmental charges. If Escrow Agent incurs any costs, losses, liabilities,
damages or expenses (including reasonable counsel/attorney fees) in connection
with its activity as Escrow Agent, its holding of the Escrow Funds, or its
filing of any interpleader or other action, the same shall be paid by
Borrowers, except to the extent that same result from Escrow Agent's negligence
or willful misconduct.
7. ESCROW AGENT SOLELY FOR BENEFIT OF LENDER:
The Borrowers and Escrow Agent acknowledge and agree that (a) this Escrow
Agreement is solely for the benefit of Lender in disbursing and collecting
funds, and (b) the Escrow Agent is solely the agent of Lender, and (c) all
Escrow Funds are the sole and exclusive property of Lender, and neither the
Borrowers nor any other person or entity shall have any right, title or
interest in any of the Escrow Funds, or any claim for any of the foregoing with
respect to the Escrow Funds, and (d) interest under the Note shall in all
events accrue as of the date hereof, and be due and payable, together with
principal payments as required under the Note, notwithstanding the other
provision of this Agreement and in particular, Section 7, and notwithstanding
the rate of interest on the investments (which may be less than the interest
due under the Note), which rate of interest is at the sole risk of the
Borrowers.
8. ESCROW AGENT'S FEES:
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<PAGE> 10
The fees payable to the Escrow Agent for its performance of services under
this Agreement are set forth in Exhibit "A", which is attached to this
Agreement and made a part hereof. Notwithstanding that this Agreement is
solely for the benefit of the Lender, all fees due Escrow Agent shall be paid
by Borrowers.
9. CHANGES:
Any changes in the terms or conditions hereof may be made only in writing
signed by all parties or their duly authorized representatives.
10. BINDING EFFECT:
This Agreement shall incur to the benefit of, and be binding, on the
parties hereto and their respective successors and assigns.
11. TERMINATION:
On the Amortization Commencement Date, or as soon thereafter as is
practicable, Escrow Agent shall deliver to the Lender all Escrow Funds
remaining in the Escrow Account (and funds in any investments made pursuant to
Section 1.C of this Agreement), together with a final monthly transaction and
investment report. This Agreement shall terminate upon deliver to Lender of
such funds and report.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed on their behalf by their duly authorized officers or representatives
on the day and year first above written.
BORROWERS:
MCA Financial Corp.
By:__________________________
Its:_________________________
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<PAGE> 11
MCA Mortgage Corporation
By:__________________________
Its:______________________
Mortgage Corporation of America
By:__________________________
Its:______________________
Mortgage Corporation of America,
Inc.
By:__________________________
Its:______________________
MCA Realty Corporation
By:__________________________
Its:______________________
Complete Financial Corp.
By:___________________________
Its:_______________________
Securities Corporation of
America
By:___________________________
Its:_______________________
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<PAGE> 12
LENDER:
The Board of Trustees of the
Policemen and Firemen
Retirement System of the City
of Detroit
By:___________________________
Its:_______________________
- and -
By:___________________________
Its:_______________________
ESCROW AGENT:
Sterling Bank and Trust
Company, FSB
By:___________________________
Its:_______________________
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<PAGE> 1
EXHIBIT 10.6
LOAN AGREEMENT
between
MCA FINANCIAL CORP.,
MCA MORTGAGE CORPORATION, and
MORTGAGE CORPORATION OF AMERICA,
as Borrowers
TEXAS COMMERCE BANK NATIONAL ASSOCIATION,
as Agent,
TEXAS COMMERCE BANK NATIONAL ASSOCIATION,
as Collateral Agent,
and
CERTAIN LENDERS,
as Lenders
$100,000,000
DATED AS OF SEPTEMBER 3, 1996
<PAGE> 2
TABLE OF CONTENTS
SECTION 1. DEFINITIONS AND REFERENCES 1
1.1 Definitions 1
1.2 Time References 17
1.3 Other References 17
1.4 Accounting Principals 17
SECTION 2. BORROWING PROVISIONS 17
2.1 Commitments 17
2.2 Borrowing Request 18
2.3 Fundings 18
2.4 Wet Borrowing Procedures 19
2.5 Terminations 20
2.6 Multiple Borrowers 20
SECTION 3. PAYMENT TERMS 21
3.1 Notes 21
3.2 Payment Procedures 21
3.3 Scheduled Payments 22
3.4 Prepayments 22
3.5 Order of Application 23
3.6 Sharing 24
3.7 Interest Rates 24
3.8 Additional Costs 26
3.9 Change in Laws 27
3.10 Foreign Lenders, Participants and Purchasers 27
3.11 Fees 28
SECTION 4. COLLATERAL PROCEDURES 28
4.1 Eligible Collateral 28
4.2 Borrowing Base 29
4.3 Collateral Delivery 29
4.4 Bailee and Agent 29
4.5 Shipment for Sale 29
4.6 Shipment for Correction 30
4.7 Release of Collateral 31
SECTION 5. CONDITIONS PRECEDENT 31
i
<PAGE> 3
SECTION 6. REPRESENTATIONS AND WARRANTIES 31
6.1 Purpose of Credit 32
6.2 About the Companies 32
6.3 Authorization and Contravention 32
6.4 Binding Effect 32
6.5 Fiscal Year 33
6.6 Current Financials 33
6.7 Financial Condition 33
6.8 Solvency 33
6.9 Litigation 33
6.10 Transactions with Affiliates 33
6.11 Taxes 33
6.12 Employee Plans 33
6.13 Property 34
6.14 Intellectual Property 34
6.15 Environmental Matters 34
6.16 Government Regulations 34
6.17 Insurance 35
6.18 Appraisals 35
6.19 Full Disclosure 35
SECTION 7. AFFIRMATIVE COVENANTS 35
7.1 Reporting Requirements 35
7.2 Use of Proceeds 36
7.3 Books and Records 36
7.4 Inspections 36
7.5 Taxes 37
7.6 Expenses 37
7.7 Maintenance of Existence, Assets, and Business 37
7.8 Insurance 38
7.9 Take-Out Commitments 38
7.10 Appraisals 38
7.11 Indemnification 38
SECTION 8. NEGATIVE COVENANTS 39
8.1 Debt 39
8.2 Liens 39
8.3 Loans, Advances, and Investments 39
8.4 Distributions 39
8.5 Merger or Consolidation 39
8.6 Liquidations and Disposition of Assets 39
8.7 Use of Proceeds 40
8.8 Transactions with Affiliates 40
8.9 Employee Plans 40
ii
<PAGE> 4
8.10 Compliance with Laws and Documents 40
8.11 Government Regulations 40
8.12 Fiscal Year Accounting 40
8.13 New Businesses 40
8.14 Assignment 40
SECTION 9. FINANCIAL COVENANTS 40
9.1 Net Worth 41
9.2 Leverage 41
9.3 Servicing Portfolio 41
SECTION 10. DEFAULTS AND REMEDIES 41
10.1 Default 41
10.2 Remedies 43
10.3 Right of Offset 43
10.4 Waivers 44
10.5 Performance by Agent 44
10.6 No Responsibility 44
10.7 No Waiver 44
10.8 Cumulative Rights 45
10.9 Rights of Individual Lenders 45
10.10 Notice to Agent 45
10.11 Costs 46
SECTION 11. MISCELLANEOUS 46
11.1 Nonbusiness Days 46
11.2 Communications 46
11.3 Form and Number of Documents 46
11.4 Exceptions to Covenants 46
11.5 Survival 46
11.6 Governing Law 47
11.7 Invalid Provisions 47
11.8 Conflicts Between Loan Documents 47
11.9 Discharge and Certain Reinstatement 47
11.10 Amendments, Consents, Conflicts, and Waivers 47
11.11 Multiple Counterparts 48
11.12 Parties 48
11.13 Participation 49
11.14 Transfers 49
11.15 Jurisdiction; Venue; Service of Process; and Jury Trial 50
11.16 Entire Agreement 51
iii
<PAGE> 5
SCHEDULES AND EXHIBITS
Schedule 2 - Lenders and Commitments
Schedule 4.1 - Eligibility Conditions
Schedule 4.2 - Borrowing-Base Calculations
Schedule 4.3 - Collateral Procedures
Schedule 5 - Closing Conditions
Schedule 6.2 - Companies
Schedule 6.9 - Litigation and Judgments
Schedule 6.10 - Affiliate Transactions
Schedule 8.1 - Permitted Debt
Schedule 8.2 - Permitted Liens
Schedule 8.3 - Permitted Loans/Investments
Exhibit A - Note
Exhibit B - [Intentionally Omitted]
Exhibit C-1 - Security Agreement
Exhibit C-2 - Financing Statement
Exhibit C-3 - Shipping Request
Exhibit C-4 - Bailee Letter for Investors
Exhibit C-5 - Bailee Letter for Pool Custodian
Exhibit C-6 - Trust Receipt and Agreement
Exhibit C-7 - Release Request
Exhibit D-1 - Borrowing Request
Exhibit D-2 - Collateral-Delivery Notice
Exhibit D-3 - Borrowing-Base Report
Exhibit D-4 - Take-Out Report
Exhibit D-5 - Management Report
Exhibit D-6 - Compliance Certificate
Exhibit D-7 - Collateral-Conversion Notice
Exhibit E - Opinion of Counsel
Exhibit F-1 - Amendment
Exhibit F-2 - Assignment and Assumption Agreement
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<PAGE> 6
LOAN AGREEMENT
THIS AGREEMENT is entered into as of September 3, 1996, between MCA
FINANCIAL CORP., a Michigan corporation, MCA MORTGAGE CORPORATION, a Michigan
corporation, and MORTGAGE CORPORATION OF AMERICA, a Michigan corporation
(collectively "BORROWERS"), the Lenders described below, TEXAS COMMERCE BANK
NATIONAL ASSOCIATION, as Agent for Lenders, and TEXAS COMMERCE BANK NATIONAL
ASSOCIATION, as Collateral Agent for Lenders.
(See SECTION 1.1 for defined terms)
RECITALS
Borrowers originate, acquire, market, sell and service mortgage loans.
Borrowers have jointly and severally requested Lenders to provide Borrowings as
may be requested from time to time by Borrowers to finance their mortgage
lending business by warehousing loans until they are sold in the secondary
market. Lenders have agreed to extend those Borrowings subject to the terms
and conditions of the Loan Documents, including that the total Borrowings may
never exceed the total Commitments and that a Borrowing Excess may never exist.
Borrowers are granting to Collateral Agent for Lenders first priority Liens
upon, among other things, the Collateral delivered to Collateral Agent under
the Loan Documents.
ACCORDINGLY, for adequate and sufficient consideration, Borrowers,
Lenders, Agent, and Collateral Agent agree as follows:
SECTION 1. DEFINITIONS AND REFERENCES. Unless stated otherwise, the following
provisions apply to each Loan Document and annexes, exhibits, and schedules to,
and certificates, reports, and other writings delivered under, the Loan
Documents.
1.1 Definitions.
AFFILIATE means, for any Person, any other individual or entity that,
directly or indirectly through ownership, voting securities, contract, or
otherwise, controls, is controlled by, or under common control with that
Person.
AGENT means, at any time, Texas Commerce Bank National Association, or
its successor appointed under the Lenders' Agreement, acting as agent for
Lenders under the Loan Documents.
APPLICABLE COVERED RATE means, for each Borrowing Purpose Category in the
table below, the annual interest rate stated beside that category:
<PAGE> 7
BORROWING PURPOSE CATEGORY APPLICABLE COVERED RATE
- ---------------------------- -----------------------
Gestation Borrowings 0.850%
- -------------------- -----------------------
Repurchase Borrowings 2.500%
- --------------------- -----------------------
B/C Paper Borrowings 1.750%
- -------------------- -----------------------
Land Contract Borrowings 2.250%
- ------------------------ -----------------------
Construction Loan Borrowings 2.250%
- ---------------------------- -----------------------
Other Borrowings 1.500%
- ---------------- -----------------------
APPLICABLE MARGIN means, for each Borrowing Purpose Category and relevant
Borrowing Price Category in the table below, the interest margin beside those
categories:
BORROWING PRICE
BORROWING PURPOSE CATEGORY CATEGORY APPLICABLE MARGIN
- --------------------------- --------------- -----------------
Gestation Borrowings Base Rate 0.000%
- -------------------- --------- -----------------
LIBOR Rate 0.850%
---------- -----------------
Repurchase Borrowings Base Rate 1.000%
- --------------------- --------- -----------------
LIBOR Rate 2.500%
---------- -----------------
B/C Paper Borrowings Base Rate 0.250%
- -------------------- --------- -----------------
LIBOR Rate 1.750%
---------- -----------------
Land Contract Borrowings Base Rate 0.750%
- ------------------------ --------- -----------------
LIBOR Rate 2.250%
---------- -----------------
Construction Loan Borrowings Base Rate 0.750%
- ---------------------------- --------- -----------------
LIBOR Rate 2.250%
---------- -----------------
Other Warehouse Borrowings Base Rate 0.000%
- -------------------------- --------- -----------------
LIBOR Rate 1.500%
---------- -----------------
APPRAISAL means, for any Mortgage Loan or other item of Collateral, a
written appraisal report as that term is defined in the Code of Professional
Ethics of the American Institute of Appraisers, meeting the requirements of all
Appraisal Laws, prepared by a professional appraiser who is a member of the
Appraisal Institute and who is acceptable to Collateral Agent, and in
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<PAGE> 8
form, scope and substance satisfactory to Collateral Agent, setting forth such
appraiser's determination of the market value of the real property securing the
Mortgage Loan or other item of Collateral.
APPRAISAL LAW means any Law that is applicable to appraisals of mortgaged
residential property in connection with transactions involving that property,
including Title XI of the Financial Institutions Reform, Recovery, and
Enforcement Act of 1989, the Federal Deposit Insurance Corporation Improvement
Act of 1991, 12 C.F.R. Chapter I, Part 34, Subpart C, 12 C.F.R. Chapter II,
Subchapter A. Part 225, Subpart G, and 12 C.F.R. Chapter III, Subchapter B,
Part 323.
APPROVED INVESTOR means (a) FHLMC, FNMA, and GNMA and (b) any other Person
from time to time named on a list agreed to by Agent and Borrowers, which list
Agent shall furnish to Collateral Agent or any Lender upon request, as that
list may be amended from time to time (i) by Borrowers and Agent to remove or
add other names as Agent and Borrowers may agree, (ii) by either Agent or
Determining Lenders to remove any such other Person after Agent has or
Determining Lenders have, given to Borrowers notice of, and an opportunity to
discuss, the proposed removal of that Person, or (iii) automatically, without
signing by any party, to remove any such Person who then (A) is not Solvent,
(B) fails to pay its debts generally as they become due, (C) voluntarily seeks,
consents to, or acquiesces in the benefit of any Debtor Law, or (D) becomes a
party to or is made the subject of any proceeding provided for by any Debtor
Law, other than as a creditor or claimant, that could suspend or otherwise
adversely affect the Rights of any Company, Agent, Collateral Agent, or any
Lender in connection with the transactions contemplated in the Loan Documents.
ASSIGNMENT means an Assignment and Assumption Agreement executed by a
selling Lender and a Purchaser under SECTIONS 11.12(b) and 11.14(b) and
delivered to Agent in substantially the form of EXHIBIT F-2.
AVERAGE ADJUSTED BASE RATE means, for any period, an annual interest rate
equal to the quotient of (a) the sum of the Base Rate plus the Applicable
Margin for each calendar day during that period divided by (b) the number of
days in that period.
AVERAGE ADJUSTED LIBOR RATE means, for any period, an annual interest rate
equal to the quotient of (a) the sum of the LIBOR Rate plus the Applicable
Margin for each calendar day during that period divided by (b) the number of
days in that period.
AVERAGE DEPOSITARY BALANCES means, for any period and for any Depositary,
(a) the quotient of (i) the sum of that Depositary's Eligible Balances as of
the close of business for each calendar day (which for any day that is not a
Business Day are deemed for this definition to be those balances for the
preceding Business Day) during that period divided by (ii) the number of
calendar days during that period minus (b) amounts necessary to satisfy any
deposit insurance,
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<PAGE> 9
reserve, special deposit, Tax (other than that Depositary's general corporate
income or franchise Taxes), duty, or other imposition (in each case at the
applicable rates) requirements applicable to that Depositary for those
accounts, minus (c) amounts required to compensate that Depositary for direct
processing and transaction costs and other services rendered in connection with
those accounts in accordance with that Depositary's system of charges for
similar accounts, minus (d) unless otherwise paid directly to that Depositary,
any amounts in those accounts utilized as of that day in the calculation of
interest on any other Debt payable by any Company to that Depositary or any
other Person.
AVERAGE PRINCIPAL DEBT means, for any period and for any Lender, the
quotient of (a) the sum of the Principal Debt owed to that Lender as of the
close of business for each calendar day (which for any day that is not a
Business Day is deemed for this definition to be the Principal Debt as of the
close of business for the preceding Business Day) divided by (b) the number of
days in that period.
B/C PAPER BORROWING means a Borrowing that is (a) subject to the B/C Paper
Sublimit and (b) supported by the Borrowing Base for Eligible B/C Paper Loans.
B/C PAPER SUBLIMIT means Thirty Million Dollars ($30,000,000).
BAILEE LETTER means, as applicable under the circumstances, one of the
letters executed and delivered by Collateral Agent in substantially the form of
EXHIBIT C-4 or EXHIBIT C-5.
BASE RATE means an annual interest rate equal from day to day to the
floating annual interest rate established by Agent from time to time as its
prime rate of interest, which may not be the lowest interest rate charge by
Agent on loans similar to Borrowings.
BASE RATE BORROWING means any Borrowing bearing interest at the Average
Adjusted Base Rate.
BORROWER is defined in the preamble to this agreement.
BORROWING means any amount disbursed (a) by Lenders to Borrowers, or any
of them, under the Loan Documents as an original disbursement of funds or (b)
by Agent, Collateral Agent, or any Lender in accordance with, and to satisfy a
Company's obligations under, any Loan Document.
BORROWING BASE is defined in, and calculated under, SCHEDULE 4.2.
BORROWING BASE REPORT means a report executed by Collateral Agent and
delivered to Borrowers, Agent, and Lenders in substantially the form of EXHIBIT
D-3.
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<PAGE> 10
BORROWING DATE means, for any Borrowing, the date it is disbursed.
BORROWING EXCESS means, at any time, the amount by which any of the
limitations of SECTION 2.1 or SCHEDULE 4.2 are exceeded.
BORROWING PRICE CATEGORY means any category of Borrowing determined with
respect to the applicable interest option, e.g., a Base Rate Borrowing or LIBOR
Borrowing.
BORROWING PURPOSE CATEGORY means any category of Borrowing determined with
respect to its purpose, e.g., a Dry Borrowing, Wet Borrowing, Gestation
Borrowing, Repurchase Borrowing, B/C Paper Borrowing, Construction Loan
Borrowing or Land Contract Borrowing.
BORROWING REQUEST means a request executed by Borrowers and delivered to
Collateral Agent in substantially the form of EXHIBIT D-1.
BUSINESS DAY means for all purposes, any day other than Saturday, Sunday,
or any other day that commercial banks are authorized or obligated by Law to be
closed in Texas or Michigan.
CALENDAR MONTH means that portion of a calendar month that occurs at any
time from the date of this agreement to the date that the Obligation is paid in
full and all commitments to lend under this agreement have terminated or been
cancelled.
CALENDAR QUARTER means that portion of any calendar quarter that occurs at
any time from the date of this agreement to the date that the Obligation is
paid in full and all commitments to lend under this agreement have terminated
or been cancelled.
CLOSING DATE means the date agreed upon by Borrowers and Agent, which must
be on or before the date of the initial Borrowing under this agreement.
COLLATERAL means all collateral defined in the Security Agreement.
COLLATERAL AGENT means, at any time, Texas Commerce Bank National
Association, or its successor appointed under the Lenders' Agreement, acting as
custodian for Lenders under the Loan Documents.
COLLATERAL CONVERSION NOTICE means a notice executed by Borrowers and
delivered to Collateral Agent in substantially the form of EXHIBIT D-7.
COLLATERAL DELIVERY NOTICE means a notice executed by Borrowers and
delivered to Collateral Agent in substantially the form of EXHIBIT D-2.
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<PAGE> 11
COLLATERAL DOCUMENTS means the documents and other items described on
SCHEDULE 4.3 and required to be delivered to Collateral Agent under SECTION
4.3.
COMMITMENT means, at any time and for any Lender, the amount stated beside
its name and so designated on SCHEDULE 2, as that schedule may be amended and
as that amount may be cancelled or terminated under this agreement.
COMMITMENT PERCENTAGE means, at any time for any Lender, the proportion
(stated as a percentage) that its Commitment bears to the total Commitments.
Until there are other Lenders, Texas Commerce Bank National Association's
Percentage is one hundred percent (100%), because initially its Eighty Million
Dollar ($80,000,000) Commitment is the only Commitment hereunder.
COMPANIES means, at any time, Borrowers and all of their Subsidiaries, if
any, including MCAI-Ohio.
COMPLIANCE CERTIFICATE means a certificate executed by a Responsible
Officer of Borrowers and delivered to Agent in substantially the form of
EXHIBIT D-6.
CONSTRUCTION LOAN means a loan that would qualify as a Mortgage Loan
except only for the fact that it is a one-time closing loan to the homeowner
(and not to his or her contractor) to finance the new construction of
residential improvements.
CONSTRUCTION LOAN BORROWING means a Borrowing that is (a) subject to the
Construction Loan Sublimit and (b) supported by the Borrowing Base for Eligible
Construction Loans.
CONSTRUCTION LOAN SUBLIMIT means Five Million Dollars ($5,000,000).
CORRECTION PERIOD means twenty-one (21) calendar days for any Collateral
Documents for any Collateral shipped under SECTION 4.6 for correction.
CURRENT FINANCIALS means either (a) the Companies' Financials for the year
ended January 31, 1995, as supplemented by the quarterly financials for the
period through April 30, 1996, as delivered to Agent prior to the Closing Date
or (b) at any time after the Companies' annual Financials are first delivered
under SECTION 7.1, the Companies' annual Financials then most recently
delivered to Agent and subsequent quarterly Financials then most recently
delivered to Agent.
DEBT, for any Person and without duplication, means (a) all obligations
required by GAAP to be classified upon that Person's balance sheet as
liabilities, (b) liabilities secured (or for which the holder of the
liabilities has an existing Right, contingent or otherwise, to be so secured)
by any Lien existing on property owned or acquired by that Person, (c)
obligations that under GAAP
6
<PAGE> 12
should be capitalized for financial reporting purposes, and (d) all guaranties,
endorsements, and other contingent obligations with respect to Debt of others
or in respect of any Employee Plan.
DEBTOR LAWS means all applicable liquidation, conservatorship, bankruptcy,
moratorium, arrangement, receivership, insolvency, reorganization, or similar
Laws from time to time in effect and generally affecting creditors' Rights.
DEFAULT is defined in SECTION 10.1.
DEFAULT RATE means, for any day, an annual interest rate equal to the
lesser of either (a) the Base Rate plus three percent (3% )or (b) the Maximum
Rate.
DEPOSITARY means any Lender with whom any Borrower maintains non-interest
bearing demand deposit accounts in its name.
DETERMINING LENDERS means, at any time, any combination of Lenders whose
(a) Termination Percentages total at least sixty-six and two-thirds percent
(66-2/3%) at any time on or after the Termination Date, or (b) Commitment
Percentages total at least sixty-six and two-thirds percent (66-2/3%) at all
other times.
DISTRIBUTION, with respect to any shares of any capital stock or other
equity securities issued by a Person, means (a) the retirement, redemption,
purchase, or other acquisition for value of those securities, (b) the
declaration or payment of any dividend with respect to those securities, (c)
any loan or advance by that Person to, or other investment by that Person in,
the holder of any of those securities, and (d) any other payment by that Person
with respect to those securities.
DRY BORROWING means a Borrowing for which all of the Collateral Documents
have been delivered to Collateral Agent in accordance with SECTION 4.3.
ELIGIBLE BALANCES means, for any calendar day and any Depositary, the sum
(which for any day that is not a Business Day is deemed for this definition to
be that sum as determined as of the close of business on the preceding Business
Day) of collected balances as of the close of business on that day in all
identified non-interest bearing demand deposit accounts or money market zero
reserve accounts of or maintained by Borrowers with that Depositary.
ELIGIBLE B/C PAPER LOAN means, at any time, a Mortgage Loan for which the
applicable conditions for eligibility described in SCHEDULE 4.1 are satisfied.
ELIGIBLE COLLATERAL means, at any time, Collateral for which the
applicable conditions for inclusion in the Borrowing Base are satisfied.
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<PAGE> 13
ELIGIBLE CONSTRUCTION LOAN means, at any time, a Mortgage Loan for which
the applicable conditions for eligibility described in SCHEDULE 4.1 are
satisfied.
ELIGIBLE GESTATION COLLATERAL means, at any time, an Eligible Mortgage
Loan for which the applicable conditions for eligibility described in SCHEDULE
4.1 are satisfied.
ELIGIBLE LAND CONTRACT means, at any time, a Land Contract for which the
applicable conditions for eligibility as described in SCHEDULE 4.1 are
satisfied.
ELIGIBLE MORTGAGE COLLATERAL means, at any time, all Eligible Mortgage
Loans, all Eligible Land Contracts, all Eligible Construction Loans and all
Eligible Mortgage Securities.
ELIGIBLE MORTGAGE LOAN means, at any time, a Mortgage Loan for which the
applicable conditions for eligibility described in SCHEDULE 4.1 are satisfied.
ELIGIBLE MORTGAGE SECURITY means, at any time, a Mortgage Security for
which the applicable conditions for eligibility described in SCHEDULE 4.1 are
satisfied.
ELIGIBLE REPURCHASED LOAN means, at any time, a Mortgage Loan for which
the applicable conditions for eligibility described in SCHEDULE 4.1 are
satisfied.
EMPLOYEE PLAN means an employee pension benefit plan covered by Title IV
of ERISA and established or maintained by any Company.
ENVIRONMENTAL LAW means any Law that relates to pollution, the protection
of human health and the environment, health and safety, or to Hazardous
Substances, including the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended (42 U.S.C. Section 9601, et seq.), the
Solid Waste Disposal Act, as amended (42 U.S.C. Section 6901 et seq.), the
Hazardous Materials Transportation Act, as amended (49 U.S.C. Section 1801, et
seq.), the Clean Air Act, as amended (42 U.S.C. Section 7401, et seq.), the
Federal Water Pollution Control Act, as amended (33 U.S.C. Section 1251, et
seq.), the Toxic Substances Control Act, as amended (15 U.S.C. Section 2601 et
seq.), the Safe Drinking Water Act, as amended (42 U.S.C. Section 300f et
seq.), the Atomic Energy Act, as amended (42 U.S.C. Section 2014 et seq.), the
Federal Insecticide, Fungicide and Rodenticide Act, as amended (7 U.S.C.
Section 136, et seq.), the Oil Pollution Act of 1990, as amended (33 U.S.C.
Section 2701, et seq.), the Emergency Planning and Community Right-to-Know Act
of 1986, as amended (42 U.S.C. Section 11001. et seq.), the Occupational Safety
and Health Act, as amended (29 U.S.C. Section 651 et seq.), the Texas Water
Code, as amended, and the Texas Health and Safety Code, as amended, as well as
the regulations adopted and publications promulgated pursuant to the above.
ERISA means the Employee Retirement Income Security Act of 1974.
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<PAGE> 14
ERISA AFFILIATES means Borrowers and every trade or business (whether or
not incorporated) that, together with any Company, would be treated as a single
employer under Section of ERISA.
FED FUNDS RATE means, for any day, the annual interest rate, rounded
upwards, if necessary, to the nearest 0.01%, determined by Agent to be either
(a) the weighted average of the rates on overnight federal funds transactions
with member banks of the Federal Reserve System arranged by federal funds
brokers for that day (or, if not a Business Day on the preceding Business Day)
as published by the Federal Reserve Bank of New York (as published by
Knight-Ridder, page 73, utilizing the Fed Effective Rate), or (b) if not so
published for any day, the average of the quotations for that day on those
transactions received by Agent from three (3) federal funds brokers of
recognized standing it may select.
FHA means the Federal Housing Administration within the United States
Department of Housing and Urban Department.
FHA LOAN means a Mortgage Loan which is either (a) fully or partially
insured by FHA under the National Housing Act or the Housing Act of 1949, (b)
subject to a current, binding, and enforceable commitment issued by FHA for
that insurance, or (c) eligible for direct endorsement under the FHA Direct
Endorsement Program.
FHLMC means the Federal Home Loan Mortgage Corporation.
FINANCIALS means balance sheets, profit and loss statements, statements
of cash flow, and any other financial statements, reports, or information
specified by any Lender.
FNMA means the Federal National Mortgage Association.
FUNDING ACCOUNT means a non-interest bearing deposit account established
by Borrowers with Collateral Agent, styled and numbered MCA Funding Account,
Account No. __________, for deposit of Borrowings.
GAAP means generally accepted accounting principles of the Accounting
Principles Board of the American Institute of Certified Public Accountants and
the Financial Accounting Standards Board that are applicable from time to time.
GESTATION BORROWING means a Borrowing that is (a) subject to the Gestation
Sublimit and (b) supported by the Borrowing Base for Eligible Gestation
Collateral.
GESTATION SUBLIMIT means, at anytime, fifty percent (50%) of the total
Commitments.
GNMA means the Government National Mortgage Association.
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<PAGE> 15
GUIDE means the following, as applicable under the circumstances, for (a)
FHLMC, the Freddie Mac Sellers' & Servicers' Guide dated September 17, 1984,
(b) FNMA, the Fannie Mae Servicing Guide dated June 30, 1990, and (c) GNMA, as
applicable, either (i) the GNMA I Mortgage Securities Guide, Handbook GNMA
5500.1REV-6, or (ii) the GNMA II Mortgage Securities Guide, Handbook GNMA
5500.2.
HAZARDOUS SUBSTANCE means any substance, material or waste (a) the
presence or Release of which requires reporting, investigation or remediation
under any Environmental Law, (b) which is defined listed as a hazardous waste,
hazardous substance, extremely hazardous waste, restricted hazardous waste,
hazardous material, toxic substance, or other similar or related term under any
Environmental Law, (c) which is toxic, radioactive, or otherwise classified as
hazardous or toxic and is or becomes regulated by any governmental authority as
a threat to human health or the environment, (d) the presence of which causes
or threatens to cause a nuisance upon the property or to adjacent property, (e)
the presence of which on adjacent properties could constitute a trespass, (f)
which is asbestos, (g) which is polychlorinated biphenyls, or (h) which
contains petroleum or any petroleum derived product.
INTEREST PERIOD is determined in accordance with Section 3.8.
IRC means the Internal Revenue Code of 1986.
JUMBO LOAN means a Mortgage Loan (other than a FHA Loan or VA Loan) that
complies with all applicable requirements for purchase under the FNMA or FHLMC
standard form of conventional mortgage purchase contract then in effect except
that the amount of it exceeds the maximum loan amount under those requirements.
JUMBO SUBLIMIT, at any time, means, except as otherwise approved by Agent
(a) for all Jumbo Loans, twenty percent (20%) of the total Commitments, and (b)
for any Jumbo Loan in excess of Seven Hundred Fifty Thousand Dollars
($750,000), only the first Seven Hundred Fifty Thousand Dollars ($750,000).
LAND CONTRACT means a contract pursuant to which a seller has agreed to
sell residential land to a purchaser on an installment sales basis with a
promise to deliver a deed to the purchaser when the entire installment sales
price is paid.
LAND CONTRACT SUBLIMIT means Four Million Dollars ($4,000,000).
LAWS means all applicable statutes, laws, treaties, ordinances, rules,
regulations, orders, writs, injunctions, decrees, judgments, opinions, and
interpretations of any Tribunal.
LENDER LIEN means any present or future first priority (except as
otherwise specifically provided in the Loan Documents) Lien securing the
Obligation and assigned, conveyed, and
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<PAGE> 16
granted to or created in favor of Collateral Agent for the benefit of Lenders
under the Loan Documents.
LENDERS means (a) the financial institutions named on the attached
SCHEDULE 2 or on the most recently amended SCHEDULE 2, if any, prepared by
Agent under this agreement, and (b) subject to this agreement, their respective
successors and permitted assigns, but (c) not any Participant who is not
otherwise a party to this agreement.
LENDERS' AGREEMENT means the Lenders' Agreement executed by Agent,
Collateral Agent, and Lenders in connection with this agreement.
LIBOR means, for any day, the rate of interest per annum which is equal to
the arithmetic mean of the rates appearing on the Reuters Screen LIBO Page as
of 11:00 a.m. London time for that day for the offering by such institutions as
are named therein to prime banks in the interbank dollar market in London,
England, of One Million Dollar ($1,000,000) deposits in United States dollars
for a one (1) month period. If Agent cannot determine that rate for any day,
then LIBOR for that day shall be the rate that deposits in United States
dollars in that amount and for that period are offered to Texas Commerce Bank
National Association at approximately 11:00 a.m., London, England, on that day
or, if that information is not reasonably available to Agent, on the next later
day for which such information is so available. Agent's determination of LIBOR
for each day shall be conclusive and binding, absent manifest error. For
purposes of this Agreement and each Note, LIBOR shall fluctuate upward and
downward automatically and concurrently with day-to-day changes in such
arithmetic mean, and in the amount of the change.
LIBOR BORROWING means any Borrowing that bears interest at the LIBOR Rate.
LIBOR RATE means, for any day, the sum of LIBOR for that day plus the
Applicable Margin.
LIEN means any lien, mortgage, security interest, pledge, assignment,
charge, title retention agreement, or encumbrance of any kind and any other
arrangement for a creditor's claim to be satisfied from assets or proceeds
prior to the claims of other creditors or the owners.
LITIGATION means any action by or before any Tribunal.
LOAN DOCUMENTS means (a) this agreement, certificates and reports
delivered under this agreement, and exhibits and schedules to this agreement,
(b) all agreements, documents, and instruments in favor of Agent, Collateral
Agent, or Lenders (or Agent or Collateral Agent on behalf of Lenders) ever
delivered under this agreement or otherwise delivered in connection with any of
the Obligation, (c) the Lenders' Agreement, if any, and (d) all renewals,
extensions, and restatements of, and amendments and supplements to, any of the
foregoing.
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MANAGEMENT REPORT means a report delivered by a Responsible Officer of
Borrowers to Agent in substantially the form of EXHIBIT D-5.
MARKET VALUE means, at any time (a) for Mortgage Loans, except as provided
in CLAUSE (b) below, a market value based upon the then most recent posted net
yield for 30-day mandatory future delivery furnished by FNMA and published and
distributed by Telerate Mortgage Services or Knight-Ridder or (if that posted
net yield is not available from these services) obtained by Agent from FNMA,
(b) for Jumbo Loans or any other Mortgage Loan for which for any reason the
posted rate is not available from FNMA, the value reasonably determined by
Agent, and (c) for Mortgage Securities, the applicable Take-Out Prices, as
detailed in the then most recent Take-Out Report delivered by Borrowers under
this agreement of all Take-Out Commitments relating to Mortgage Securities.
MATERIAL ADVERSE EVENT means any circumstance or event that, individually
or collectively, is reasonably expected to result in any (a) impairment of any
Borrower's ability to perform any of its payment or other material obligations
under any Loan Document or Agent's, Collateral Agent's, or any Lender's ability
to enforce any of those obligations or any of its Rights under any Loan
Document, (b) material adverse effect on any Borrower's individual financial
condition or the Companies' consolidated financial condition represented to
Lenders in the Current Financials delivered to Lenders as of the date of this
agreement, (c) material adverse effect on any Collateral, or (d) Default.
MATERIAL AGREEMENT means, for any Person, any agreement to which that
Person is a party, by which that Person is bound, or to which any assets of
that Person may be subject, and that is not cancelable by that Person upon less
than thirty (30) days notice without liability for further payment other than
nominal penalty, and the default under which or cancellation or forfeiture of
which would be a Material Adverse Event.
MAXIMUM AMOUNT and MAXIMUM RATE respectively mean, for any day and for any
Lender, the maximum nonusurious amount and the maximum nonusurious rate of
interest that, under applicable Law, the Lender is permitted to contract for,
charge, take, reserve, or receive on its portion of the Obligation.
MCAI-OHIO means Mortgage Corporation of America, Inc., an Ohio corporation
and a wholly-owned Subsidiary of MCA Financial Corp.
MORTGAGE COLLATERAL means all Mortgage Loans, Construction Loans, Land
Contracts, Mortgage Securities, and related Collateral Documents offered as
Collateral under the Loan Documents.
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MORTGAGE LOAN means a loan that is not a construction or non-residential
commercial loan, is evidenced by a valid promissory note, and is secured by a
mortgage, deed of trust, or trust deed that grants a perfected first priority
Lien on the underlying residential real property.
MORTGAGE POOL means (a) a "group" or "grouping" of Mortgage Loans
assembled in accordance with, and as that term is used in, the FHLMC Guide, (b)
a "pool" of Mortgage Loans assembled in accordance with, and as that term is
used in, the FNMA Guide or the GNMA I Guide, (c) a "pool" of Mortgage Loans of
a "loan package" consisting of Mortgage Loans assembled in accordance with, and
as those terms as used in, the GNMA II Guide, or (d) any other pool of Mortgage
Loans assembled by an Approved Investor securing, and providing for
pass-through payments of principal and interest on, its Mortgage Securities.
MORTGAGE SECURITY means a security in respect of an underlying pool of
related Mortgage Loans that provides for payment by the issuer to the holder of
specified principal installments and a fixed interest rate on the unpaid
balance, with all prepayments being passed through to the holder, and is issued
in certificate or book entry form.
MULTIEMPLOYER PLAN means a multiemployer plan as defined in Section
Section 3(37) or 4001(a)(3) of ERISA of Section 414(f) of the IRC to which
any ERISA Affiliate is making, or has made, or is accruing, or has accrued, an
obligation to make contributions.
NET WORTH means, for any Person, its stockholder's equity as determined
under GAAP.
NOTE means a promissory note executed and delivered by Borrowers, payable
to a Lender's order, in the stated principal amount of that Lender's
Commitment, and substantially in the form of EXHIBIT A, as renewed, extended,
amended, or replaced.
OBLIGATION means all (a) present and future indebtedness, obligations, and
liabilities of any Borrower to Agent, Collateral Agent, or any Lender and
related to any Loan Document, whether principal, interest, fees, costs,
attorneys' fees, or otherwise, (b) amounts that would become due but for
operation of 11 U.S.C. Section Section 502 and 503 or any other provision of
Title 11 of the United States Code, (c) pre- and post-maturity interest on any
of the foregoing, including all post-petition interest if any Company
voluntarily or involuntarily files for protection under any Debtor Law, and (d)
all renewals, extensions, and modifications of any of the foregoing.
PARTICIPANT is defined in SECTION 11.13.
PBGC means the Pension Benefit Guaranty Corporation.
PERMITTED DEBT means Debt described on SCHEDULE 8.1.
PERMITTED LIENS means Liens described on SCHEDULE 8.2.
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PERMITTED LOANS/INVESTMENTS means loans, advances, and investments
described on SCHEDULE 8.3.
PERSON means any individual, entity, or Tribunal.
POTENTIAL DEFAULT means the occurrence of any event or existence of any
circumstance that would, upon notice, time lapse, or both, become a Default.
PRINCIPAL DEBT means, at any time, the outstanding principal balance of
all Borrowings.
PURCHASER is defined in SECTION 11.14.
REGULATION U means Regulation U promulgated by the Board of Governors of
the Federal Reserve System, 12 C.F.R. Part 221.
RELEASE REQUEST means a Release Request executed and delivered by
Borrowers to Collateral Agent in substantially in the form of EXHIBIT C-7.
REPRESENTATIVES means representatives, officers, directors, employees,
attorneys, and agents.
REPURCHASE BORROWING means a Borrowing that is (a) subject to the
Repurchase Sublimit and (b) supported by the Borrowing Base for Eligible
Repurchased Loans.
REPURCHASE SUBLIMIT means Two Million Dollars ($2,000,000).
REUTERS SCREEN LIBO PAGE means the display designated as page "LIBO" on
the Reuters Monitor Money Rates Service or such other internationally
recognized service as the Bank shall select from time to time, or such other
page, if any, as shall replace the LIBO page on any such selected service for
the purpose of displaying London interbank offered rates of major banks.
RESPONSIBLE OFFICER means the chairman, president, vice president, chief
executive officer, chief financial officer, or any other officer designated as
a "Responsible Officer" by any of the above in writing to Agent and Collateral
Agent.
RIGHTS means rights, remedies, powers, privileges, and benefits.
SECURITY AGREEMENT means the Security Agreement executed by Borrowers and
Collateral Agent in substantially the form of EXHIBIT C-1.
A "SERVICER" means variously a "seller," "service," "issuer," or "lender,"
as defined or used in the applicable Guide in respect of a Person having
Servicing Rights.
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SERVICING PORTFOLIO means, at any time, the total unpaid principal amount
of Mortgage Loans service by any Borrower for a fee other than any Mortgage
Loans serviced by Borrowers under a subservicing agreement or a master
servicing agreement.
SETTLEMENT ACCOUNT means a non-interest bearing deposit account
established by Borrowers with Collateral Agent, styled and numbered "MCA
Settlement Account," Account No. _______________, for deposit of payments from
investors, the settlement of collections from Mortgage Securities in connection
with Mortgage Collateral, and deposit of payments on the Obligation.
SHIPPING PERIOD means forty-five (45) calendar days for the Collateral
Documents for any Collateral shipped to or for an investor under SECTION 4.5.
SHIPPING REQUEST means a Shipping Request executed and delivered by
Borrowers to Collateral Agent in substantially the form of EXHIBIT C-3.
SOLVENT means, for any Person, that (a) the fair market value of its
assets exceeds its liabilities, (b) it has sufficient cash flow to enable it to
pay its debts as they mature, and (c) it does not have unreasonably small
capital to conduct its businesses.
STATED TERMINATION DATE means September 3, 1997.
SUBORDINATED DEBT means any Debt (which must be Permitted Debt) in which
MCA Financial Corporation is the debtor that is expressly subordinated, in form
and substance acceptable to Agent in its sole discretion, to the Obligation.
SUBSIDIARY of any Person means any entity of which at least fifty percent
(50%) (in number of votes) of the stock (or equivalent interests) is owned of
record or beneficially, directly or indirectly, by that Person.
TAKE-OUT COMMITMENT means a binding commitment from an Approved Investor
to purchase items of Collateral, acceptable in form and substance to Agent, in
favor of any Borrower with respect to which there is no condition which cannot
be reasonably anticipated to be satisfied or complied with before its
expiration.
TAKE-OUT PRICE means, at any time, the amount described and calculated as
provided on SCHEDULE 4.2.
TAKE-OUT REPORT means a report delivered by Borrowers to Collateral Agent
substantially in the form of EXHIBIT D-4, or in another form approved by
Collateral Agent.
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TAXES means, for any Person, taxes, assessments, or other governmental
charges or levies imposed upon it, its income, or any of its properties,
franchises, or assets.
TERMINATION DATE means the earlier of either (a) the Stated Termination
Date or (b) the date on which all Commitments have otherwise terminated or been
cancelled.
TERMINATION PERCENTAGE means, at anytime for any Lender, the proportion
(stated as a percentage) that its Principal Debt bears to the total Principal
Debt.
TRIBUNAL means any (a) local, state, or federal judicial, executive, or
legislative instrumentality, (b) private arbitration board or panel, or (c)
central bank.
TRUST RECEIPT means a Trust Receipt and Agreement executed and delivered
by Borrowers to Collateral Agent in substantially the form of EXHIBIT C-6.
UCC means the Uniform Commercial Code as enacted in Texas or other
applicable jurisdictions.
VA means the U.S. Department of Veterans Affairs.
VA LOAN means a Mortgage Loan either (a) full or partial payment of which
is guaranteed by VA under the Servicemen's Readjustment Act of 1944 or Chapter
37 of Title 38 of the United States Code, (b) for which VA has issued a current
binding and enforceable commitment for such a guaranty, or (c) which is subject
to automatic guarantee by VA, which in each case, the applicable guaranty,
commitment to guarantee, or automatic guaranty is for the maximum amount
permitted by Law.
WET BORROWING means a Borrowing, other than a Gestation Borrowing,
Repurchase Borrowing or Construction Loan Borrowing, for which all of the
Collateral Documents have not been delivered to Collateral Agent in accordance
with SECTION 4.3.
WET PERIOD means seven (7) Business Days for the Collateral Documents for
any Mortgage Loan that supports a Wet Borrowing.
WET SUBLIMIT means thirty percent (30%) of the total Commitments except
that Wet Borrowings that are also B/C Paper Borrowings shall not exceed (x)
twenty-five percent (25%) of the total Commitments at any time or (y) fifteen
percent (15%) of the total Commitments on any day other than one of the last
three, or first four, calendar days of a Calendar Month.
WIRE INSTRUCTIONS means, for any Person, the information for wire
transfers of funds to that Person, which (until changed by written notice to
all other parties to this agreement) are
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stated for (a) Borrowers, Agent, and Collateral Agent beside their names on the
signature pages below, and (b) each Lender, beside its name on SCHEDULE 2.
1.2 Time References. Unless otherwise specified, in the Loan Documents (a)
time references (e.g., 10:00 a.m.) are to time in Houston, Texas, and (b) in
calculating a period from one date to another, the word "from" means "from and
including" and the word "to" or "until" means "to but excluding."
1.3 Other References. Unless otherwise specified, in the Loan Documents
(a) where appropriate, the singular includes the plural and vice versa, and
words of any gender include each other gender, (b) heading and caption
references may not be construed in interpreting provisions, (c) monetary
references are to currency of the United States of America, (d) section,
paragraph, annex, schedule, exhibit, and similar references are to the
particular Loan Document in which they are used, (d) references to "telecopy,"
"facsimile," "fax," or similar terms are to facsimile or telecopy transmission,
(f) references to "including" mean including without limiting the generality of
any description preceding that word, (g) the rule of construction that
references to general items that follow references to specific items as being
limited to the same type or character of those specific items is not applicable
in the Loan Documents, (h) references to any Person include that Person's
heirs, personal representatives, successors, trustees, receivers, and permitted
assigns, (i) references to any Law include every amendment or supplement to it,
rule and regulation adopted under it, and successor or replacement for it, and
(j) references to any Loan Document or other document include every renewal and
extension of it, amendment and supplement to it, and replacement or
substitution for it.
1.4 Accounting Principals. Unless otherwise specified, in the Loan
Documents (a) GAAP determines all accounting and financial terms and compliance
with financial covenants, (b) otherwise, all accounting principles applied in a
current period must be comparable in all material respects to those applied
during the preceding comparable period, and (c) while Borrowers have any
consolidated Subsidiaries (i) all accounting and financial terms and compliance
with reporting covenants must be on a consolidating and consolidated basis, as
applicable and (ii) compliance with financial covenants must be on a
consolidated basis.
SECTION . BORROWING PROVISIONS.
2.1 Commitments. Subject to the Loan Documents, on Business Days before
the Termination Date, on a revolving basis and in a minimum amount of One
Hundred Thousand Dollars ($100,000) and in Ten Thousand Dollar ($10,000)
increments, each Lender severally, but not jointly, commits to provide
Borrowings to Borrowers, provided that:
* The total Principal Debt may never exceed the lesser of
either the total Commitments or the Borrowing Base.
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* The Principal Debt of all Wet Borrowings may never exceed
the Wet Sublimit.
* The Principal Debt of all Gestation Borrowings may never
exceed the lesser of either the Gestation Sublimit or the
Borrowing Base for Eligible Gestation Collateral.
* The Principal Debt for all Repurchase Borrowings may never
exceed the lesser of either the Repurchase Sublimit or the
Borrowing Base for Eligible Repurchased Loans.
* The Principal Debt for all B/C Paper Borrowings may never
exceed the lesser of either the B/C Paper Sublimit or the
Borrowing Base for Eligible B/C Paper Loans.
* The Principal Debt for all Construction Loan Borrowings may
never exceed the lesser of either the Construction Loan
Sublimit or the Borrowing Base for Eligible Construction
Loans.
* The Principal Debt for all Land Contract Borrowings may
never exceed the lesser of either the Land Contract
Sublimit or the Borrowing Base for Eligible Land Loans.
* No Lender's direct or indirect portion of the Principal Debt
may ever exceed either its Commitment or its Commitment
Percentage of the foregoing limitations.
2.2 Borrowing Request. Borrowers may only request a Borrowing by timely
delivering to Collateral Agent a Collateral Delivery Notice and required
Collateral Documents under SECTION 4.3 and by delivering to Collateral Agent a
Borrowing Request for the Borrowing before 11:00 a.m. on the Borrowing Date. A
Borrowing Request is irrevocable and binding on Borrowers when delivered.
Collateral Agent shall use its best efforts to promptly, but at least by 1:00
p.m. on the day it timely receives a Borrowing Request, send a copy of it to
Agent and each Lender by fax and confirm it by telephone.
2.3 Fundings.
(a) Remittance by Lenders. Each Lender shall remit its Commitment
Percentage of any Borrowing requested in a Borrowing Request to Collateral
Agent's principal office in Houston, Texas by wire transfer according to
Collateral Agent's Wire Instructions, in funds that are available for immediate
use by Collateral Agent by 2:00 p.m. on the Borrowing Date.
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(b) Funding by Collateral Agent. Subject to receipt of those funds,
Collateral Agent shall, for any Borrowing on the Borrowing Date, unless to its
actual knowledge any of the applicable conditions precedent have not been
satisfied by Borrowers or waived by the requisite Lenders, either (i) deposit
those funds into the Funding Account for a Dry Borrowing, or (ii) wire transfer
those funds in accordance with wire instructions accompanying the Borrowing
Request for a Wet Borrowing.
(c) Non-remittance. Absent contrary written notice from a Lender
received by Collateral Agent by 2:00 p.m. on the Borrowing Date, Collateral
Agent may assume that each Lender has made its Commitment Percentage of a
Borrowing under a Borrowing Request available to Collateral Agent on the
Borrowing Date and may, but is not obligated to, make available to Borrowers a
corresponding amount. If a Lender fails to make its Commitment Percentage of
that Borrowing available to Collateral Agent on the Borrowing Date, whether
because of that Lender's default, because that Lender is not open for business
on that Business Day, or otherwise, then Collateral Agent may recover that
amount on demand (i) from that Lender, together with interest at the Fed Funds
Rate plus one and one-half percent (1.50%), during the period from the
Borrowing Date to the date Collateral Agent recovers that amount from that
Lender, which payment is then deemed to be that Lender's Commitment Percentage
of that Borrowing, or (ii) if that Lender fails to pay that amount upon demand,
then from Borrowers together with interest at an annual interest rate equal to
the rate applicable to the requested Borrowing during the period from the
Borrowing Date to the date Collateral Agent recovers that amount from
Borrowers. Notwithstanding these provisions, each Lender remains obligated to
lend its Commitment Percentage of that Borrowing, assumes the credit risk for
that amount when the Borrowing is made available to or for Borrowers, and,
after Collateral Agent has recovered the amount of interest provided for in
CLAUSE (I) above, is entitled to interest on that amount from the Borrowing
Date.
(d) Other Lender. Although no Lender is responsible for the failure
of any other Lender to make its Commitment Percentage of any Borrowing, that
failure does not excuse any other Lender from making its Commitment Percentage
of that Borrowing.
2.4 Wet Borrowing Procedures. The conditions and procedures of Section 2.2
and Section 2.3 apply to Wet Borrowings except a Wet Borrowing may be funded
before delivery to Collateral Agent of all of the required Collateral Documents
supporting that Wet Borrowing. The Collateral Delivery Notice delivered to
Collateral Agent for a Wet Borrowing may be sent to Collateral Agent by fax but
must identify and describe each Mortgage Loan that supports that Wet Borrowing
and the amount of the Borrowing Base applicable to it. By delivering the
Collateral Delivery Notice, Borrowers confirm their grant under this agreement
of Lender Liens, from the Borrowing Date for each Wet Borrowing, on each
Collateral Document offered as Collateral in that Collateral Delivery Notice
that is perfected subject to the delivery of the related promissory notes for
those Mortgage Loans to Collateral Agent or its bailee.
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2.5 Terminations. All Commitments automatically terminate in full on the
Termination Date. After giving written and irrevocable notice to Agent and
each Lender at least thirty (30) Business Days before the effective date of
any termination, Borrowers jointly may (fully or partially) terminate the
Commitments before the Termination Date, and any partial termination must be
ratable in accordance with each Lender's Commitment Percentage. Once
terminated, no part of any Commitment may be reinstated except by an amendment
to this agreement.
2.6 Multiple Borrowers; MCAI-Ohio's Collateral.
(a) Borrowers. Each representation and warranty in the Loan Documents
by a Borrower is deemed to be its separate representation and warranty and the
joint and several representation and warranty of all Borrowers. Each covenant
and agreement by any Borrower under the Loan documents is the joint and several
covenant and agreement of all Borrowers. Any communication under the Loan
Documents to any one Borrower is deemed to have been concurrently received by
each other Borrower.
(b) Basis for Structure. The Companies that execute this agreement (the
Borrowers and, in the capacity and for the purposes stated in the paragraph
immediately above its signature block below, MCAI-Ohio) desire to utilize
their borrowing potential on a combined basis to the same extent possible if
they were merged into a single corporate entity (although MCAI-Ohio has no
right to borrow hereunder from the Lenders). Each such Company has determined
that it will specifically and materially benefit from all Borrowings.
Borrowers intend and Lenders have required that all Borrowers jointly and
severally execute and deliver this agreement, the Notes, and certain other Loan
Documents and -- although MCAI-Ohio cannot borrow hereunder from the Lenders,
as aforesaid -- MCAI-Ohio joins in this agreement so that Collateral owned by
MCAI-Ohio (provided that it would otherwise qualify as Eligible Collateral) may
be considered Eligible Collateral and so that its value may be included in any
relevant Borrowing Base. Borrowers and MCAI-Ohio have requested and bargained
for the structure and terms of, and security for, all Borrowings.
(c) Joint and Several Obligation. Each Borrower irrevocably and
unconditionally agrees (i) that it is jointly and severally liable to Agent,
Collateral Agent, and Lenders for full payment and performance on the
Obligation and all obligations of Borrowers under the Loan Documents, (ii) to
full pay and perform the Obligation and all of those obligations of Borrowers,
and (iii) TO INDEMNIFY, AS A PRIMARY OBLIGOR, AGENT, COLLATERAL AGENT, AND ANY
LENDER AGAINST ANY LOSS AGENT, COLLATERAL AGENT, OR ANY LENDER MAY INCUR AS A
RESULT OF ANY OBLIGATIONS OF ANY BORROWER BEING OR BECOMING VOID, VOIDABLE,
UNENFORCEABLE, OR INEFFECTIVE FOR ANY REASON WHATSOEVER, WHETHER KNOWN TO
AGENT, COLLATERAL AGENT, ANY LENDER, OR ANY OTHER PERSON, THE AMOUNT OF THAT
LOSS BEING THE AMOUNT WHICH AGENT, COLLATERAL AGENT, OR THAT LENDER, AS THE
CASE MAY BE, WOULD OTHERWISE HAVE BEEN ENTITLED TO RECOVER FROM ANY BORROWER.
THIS INDEMNITY SURVIVES
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THE PAYMENT AND PERFORMANCE OF THE OBLIGATION AND TERMINATION OF THE LOAN
DOCUMENTS.
(d) Contribution Rights. Borrowers each intend that their joint and
several obligations under the Loan Documents, and Borrowers and MCAI-Ohio
intend that the Liens therein granted in their Collateral, are not subject to
challenge or repudiation on any basis. Therefore, as of the date any transfer
is deemed to occur under the Loan Documents, each such Company's liabilities
under the Loan Documents (including, in MCAI-Ohio's case, the liabilities
secured by its Collateral, irrespective of whether MCAI-Ohio is personally
liable for payment thereof) and all of such Company's other liabilities,
calculated in each case to the full extent of that Company's probable net
exposure when and if those liabilities become absolute and mature (i.e., "DATED
LIABILITIES"), are intended by that Company to be less than the fair valuation
of all of its assets as of that date (i.e., "DATED ASSETS"). To that end, each
such Company (i) grants to and recognizes in each other Borrower (and, in the
case of each Borrower, in MCAI-Ohio) ratable Rights of subrogation and
contribution in the amount, if any, by which the granting Companu's dated
assets (but for the total subrogation and contribution in its favor under this
section) would exceed the granting Company's dated liabilities, and (ii)
acknowledges receipt of and recognizes its ratable Rights to subrogation and
contribution from each such other Company in the amount that the other such
Company's dated assets (but for the total subrogation and contribution in its
favor under this section) would exceed the other such Company's dated
liabilities. Each such Company will recognize Rights of subrogation and
contribution at least equal to its obligations under the Loan Documents
(including, in MCAI-Ohio's case, the obligations secured by its Collateral,
irrespective of whether MCAI-Ohio is personally liable therefor). It is a
material objective of this section that each such Compaany recognize Rights to
subrogation and contribution rather than be deemed not to be Solvent by reasons
of an arbitrary interpretation of its joint and several obligations under the
Loan Documents.
(e) MCAI-Ohio's Consent to Pledge of its Collateral by MCA Financial Corp.;
Borrowers' Promise to Make Loan Proceeds Proportionately Available to
MCAI-Ohio; Further Assurances Concerning Collateral. MCAI-Ohio hereby
irrevocably appoints MCA Financial Corp. as its agent to pledge to the
Collateral Agent, as secured party for the Lenders, all of MCAI-Ohio's right,
title and interest in and to any and all Collateral from time to time pledged
to secure or otherwise securing the Obligation, or any portion of it, and
agrees that MCA Financial Corp.'s pledge of any thereof from time to time so
made to the Collateral Agent shall automatically constitute the pledge of all
of MCAI-Ohio's right, title and interest therein, whether or not that (or that
MCA Financial Corporation is acting as agent for MCAI-Ohio) is stated in (or in
connection with) the pledge, to the exact same effect as if MCAI-Ohio had
itself pledged such Collateral, and (iii) acknowledges and agrees that
MCAI-Ohio has received and will receive reasonably equivalent value for all
such past, concurrent and future pledges thereof by reason of the Borrowers'
joint and several promise and agreement to and with MCAI-Ohio, hereby made and
confirmed, to make that share of the proceeds of each Advance (or an equal
amount in cash or cash equivalents) which is proportionate to the value of
MCAI-Ohio's Collateral in the
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Borrowing Base against which such Advance is made, available to MCAI-Ohio
(either by relending such proceeds or lending, or by MCA Financial Corp.'s
contributing as new cash capital, an equal amount of cash or cash equivalents,
to MCAI-Ohio) before, at or within a reasonable time after each such Advance
shall have been funded. In furtherance of the foregoing provisions of this
SECTION 2.6(E), MCA Financial Corp. and MCAI-Ohio hereby agree to (i) perform,
or cause to be performed, such acts and (ii) duly to authorize, execute,
acknowledge, deliver, file and record (or cause such actions to be taken with
respect to) such financing statements, assignments, security agreements, deeds
of trust, mortgages, and supplements, modifications or amendments to any of
them, and such other papers as the Agent or the Collateral Agent may reasonably
request from time to time in order to establish and preserve the priority of,
perfect and protect the Liens granted or intended to be granted to the
Collateral Agent in and to any and all such Collateral and to preserve and
protect the Collateral Agent's rights in respect of all present and future
Collateral for the Obligations.
SECTION 3. PAYMENT TERMS.
3.1 Notes. The Principal Debt (and related interest) of Borrowings are
evidenced by the Notes. Notwithstanding any sale of participating interests
under SECTION 11.13 or any contrary notice, Borrowers and Agent may deem and
treat each Lender as the absolute owner of its respective Note for all
purposes.
3.2 Payment Procedures.
(a) Payments. Borrowers shall jointly and severally make each
payment and prepayment on the Obligation (other than interest) to Collateral
Agent, on behalf of Lenders, in accordance with Collateral Agent's Wire
Instructions in funds that are available for immediate use by Collateral Agent.
Each Lender may directly invoice Borrowers for its portion of interest under the
Loan Documents. Payments that are received by 3:00 p.m. on a Business Day are
deemed received on that Business Day. Payments that are received after 3:00
p.m. on a Business Day are deemed received on the next Business Day. Subject to
SECTION 3.7(f), applicable interest continues to accrue through the calendar day
immediately before the Business Day on which the payment is deemed received.
(b) Distributions. When received under CLAUSE (a) above, Collateral
Agent shall distribute each payment to each Lender, in accordance with SECTION
3.5 and each Lender's Wire Instructions, reasonably promptly after receipt but
by no later than 4:00 p.m. on the Business Day the payment is deemed to be
received by Collateral Agent under CLAUSE (a) above. If Collateral Agent fails
to distribute any payment to any Lender as required by this clause, then
Collateral Agent shall pay to that Lender on demand interest on that payment,
from the date due under this clause until paid, at an annual interest rate equal
from day to day to the Fed Funds Rate plus on and one-half percent (1.50%).
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3.3 Scheduled Payments. Unless otherwise provided in this agreement,
Borrowers shall jointly and severally pay the Obligation in accordance with the
following table:
Obligation Payable
- ---------- -------
Interest on each Borrowing except at On (a) the fifteenth (15th) day of each
the Default Rate Calendar Month as it accrued on the
last day of the preceding Calendar
Month and (b) on the Termination Date.
- ------------------------------------- --------------------------------------
Interest at the Default Rate On demand as it accrues
regardless of Borrowing Price
Category
- ------------------------------------- --------------------------------------
Principal Debt of, and other On the Termination Date
Obligation related to, Borrowing
- ------------------------------------- --------------------------------------
3.4 Prepayments.
(a) Commitment Termination. Borrowers shall jointly and severally, on
the date that full or partial termination of a Lender's Commitment becomes
effective under SECTION 2.5, pay to that Lender the full Obligation owed to it
in respect of that commitment in the case of a full termination or the Principal
Debt owed to it for the relevant Borrowings that exceed its reduced commitment,
as the case may be.
(b) Borrowing Excess. If at any time a Borrowing Excess exists, then,
ON DEMAND, Borrowers shall take whichever one or more of the following actions
that is applicable and eliminates that Borrowing Excess:
(i) For a Borrowing Excess that is not capable of elimination by
delivery of additional Collateral to increase the Borrowing Base, e.g., if the
total Principal Debt were to exceed the total Commitments, or when a Default
exists, prepay to Collateral Agent for distribution to the appropriate Lender(s)
Principal Debt of the appropriate one or more Borrowing Purpose Categories
(together with any related Funding Loss).
(ii) For any other Borrowing Excess and only when no Default
exists, either (A) deliver to Collateral Agent, in accordance with this
agreement, additional Collateral that causes the Borrowing Base to increase, (B)
prepay to Collateral Agent for distribution to the appropriate Lender(s)
Principal Debt of the appropriate one or more Borrowing Purpose Categories
(together with any related Funding Loss), or (C) any combination of the actions
under clauses (A) or (B) above.
(c) Voluntary Prepayments. Borrowers may voluntarily prepay all or
any of the Obligation at any time without premium or penalty, but with any
applicable Funding Loss.
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3.5 Order of Application. All payments and proceeds, whether voluntary,
involuntary, through the exercise of any Right of set-off or other Right,
realization against any Collateral, or otherwise, shall be applied in the
following order:
(a) No Default. While no Default exists, in the order and manner that
Borrowers direct, subject in all respects to SECTION 3.6 and each Lender's right
to receive its pro rata share of, among other things, all payments of principal.
(b) Default or No Direction. While a Default exists or if Borrowers
fail to give any direction, in the following order and manner:
(i) All costs and expenses incurred by Agent in connection with
its duties under the Loan Documents, including fees and expenses paid by Agent
to any servicing companies retained by Agent to assist it in servicing any
Collateral required to be serviced, to any attorneys, or to any agents, that
have not been reimbursed by Lenders, together with interest at the Default Rate,
payable solely to Agent.
(ii) All costs and expenses incurred by Collateral Agent in
connection with its duties under the Loan documents, including fees and expenses
paid by Collateral Agent to any servicing companies retained by Agent or
Collateral Agent to assist it in servicing any Collateral required to be
serviced, to any attorneys, or to any agents, that have not been reimbursed by
Lenders, together with interest at the Default Rate, payable solely to
Collateral Agent.
(iii) All costs and expenses incurred by any Lender in connection
with the Loan Documents that are reimbursable to it under the Loan Documents and
all amounts paid by that Lender to Agent or Collateral Agent as a reimbursement
to it of costs and expenses incurred by Agent or Collateral Agent in connection
with its duties under the Loan documents, together with interest at the Default
Rate, payable ratably to Lenders in the proportion that each Lender's share of
those costs and expenses bears to the total of those costs and expenses for all
Lenders.
(iv) Accrued and unpaid interest on the Obligation, payable
ratably to Lenders in the proportion that the amount of interest owed to each
Lender bears to the total of all interest owed to all Lenders.
(v) Principal Debt payable ratably to each Lender in accordance
with its Termination Percentage. Principal Debt shall be applied (A) to the
Borrowing Purpose Category to the extent the collections or proceeds are from or
arose in respect of the Collateral in its Borrowing Base and (B) then in the
following order:
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* Repurchase Borrowings
* Land Contract Borrowings
* Construction Loan Borrowings
* B/C Paper Borrowings (Wet Borrowings)
* B/C Paper Borrowings (Dry Borrowings)
* Wet Borrowings (other than above)
* Dry Borrowings (other than above)
* Gestation Borrowings
(vi) All other portions of the Obligations, payable ratably to
Lenders in the proportion that each Lender's share of those amounts bears to the
total of those amounts for all Lenders.
(vii) Either to any Borrower or to its successors or assigns on
behalf of all Borrowers, to be divided between them as they may agree or as a
court of competent jurisdiction may direct.
3.6 Sharing. If any Lender obtains any amount, whether voluntary,
involuntary, or otherwise, including as a result of exercising its Rights under
SECTION 10.3, that exceeds the portion of that amount it is otherwise entitled
under the Loan Documents to receive, then that Lender shall purchase from the
other Lenders participation that result in the purchasing Lender's sharing the
excess amount ratably with each Lender in accordance with the portion it is
entitled to receive under the Loan Documents. If all or any of that excess
amount is subsequently recovered from that purchasing Lender, then the purchase
of participation in it is automatically rescinded and the purchase price
restored to that purchasing Lender to the extent of the recovery. Any Lender
purchasing a participation from another Lender under this section may, to the
extent lawful, exercise all of its Rights of payment (including the Right of
offset) with respect to that participation as fully as if that Lender were the
direct creditor of Borrowers in the amount of that participation.
3.7 Interest Rates.
(a) Rate Election. The relevant Borrower shall designate in writing
to the Agent from time to time which Borrowings, if any, Borrower elects to be
LIBOR Rate Borrowings or on or before the Business Day when such election is to
become effective. All Borrowings not so designated shall be Base Rate
Borrowings.
(b) Non-Default Rate. Subject to CLAUSE (b) below, all Principal Debt
bears an annual interest rate equal to the lesser of either the Maximum Rate or
the rate made applicable by the following table:
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PRINCIPAL DEBT RATE
- -------------- ----
Average Principal Debt of all other Applicable Covered Rate
Borrowings owed to a Depositary
during any Calendar Month that does
not exceed its Average Depositary
Balances for that Calendar Month
- ------------------------------------- ----------------------------------------
Average Principal Debt of all LIBOR Average Adjusted LIBOR Rate for that
Rate Borrowings owed to a Depositary Calendar Month
during any Calendar Month that
exceeds its Average Depositary
Balances for that Calendar Month
- ------------------------------------- ----------------------------------------
Average Principal Debt of all Average Adjusted Base Rate for that
Borrowings owed to any Lender and Calendar Month
not bearing interest under the above
rows of this table for any Calendar
Month
- ------------------------------------- ----------------------------------------
(c) Default Rate. For all past due Principal Debt and past due
interest on the Principal Debt from the date due (whether stated or by
acceleration) until paid, whether or not payment is before or after entry of a
judgment, the rate applicable in the following table:
PRINCIPAL DEBT AND PAST DUE INTEREST RATE
- ------------------------------------ ----
Average Principal Debt owed to a Depositary Five percent (5.0%) per annum
during a Calendar Month and all past due
accrued interest on that Principal Debt that
does not exceed its Average Depositary Balances
for that Calendar Month
- ------------------------------------------------- -----------------------------
Average Principal Debt owed to any Lender and Default Rate
not bearing interest under the above section of
this table, and all past due interest on that
Principal Debt, for any Calendar Month
- ------------------------------------------------- -----------------------------
(d) Rate Changes. Each change in the LIBOR Rate, Fed Funds Rate, Base
Rate, and Maximum Rate is effective upon the effective date of change without
notice to Borrowers or any other Person.
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(e) Calculations. Interest shall be calculated on the basis of actual
days (including the first but excluding the last) over a 360-day year, unless
the calculation would result in an interest rate greater than the Maximum Rate,
in which event interest shall be calculated on the basis of the actual number of
days in that year. All interest rate determinations and calculations by Lenders
are conclusive and binding absent manifest error.
(f) Recapture. If the designated interest rate applicable to any
Borrowing exceeds the Maximum Rate, the interest rate on that Borrowing is
limited to the Maximum Rate. However, any subsequent reductions in the
designated rate shall not become effective until the total amount of accrued
interest equals the amount of interest that would have accrued if that
designated rate had always been in effect. If at maturity (whether stated or by
acceleration), or at final payment of the Notes, the total interest paid or
accrued is less than the interest that would have accrued if the designated rate
had always been in effect, then, at that time and to the extent permitted by
Law, Borrowers shall pay an amount equal to the difference of (i) the lesser or
either the amount of interest that would have accrued if the designated rates
had always been in effect or the amount of interest that would have accrued if
the Maximum Rate had always been in effect, minus (ii) the amount of interest
actually paid or accrued on the Notes.
(g) Maximum Rate; Chapter 15 Inapplicable. Regardless of any Loan
Document provision, no Lender is entitled to contract for, charge, take,
reserve, receive or apply, as interest on all or any of the Obligation, any
amount in excess of the Maximum Rate. If a Lender ever does so, then any excess
is treated as a partial prepayment of principal, and any remaining excess shall
be refunded to Borrowers. In determining if the interest paid or payable
exceeds the Maximum Rate, Borrowers and Lenders shall, to the extent lawful, (i)
treat all Borrowings as a single extension of credit, (ii) characterize any
nonprincipal payment as an expense, fee, or premium rather than as interest,
(iii) exclude voluntary prepayments and their effects, and (iv) amortize,
prorate, allocate, and spread the total amount of interest throughout the full
contemplated term of the Obligation. However, if the Obligation is paid in full
before the end of that full contemplated term and the interest received for the
Obligation's actual period of existence exceeds the Maximum Amount, then Lenders
shall refund any excess without being subject to any penalties provided by any
Laws. If Texas Laws are applicable for purposes of determining the "Maximum
Rate" or the "Maximum Amount," then those terms respectively mean the "indicated
rate ceiling", and the amount calculated by applicable the "indicated rate
ceiling" from time to time in effect under Article 1.04, Title 79, Texas Revised
Civil Statute, as amended. Chapter 15, Subtitle 79, Texas Revised Civil
Statutes, 1925 (which regulates certain revolving credit loan accounts and
revolving triparty accounts), does not apply to the Obligation.
3.8 Additional Costs. This section survives the full satisfaction of the
Obligation and termination of the Loan Documents, and release of Lender Liens.
(a) For any Borrowing, if (i) (A) any change after the date of this
agreement in any present Law or any future Law regarding capital adequacy or
compliance by any Lender
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<PAGE> 33
with any request, directive, or requirement now or in the future imposed by any
Tribunal regarding capital adequacy or any change in the risk category of this
transaction reduces the rate of return on its capital as a consequence of its
obligations under this agreement to a level below that which it otherwise could
have achieved (taking into consideration its policies with respect to capital
adequacy) by an amount deemed by it to be material (and it may, in determining
the amount, utilize reasonable assumptions and allocations of costs and
expenses and use any reasonable averaging or attribution method), then (ii)
that Lender (through Agent) shall notify Borrowers and deliver to Borrowers a
certificate stating in reasonable detail the calculation of the amount
necessary to compensate it (which certificate shall be conclusive and binding
absent manifest error), and Borrowers shall pay that amount to Lender within
ten (10) days after demand.
(b) Any Taxes payable by Agent or any Lender or ruled (by a Tribunal)
payable by Agent or any Lender in respect of any Loan Document shall, if
permitted by Law and if deemed material by Agent or that Lender (who may, in
determining the material nature of the amount payable, utilize reasonable
assumptions and allocations of costs and expenses and use any reasonable
averaging or attribution method), be paid by Borrowers, together with interest
and penalties, if any (except for Taxes payable on the overall net income of
Agent or that Lender and except for interest and penalties incurred as a result
of the gross negligence or willful misconduct of Agent or any Lender). Agent or
that Lender (through Agent) shall notify Borrowers and deliver to Borrowers a
certificate stating in reasonable detail the calculation of the amount of
payable Taxes (which certificate shall be conclusive and binding absent manifest
error), and Borrowers shall pay that amount to Agent for the account of Agent or
that Lender, as the case may be, within ten (10) days after demand. If Agent or
that Lender subsequently receives a refund of the Taxes paid to it by Borrowers,
then the recipient shall promptly pay the refund to Borrowers.
3.9 Change in Laws. If any change, after the date of this agreement, in
any present Law or any future Law makes it unlawful for any Lender to make or
maintain LIBOR Borrowings, then that Lender shall promptly notify Agent, who
shall promptly notify Borrowers and (a) as to undisbursed funds, any requested
Borrowing shall be made as a Base Rate Borrowing, (b) as to any outstanding
Borrowing (i) if maintaining the Borrowing until the last day of the applicable
Interest Period is unlawful, the Borrowing shall be converted to a Base Rate
Borrowing as of the date of notice, but Borrowers are not obligated to pay any
related Funding Loss, or (ii) if not prohibited by Law, the Borrowing shall be
converted to a Base Rate Borrowing as of the last day of the applicable Interest
Period, or (iii) if any conversion will not resolve the unlawfulness, Borrowers
shall promptly prepay the Borrowing, without penalty, and without payment of any
related Funding Loss.
3.10 Foreign Lenders, Participants and Purchasers. Each Lender,
Participant (by accepting a participation interest under this agreement), and
Purchaser (by executing an Assignment) that is not organized under the Laws of
the United States of America or one of its states (a) represents to Agent and
Borrowers that (i) no Taxes are required to be withheld by
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Agent or Borrowers with respect to any payments to be made to it in respect of
the Obligation and (ii) it has furnished to Agent and Borrowers two duly
completed copies of either U.S. Internal Revenue Service Form 4224, form 1001,
form W-8, or any other form acceptable to Agent that entitles it to exemption
from U.S. federal withholding Tax on all interest payments under the Loan
Documents, and (b) covenants to (i) provide Agent and Borrowers a new Form
4224, Form 1001, Form W-8, or other form acceptable to Agent upon the
expiration or obsolescence of any previously delivered form according to Law,
duly executed and completed by it, and (ii) comply from time to time with all
Laws with regard to the withholding Tax exemption. If any of the foregoing is
not true or the applicable forms are not provided, then Borrowers and Agent
(without duplication) may deduct and withhold from interest payments under the
Loan Documents United States federal income Tax at the full rate applicable
under the IRC.
3.11 Fees. The following are not compensation for the use, detention, or
forbearance of money, are in addition to and not in lieu of interest and
expenses otherwise described in the Loan Documents, are non-refundable, bear
interest if not paid when due at the Default Rate, and are calculated on the
basis of actual days (including the first but excluding the last) elapsed over a
year of 360 days (or actual days during that year, if the calculation would
otherwise result in exceeding the Maximum Amount and the payment were deemed to
be interest notwithstanding the above provisions to the contrary):
(a) Agent's Fees. Borrowers shall pay to Agent, for its sole account,
agency fees in amounts and upon such payment terms as may be separately agreed
upon by Borrowers and Agents in writing.
(b) Collateral Agent's Fees. Borrowers shall pay to Collateral Agent,
for its sole account, custodial fees in amounts and upon such payment terms as
may be separately agreed upon by Borrowers and Collateral Agent in writing.
(c) Commitment Fee. On the Closing Date and on the first day of each
ensuing Calendar Quarter until the Commitments have been fully terminated,
Borrowers shall pay to Agent a commitment fee for Lenders. Each payment of that
commitment fee is calculated for the period from that payment date until the
next payment date as one-eighth percent (0.125%) (divided by four) multiplied by
the total Commitments. From payments of that commitment fee received, Agent
shall pay to each Lender that Lender's pro rata share, based on the Lender's pro
rata share of the total Commitments, as reduced pro rata for any period for
which such commitment fee has accrued that is prior to that Lender's becoming a
Lender.
SECTION 4. COLLATERAL PROCEDURES.
4.1 Eligible Collateral. The eligibility requirements for Collateral to be
included in the Borrowing Base are listed on Schedule 4.1. If at any time any
item of Collateral ceases to meet
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those requirements, then that item then and thereafter shall be automatically
excluded from all calculations of the Borrowing Base.
4.2 Borrowing Base. The elements for calculating the Borrowing Base are
listed on SCHEDULE 4.2. By 2:00 p.m. on the date of any Borrowing, any payment
of Principal Debt, or removal of any Collateral, Collateral Agent shall deliver
to Borrowers and Lenders a Borrowing Base Report prepared on the basis of the
information provided by Borrowers in the most recent Take-Out Report and other
information then available to Collateral Agent as provided in this agreement.
4.3 Collateral Delivery. Borrowers must comply with all the required
procedures in SCHEDULE 4.3 for Collateral offered in connection with this
agreement by no later than 11:00 a.m. on (a) the Borrowing Date for Collateral
supporting any Borrowing other than a Wet Borrowing and (b) the seventh (7th)
Business Day after the Borrowing Date of any Wet Borrowing for Collateral
supporting that Borrowing. By 11:00 a.m. on the Business Day that Borrowers are
converting any Dry Borrowing to a Gestation Borrowing, Borrowers shall execute
and deliver to Collateral Agent a Collateral Conversion Notice.
4.4 Bailee and Agent. Agent, Collateral Agent, and Lenders appoint
Borrowers, and Borrowers shall act, as their (a) special agent for the sole and
limited purpose of obtaining and maintaining Appraisals for collateral as
required by the Loan Documents and (b) bailee to (i) hold in trust for
Collateral Agent (A) the original recorded mortgage, deed of trust, or trust
deed securing each item of Collateral, (B) a mortgagee policy of title insurance
(or binding unexpired and unconditional commitment to issue such insurance if
the policy has not yet been delivered to Borrowers) insuring Borrowers'
perfected, first priority Lien created by that mortgage, deed of trust, or trust
deed, (C) any related original insurance policies, and (D) all other original
documents, including any undelivered Take-Out Commitments, promissory notes, and
Mortgage Securities, (ii) specifically identify those items in the appropriate
Collateral Delivery Notice, and (iii) deliver to Collateral Agent any of the
foregoing items as soon as reasonably practicable upon Collateral Agent's
request.
4.5 Shipment for Sale.
(a) Shipment of Collateral. If no Default, Potential Default, or
Borrowing Excess exists and if shipment would not result in any Approved
Investor (other than FNMA, FHLMC, and GNMA, or any other investor that Agent has
approved in writing) or its servicers and custodians holding Collateral
Documents for Collateral with more than a total Five Million Dollars
($5,000,000) face amount, then Borrowers may, by a Shipping Request delivered to
Collateral Agent by 11:00 a.m. on the Business Day of shipment, request
Collateral Agent to ship Collateral Documents to an Approved Investor or its
servicer or custodian for purchase or pooling of the related Collateral. If
Collateral Agent has no actual knowledge that any of the above conditions have
not been satisfied, then Collateral Agent shall ship the Collateral Documents it
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<PAGE> 36
holds for that Collateral to that Approved Investor or its servicer or
custodian under the appropriate Bailee letter.
(b) Ineligible Collateral. Collateral shipped under clause (a) above,
unless returned to Collateral Agent, ceases to be Eligible Collateral (i) to the
extent that collateral Documents for collateral with more than a total face
amount of Five Million Dollars ($5,000,000) are held by or for any Approved
Investor (other than FNMA, FHLMC, and GNMA, or any other investor that Agent has
approved in writing) and (ii) upon the earlier of either the release of the
Lender Liens in that Collateral under clause (c) below or the expiration of the
Shipping Period for that Collateral.
(c) Release of Liens. The Lender Liens on any Collateral shipped
under clause (a) above continue on that Collateral until either (i) Collateral
Agent receives payment in the Settlement Account in an amount at least equal to
the price paid by the purchaser for each item of Eligible Collateral so sold or
(ii) in the case of Collateral being sold or exchanged for Mortgage Securities,
Eligible Mortgage Securities are delivered to or for Collateral Agent in
accordance with SCHEDULE 4.3 and other applicable provisions of the Loan
Documents and become Collateral under this agreement for all purposes.
(d) Certain Credits. Neither Agent, Collateral Agent, nor any Lender
is obligated at any time to credit Borrowers for any amounts due from any
purchase of any Collateral contemplated under this agreement until Collateral
Agent has actually received immediately available funds for that Collateral in
the amount required under this agreement. Neither Agent, Collateral Agent, nor
any Lender is obligated at any time to collect any amounts or otherwise enforce
any obligations due from any purchaser in respect of any such purchase.
4.6 Shipment for Correction. If no Default, Potential Default, or
Borrowing Excess exists or occurs as a result of the shipment and if shipment
would not result in any Collateral Documents for Collateral with more than a
total face amount of One Million Dollars ($1,000,000) being outstanding for
correction, then Borrowers may, by a Trust Receipt delivered to Collateral
Agent, request that Collateral Agent ship to Borrowers the entire mortgage loan
file of Collateral Documents for any item of Collateral so that certain of those
Collateral Documents may be corrected or replaced for clerical or other
non-substantive mistakes. If Collateral Agent has no actual knowledge that any
of the above conditions have not been satisfied, then and subject to the
limitations below, then Collateral Agent shall ship to Borrowers the entire
mortgage loan file of Collateral Documents to be corrected or replaced.
Borrowers shall redeliver to Collateral Agent the corrected Collateral Documents
(meeting the requirements of SCHEDULE 4.3) before the expiration of the
Correction Period for that collateral. Collateral shipped under this section,
unless returned to Collateral Agent, ceases to be Eligible Collateral (a) to the
extent that Collateral Documents for Collateral with more than a total face
amount of One Million Dollars ($1,000,000) are outstanding for correction at any
time and (b) upon the expiration of the Correction Period for
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that Collateral. The Lender Liens on any Collateral shipped under this section
continue in full force and effect.
4.7 Release of Collateral.
(a) Excess Collateral. If no Default or Potential Default exists and
no Borrowing Excess exists or would occur (after taking into account any
corresponding payment on the Obligation) as a result of the release, Borrowers
may, by a Release Request delivered to Collateral Agent by 11:00 a.m. on the
Business Day of the release, request that Collateral Agent release the Lender
Liens on any Collateral.
(b) Satisfaction of Obligation. If the Obligation is fully paid and
performed and all commitments by each Lender to extend credit under the Loan
Documents are terminated or cancelled, Borrowers may, by written request to
Collateral Agent, request that Collateral Agent release the Lender Liens on all
of the Collateral, return to Borrowers or its designee all Collateral Documents
then held by Collateral Agent, and execute a release of any financing statements
or other documents filed or recorded to perfect the Lender Liens.
(c) Releases. If Collateral Agent has no actual knowledge that any of
the above conditions for a release have not been satisfied, then Collateral
Agent shall effect those releases..
SECTION 5. CONDITIONS PRECEDENT. No Lender is obligated to fund its part of
any Borrowing unless Agent has received all of the documents and items described
on Schedule 5, provided that the Lenders may elect to fund before all of such
documents shall have been furnished (although no such election shall be
construed as a waiver of the requirement that all such documents and items be
furnished, and the Lenders may elect to cease funding at any time before all of
such documents and items shall have been furnished.) In addition, no Lender is
obligated to fund its part of any Borrowing unless on the applicable Borrowing
Date (and after giving effect to the requested Borrowing): (a) Collateral Agent
has timely received a Borrowing Request; (b) all of the representations and
warranties of Borrowers in the Loan Documents are true and correct in all
materials respects (unless they speak to a specific date or are based on facts
which have changed by transactions contemplated or permitted by this agreement);
(c) no Default or Potential Default exists; (d) the funding of the Borrowing is
permitted by Law and does not cause a borrowing Excess; and (e) if reasonably
requested by Agent, it has received evidence substantiating any of the matters
in the Loan Documents that are necessary to enable Borrowers, as the case may
be, to qualify for the Borrowing. Each condition precedent in this agreement
(including those on Schedule 5) is material to the transactions contemplated by
this agreement, and time is of the essence with respect to each. Subject to
first obtaining the approval of all lenders, Agent or any Lender may fund any
Borrowing without all conditions being satisfied. However, to the extent lawful,
that funding is not a waiver of the requirement that each condition precedent be
satisfied as a prerequisite for any subsequent funding, unless all Lenders
specifically waive an item in writing.
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SECTION 6. REPRESENTATIONS AND WARRANTIES. Borrowers jointly and severally
represent and warrant to Agent and Lenders as follows:
6.1 Purpose of Credit. Borrowings are to be used as stated in the
recitals of this agreement. No Company is engaged 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 meaning of
Regulation U. No part of the proceeds of any Borrowing is to be used, directly
or indirectly, for a purpose that violates any Law, including the provisions of
Regulation U.
6.2 About the Companies.
(a) Subsidiaries and Trade Names. Except as described on Schedule
6.2 (i) no Borrower has any Subsidiaries and (ii) no Borrower has used or
transacted business under any other corporate or trade name in the six-month
period preceding the date of this agreement.
(b) Existence, Qualification, and Compliance. Each Company is duly
organized, validly existing, and in good standing under the Laws of the
jurisdiction in which it is incorporated as stated on Schedule 6.2. Except
where failure is not a Material Adverse Event, each Company (i) is duly
qualified to transact business and is in good standing as a foreign corporation
or other entity in each jurisdiction where nature and extent of its business and
properties require due qualification and good standing (as described on Schedule
6.2), (ii) possesses all requisite authority, permits, and power to conduct its
business as it now being, or is contemplated by this agreement to be, conducted,
and (iii) is in compliance with all applicable Laws.
(c) Offices. Each Company's chief executive office and other
principal offices are described on Schedule 6.2. The present and foreseeable
location of each Company's books and records concerning accounts and accounts
receivable is at its chief executive office, and all of its books, and records
are in its possession.
6.3 Authorization and Contravention. The execution and delivery by each
Company of each Loan Document to which it is a party and the performance by it
of its related obligations (a) are within its corporate power, (b) have been
duly authorized by all necessary corporate action, (c) except for any action or
filing that has been taken or made on or before the date of this agreement,
require no action by or filing with any Tribunal, (d) do not violate any
provision of its articles of incorporation, charter or bylaws, (e) except where
not a material Adverse Event, do not violate any provision of law applicable to
it or any material agreements to which it is a party, and (f) except for Lender
Liens, do not result in the creation or imposition of any Lien on any asset of
any Company.
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6.4 Binding Effect. Upon execution and delivery by all parties to it, each
Loan Document will constitute a legal and binding obligation of each Company
party to it, enforceable against it in accordance with its terms, except as
enforceability may be limited by applicable Debtor Laws and general principles
of equity.
6.5 Fiscal Year. The Companies' fiscal year ends each January 31.
6.6 Current Financials. The Current Financials were prepared in accordance
with GAAP and present fairly, in all material respect and to the extent required
by GAAP, the financial condition, results of operations, and cash flows of the
Companies as of, and for the portion of the fiscal year ending on their date or
dates (subject only to normal year-end adjustments). All material liabilities
of the Companies as of the date or dates of the Current Financials are reflected
in them or notes to them. Except for transactions directly related to, or
specifically contemplated by, the Loan Documents, no subsequent material adverse
changes have occurred in the financial condition of the Companies from that
shown in the Current Financials, nor has any Company incurred any subsequent
material liability.
6.7 Financial Condition. The Companies satisfy each of the covenants set
out in Section 9.
6.8 Solvency. On the date of each Borrowing, each Company is, and after
giving effect to the requested Borrowing will be, Solvent.
6.9 Litigation. Except as disclosed on Schedule 6.9 (a) no Company is
subject to, or aware of the threat of, any Litigation that is reasonably likely
to be determined adversely to it or, if so adversely determined, would be a
Material Adverse Event, and (b) no outstanding or unpaid judgments against any
Company exists.
6.10 Transactions with Affiliates. No Company is a party to a material
transaction with any of its Affiliates except (a) transactions in the ordinary
course of business and upon fair and reasonable terms not materially less
favorable than it could obtain or could become entitled to in an arm's-length
transaction with a Person that was not its Affiliate, and (b) transactions
described on Schedule 6.610.
6.11 Taxes. All Tax returns for each Company required to be filed have
been filed (or extensions have been granted) before delinquency, except for
returns for which the failure to file is not a Material Adverse Event, and all
Taxes imposed upon each Company that are due and payable have been paid before
delinquency.
6.12 Employee Plans. Except where occurrence or existence is not a
Material Adverse Event, (a) no Employee Plan has incurred an "accumulated
funding deficiency" (as defined in Section 302 of ERISA or Section 412 of the
IRC), (b) no Company has incurred liability under ERISA to the
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PBGC in connection with any Employee Plan, (c) no Company has withdrawn in
whole or in part from participation in a Multiemployer Plan, (d) no Company has
engaged in any "prohibited transaction" (as defined in Section 406 of ERISA or
Section 4975 of the IRC), and (e) no "reportable event" (as defined in Section
4043 of ERISA) has occurred in respect of any Employee Plan, excluding events
for which the notice requirement is waived under applicable PBGC regulations.
6.13 Property. Each Company has good and marketable title to all its
property reflected on the Current Financials except for property that is
obsolete or that has been disposed of in the ordinary course of business or,
after the date of this agreement, as otherwise permitted by this agreement.
6.14 Intellectual Property. Each Company owns all material licenses,
patents, patent applications, copyrights, service marks, trademarks, trademark
applications, and trade names necessary to continue to conduct its businesses as
presently conducted and proposed to be conducted immediately after the date of
this agreement. Each Company is conducting its business without infringement or
claim of infringement of any license, patent, copyright, service mark,
trademark, trade name, trade secret, or other intellectual property right of
others, other than any infringements or claims that, if successfully asserted
against or determined adversely to any Company, are not a Material Adverse
Event. No Company has knowledge of any infringement or claim of infringement by
others of any material license, patent, copyright, service mark, trademark,
trade name, trade secret, or other intellectual property of Company.
6.15 Environmental Matters. Except where not a Material Adverse Event, no
Company (a) knows of any environmental condition or circumstance adversely
affecting any Company's properties or operations or any material portion of the
properties underlying the Collateral, (b) has received any report of any
Company's violation of any Environmental law, or (c) knows that any Company is
under any obligation to remedy any violation of any Environmental law. Each
Company has taken prudent steps to determine that its properties and operations
and that substantially all of the properties underlying the Collateral do not
violate any Environmental Law except violations that are not a Material Adverse
Event.
6.16 Government Regulations.
(a) Inapplicable Regulations. No Company is subject to regulation
under the Investment Company Act of 1940, as amended, or the Public Utility
Holding Company Act of 1935, as amended.
(b) Borrower's Eligibility. Each Borrower is approved and qualified
and in good standing as an issuer, mortgagee, or seller/servicer, as described
below, and meets all requirements applicable to it status as such: (i) GNMA
approved issuer of Mortgage Securities guaranteed by GNMA; (ii) FNMA approved
seller/servicer of Mortgage Loans, eligible to originate, purchase, hold, sell,
and service Mortgage Loans to be sold to FNMA; (iii) FHLMC
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approved seller/servicer of Mortgage Loans, eligible to originate, purchase,
hold, sell and service Mortgage Loans to be sold to FHLMC; (iv) FHA approved
mortgagee, eligible to originate, purchase, hold, sell and service FHA Loans;
and (v) approved mortgagee, eligible to originate, purchase, hold, sell and
service VA Loans.
6.17 Insurance. Each Company maintains with financially sound,
responsible, and reputable insurance companies or associations (or, as to
workers' compensation or similar insurance, with an insurance fund or by
self-insurance authorized by the jurisdictions in which it operates) insurance
concerning its properties and businesses against casualties and contingencies
and of types and in amounts (and with co-insurance and deductibles) as is
customary in the case of similar businesses.
6.18 Appraisals. With respect to the property the subject of any
Collateral, Borrowers have obtained Appraisals in material compliance with all
Appraisal Laws.
6.19 Full Disclosure. Each material fact or condition relating to the Loan
Documents or the financial condition, business, or property of the Companies
that is a Material Adverse Event has been disclosed in writing to Agent,
Collateral Agent, and Lenders. All information previously furnished by any
Company to Agent, Collateral Agent, or any Lender in connection with the Loan
Documents was, and all information furnished in the future by any Company to
Agent, Collateral Agent, or any Lender will be, true and accurate in all
material respects or based on reasonable estimates on the date the information
is stated or certified.
SECTION 7. AFFIRMATIVE COVENANTS. Until all commitments by Lenders to extend
credit under this agreement have been cancelled or terminated and the Obligation
is fully paid and performed, Borrowers jointly and severally covenant and agree
with Agent and Lenders as follows:
7.1 Reporting Requirements. Borrowers shall cause to be furnished to Agent
(except as otherwise required below) the following, all in form and detail
reasonably satisfactory to Agent:
(a) Annual Financials. Promptly when available but at least within
ninety (90) days after each fiscal year end of Borrowers, Financials of the
Companies (on both a consolidated and a consolidating basis) as of that year
end, each reflecting the corresponding figures for the preceding fiscal year in
comparative form, accompanied by (i) the related report prepared by independent
certified public accountants acceptable to Agent and stating that those
statements were prepared in accordance with GAAP applied on a basis consistent
with prior periods except for such changes in GAAP concurred in by Borrowers'
independent public accountants, and (ii) a Compliance Certificate.
(b) Quarterly Financials. Promptly when available but at least within
forty-five (45) days after the last day of each Calendar Quarter, Financials of
the Companies (on both a
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consolidated and a consolidating basis) as of the end of that Calendar Quarter,
accompanied by a Compliance Certificate.
(c) Management Report. Promptly when available but at least within
thirty (30) calendar days of the last day of each Calendar Month, a monthly
Management Report.
(d) Take-Out Report. By 5:00 p.m. on each Monday (or, if any Monday
is not a Business Day, then by that time on the next Business Day) but only to
the extent that Borrowers have elected not to deliver specifically designated
Take-Out Commitments to Collateral Agent under Schedules 4.2 and 4.3, a Take-Out
Report that is prepared as of the close of business on the preceding Business
Day, delivered solely to Collateral Agent, and reports the Take-Out Prices of
the Mortgage Collateral Groups comprising the Collateral for which specifically
designated Take-Out Commitments have not been delivered.
(e) Investor Information. Promptly after the request by Agent or
Determining Lenders, financial information about any investor (other than FNMA,
FHLMC, and GNMA) for purposes of determining whether that investor should be or
remain an Approved Investor.
(f) Servicing Portfolio Information. Promptly when available, but at
least twice a year, an appraisal of the Servicing Portfolio as required to be
prepared by Borrowers under the Credit Enhancement Umbrella Agreement among
Borrowers and the Board of Trustees of the Policeman's and Firemen's Retirement
System of the City of Detroit dated April 30, 1993, as amended.
(g) Notices. Notice, promptly after any Company knows or has reason
to know, of (i) the existence and status of any Litigation that, if determined
adversely to any Company, would be a Material Adverse Event, (ii) any change in
any material fact or circumstance represented or warranted by any Company in any
Loan Document that constitutes a Material Adverse Event, (iii) the receipt by
any Company of notice of any violation or alleged violation of ERISA or any
Environmental Law or other Law if that violation is a Material Adverse Event, or
(iv) a Default or Potential Default specifying the nature thereof and what
action the Companies have taken, are taking, or propose to take with respect to
it.
(h) Other Information. Promptly upon reasonable request by Agent or
Determining Lenders (through Agent), information (not otherwise required to be
furnished under the Loan Documents) respecting the business affairs, assets, and
liabilities of any Company and opinions, certifications, and documents in
addition to those mentioned in this agreement.
7.2 Use of Proceeds. Borrowers shall use the proceeds of Borrowings only
for the purposes stated in the recitals of this agreement.
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7.3 Books and Records. Each Company shall maintain books, records, and
accounts necessary to prepare Financials in accordance with GAAP.
7.4 Inspections. Upon reasonable request, each Company shall allow Agent,
any Lender, or their respective Representatives to inspect any of its
properties, to review reports, files, and other records and to make and take
away copies, to conduct tests or investigations, and to discuss any of its
affairs, conditions, and finances with its directors, officers, employees,
representatives, or accountants from time to time during reasonable business
hours.
7.5 Taxes. Each Company shall promptly pay when due any and all Taxes
other than Taxes of which the failure to pay is not a Material Adverse Event or
which are being contested in good faith by lawful proceedings diligently
conducted, against which reserve or other provision required by GAAP has been
made, and in respect of which levy and execution of any Lien have been and
continue to be stayed.
7.6 Expenses. Borrowers shall pay (a) all reasonable legal fees and
expenses incurred by Agent and Collateral Agent in connection with the
preparation, negotiation, and execution of the Loan Documents, (b) all
reasonable legal fees and expenses incurred by Agent in connection with each
separate future amendment, consent, waiver, or approval executed in connection
with any Loan Document, (c) all fees, charges, or Taxes for the recording or
filing of any Loan Document to create or perfect Lender Liens, (d) all other
reasonable out-of-pocket expenses of Agent or any Lender in connection with the
preparation, negotiation, execution, or administration of the Loan Documents,
including courier expenses incurred in connection with the Collateral, (e) all
amounts expended, advanced, or incurred by Agent or any Lender to satisfy any
obligation of an Company under any Loan Document, to collect the obligation, or
to enforce the Rights of Agent or any Lender under any Loan Document, including
all court costs, attorneys' fees (whether for trial, appeal, other proceedings,
or otherwise), fees of auditors and accountants, and investigation expenses
reasonably incurred by Agent or any Lender in connection with any such matters,
(f) interest at an annual interest rate equal to the Default Rate on each item
specified in clauses (a) through (e) above from thirty (30) days after the date
of written demand or request for reimbursement to the date of reimbursement, and
(g) any and all stamp and other Taxes payable or determined to be payable in
connection with the execution, delivery, or recordation of any Loan Document, IN
CONNECTION WITH WHICH BORROWERS SHALL INDEMNIFY AND SAVE AGENT AND EACH LENDER
HARMLESS FROM AND AGAINST ANY AND ALL LIABILITIES WITH RESPECT TO OR RESULTING
FROM ANY DELAY IN PAYING OR OMISSION TO PAY THOSE TAXES TO THE EXTENT THOSE
LIABILITIES ARISE SOLELY BECAUSE BORROWERS FAILED TO PAY THE TAXES UPON DEMAND
BY AGENT OR ANY LENDER, WHICH INDEMNITY SURVIVES THE PAYMENT AND PERFORMANCE OF
THE OBLIGATION AND TERMINATION OF THE LOAN DOCUMENTS.
7.7 Maintenance of Existence, Assets, and Business. Each Company shall (a)
except as permitted by Section 8.5, maintain its corporate existence and good
standing in its state of incorporation and its authority to transact business in
all other states where failure to maintain its
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authority to transact business is a Material Adverse Event, and (b) maintain
all licenses, permits, and franchises necessary for its business where failure
to do so is a Material Adverse Event, including each Borrower's eligibility as
a lender, seller/servicer, and issuer as described in Section 6.16(b).
7.8 Insurance. Each Company shall (a) maintain with financially sound and
reputable insurers, insurance with respect to its assets and business against
such liabilities, casualties, risks, and contingencies and in such types and
amounts, including a fidelity bond or bonds in form and with coverage, with a
company, and with respect to such individuals or groups of individuals, as
satisfy prevailing FNMA, FHLMC, and GNMA requirements applicable to a qualified
mortgage institution and otherwise as is customary in the case of Persons
engaged in the same or similar businesses and similarly situated, and (b) upon
Agent's request, furnish to Agent from time to time (i) a summary of its
insurance coverage in form and substance satisfactory to Agent, and (ii)
originals or copies of the applicable policies.
7.9 Take-Out Commitments. Borrowers shall perform and observe in all
material respects each of the provisions of each Take-Out Commitment on their
part to be performed or observed and cause all things to be done that are
necessary to have each item of Mortgage Collateral and the Collateral Documents
covered by a Take-Out Commitment comply with its requirements.
7.10 Appraisals. Borrowers shall promptly (a) permit Agent's and any
Lender's authorized Representatives to discuss with Borrowers' officers or with
the appraisers furnishing Appraisals the procedures for preparation, review, and
retention of, and to review and obtain copies of, all Appraisals pertaining to
any Collateral, and (b) upon Agent's or any Lender's request, cooperate with it
to ascertain that the Appraisals comply with all Appraisal Laws.
7.11 Indemnification. IN CONSIDERATION OF THE COMMITMENTS BY AGENT AND
LENDERS UNDER THE LOAN DOCUMENTS, BORROWERS SHALL INDEMNIFY AND DEFEND AGENT,
COLLATERAL AGENT, EACH LENDER, AND THEIR RESPECTIVE AFFILIATES AND
REPRESENTATIVES (COLLECTIVELY, THE "INDEMNIFIED PARTIES"), AND DEFEND THEM AND
HOLD EACH OF THEM HARMLESS, AGAINST ANY AND ALL LOSSES, LIABILITIES, CLAIMS,
DAMAGES, DEFICIENCIES, INTEREST, JUDGMENTS, COSTS OR EXPENSES, INCLUDING
REASONABLE ATTORNEYS' FEES, INCURRED BY ANY OF THEM ARISING FROM OR BECAUSE OF
(A) ANY INVESTIGATION, LITIGATION, OR OTHER PROCEEDING BROUGHT OR THREATENED IN
CONNECTION WITH ANY LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED BY THE LOAN
DOCUMENTS, INCLUDING ANY USE BY ANY COMPANY OF THE PROCEEDS OF BORROWINGS, (B)
ANY IMPOUNDMENT, ATTACHMENT, RETENTION OF ANY COLLATERAL OR ANY FAILURE OF ANY
INVESTOR TO PAY THE ENTIRE PURCHASE PRICE OF ANY COLLATERAL UNDER ANY TAKE-OUT
COMMITMENT, (C) ANY ALLEGED VIOLATION OF ANY FEDERAL OR STATE LAW RELATING TO
USURY IN CONNECTION WITH ANY COLLATERAL, AND (D) ANY REPRESENTATION MADE BY ANY
COMPANY UNDER ANY LOAN DOCUMENT. ALTHOUGH EACH INDEMNIFIED PARTY IS ENTITLED TO
INDEMNIFICATION FOR ANY
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INDEMNIFIED PARTY'S ORDINARY NEGLIGENCE, NO INDEMNIFIED PARTY IS ENTITLED TO
INDEMNIFICATION FOR ITS OWN GROSS NEGLIGENCE, WILLFUL MISCONDUCT, OR FRAUD.
THIS INDEMNITY SURVIVES THE PAYMENT AND PERFORMANCE OF THE OBLIGATION AND
TERMINATION OF THE LOAN DOCUMENTS.
SECTION 8. NEGATIVE COVENANTS. Until all commitments by Lenders to extend
credit under this agreement have been cancelled or terminated and the
Obligation is fully paid and performed, Borrowers jointly and severally
covenant and agree with Agent and Lenders as follows:
8.1 Debt. No Company may directly or indirectly create, incur, or
suffer to exist (a) any Debt except Permitted Debt, (b) any Wet Borrowings
except in connection with this agreement or in connection with any Permitted
Debt whose description on SCHEDULE 8.1 specifically allows for Wet Borrowings,
(c) any warehouse-type Debt except as specifically allowed by this agreement or
as approved by Agent in writing, or (d) any mortgage loan repurchase agreements
(except in connection with any Permitted Debt whose description on SCHEDULE 8.1
specifically allows for mortgage loan repurchase agreements or as otherwise
permitted by Agent in writing).
8.2 Liens. No Company may directly or indirectly (a) create, incur, or
suffer to exist any Lien on any of its assets except Permitted Liens or (b)
enter into or permit to exist any arrangement or agreement (except the Loan
Documents) that directly or indirectly prohibits any Company from creating or
incurring any Lien on any of its assets.
8.3 Loans, Advances, and Investments. No Company may make any loan,
advance, extension of credit, or capital contribution to, make any investment
in, or purchase or commit to purchase any stock or other securities or evidences
of Debt of, or interests in, any other Person except Permitted
Loans/Investments.
8.4 Distributions. Borrowers may not directly or indirectly pay or
declare any Distribution during any fiscal year except (a) dividends payable
solely in the form of capital stock, (b) cash distributions in an amount not to
exceed that needed to service Permitted Debt in which MCA Financial Corp. is the
debtor so long as no Default or Potential Default exists or would be created by
the Distribution, (c) required preferred stock dividends so long as no Default
or Potential Default exists or would be created by the Distribution, or (d)
Distributions otherwise approved in writing by Agent.
8.5 Merger or Consolidation. No Company may directly or indirectly
merge or consolidate with or into any other Person except that any Company may
merge into or be consolidated with any other Company so long as any Borrower
involved is the surviving corporation.
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8.6 Liquidations and Disposition of Assets. No Company may directly or
indirectly dissolve or liquidate or sell, transfer, lease, or otherwise dispose
of any material portion of its assets or business except for sales or other
dispositions by any Company, in the ordinary course of business, of (a) subject
to SECTION 9.3, any part of its Servicing Portfolio, or (b) subject to SECTION
4, any Collateral.
8.7 Use of Proceeds. Borrowers may not directly or indirectly use the
proceeds of Borrowings (a) for any purpose other than as represented in this
agreement, (b) for the funding or acquisition of commercial loans, (c) for wages
of employees, unless a timely payment to or deposit with the United States of
America of all amounts of Tax required to be deducted and withheld with respect
to such wages is also made, or (d) in violation of Regulation U or Section 7 of
the Securities Exchange Act of 1934.
8.8 Transactions with Affiliates. No Company may directly or indirectly
enter into any transaction with any of its Affiliates other than transactions in
the ordinary course of business or upon fair and reasonable terms not materially
less favorable than it could obtain or could become entitled to in an
arm's-length transaction with a person that was not its Affiliate.
8.9 Employee Plans. Except where a Material Adverse Event would not
result, no Company may directly or indirectly permit any of the events or
circumstances described in Section 6.12 to exist or occur.
8.10 Compliance with Laws and Documents. No Company may directly or
indirectly (a) violate the provisions of any Laws applicable to it or of any
Material Agreement to which it is a party if that violation alone or with all
other violations is a Material Adverse Event or (b) violate the provisions of
its articles of incorporation, charter or bylaws or repeal, replace or amend any
provision of its articles of incorporation, charter or bylaws if any such action
is a Material Adverse Event.
8.11 Government Regulations. No Company may directly or indirectly conduct
its business in a way that it becomes regulated under the Investment Company Act
of 1940.
8.12 Fiscal Year Accounting. No Company may directly or indirectly change
its fiscal year nor use any accounting method other than GAAP.
8.13 New Businesses. No Company may directly or indirectly engage in any
business except the businesses in which it or any of its Affiliates is presently
engaged and any other reasonably related business.
8.14 Assignment. No Company may directly or indirectly assign or transfer
any of its Rights, duties, or obligations under any of the Loan Documents.
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SECTION 9. FINANCIAL COVENANTS. Until all commitments by Lenders to extend
credit under this agreement have been cancelled or terminated and the Obligation
is fully paid and performed, Borrowers jointly and severally covenant and agree
with Agent and Lenders as follows:
9.1 Net Worth.
(a) The sum of MCA Financial Corporation's consolidated Net worth
plus its Subordinated Debt may never be less than the sum of Sixteen Million
Dollars ($16,000,000).
(b) MCA Mortgage Corporation's Net Worth may never be less than
Eight Million Five Hundred Thousand Dollars ($8,500,000) plus ninety percent
(90%) of all capital contributions directly or indirectly made to it by or on
behalf of its corporate parent, MCA Financial Corporation, on or after thirty
(30) days before the effective date of this Agreement.
(c) Mortgage Corporation of America's Net Worth may never be less
than Five Million Dollars ($5,000,000) plus ninety percent (90%) of all capital
contributions directly or indirectly made to it by or on behalf of its corporate
parent, MCA Financial Corporation, on or after thirty (30) days before the
effective date of this Agreement.
9.2 Leverage.
(a) MCA Financial Corporation's ratio of (i) its total Debt to (ii)
the sum of its consolidated Net Worth plus its Subordinated Debt may never
exceed 10.0 to 1.0.
(b) MCA Mortgage Corporation's ratio of its total Debt to its Net
Worth may never exceed 10.0 to 1.0.
(c) Mortgage Corporation of America's ratio of its total Debt to its
Net Worth may never exceed 10.0 to 1.0.
9.3 Servicing Portfolio. The Servicing Portfolio may never be less than
One Billion Two Hundred Million Dollars ($1,200,000,000) at any time on or after
the Closing Date.
SECTION 10. DEFAULTS AND REMEDIES.
10.1 Default. The term "DEFAULT" means the existence or occurrence of
any one or more of the following:
(a) Obligation. Borrowers fail to pay (i) any interest on the
Obligation when due under the Loan Documents and that failure continues for five
(5) days or (ii) any other part of the Obligation when due under the Loan
Documents.
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(b) Covenants. Any Company fails to punctually and properly perform,
observe, and comply with any (i) any covenant, agreement, or condition under
SECTIONS 8 or 9 or (ii) any covenant, agreement, or condition contained in any
of the Loan documents, other than covenants to pay the Obligation and the
covenants listed in CLAUSE (I) above, and that failure continues for a period of
fifteen (15) calendar days after any Company has, or, with the exercise of
reasonable investigation, should have, notice of it.
(c) Misrepresentation. Any material statement, warranty, or
representation by or on behalf of any Company in any Loan Document or other
writing authored by or on behalf of any Company and furnished in connection with
the Loan Documents, proves to have been incorrect or misleading in any material
respect as of the date made or deemed made.
(d) Debtor Law. Any Company (i) is not Solvent, (ii) fails to pay its
Debts generally as they become due, (iii) voluntarily seeks, consents to, or
acquiesces in the benefit of any Debtor Law, or (iv) becomes a party to or is
made the subject of any proceeding provided for by any affect the Rights of
Agent, Collateral Agent, or any Lender granted in the Loan Documents unless, if
the proceeding is involuntary, the applicable petition is dismissed within sixty
(60) days after its filing.
(e) Other Debt. Any Company fails to make any payment due on any Debt
or security (with respect to which any Company has redemption, sinking fund, or
other purchase obligations) or any event occurs or any condition exists in
respect of any Debt or security of any Company, the effect of which is (i) to
cause or to permit any holder of that Debt or security to become due before its
stated maturity or its regularly scheduled payment dates, or (ii) to permit a
trustee or the holder of any security (other than common stock of any Company)
to elect (whether or not it does elect) a majority of the directors on the board
of directors of that Company.
(f) Judgments. Any Company fails to pay any money judgment against it
at least ten (10) days prior to the date on which any of the assets of that
Company may be lawfully sold to satisfy that judgment.
(g) Attachment. The failure to have discharged within a period of
thirty (30) days after the commencement of any attachment, sequestration, or
similar proceeding against any of the assets of any Company.
(h) Unenforceability. Any material provision of any Loan Document for
any reason ceases to be in full force and effect or is fully or partially
declared null and void or unenforceable or the validity or enforceability of any
Loan Document is challenged or denied by any Company.
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(i) Change of Control. Any (i) material change in the ownership or
management of any Borrower from that ownership and management as it exists on
the date of this agreement or (ii) failure to provide advance notice of any
material change in ownership or management.
(j) Agency Qualifications. (i) Any Borrower fails to meet any GNMA
seller or servicing standard or requirement that is a Material Adverse Event,
(ii) GNMA revokes or terminates any Borrowers' Right to service for GNMA, (iii)
GNMA issues a letter of extinguishment under any GNMA guaranty agreement, (iv)
any Borrower ceases to be an eligible issuer or servicer for either FNMA or
FHLMC, (v) FNMA or FHLMC impose any sanctions upon any Borrower resulting in a
Material Adverse Event, (vi) FNMA or FHLMC terminate or revoke any Borrower's
Right to service for FNMA or FHLMC, or (vii) FNMA or FHLMC initiate any transfer
of servicing from any Borrower.
10.2 Remedies.
(a) Debtor Law. Upon the occurrence of a Default under SECTION
10.1(D), the commitments of Lenders to extend credit under this agreement
automatically terminate and the full Obligation is automatically due and
payable, without presentment, demand, notice of default, notice of the intent to
accelerate, notice of acceleration, or other requirements of any kind, all of
which are expressly waived by Borrowers.
(b) Other Defaults. While a Default exists, other than those
described in CLAUSE (A) above, Agent may and, upon the direction of Determining
Lenders, shall declare the obligation to be immediately due and payable,
whereupon it shall be due and payable, whereupon the commitments of Lenders to
extend credit under this agreement are then automatically terminated.
(c) Other Remedies. Following the termination of the commitments of
Lenders to extent credit under this agreement and the acceleration of the
Obligation, Agent may (and, at the direction of Determining Lenders, shall) do
any one or more of the following: Reduce any claim to judgment; foreclose upon
or otherwise enforce any Lender Liens; and exercise any other Rights in the Loan
Documents, at Law, in equity, or otherwise that Determining Lenders may direct.
Should any Default continue that, in Agent's opinion, materially and adversely
affects the Collateral or the interests of the Lenders under this agreement,
Agent may, in a notice to the lenders of that Default set forth one or more
actions that Agent, in its opinion, believes should be taken. Unless otherwise
directed by Determining Lenders (excluding the Lender serving as Agent) within
ten (10) days following the date of the notice setting forth the proposed action
or actions, Agent may, but shall not be obligated to, take the action or actions
set forth in that notice.
10.3 Right of Offset. Borrowers hereby grant to Agent, collateral Agent,
and to each Lender a right of offset, to secure the repayment of the Obligation,
upon any and all monies, securities, or other property of Borrowers, and the
proceeds therefrom now or hereafter held or
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received by or in transit to Agent, Collateral Agent, or such Lender from or
for the account of Borrowers, whether for safekeeping, custody, pledge,
transmission, collection, or otherwise, and also upon any and all deposits
(general or special, time or demand, provisional or final) and credits of
Borrowers, and any and all claims of Borrowers against Agent, collateral Agent,
or such Lender, at any time existing. Upon the occurrence of any Default,
Agent, collateral Agent, and each Lender are authorized at any time and from
time to time, without notice to any Company, to offset, appropriate, and apply
any and all of those items against the Obligation, subject to SECTION 3.6.
Notwithstanding anything in this section or elsewhere in this agreement to the
contrary, neither Agent, Collateral Agent, nor any other Lender shall have any
right to offset, appropriate, or apply any accounts of Borrowers which consist
of escrowed funds (except and to the extent of any beneficial interest which
Borrowers have in such escrowed funds) which have been so identified by any
Company in writing at the time of deposit thereof.
10.4 Waivers. Borrower waive any right to require Agent to (a) proceed
against any Person, (b) proceed against or exhaust any of the Collateral or
pursue its Rights and remedies as against the collateral in any particular
order, or (c) pursue any other remedy in its power. Agent shall not be required
to take any steps necessary to preserve any Rights of any Company against any
Person from which any Company purchased an Collateral or to preserve Rights
against prior parties. Borrowers and each surety, endorser, guarantor, pledgor,
and other party ever liable or whose property is ever liable for payment of any
of the Obligation jointly and severally waive presentment and demand for
payment, protest, notice of intention to accelerate, notice of acceleration, and
notice of protest and nonpayment, and agree that their or their property's
liability with respect to the Obligation, or any part thereof, shall not be
affected by any renewal or extension in the time of payment of the Obligation,
by any indulgence, or by any release or change in any security for the payment
of the Obligation, and hereby consent to any and all renewals, extensions,
indulgences, releases, or changes, regardless of the number thereof.
10.5. Performance by Agent. Should any covenant, duty, or agreement of any
Company fail to be performed in accordance with the terms of this agreement or
of any document delivered under this agreement, Agent may, at its option, after
notice to Borrowers perform, or attempt to perform, such covenant, duty, or
agreement on behalf of that Company and shall notify each Lender that it has
done so. In such event, Borrowers shall jointly and severally, at the request
of Agent, promptly pay any amount expended by Agent in such performance or
attempted performance to Agent at its principal place of business, together with
interest thereon at the Maximum Rate from the date of such expenditure by Agent
until paid. Notwithstanding the foregoing, it is expressly understood that
Agent does not assume and shall never have, except by express written consent of
Agent, any liability or responsibility for the performance of any duties of any
Company under this agreement or under any other document delivered under this
agreement.
10.6 No Responsibility. Except in the case of fraud, gross negligence, or
willful misconduct, neither Agent nor any of its officers, directors, employees,
or attorneys shall assume,
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or ever have any liability or responsibility for, any diminution in the value
of the collateral or any part of the Collateral.
10.7 No Waiver. The acceptance by Agent or any Lender at any time and from
time to time of partial payment or performance by any company of any of their
respective obligations under this agreement or under any Loan Document shall not
be deemed to be a waiver of any Default then existing. No waiver by Agent or
any Lender shall be deemed to be a waiver of any other then existing or
subsequent Default. No delay or omission by Agent or any Lender in exercising
any right under this agreement or under any other document required to be
executed under or in connection with this agreement shall impair such right or
be construed as a waiver thereof or any acquiescence therein, nor shall any
single or partial exercise of any such right preclude other or further exercise
thereof, or the exercise of any other right under this agreement or otherwise.
10.8 Cumulative Rights. All Rights available to Agent and the Lenders
under this agreement or under any other document delivered under this agreement
shall be cumulative of and in addition to all other Rights granted to Agent and
the Lenders at Law or in equity, whether or not the Notes be due and payable and
whether or not Agent shall have instituted any suit for collection, foreclosure,
or other action in connection with this agreement or any other document
delivered under this agreement.
10.9 Rights of Individual Lenders. No Lender shall have any right by
virtue of, or by availing itself of, any provision of this agreement to
institute any actions or proceedings at Law, in equity, or otherwise (excluding
any actions in bankruptcy), upon or under or with respect to this agreement, or
for the appointment of a receiver, or for any other remedy under this agreement,
unless (a) Determining Lenders previously shall have given to Agent written
notice of a Default and the continuance thereof, including a written request
upon Agent to institute such action or proceedings in its own name and offering
to indemnify Agent against the costs, expenses and liabilities to be incurred
therein or thereby, (b) Agent, for ten (10) Business Days after its receipt of
such notice, shall have failed to institute any such action or proceeding, and
(c) no direction inconsistent with such written request shall have been given to
Agent by Determining Lenders. It is understood and intended, and expressly
covenanted by the taker and holder of every Note with every other taker and
holder and Agent, that no one or more holders of Notes shall have any right in
any manner whatever by virtue, or by availing itself, of any provision of this
agreement to affect, disturb or prejudice the Rights of any other Lenders, or to
obtain or seek to obtain priority over or preference to any other such Lender,
or to enforce any right under this agreement, except in the manner herein
provided and for the equal, ratable and common benefit of all Lenders. For the
protection and enforcement of the provisions of this SECTION 10.9, each and
every Lender and Agent shall be entitled to such relief as can be given either
at law or in equity.
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10.10 Notice to Agent. Should any Default or Potential Default occur and
be continuing, any Lender having actual knowledge thereof shall notify Agent and
Borrowers of the existence thereof, but the failure of any Lender to provide
that notice shall not prejudice that Lender's Rights under this agreement.
10.11 Costs. All court costs, reasonable attorneys' fees, other costs of
collection, and other sums spent by Agent or any Lender in the exercise of any
Right provided in any Loan Document is payable to Agent or that Lender, as the
case may be, on demand, is part of the Obligation, and bears interest at the
Default Rate from the date paid by Agent or any Lender to the date repaid by
Borrowers.
SECTION 11. MISCELLANEOUS.
11.1 Nonbusiness Days. Any action that is due under any Loan Document
on a non- Business Day may be delayed until the next Business Day. However,
interest accrues on any payment until it is made.
11.2 Communications. Unless otherwise stated, a communication under any
Loan Document to a party to this agreement must be written to be effective and
is deemed given:
* For Borrowing Requests, Collateral Delivery Notices,
Shipping Requests, and Release Requests, only when actually
received by Agent or collateral Agent, as applicable.
* Otherwise, if by fax, when transmitted to the appropriate
fax number, but, without affecting the date deemed given, the fax
must be promptly confirmed by telephone.
* Otherwise, if by mail, on the third Business Day after
enclosed in a properly addressed, stamped, and sealed envelope
deposited in the appropriate official postal service.
* Otherwise, when actually delivered.
Until changed by written notice to each other party to this agreement, the
address and fax number are stated for (a) Borrowers Agent, and collateral Agent
beside their names on the signature pages below, and (b) each Lender, beside
its name on SCHEDULE 2.
11.3 Form and Number of Documents. The form, substance, and number of
counterparts of each writing to be furnished under the Loan Documents must be
satisfactory to Agent and its counsel.
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<PAGE> 53
11.4 Exceptions to Covenants. An exception to any Loan Document covenant
does not permit violation of any other Loan Document covenant.
11.5 Survival. All Loan Document provisions survive all closings and are
not affected by any investigation made by any party.
11.6 Governing Law. Unless otherwise stated, each Loan Document must be
construed, and its performance enforced, under the Laws of the State of Texas
and the United States of America.
11.7 Invalid Provisions. If any provision of a Loan Document is
judicially determined to be unenforceable, all other provisions of it remain
enforceable. If the provision determined to be unenforceable is a material
part of that Loan Document, then, to the extent lawful, it shall be replaced by
a judicially construed provision that is enforceable but otherwise as similar
in substance and content to the original provision as the context of it
reasonably allows.
11.8 Conflicts Between Loan Documents. The provisions of this agreement
control if in conflict (i.e., the provisions contradict each other as opposed to
a Loan Document containing additional provisions not in conflict) with the
provisions of any other Loan Document.
11.9 Discharge and Certain Reinstatement. Borrowers' obligations under
the Loan Documents remain in full force and effect until no Lender has any
commitment to extend credit under the Loan documents and the Obligation is fully
paid (except for provisions under the Loan Documents which by their terms
expressly survive payment of the Obligation and termination of the Loan
Documents). If any payment under any Loan Document is ever rescinded or must be
restored or returned for any reason, then all Rights and obligations under the
Loan Documents in respect of that payment are automatically reinstated as though
the payment had not been made when due.
11.10 Amendments, Consents, Conflicts, and Waivers. An amendment (which
may be in substantially the form of EXHIBIT F-1) of, or an approval, consent, or
waiver by Agent or by one or more Lenders under, any Loan Document must be in
writing and must be:
(a) Executed by Borrowers and Agent if it purports to reduce or
increase any fees payable to Agent by Borrowers.
(b) Executed by Borrowers and collateral Agent if it purports to
reduce or increase any fees payable to Collateral Agent by Borrowers.
(c) Executed by Borrowers and Agent and executed or approved in
writing by all Lenders in action of all Lenders is specifically provided in any
Loan document or if it purports to (i) except as otherwise stated in this
Section 11.10, extend the due date or decrease the
48
<PAGE> 54
scheduled amount of any payment under, or reduce the rate or amount of
interest, fees, or other amounts payable to Agent or any Lender under, any Loan
Document, (ii) change the definition of BORROWING BASE (or any component of
it), COMMITMENT PERCENTAGE, DETERMINING LENDERS, ELIGIBLE B/C PAPER LOAN,
ELIGIBLE CONSTRUCTION LOAN, ELIGIBLE GESTATION COLLATERAL, ELIGIBLE LAND
CONTRACT, ELIGIBLE MORTGAGE COLLATERAL, ELIGIBLE MORTGAGE LOAN, ELIGIBLE
MORTGAGE SECURITY, ELIGIBLE REPURCHASED LOAN, MARKET VALUE, STATED TERMINATION
DATE, OR TERMINATION PERCENTAGE, or (iii) partially or fully release or any
collateral except releases of collateral contemplated in this agreement.
(d) Otherwise (i) for this agreement, executed by Borrowers, Agent,
and Determining Lenders, or (ii) for other Loan Documents, approved in writing
by Determining Lenders and executed by Borrowers, Agent, and any other party to
that Loan Document.
No course of dealing or any failure or delay by Agent, any Lender, or any
of their respective Representatives with respect to exercising any Right of
Agent or any Lender under the Loan Documents operates as a waiver of that Right.
An approval, consent, or waiver is only effective for the specific instance and
purpose for which it is given. The Loan Documents may only be supplemented by
agreements, documents, and instruments delivered according to their respective
express terms.
11.11 Multiple Counterparts. Any Loan Document may be executed in any
number of counterparts with the same effect as if all signatories had signed the
same document, and all of those counterparts must be construed together to
constitute the same document; but in making proof of this agreement, it shall
not be necessary to produce or account for more than one such counterpart. This
agreement is effective when counterparts of it have been executed and delivered
to Agent by each Lender, Agent, and Borrowers, or, in the case only of those
Lenders, when Agent has received faxed or other evidence satisfactory to it that
each Lender has executed and is delivering to Agent a counterpart of it.
11.12 Parties. This agreement binds and inures to Borrowers, each Lender,
Agent, Collateral Agent, and their respective successors and permitted assigns.
Only those Persons may rely upon or raise any defense about this agreement.
(a) Assignment by Companies. No Company may assign any rights or
obligations under any Loan Document without first obtaining the written consent
of Agent and all Lenders.
(b) Assignment by Lender. Any Lender may assign, pledge, and
otherwise transfer all or any of its Rights and obligations under the Loan
Documents either (i) to a Federal Reserve Bank without the consent of any party
to this agreement so long as that Lender is not released from its obligations
under the Loan documents, or (ii) otherwise in the ordinary course of its
lending business and in accordance with all Laws, with the Lenders' Agreement,
and with
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<PAGE> 55
SECTION 11.13 or 11.14 so long as (A) except for assignments, pledges, and
other transfers by a Lender to its Affiliates, the written consent of Borrowers
and Agent, which may not be unreasonably withheld, must be first obtained, (B)
the assignment or transfer (other than a pledge) does not involve a purchase
price that directly or indirectly reflects a discount from face value unless
that Lender first offered that assignment or transfer to the other Lenders on
ratable basis according to their Commitment Percentages, (C) neither Borrowers
nor Agent are required to incur any cost or expense incident to any assignment,
pledge, or other transfer by any Lender, all of which are for the account of
the assigning, pledging, or transferring Lender and its assignee, pledgee, or
transferee as they may agree, and (D) if the Participant or Purchaser is
organized under the Laws of any jurisdiction other than the United States of
America or any of its states, it complies with SECTION 3.13.
(c) Otherwise Void. Any purported assignment, pledge, or other
transfer in violation of this section is void from the beginning and not
effective.
11.13 Participation. Subject to SECTION 11.12(B) and this section and only
if no Default exists, a Lender may at any time sell to one or more Persons (each
a "PARTICIPANT") participating interests in its commitment and its share of the
Obligation.
(a) Additional Conditions. For each participation (i) the selling
Lender must remain, and the Participant may not become, a "Lender" under this
agreement, (ii) the selling Lender's obligations under the Loan Documents must
remain unchanged, (iii) the selling Lender must remain the holder of its one or
more Notes and its share of the Obligation for all purposes under the Loan
Documents, and (v) Borrowers Agent and Collateral Agent may continue to deal
solely and directly with the selling Lender in connection with those Rights and
obligations.
(b) Participant Rights. The selling Lender may obtain for each of its
Participants the benefits of the Loan Documents related to participation in its
share of the Obligation, but Borrowers are never obligated to pay any greater
amount that would be due to the selling Lender under the Loan Documents
calculated as though no participation had been made. Otherwise, Participants
have no Rights under the Loan Documents except certain permitted voting Rights
described below.
(c) Participation Agreements. An agreement for a participating
interest (i) may only provide to a Participant voting Rights in respect of any
amendment of or approval, consent, or waiver under any Loan Document related to
the matters in Section 11.10(c) if it also provides for a voting mechanism that
a majority of that selling Lender's Commitment Percentage or Termination
Percentage, as the case may be (whether directly held by that selling Lender or
participated) controls the vote for that selling Lender, and (ii) may not permit
a Participant to assign, pledge, or otherwise transfer its participating
interest in the Obligation to any Person except any Lender or its Affiliates.
50
<PAGE> 56
11.14 Transfers. Subject to SECTION 11.12(B) and this section and only if
no Default exists, a Lender may at any time sell to one or more financial
institutions (each a "PURCHASER") all or part of this Rights and obligations
under the Loan Documents.
(a) Additional Conditions. The sale (i) must be accomplished by the
selling Lender and Purchaser executing and delivering to Agent and Borrowers an
Assignment and (ii) may not occur until the selling Lender pays to Agent an
administrative transfer fee of Two Thousand Five Hundred Dollars ($2,500).
(b) Procedures. Upon satisfaction of the foregoing conditions and as
of the Effective Date in the Assignment, which may not be before delivery of
that Assignment to Agent and Borrowers, then (i) a Purchaser is for all purposes
a Lender party to, with all the Rights and obligations of a Lender under, this
agreement, with a commitment as stated in the Assignment, (ii) the selling
Lender is released from its obligations under the Loan Documents to a
corresponding extent, (iii) SCHEDULE 2 is automatically deemed to reflect the
name, address, and Commitment of the Purchaser and the reduced commitment of the
selling Lender, and Agent shall deliver to Borrowers and Lenders an amended
SCHEDULE 2 reflecting those changes, (iv) Borrowers shall execute and deliver to
each of the selling Lender and the Purchaser a Note, each based upon their
respective Commitments following the transfer, (v) upon delivery of the one or
more Notes under CLAUSE (IV) above, the selling Lender shall return to Borrowers
all notes previously delivered to it under this Agreement, and (vi) the
Purchaser is subject to all the provisions in the Loan Documents, the same as if
it were a Lender that executed this agreement on its original date.
11.15 Jurisdiction; Venue; Service of Process; and Jury Trial. EACH PARTY,
IN EACH CASE FOR ITSELF, ITS SUCCESSORS AND ASSIGNS (AND IN THE CASE OF EACH
BORROWER, FOR EACH OF ITS SUBSIDIARIES), (A) IRREVOCABLY SUBMITS TO THE
NONEXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS LOCATED IN TEXAS, AND
AGREES AND CONSENTS THAT SERVICE OF PROCESS MAY BE MADE UPON IT IN ANY LEGAL
PROCEEDING ARISING OUT OF OR IN CONNECTION WITH THE LOAN DOCUMENTS AND THE
OBLIGATION BY SERVICE OF PROCESS AS PROVIDED BY TEXAS LAW, (B) IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW
OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY LITIGATION ARISING OUT OF OR IN
CONNECTION WITH THE LOAN DOCUMENTS AND THE OBLIGATION BROUGHT IN ANY SUCH COURT,
(C) IRREVOCABLY WAIVES ANY CLAIMS THAT ANY LITIGATION BROUGHT IN ANY SUCH COURT
HAS BEEN BROUGHT IN ANY INCONVENIENT FORUM, (D) AGREES TO DESIGNATE AND MAINTAIN
AN AGENT FOR SERVICE OF PROCESS IN DALLAS, TEXAS, IN CONNECTION WITH ANY SUCH
LITIGATION AND TO DELIVER TO AGENT EVIDENCE THEREOF, IF REQUESTED, (E)
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED
COURTS IN ANY SUCH LITIGATION BY THE MAILING OF COPIES THEREOF BY CERTIFIED
MAIL, RETURN RECEIPT REQUESTED, POSTAGE
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<PAGE> 57
PREPAID AT ITS ADDRESS SET FORTH HEREIN, (F) IRREVOCABLY AGREES THAT ANY LEGAL
PROCEEDING AGAINST ANY PARTY ARISING OUT OF OR IN CONNECTION WITH THE LOAN
DOCUMENTS OR THE OBLIGATION SHALL BE BROUGHT IN ONE OF THE AFOREMENTIONED
COURTS, AND (G) IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ITS
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF ANY LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED THEREBY. The
scope of each of the foregoing waivers is intended to be all encompassing of any
and all disputes that may be filed in any court and that relate to the subject
matter of this transaction, including contract claims, tort claims, breach of
duty claims, and all other common law and statutory claims. Borrowers (for
themselves and on behalf of each of their Subsidiaries) and each other party to
this agreement acknowledge that this waiver is a material inducement to the
agreement of each party hereto to enter into a business relationship, that each
has already relied on this waiver in entering into this agreement, and each will
continue to rely on each of such waivers in related future dealings. Borrowers
(for themselves and on behalf of each of their Subsidiaries) and each other
party to this agreement warrant and represent that they have reviewed these
waivers with their legal counsel, and that they knowingly and voluntarily agree
to each such waiver following consultation with legal Counsel. THE WAIVERS IN
THIS SECTION 11.15 ARE IRREVOCABLE, MEANING THAT THEY MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING, AND THESE WAIVERS SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, SUPPLEMENTS, AND REPLACEMENTS TO OR OF THIS OR ANY OTHER LOAN
DOCUMENT. In the event of Litigation, this agreement may be filed as a written
consent to a trial by the court.
11.16 Entire Agreement. THE LOAN DOCUMENT REPRESENT THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
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<PAGE> 58
EXECUTED as of the date first stated in this agreement.
(address) MCA FINANCIAL CORP.,
23999 Northwestern Highway, Suite 230 MCA MORTGAGE CORPORATION, and
Southfield, MI 48075 MORTGAGE CORPORATION OF
Attn: Tom Cronin AMERICA, as Borrowers
Tel: (810) 358-0606
Fax: (810) 358-7526
By:___________________________________
(Wire Instructions) Tom Cronin, Vice Chairman
(address) TEXAS COMMERCE BANK NATIONAL
712 Main Street ASSOCIATION, as Agent and a Lender
Houston, TX 77002
Attn: Pamela E. Skinner
Vice President By:____________________________________
Tel: (713) 216-5382 Pamela E. Skinner, Vice President
Fax: (713) 216-2082
(Wire Instructions)
(address) TEXAS COMMERCE BANK NATIONAL
712 Main Street ASSOCIATION, as Collateral Agent
Houston, TX 77002
Attn: Pamela E. Skinner
Vice President By:____________________________________
Tel: (713) 216-5382 Pamela E. Skinner, Vice President
Fax: (713) 216-5382
(Wire Instructions)
Unnumbered signature page to Loan Agreement among
MCA Financial Corp., MCA Mortgage Corporation
and Mortgage Corporation of America,
Texas Commerce Bank National Association, as Agent
and as Collateral Agent, and Certain Lenders,
joined by Mortgage Corporation of America, Inc.
<PAGE> 59
MORTGAGE CORPORATION OF AMERICA, INC. joins the Borrowers, the Agent, the
Collateral Agent and the Lenders in executing this agreement for the purposes
of making the agreements stated in SECTION 2.6 of this Agreement.
(address)
23999 Northwestern Highway, Suite 230
Southfield, MI 48075 MORTGAGE CORPORATION OF
Attn: Lee P. Wells AMERICA, INC.
Tel: (810) 358-5555
Fax: (810) 358-7507
By:___________________________
(Wire Instructions) Lee P. Wells
Title:________________________
Unnumbered signature page to Loan Agreement among
MCA Financial Corp., MCA Mortgage Corporation
and Mortgage Corporation of America,
Texas Commerce Bank National Association, as Agent
and as Collateral Agent, and Certain Lenders,
joined by Mortgage Corporation of America, Inc.
<PAGE> 60
SCHEDULE 2
LENDERS AND COMMITMENTS
<TABLE>
LENDER COMMITMENT
- --------------------------------------------------------------------
<S> <C>
Texas Commerce Bank National Association $80,000,000
712 Main Street
Houston, Texas 77002
Attn: Pamela E. Skinner, Vice President
Fed. Tax I.D. No. 74-0800980
Tel. (713) 216-5382
Fax (713) 216-2082
(Wire Instructions)
___________________________________
___________________________________
___________________________________
- --------------------------------------------------------------------
TOTAL $80,000,000
- --------------------------------------------------------------------
</TABLE>
<PAGE> 61
SCHEDULE 4.1
ELIGIBILITY CONDITIONS
A. ELIGIBLE MORTGAGE LOAN means a Mortgage Loan:
1. For which, if a Wet Borrowing was made for it, the applicable
Wet Period has not expired.
2. That is an FHA Loan, VA Loan, Jumbo Loan, or other Mortgage
Loan that complies with all applicable requirements for purchase
under the FHLMC Guide or the FNMA Guide.
3. The promissory note evidencing which (a) is the standard form
approved by VA, FHA, FNMA, or FHLMC or a form otherwise acceptable
to Collateral Agent, (b) has a maturity within 30 years of its
origination, (c) is payable or endorsed (without restrictions or
limitation) to a Borrower's order, (d) is endorsed in blank by
that Borrower, (e) is fully funded, and (f) is valid and
enforceable without offset, counterclaim, defense, or right of
rescission or avoidance of any kind other than for valid payments
made on it and any exceptions to enforceability under Debtor
Laws.
4. For which no default in the payment of principal or interest
or any other default has continued uncured for thirty (30)
calendar days, no foreclosure or other similar proceedings have
commenced, and no claim for any credit, allowance, or adjustment
exists.
5. That is secured by a mortgage, deed of trust, or trust deed
that has been or will be sent for recording and that (a) is the
standard form approved by VA, FHA, FNMA, or FHLMC or a form
otherwise acceptable to Collateral Agent and (b) grants a first
priority Lien on residential real property described below that
will be perfected upon recording.
6. For which the underlying residential real property (a)
consists of land and (i) a one- to four-family dwelling, (ii) a
condominium unit, or (iii) a manufactured home unit, but not (iv)
a mobile home, a co-op, or a multi-family dwelling for more than
four families, (b) is, if required by Appraisal Laws, covered by
an Appraisal, and (c) is insured against loss or damage by fire
and all other hazards normally included in standard extended
coverage insurance (including flood insurance if the property is
in a federally designated flood plain) in accordance with the
Collateral Documents for it and the appropriate Borrower is named
as a loss-payee for that insurance.
SCHEDULE 4.1
<PAGE> 62
7. That conforms in all respects with all of the requirements of a
valid and enforceable Take-Out Commitment held by the appropriate
Borrower as reported on Take-Out Reports delivered under the Loan
Agreement.
8. The Collateral Documents for which (a) are delivered to Collateral
Agent within ninety (90) calendar days after the date of the
related promissory note, (b) are in compliance with all Laws, (c)
are otherwise in compliance with the requirements of the Loan
Documents and otherwise in form and substance acceptable to
Collateral Agent, and (d) are subject to Lender Liens.
9. That has been held by Collateral Agent for Lenders as an Eligible
Mortgage Loan for one hundred eighty (180) calendar days or less.
10. That has not, and no Collateral Document for which has, been (a)
sold to an investor and repurchased by any Borrower, (b) rejected
by an investor, (c) delivered to an investor or any Person for more
than the Shipping Period, or (d) delivered to any Borrower for
correction for more than the Correction Period.
11. That is (a) not an Eligible Repurchased Loan, (b) not an Eligible
B/C Paper Loan, and (c) not subject to a repurchase agreement.
B. ELIGIBLE GESTATION COLLATERAL means an Eligible Mortgage Loan:
1. For which Collateral Agent has issued its certification or initial
certification for inclusion of that Mortgage Loan in a Mortgage
Pool.
2. For which a Borrower has delivered to Collateral Agent a valid and
enforceable Take-Out Commitment for that Mortgage Loan that is
issued by a Person, and is in form and substance, acceptable to
Collateral Agent.
3. That has been held by Collateral Agent as Eligible Gestation
Collateral for no more than thirty (30) calendar days.
C. ELIGIBLE MORTGAGE SECURITY means a Mortgage Security:
1. That is valid and enforceable without offset, counterclaim,
defense, or right of rescission or avoidance of any kind.
2. That is guaranteed or issued by either (a) FNMA, FHLMC, or GNMA or
(b) any other Person if (i) Borrowers first obtain Determining
Lenders' written approval in their sole discretion and (ii) that
other Person has not later been rejected by Determining Lenders in
their sole discretion.
3. Under which no default exists.
2
SCHEDULE 4.1
<PAGE> 63
4. That conforms in all respects with all of the requirements of a
valid and enforceable Take-Out Commitment held by the appropriate
Borrower to which it has been allocated for purchase as reported on
Take-Out Reports delivered under the Loan Agreement.
5. Issued in connection with a Mortgage Pool composed of Mortgage
Loans that were, before the issuance of that Mortgage Security,
Eligible Mortgage Loans constituting part of the Collateral.
6. The Collateral Documents for which (a) have been delivered to
Collateral Agent, (b) are in compliance with all Laws, (c) are
otherwise in form and substance acceptable to Collateral Agent, and
(d) are subject to Lender Liens.
7. That has been held by Collateral Agent for Lenders as an Eligible
Mortgage Security for a time period that, when added to the longest
time period any Mortgage Loan to which it relates was included in
the Collateral as an Eligible Mortgage Loan, is one hundred eighty
(180) calendar days or less.
D. ELIGIBLE CONSTRUCTION LOAN means a loan:
1. that is evidenced by a valid promissory note and is secured by a
mortgage, deed of trust, or trust deed that grants a perfected
first priority Lien on the underlying residential real property and
all improvements constructed and to be constructed thereon, and
that is given to evidence and secure advances of loan proceeds to
or for account of the owner of such real property who intends to
reside in it upon completion of such construction, to pay the costs
of construction of new residential improvements to such underlying
real property and/or the acquisition cost of such underlying real
property.
2. That is an FHA Loan, VA Loan, Jumbo Loan, or other Mortgage Loan
that complies, or after construction is substantially completed
will comply, with all applicable requirements for purchase under
the FHLMC Guide or the FNMA Guide.
3. The promissory note evidencing which (a) is the standard form
approved by VA, FHA, FNMA, or FHLMC or a form otherwise acceptable
to Collateral Agent, (b) has a maturity within 30 years (plus a
reasonable period for construction of such improvements) of its
origination, (c) is payable or endorsed (without restrictions or
limitation) to a Borrower's order, (d) is endorsed in blank by that
Borrower, (e) is fully funded, or will be upon completion of
construction of such improvements, and (f) is valid and enforceable
without offset, counterclaim, defense, or right of rescission or
avoidance of any kind other than for valid payments made on it and
any exceptions to enforceability under Debtor Laws.
3
SCHEDULE 4.1
<PAGE> 64
4. Whose loan-to-value ratio does not exceed eighty percent (80%) and
the total amount of which does not exceed ninety percent (90%) of
the hard construction costs for such improvements, including land
cost.
5. In respect of the underlying real property or improvements no
mechanic's lien claim for nonpayment of any labor or materials for
such construction has been asserted that has been outstanding for
more than thirty (30) days and has not been satisfied and released.
6. For which no default in the payment of principal or interest or any
other default has continued uncured for thirty (30) calendar days,
no foreclosure or other similar proceedings have commenced, and no
claim for any credit, allowance, or adjustment exists.
7. That is secured by a mortgage, deed of trust, or trust deed that
has been or will be sent for recording and that (a) is the standard
form approved by VA, FHA, FNMA, or FHLMC or a form otherwise
acceptable to Collateral Agent and (b) grants a first priority Lien
on residential real property described below that will be perfected
upon recording.
8. For which the underlying residential real property (a) consists of
land and (i) a one- to four-family dwelling, or (ii) a manufactured
home unit, but not (iii) a mobile home, a condominium unit, a
co-op, or a multi-family dwelling for more than four families, (b)
is, if required by Appraisal Laws, covered by an Appraisal, and (c)
is insured against loss or damage by fire and all other hazards
normally included in standard extended coverage insurance
(including flood insurance if the property is in a federally
designated flood plain) in accordance with the Collateral Documents
for it and the appropriate Borrower is named as a loss-payee for
that insurance (which coverage may be provided through an
appropriate builder's risk insurance policy during construction of
such improvements).
9. That conforms in all respects with all of the requirements of a
valid and enforceable Take-Out Commitment held by the appropriate
Borrower as reported on Take-Out Reports delivered under the Loan
Agreement, or is otherwise hedged in a fashion and by a device that
is acceptable to and approved by the Agent.
10. The Collateral Documents for which (a) are delivered to Collateral
Agent within ninety (90) calendar days after the date of the
related promissory note, (b) are in compliance with all Laws, (c)
are otherwise in compliance with the requirements of the Loan
Documents and otherwise in form and substance acceptable to
Collateral Agent, and (d) are subject to Lender Liens.
4
SCHEDULE 4.1
<PAGE> 65
11. That has been held by Collateral Agent for Lenders as an Eligible
Mortgage Loan for two hundred seventy (270) calendar days or less.
12. That has not, and no Collateral Document for which has, been
(a) sold to an investor and repurchased by any Borrower, (b)
rejected by an investor, (c) delivered to an investor or any Person
for more than the Shipping Period, or (d) delivered to any Borrower
for correction for more than the Correction Period.
13. That is (a) not an Eligible Repurchased Loan, (b) not an
Eligible B/C Paper Loan, and (c) not subject to a repurchase
agreement.
E. ELIGIBLE REPURCHASED LOAN means a Mortgage Loan:
1. That has been repurchased by a Borrower from an investor, or
out of a Mortgage Pool, pursuant to such Borrower's obligation or
right to do so as servicer of that Mortgage Loan.
2. That is an FHA Loan, VA Loan, Jumbo Loan, or other Mortgage
Loan that complies with all applicable requirements for purchase
under the FHLMC Guide or the FNMA Guide.
3. The promissory note evidencing which (a) is the standard form
approved by VA, FHA, FNMA, or FHLMC or a form otherwise acceptable
to Collateral Agent, (b) has a maturity within 30 years of its
origination, (c) is payable or endorsed (without restriction or
limitation) to a Borrower's order, (d) is endorsed in blank by that
Borrower, (e) is fully funded, and (f) is valid and enforceable
without offset, counterclaim, defense, or right of rescission or
avoidance of any kind other than for valid payments made on it and
any exceptions to enforceability under Debtor Laws.
4. For which no claim for any credit, allowance, or adjustment
exists.
5. That is secured by a mortgage, deed of trust, or trust deed
that (a) is the standard form approved by VA, FHA, FNMA, or FHLMC or
a form otherwise acceptable to Collateral Agent and (b) grants a
first priority Lien on residential real property described below
that has been or will be perfected upon recording.
6. For which the underlying residential real property (a)
consists of land and (i) a one-to-four-family dwelling, (ii) a
condominium unit, or (iii) a manufactured home unit, but not (iv) a
mobile home, a co-op, or a multi-family dwelling for more than four
families, (b) is, if required by Appraisal Laws, covered by an
Appraisal, and (c) is insured against loss or damage by fire and all
other hazards normally included in standard extended coverage
insurance (including flood insurance if the property is in a
federally designated flood plain) in accordance with the Collateral
5
SCHEDULE 4.1
<PAGE> 66
Documents for it, and the appropriate Borrower is named as a
loss-payee for that insurance.
7. The Collateral Documents for which (a) are in compliance with all
Laws, (b) are otherwise in compliance with the requirements of the
Loan Documents and otherwise in form and substance acceptable to
Collateral Agent, and (c) are subject to Lender Liens.
8. That has been held by Collateral Agent for Lenders as an Eligible
Repurchased Loan for ninety (90) calendar days or less.
9. That has not, and no Collateral Document for which has, been (a)
delivered to an investor or any Person for more than the Shipping
Period, or (b) delivered to any Borrower for correction for more
than the Correction Period.
10. That is (a) not an Eligible B/C Paper Loan and (b) not subject to a
repurchase agreement.
F. ELIGIBLE B/C PAPER LOAN means a Mortgage Loan:
1. For which, if a Wet Borrowing was made for it, the applicable Wet
Period has not expired.
2. That has been assigned a rating of "B" or "C" by the relevant
Borrower pursuant to underwriting standards acceptable to the
Agent, and based upon such Mortgage Loan's status as not complying
with all applicable requirements for purchase under either the
FHLMC Guide or the FNMA Guide, and therefore being saleable only to
investors other than FHLMC or FNMA.
3. The promissory note evidencing which (a) is the standard form
approved by VA, FHA, FNMA, or FHLMC or a form otherwise acceptable
to Collateral Agent, (b) has a maturity within 30 years of its
origination, (c) is payable or endorsed (without restriction or
limitation) to a Borrower's order, (d) is endorsed in blank by that
Borrower, (e) is fully funded, and (f) is valid and enforceable
without offset, counterclaim, defense, or right of rescission or
avoidance of any kind other than for valid payments made on it and
any exceptions to enforceability under Debtor Laws.
4. For which no foreclosure or other similar proceedings have
commenced, and no claim for any credit, allowance, or adjustment
exists, and for which no default in the payment of principal or
interest or any other default has continued uncured for sixty (60)
calendar days -- or, in the case of any Eligible B/C Paper Loan
that conforms in all respects with all of the requirements of a
valid and enforceable Take-Out Commitment held by such Borrower as
reported on Take-Out Reports
6
SCHEDULE 4.1
<PAGE> 67
delivered under the Loan Agreement, for which no such default has
continued uncured for ninety (90) calendar days.
5. That is secured by a mortgage, deed of trust, or trust deed that
(a) is the standard form approved by VA, FHA, FNMA, or FHLMC or a
form otherwise acceptable to Collateral Agent and (b) grants a
first priority Lien on residential real property described below
that will be perfected upon recording.
6. For which the underlying residential real property (a) consists of
land and (i) a one-to-four-family dwelling, (ii) a condominium
unit, or (iii) a manufactured home unit, but not (iv) a mobile
home, a co-op, or a multi-family dwelling for more than four
families, (b) is, if required by Appraisal Laws, covered by an
Appraisal, and (c) is insured against loss or damage by fire and
all other hazards normally included in standard extended coverage
insurance (including flood insurance if the property is in a
federally designated flood plain) in accordance with the Collateral
Documents for it, and the appropriate Borrower is named as a
loss-payee for that insurance.
7. The Collateral Documents for which (a) are delivered to Collateral
Agent within ninety (90) calendar days after the date of the
related promissory note, (b) are in compliance with all laws, (c)
are otherwise in compliance with the requirements of the Loan
Documents and otherwise in form and substance acceptable to
Collateral Agent, and (d) are subject under the Loan Agreement.
8. That has been held by Collateral Agent for Lenders as an Eligible
B/C Paper Loan for ninety (90) calendar days or less, except that
for Eligible B/C Paper Loans that conform in all respects with all
of the requirements of a valid and enforceable Take-Out Commitment
held by the appropriate Borrower as reported on Take-Out reports
delivered under the Loan Agreement, the applicable limit is one
hundred eighty (180) calendar days.
9. That has not, and no Collateral Document for which has, been (a)
sold to an investor and repurchased by any Borrower, (b) rejected
by an investor, (c) delivered to an investor or any Person for more
than the Shipping Period, or (d) delivered to any Borrower for
correction for more than the Correction Period.
10. That is (a) not an Eligible Repurchased Loan and (b) not subject to
a repurchase agreement.
G. ELIGIBLE LAND CONTRACT means a Land Contract:
1. Which (a) is in form acceptable to Collateral Agent, (b) has a
maturity within twenty (20) years of its origination, (c) has a
Borrower as the original "Seller" or is properly assigned (without
restriction or limitation) to a Borrower and is
7
SCHEDULE 4.1
<PAGE> 68
collaterally assigned to Collateral Agent, (d) is fully funded, and
(f) is valid and enforceable without offset, counterclaim, defense
or right of recision or avoidance of any kind other than for valid
payments made on it and any exceptions to enforceability under
Debtor Laws.
2. For which no default in the payment of principal or interest or any
other default has continued uncured for sixty (60) calendar days,
no foreclosure or other similar proceedings have commenced, and no
claim for any credit, allowance or adjustment exists.
3. For which the underlying residential real property (a) consists of
land and (i) a one-to-four family dwelling, (ii) a condominium unit
or (iii) a manufactured home unit, but not (iv) a mobile home, a
co-op, or a multi-family dwelling for more than four families, (b)
is, if required by Appraisal Laws, covered by an Appraisal, and (c)
is insured against loss or damage by fire and all other hazards
normally included in standard extended coverage insurance
(including without limitation, flood insurance if the property is
in a federally designated flood plain) in accordance with the
Collateral Documents for it, and the appropriate Borrower is named
as a loss payee for that insurance.
4. The Collateral Documents for which (a) are delivered to Collateral
Agent within ninety (90) calendar days after the date of the
related Land Contract, (b) are in compliance with all Laws, (c) are
otherwise in compliance with the requirements of the Loan Documents
and otherwise in form and substance acceptable to Collateral Agent,
and (d) are subject to Lender Liens.
5. That has been held by Collateral Agent for Lenders as an Eligible
Land Contract for one hundred eighty (180) calendar days or less.
6. That has not, and no Collateral Document for which has, been (a)
sold to an investor and repurchased by any Borrower, (b) rejected
by an investor, (c) delivered to an investor or any Person for more
than the Shipping Period, or (b) delivered to any Borrower for
correction for more than the Correction Period.
7. That is not subject to a repurchase agreement.
8 SCHEDULE 4.1
<PAGE> 69
SCHEDULE 4.2
BORROWING BASE CALCULATIONS
A. BORROWING BASE means the sum of:
1. For Eligible Mortgage Collateral, ninety-eight percent (98%) of
the least of its (i) face amount, (ii) only in respect of Eligible
Mortgage Loans, face amount less discounts, (iii) Take-Out Price;
or (iv) at the election of Agent or Determining Lenders' at any
time, Market Value; and
2. For Eligible Gestation Collateral, ninety-nine percent (99%) of
the Take-Out Price for Eligible Gestation Collateral matched either
to a security settlement or to a whole loan settlement; and
3. For Eligible Repurchased Loans, eighty-five percent (85%) of the
lesser of (i) the face amount of the underlying promissory note or
(ii) its unpaid principal balance;
4. For Eligible B/C Paper Loans, ninety-eight percent (98%) of the
lesser of (i) the face amount of the underlying promissory note or
(ii) the Take-Out Price;
5. For Eligible Construction Loans, ninety-five percent (95%) of the
lesser of (i) the appraised value of the underlying real estate and
the residential improvements being constructed on it or (ii) the
purchase price committed to be paid by a buyer under an executed
real estate purchase and sale agreement or earnest money contract
for the purchase of such property upon (or before) completion of
the construction of such improvements; and
6. For Eligible Land Contracts, ninety-five percent (95%) of the
lesser of (i) the appraised value of the subject property, (ii) the
contract purchase price, or (iii) the actual amount funded by
Borrowers with respect to the Land Contract.
B. TAKE-OUT PRICE. For the Mortgage Collateral for which Borrowers elect:
1. To deliver to Collateral Agent a Take-Out Commitment designating
specific Mortgage Collateral for purchase, the amount that the
Approved Investor has committed to pay for that Mortgage
Collateral.
2. Not to deliver to Collateral Agent a Take-Out Commitment
designating a specific item of Mortgage Collateral for purchase, an
amount determined by Mortgage Collateral Group as follows:
<PAGE> 70
(a) MORTGAGE COLLATERAL GROUP means all Mortgage Collateral
bearing the same interest rate without regard to whether that
Mortgage Collateral consists of Mortgage Loans or Mortgage
Securities. In determining any such grouping, Mortgage
Securities are grouped with other Mortgage Collateral in
accordance with the interest rates of the underlying and
related pools of Mortgage Loans and not by the interest rates
appearing on the face of any of the Mortgage Securities.
(b) The Take-Out Price for each Mortgage Collateral Group
shall be the corresponding weighted average Take-Out Price,
expressed as a percentage, determined from all of the
respective Take-Out Commitments for the sale of the items
comprising that Mortgage Collateral Group held by Borrowers
at that time, and not designated for specific Mortgage
Collateral under PART B.1. above, calculated as follows:
- All Take-Out Commitments are first grouped to
correspond to each related Mortgage Collateral Group,
with the result that for each Mortgage Collateral Group
there will be a corresponding group of Take-Out
Commitments;
- The aggregate principal balance of Take-Out Commitments
in each Mortgage Collateral Group is then determined;
and
- The principal balance of each Take-Out Commitment in
each Mortgage Collateral Group is then multiplied by
the related percentage of par and the sum of the
products thereof is divided by the aggregate principal
balance of Take-Out Commitments in that Mortgage
Collateral Group to determine the weighted average
Take-Out Price for that Mortgage Collateral Group.
(c) For all Mortgage Collateral, the weighted average Take-Out
Price, expressed as a percentage, shall be is determined by
dividing (i) the total Take-Out Price for all Mortgage
Collateral Groups determined above by (ii) the total
principal amount of all Take-Out Commitments determined
above.
If the price in a Take-Out Commitment is stated as a yield and not as a
percentage of par, a yield so stated shall be converted to a percentage price
by the use of the "Net Yield Tables for GNMA Mortgage Securities" published by
Financial Publishing Company or the "Mortgage Yield Conversion Tables"
published by FNMA, as applicable and acceptable to Agent.
2
SCHEDULE 4.2
<PAGE> 71
SCHEDULE 4.3
COLLATERAL PROCEDURES
A. MORTGAGE LOAN OR CONSTRUCTION LOAN FOR DRY BORROWING. Delivery of a
Mortgage Loan or a Construction Loan to support a Dry Borrowing requires
delivery to Collateral Agent of the following Collateral Documents, each
of which must be in form and substance satisfactory to Collateral Agent,
in the following manner:
1. A Collateral Delivery Notice that, among other things, identifies
the documents being delivered to Collateral Agent for that Dry
Borrowing.
2. The original promissory note evidencing that Mortgage Loan or
Construction Loan, properly payable or endorsed to the appropriate
Borrower, and endorsed in blank by that Borrower.
3. An assignment from that Borrower of the mortgage, deed of trust,
or trust deed securing that Mortgage Loan or Construction Loan,
executed in blank by that Borrower, and in recordable form.
4. A certified copy of each intervening assignment to that Borrower
of that mortgage, deed of trust, or trust deed sent for recording
and copies of all previous intervening assignments.
5. A certified copy of that original mortgage, deed of trust, or
trust deed sent for recording in the jurisdiction where the
property is located.
6. Except in the case of a Repurchase Borrowing, a Construction Loan
Borrowing or a B/C Paper Borrowing for Eligible B/C Paper Loans
that have not been held by the Collateral Agent for more than one
hundred eighty (180) calendar days, either (i) a Take-Out
Commitment specifically designating that Mortgage Loan or
Construction Loan for purchase or (b) Take-Out Commitments with the
take-out prices indicated (unless a master Take-Out Commitment has
already been delivered to, and is on file with, Collateral Agent).
7. Except in the case of a Repurchase Borrowing, and unless
Collateral Agent has initiated the wire transfer for originating
the Mortgage Loan or Construction Loan, a copy of the check
evidencing that origination.
8. A data processing printout reflecting that Mortgage Loan's or
Construction Loan's loan number, mortgagor, origination date,
original amount, outstanding principal balance, interest rate, type
of loan, and requested advance amount.
SCHEDULE 4.3
<PAGE> 72
9. Any and all other files, documents, instruments, certificates,
correspondence, or other records that are requested by Collateral
Agent.
B. MORTGAGE LOAN FOR WET BORROWING. Delivery of a Mortgage Loan for a Wet
Borrowing requires delivery to Collateral Agent of the following
Collateral Documents, each of which must be in form and substance
satisfactory to Collateral Agent, in the following manner:
1. A Collateral Delivery Notice that, among other things,
identifies the documents that must be delivered to Collateral Agent
before the expiration of the Wet Period for that Wet Borrowing.
2. Unless Collateral Agent has approved a wire transfer
initiated by a Borrower for originating that Mortgage Loan, either a
copy of the check evidencing that origination or (b) evidence that
the check for that origination is held by a title company pending
disbursement.
3. A data processing print-out reflecting that Mortgage Loan's
loan number, mortgagor, origination date, original amount,
outstanding principal balance, interest rate, type of loan, and
requested advance amount.
C. MORTGAGE SECURITY FOR DRY BORROWING. Delivery of a Mortgage Security for
a Dry Borrowing requires delivery to Collateral Agent of the following
Collateral Documents, each of which must be in form and substance
satisfactory to Collateral Agent, in the following manner:
1. A Collateral Delivery Notice that, among other things,
identifies the documents being delivered to Collateral Agent for
that Dry Borrowing.
2. For a Mortgage Security that is not in book entry form:
(a) The Original Mortgage Security.
(b) An updated bond power endorsed, or another
appropriate instrument of assignment executed by the
appropriate Borrower in blank.
3. For a Mortgage Security that is in book entry form,
conformation of either:
(a) The appropriate entry (i) in records of a Federal
Reserve Bank of the nominal ownership by Collateral Agent (n
behalf of Lenders) of any FNMA Mortgage Security that
constitutes a "FNMA BOOK ENTRY SECURITY,", as defined in the
Book Entry Procedures for FNMA Securities, 24 C.F.R. Section
Section 81.41-81.49 (the "FNMA BOOK ENTRY PROCEDURES"), or a
FHLMC Mortgage Security that constitutes a "FHLMC BOOK ENTRY
SECURITY," as defined in the Federal Home Loan Mortgage
Corporation Book Entry
2
SCHEDULE 4.3
<PAGE> 73
Regulations, 1 C.F.R. Section Section 462.1-462.8 (the
"FHLMC BOOK ENTRY REGULATIONS"), and (ii) by Collateral Agent
in its records of the appropriate Borrower's ownership of
that book entry Mortgage Security subject to a Lender Lien;
or
(b) The (i) appropriate entry by Chemical Bank, in its
capacity as custodian for Participants Trust Company ("PTC"),
GNMA's central depositary, in its records of the nominal
ownership by Collateral Agent (on behalf of Lenders) of any
GNMA-guaranteed Mortgage Security, (ii) the appropriate entry
by Collateral Agent in its records of the appropriate
Borrower's ownership of that book entry Mortgage Security
subject to a Lender Lien, and (iii) receipt by Collateral
Agent of a confirmation of transaction in the form of a
written advice specifying the amount and description of that
book entry Mortgage Security subject to that Lien.
4. Either (a) a Take-Out Commitment specifically designating that
Mortgage Security for purchase or (b) Take-Out commitments with the
take-out prices indicated (unless a master Take-Out Commitment has
already been delivered to, and is on file with, Collateral Agent).
D. LAND CONTRACT BORROWING. Delivery of a Land Contract to support a Land
Contract borrowing requires delivery to Collateral Agent of the following
Collateral Documents, each of which must be in form and substance
satisfactory to Collateral Agent, in the following manner:
1. A Collateral Delivery Notice that, among other things, identifies
the documents being delivered to Collateral Agent for that Land
Contract Borrowing.
2. The original Land Contract properly collaterally assigned to
Collateral Agent for Lenders.
3. A copy of a deed or title policy showing a Borrower as owner of
the underlying real property.
4. A data processing printout reflecting that Land Contract's loan
number, mortgagor, origination date, original amount, outstanding
principal balance, interest rate, type of loan and requested
advance amount.
5. Any and all other files, documents, instruments, certificates,
correspondence or other records that are requested by Collateral
Agent.
3
SCHEDULE 4.3
<PAGE> 74
SCHEDULE 5
CLOSING CONDITIONS
Unless otherwise specified, all dated as of
the Closing Date or a date (a "CURRENT DATE")
within 30 days before the Closing Date.
LSZ [1.] LOAN AGREEMENT dated as of September 3, 1996, between Borrowers,
Agent, Collateral Agent, and certain Lenders, all of the
terms in which have the same meanings when used in this schedule,
accompanied by:
Schedule 2 - Lenders and Commitments
Schedule 4.1 - Eligibility Conditions
Schedule 4.2 - Borrowing-Base Calculations
Schedule 4.3 - Collateral Procedures
Schedule 5 - Closing Conditions
Schedule 6.2 - Companies
Schedule 6.9 - Litigation and Judgments
Schedule 6.10 - Affiliate Transactions
Schedule 8.1 - Permitted Debt
Schedule 8.2 - Permitted Liens
Schedule 8.3 - Permitted Loans/Investments
Exhibit A - Note
Exhibit B - [Intentionally Omitted]
Exhibit C-1 - Security Agreement
Exhibit C-2 - Financing Statement
Exhibit C-3 - Shipping Request
Exhibit C-4 - Bailee Letter for Investors
Exhibit C-5 - Bailee Letter for Pool Custodian
Exhibit C-6 - Trust Receipt and Agreement
Exhibit C-7 - Release Request
Exhibit D-1 - Borrowing Request
Exhibit D-2 - Collateral Delivery Notice
Exhibit D-3 - Borrowing Base Report
Exhibit D-4 - Take-Out Report
Exhibit D-5 - Management Report
Exhibit D-6 - Compliance Certificate
Exhibit D-7 - Collateral Conversion Notice
Exhibit E - Opinion of Counsel
Exhibit F-1 - Amendment
Exhibit F-2 - Assignment and Assumption Agreement
SCHEDULE 5
<PAGE> 75
LSZ [2.] NOTE in the original principal amount of Eighty Million Dollars
($80,000,000), executed by Borrowers, payable to the order of
Texas Commerce Bank National Association, and in substantially in
the form of EXHIBIT A to the Loan Agreement.
LSZ [3.] SECURITY AGREEMENT executed by Borrowers as debtor and Collateral
Agent as secured party, and in substantially the form of
EXHIBIT C-1 to the Loan Agreement.
LSZ [4.] FINANCING STATEMENTS executed by Borrowers as debtor and Collateral
Agent as secured party, for filing with the following
UCC offices, and in substantially the form of EXHIBIT C-2 to the
Loan Agreement:
<TABLE>
<CAPTION>
NAME JURISDICTION NUMBER DATE
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
MCA Financial Corp. Sec. of State, TX
- --------------------------------------------------------------------------------
Sec. of State, MI
- --------------------------------------------------------------------------------
Sec. of State, IL
- --------------------------------------------------------------------------------
MCA Mortgage Corporation Sec. of State, TX
- --------------------------------------------------------------------------------
Sec. of State, MI
- --------------------------------------------------------------------------------
Sec. of State, IL
- --------------------------------------------------------------------------------
Mortgage Corporation of America Sec. of State, TX
- --------------------------------------------------------------------------------
Sec. of State, MI
- --------------------------------------------------------------------------------
Sec. of State, IL
- --------------------------------------------------------------------------------
Mortgage Corporation of America, Inc. Sec. of State, TX
- --------------------------------------------------------------------------------
Sec. of State, MI
- --------------------------------------------------------------------------------
Sec. of State, IL
- --------------------------------------------------------------------------------
</TABLE>
LSZ [5.] UCC SEARCH REPORTS for financing statements filed against Borrowers
as Debtor with the following UCC filing offices as of Current Dates:
<TABLE>
<CAPTION>
DEBTOR FILE NO. FILE DATE DESCRIPTION
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Mortgage Corp. of America C379437 07/24/90 Land contracts
(Manufacturers Nat'l Bank
of Detroit)
- ------------------------------------------------------------------------------------------------------
Mortgage Corp. of America C464681 04/04/91 Fixtures, goods, inventory,
(Mortgage Corp. of America) equipment, personal property,
accounts, & contract rights.
- ------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 5
2
<PAGE> 76
<TABLE>
<CAPTION>
DEBTOR FILE NO. FILE DATE DESCRIPTION
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Mortgage Corp. of America C488600 06/11/91 Computer equipment, leased.
(NBA Equipment Finance, Inc.)
- ----------------------------------------------------------------------------------------------------------
First American Mortgage C500463 07/19/91 Assets contributed to capital.
Associates, Inc. (Mortgage Corp. of America)
- ----------------------------------------------------------------------------------------------------------
Mortgage Corp. of America C518773 09/16/91 Equipment lease filing.
(U.S. Financial Services, Inc.)
- ----------------------------------------------------------------------------------------------------------
Mortgage Corp of America C550908 12/30/91 (1) Konica 3035 Copier
(Ervin Leasing Co.)
- ----------------------------------------------------------------------------------------------------------
Mortgage Corporation of 17754B 01/31/92 FHLMC & FNMA & GNMA Servicing
America (IBJ Schroder Bank & Trust Co.) Contracts
- ----------------------------------------------------------------------------------------------------------
Mortgage Corp. of America C565309 02/12/92 Rights to accounts, general
(Huntington Banks of Michigan) intangibles, & contract
rights relating to land
contract dated December 23,
1988.
- ----------------------------------------------------------------------------------------------------------
Mortgage Corporation of C565310 02/12/92 Rights to accounts, general
America (Huntington Banks of Michigan) intangibles, & contract
rights relating to land
contract dated September 12,
1988.
- ----------------------------------------------------------------------------------------------------------
Mortgage Corp. of America C565311 Rights to accounts, general
(Huntington Banks of Michigan) intangibles, & contract
rights relating to land
contract dated September 2,
- ----------------------------------------------------------------------------------------------------------
Mortgage Corp. of America C571939 03/04/92 Fixture filing.
(Huntington Banks of Michigan)
- ----------------------------------------------------------------------------------------------------------
Mortgage Corp. of America C571940 03/04/92 Fixture filing.
(Huntington Banks of Michigan)
- ----------------------------------------------------------------------------------------------------------
Mortgage Corp. of America C571941 03/04/92 Fixture filing.
(Huntington Banks of Michigan
- ----------------------------------------------------------------------------------------------------------
Mortgage Corp. of America C590779 04/28/92 (1) Konica 4045 Copying
(Ervin Leasing Company) System with 20 Bin Sorter
- ----------------------------------------------------------------------------------------------------------
Mortgage Corp. of America C659102 11/23/92 All moneys due and to become
due
- ----------------------------------------------------------------------------------------------------------
Mortgage Corp. of America 30157B 04/19/93 Telecommunications and data
(Ameritech Credit Corp.) equipment.
- ----------------------------------------------------------------------------------------------------------
Mortgage Corp. of America 30158B 04/19/93 Telecommunications and data
(Ameritech Credit Corp.) equipment.
- ----------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 5
3
<PAGE> 77
<TABLE>
<CAPTION>
DEBTOR FILE NO. FILE DATE DESCRIPTION
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
First American Mortgage 30780B 05/03/93 Servicing rights,
Associates, Inc. (d/b/a (Comerica Bank) contracts,
Mortgage Corp. of accounts, contract
America) rights, general
intangibles, and
business records.
- ---------------------------------------------------------------------------------------
Mortgage Corp. of 30781B 05/03/93 Servicing rights,
America (a trade name of (Comerica Bank) contracts,
First American Mortgage accounts, contract
Associates, Inc.) rights, general
intangibles, and
business records.
- ---------------------------------------------------------------------------------------
First American Mortgage 30790B 05/03/93 Servicing
Associates, Inc., d/b/a (Board of Trustees collateral,
Mortgage Corp. of Policemen & Fireman supplies,
America Retirement) receivables, and
related contracts,
certain
intellectual
property, general
intangibles, &
credit facility
collateral.
- ---------------------------------------------------------------------------------------
MCA Mortgage Corporation 33549B 07/21/93 Servicing rights,
(f/k/a Mortgage (Comerica Bank) contracts,
Corporation of America) accounts, contract
rights, general
intangibles, &
business records.
- ---------------------------------------------------------------------------------------
MCA Mortgage Corporation 33550B 07/21/93 Servicing rights,
(f/k/a Mortgage (Comerica Bank) contracts,
Corporation of America) accounts, contract
rights, general
intangibles, &
business records.
- ---------------------------------------------------------------------------------------
MCA Mortgage Corporation 33552B 07/21/93 Servicing
(f/k/a Mortgage (Board of Trustees collateral,
Corporation of America) Policemen & Fireman supplies,
Retirement) receivables, and
related contracts,
certain
intellectual
property, general
intangibles, &
credit facility
collateral.
- ---------------------------------------------------------------------------------------
MCA Mortgage Corporation 33553B 07/21/93 Servicing
(f/k/a Mortgage (Board of Trustees) collateral,
Corporation of America) supplies,
receivables, and
related contracts,
certain
intellectual
property, general
intangibles, &
credit facility
collateral.
- ---------------------------------------------------------------------------------------
Mortgage Corp. of America C801709 01/25/94 (1) Refurbished
(Leasetec Systems Credit Prime 2950 CPU &
Corp.) accessories.
- ---------------------------------------------------------------------------------------
MCA Mortgage Corporation 42065B 04/22/94 Mortgage loans &
(DLJ Mortgage Capital, Inc.) Custody Agreement
RELEASE REQUIRED
- ---------------------------------------------------------------------------------------
MCA Mortgage Corporation L835137 04/28/94 Mortgage insurance
(PNC Mortgage Bank, N.A.) & commitments
RELEASE REQUIRED issues, right,
title, & interest
to files, surveys,
& property.
- ---------------------------------------------------------------------------------------
</TABLE>
4 SCHEDULE 5
<PAGE> 78
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
DEBTOR FILE NO. FILE DATE DESCRIPTION
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
MCA Mortgage Corporation C839591 05/09/94 Mortgage insurance &
(PNC Mortgage Bank, N.A.) commitments issues,
RELEASE REQUIRED right, title, &
interest to files,
surveys, & property.
- ------------------------------------------------------------------------------------------
MCA Mortgage Corporation C892961 10/07/94 Servicing rights &
(Washington Square Mortgage escrow account related
Co.) to mortgage loans.
- ------------------------------------------------------------------------------------------
MCA Mortgage Corporation C898147 10/20/94 Servicing rights &
(Washington Square Mortgage escrow account related
Co.) to mortgage loans.
- ------------------------------------------------------------------------------------------
Mortgage Corp. of America 52567B 02/15/95 Servicing rights,
(First Fidelity Bank, N.A.) contracts, accounts,
contract rights, &
general intangibles,
loan collateral &
business records.
- ------------------------------------------------------------------------------------------
MCA Mortgage Corporation 53568B 02/15/95 Servicing rights,
(f/k/a Mortgage (First Fidelity Bank, N.A.) contracts, accounts,
Corporation of America) contract rights,
general intangibles, &
loan collateral.
- ------------------------------------------------------------------------------------------
Mortgage Corp. of America C991172 07/13/95 Equipment lease filing.
(U.S. Financial Services, Inc.)
- ------------------------------------------------------------------------------------------
MCA Mortgage Corporation 59316B 08/09/95 Payments due from
(Dona Ana Savings Bank FSB) purchase consideration
withheld pursuant to
purchase of mortgage
loan servicing rights.
- ------------------------------------------------------------------------------------------
MCA Mortgage Corporation D003171 08/16/95 Copier (1) Canon Fax
(Hovinga Business Systems)
- ------------------------------------------------------------------------------------------
Mortgage Corp. of America D014338 09/21/95 Equipment lease filing.
(Huntington Bank)
- ------------------------------------------------------------------------------------------
Mortgage Corp. of America D022321 10/16/95 Equipment lease filing.
(Monroe Bank & Trust)
- ------------------------------------------------------------------------------------------
MCA Mortgage Corporation D022811 10/17/95 Equipment.
(Hovinga Business Systems)
- ------------------------------------------------------------------------------------------
Mortgage Corp. of America D023373 10/18/95 Equipment lease filing.
(U.S. Financial Services, Inc.)
- ------------------------------------------------------------------------------------------
Mortgage Corp. of America D047652 12/28/95 Equipment lease filing.
(Monroe Bank & Trust)
- ------------------------------------------------------------------------------------------
MCA Financial Corp. 17753B 01/31/93 FHLMC, FNMA, & GNMA
(IBJ Schroder Bank & Trust) Servicing Contracts.
- ------------------------------------------------------------------------------------------
</TABLE>
5 SCHEDULE 5
<PAGE> 79
<TABLE>
<CAPTION>
DEBTOR FILE NO. FILE DATE DESCRIPTION
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
MCA Financial Corp. C640136 09/28/92 Inventory, equipment,
(Sterling Savings Bank) furniture, fixtures, goods,
accounts, contract rights.
- -----------------------------------------------------------------------------------------------------
MCA Financial Corp. C640137 09/28/92 Machinery, apparatus,
(Sterling Savings Bank) equipment, fittings,
fixtures, and articles of
personal property.
- -----------------------------------------------------------------------------------------------------
MCA Financial Corp. C660961 11/30/92 Equipment lease filing.
(BankOne)
- -----------------------------------------------------------------------------------------------------
MCA Financial Corp. C668445 12/28/92 (1) Konica 955 Facsimile.
(Ervin Leasing Co.)
- -----------------------------------------------------------------------------------------------------
MCA Financial Corp. C668446 12/28/92 (1) Konica 955 Facsimile.
(Ervin Leasing Co.)
- -----------------------------------------------------------------------------------------------------
MCA Financial Corp. C668447 12/28/92 Konica 955 Facsimile System.
(Ervin Leasing Company)
- -----------------------------------------------------------------------------------------------------
MCA Financial Corp. C672755 01/08/93 Equipment lease filing.
(First Independence Nat'l
Bank of Detroit)
- -----------------------------------------------------------------------------------------------------
MCA Financial Corp. C688058 02/23/93 Equipment lease filing.
(BankOne)
- -----------------------------------------------------------------------------------------------------
MCA Financial Corp. C702325 04/05/93 Equipment lease filing.
(BankOne)
- -----------------------------------------------------------------------------------------------------
MCA Financial Corp. 30156B 04/19/93 Telecommunications & data
(Ameritech Credit Corporation) equipment.
- -----------------------------------------------------------------------------------------------------
MCA Financial Corp. C732012 06/28/93 (1) Konica 6090 Copier with
(Ervin Leasing Company) 20-bin Stapling Sorter.
- -----------------------------------------------------------------------------------------------------
MCA Financial Corp. C732013 06/28/93 (1) Konica 955 Facsimile.
(Ervin Leasing Company)
- -----------------------------------------------------------------------------------------------------
MCA Financial Corp. C732014 06/28/93 (1) Konica 4045 Copier with
(Ervin Leasing Company) 20-bin Stapling Sorter.
- -----------------------------------------------------------------------------------------------------
MCA Financial Corp. C733795 07/02/93 (1) Konica 5080 Copier with
(Ervin Leasing Company) 20-bin Stapling Sorter.
- -----------------------------------------------------------------------------------------------------
MCA Financial Corp. 33548B 07/21/93 Servicing rights,
(Comerica Bank) contracts, accounts,
contract rights, general
intangibles, business
records.
- -----------------------------------------------------------------------------------------------------
</TABLE>
6 SCHEDULE 5
<PAGE> 80
<TABLE>
<CAPTION>
DEBTOR FILE NO. FILE DATE DESCRIPTION
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
MCA Financial Corp. 33551B 07/21/93 Servicing collateral,
(Board of Trustees supplies, receivables, &
Policemen & Firemen related contracts,
Retirement) intellectual property
general intangibles, &
credit facility
collateral.
- ---------------------------------------------------------------------------------------------------------
MCA Financial Corp. C742080 07/29/93 (1) Konica 6090 Copier
(Ervin Leasing Company) with bin Stapling Sorter.
- ---------------------------------------------------------------------------------------------------------
MCA Financial Corp. C750391 08/24/93 (1) Konica 4185 Copier
(Ervin Leasing Company) with bin Stapling Sorter.
- ---------------------------------------------------------------------------------------------------------
MCA Financial Corp. C750393 08/24/93 (1) Konica 825 Fax.
(Ervin Leasing Company)
- ---------------------------------------------------------------------------------------------------------
MCA Financial Corp. C753214 08/31/92 Equipment lease filing.
(Old Kent Bank & Trust Co.)
- ---------------------------------------------------------------------------------------------------------
MCA Financial Corp. 34959B 09/09/93 Telecommunications & data
(Ameritech Credit Corp.) equipment.
- ---------------------------------------------------------------------------------------------------------
MCA Financial Corp. C756885 09/13/93 (1) Konica 955 Facsimile.
(Ervin Leasing Company)
- ---------------------------------------------------------------------------------------------------------
MCA Financial Corp. C758494 09/17/93 Equipment lease filing.
(BankOne)
- ---------------------------------------------------------------------------------------------------------
MCA Financial Corp. C759954 09/22/93 (1) Konica 825 Facsimile.
(Ervin Leasing Company)
- ---------------------------------------------------------------------------------------------------------
MCA Financial Corp. C761682 09/27/92 (1) Konica 825 Fax.
(Ervin Leasing Company)
- ---------------------------------------------------------------------------------------------------------
MCA Financial Corp. C761683 09/27/93 (1) Konica 4045 Copier
(Ervin Leasing Company) with 20-bin Stapling
Sorter.
- ---------------------------------------------------------------------------------------------------------
MCA Financial Corp. C775564 11/08/93 (1) Konica 4155 Copying
(Ervin Leasing Company) System.
- ---------------------------------------------------------------------------------------------------------
MCA Financial Corp. C794626 01/05/94 (1) Konica 955 Facsimile.
(Ervin Leasing Company)
- ---------------------------------------------------------------------------------------------------------
MCA Financial Corp. C797855 01/13/94 (1) Konica 825L Facsimile.
(Ervin Leasing Company)
- ---------------------------------------------------------------------------------------------------------
MCA Financial Corp. C805065 02/04/94 (1) Konica 6090 Copier.
(Ervin Leasing Company)
- ---------------------------------------------------------------------------------------------------------
MCA Financial Corp. C807549 02/11/94 Equipment lease filing.
(BankOne)
- ---------------------------------------------------------------------------------------------------------
MCA Financial Corp. C808165 02/14/94 Equipment lease filing.
(Monroe Bank & Trust)
- ---------------------------------------------------------------------------------------------------------
</TABLE>
7 SCHEDULE 5
<PAGE> 81
<TABLE>
<CAPTION>
DEBTOR FILE NO. FILE DATE DESCRIPTION
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
MCA Financial Corp. C809004 02/16/94 Equipment lease filing.
(BankOne)
- ---------------------------------------------------------------------------------------
MCA Financial Corp. C821591 03/23/94 Equipment lease filing.
(Old Kent Bank & Trust Company)
- ---------------------------------------------------------------------------------------
MCA Financial Corp. C821989 03/24/94 Equipment lease filing.
(BankOne)
- ---------------------------------------------------------------------------------------
MCA Financial Corp. C833409 04/25/94 (1) Konica 4065 Copying
(Ervin Leasing Company) System.
- ---------------------------------------------------------------------------------------
MCA Financial Corp. C833463 04/25/94 (1) Konica 825 Facsimile.
(Ervin Leasing Company)
- ---------------------------------------------------------------------------------------
MCA Financial Corp. C854865 06/20/94 Equipment lease filing.
(Comerica Leasing Corp.)
- ---------------------------------------------------------------------------------------
MCA Financial Corp. C8577369 06/27/94 Equipment lease filing.
(Comerica Leasing Corp.)
- ---------------------------------------------------------------------------------------
MCA Financial Corp. C883210 09/12/94 (1) Konica Fax 825.
(Ervin Leasing Company)
- ---------------------------------------------------------------------------------------
MCA Financial Corp. C903302 11/07/94 (1) Konica 2590 Copier
(Ervin Leasing Company) with RADF & cabinet.
- ---------------------------------------------------------------------------------------
MCA Financial Corp. C903732 11/08/94 Equipment lease filing.
(Huntington Bank of Michigan)
- ---------------------------------------------------------------------------------------
MCA Financial Corp. C906690 11/16/94 Equipment lease filing.
(Old Kent Bank & Trust Company)
- ---------------------------------------------------------------------------------------
MCA Financial Corp. C914583 12/12/94 (1) Konica 2590 (used)
(Ervin Leasing Company) Copying System.
- ---------------------------------------------------------------------------------------
MCA Financial Corp. C916662 12/19/94 (1) Konica 4155 Copier
(Ervin Leasing Company) with Sorter.
- ---------------------------------------------------------------------------------------
MCA Financial Corp. C923941 01/10/95 (1) Canon NP6060 Copier
(Hovinga Business Systems, System.
Inc.)
- ---------------------------------------------------------------------------------------
MCA Financial Corp. C935610 02/10/95 Equipment lease filing.
(U.S. Financial Services, Inc.)
- ---------------------------------------------------------------------------------------
MCA Financial Corp. 52569B 02/15/95 Servicing rights,
(First Fidelity Bank, N.A.) contracts, accounts,
contract rights, general
intangibles, loan
collateral, & business
cards.
- ---------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 5
8
<PAGE> 82
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
DEBTOR FILE NO. FILE DATE DESCRIPTION
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
- --------------------------------------------------------------------------------
MCA Financial Corp. C968448 05/09/95 Equipment lease filing.
(Dana Commercial
Credit Corp.)
- --------------------------------------------------------------------------------
MCA Financial Corp. C989789 07/10/95 (1) Konica 825 Plain
(Ervin Leasing Company) Paper Fax.
- --------------------------------------------------------------------------------
MCA Financial Corp. C991171 07/13/95 Equipment lease filing.
(Huntington Bank)
- --------------------------------------------------------------------------------
MCA Financial Corp. D010289 09/08/95 Equipment lease filing.
(Huntington Banks of
Michigan)
- --------------------------------------------------------------------------------
MCA Financial Corp. D012586 09/15/95 Equipment lease filing
(Dana Commercial with attachments &
Credit Corp.) related chattel paper.
- --------------------------------------------------------------------------------
MCA Financial Corp. D014339 09/21/95 Equipment lease filing.
(Huntington Bank)
- --------------------------------------------------------------------------------
MCA Financial Corp. D034735 11/17/95 Equipment lease filing.
(Old Kent Bank)
- --------------------------------------------------------------------------------
MCA Financial Corp. 64247B 12/08/95 Equipment lease filing.
(Vanguard Financial
Service Corp.)
- --------------------------------------------------------------------------------
MCA Financial Corp. D066724 02/26/96 Equipment lease filing.
(Huntington Bank)
- --------------------------------------------------------------------------------
MCA Financial Corp. D074264 03/15/96 Equipment lease filing.
(Franklin Bank)
- --------------------------------------------------------------------------------
</TABLE>
MCA [6.] TERMINATIONS OR AMENDMENTS OF FINANCING STATEMENTS reflected in the
UCC Search Reports described above that, in the judgment of Agent
and its special counsel, conflict with the priority of the Lender
Liens contemplated by the Loan Documents, each executed by the
appropriate secured party and (if necessary) debtor, and in form
acceptable to Agent for filing with the applicable UCC filing
officers, including those marked "release required" above.
TCB [7.] CONFIRMATION of the establishment of the Funding Account and the
Settlement Account.
TCB [8.] LIST delivered by Borrowers and agreed to be Agent, identifying the
non-FNMA, FHLMC and GNMA Approved Investors.
TCB [9.] AGENCY FEES AGREEMENT executed by Borrowers and Agent.
TCB [10.] CUSTODIAL FEES AGREEMENT executed by Borrowers and Collateral Agent.
9 SCHEDULE 5
<PAGE> 83
[11.] CORPORATE CHARTER for MCA Financial Corp., certified as of March
13, 1996, by the Michigan Department of Commerce.
MCA [12.] OFFICERS' CERTIFICATE for MCA Financial Corp., executed by the
President and Secretary of MCA Financial Corp. as to (a) the due
incumbency of its officers authorized to execute or attest to the
Loan Documents, (b) resolutions duly adopted by its directors
approving and authorizing the execution of the Loan Documents, (c)
its corporate charter, and (d) bylaws, accompanied by:
Exhibit A - Resolutions
Exhibit B - Charter
Exhibit C - Bylaws
MCA 13. CORPORATE CHARTER for MCA Mortgage Corporation, certified as of
March 13, 1996, by the Michigan Department of Commerce.
MCA [14.] OFFICERS' CERTIFICATE for MCA Mortgage Corporation, executed by the
President and Secretary of MCA Mortgage Corporation as to (a) the
due incumbency of its officers authorized to execute or attest to
the Loan Documents, (b) resolutions duly adopted by its directors
approving and authorizing the execution of the Loan Documents, (c)
its corporate charter, and (d) bylaws, accompanied by:
Exhibit A - Resolutions
Exhibit B - Charter
Exhibit C - Bylaws
MCA 15. CORPORATE CHARTER for Mortgage Corporation of America, certified as
of March 13, 1996, by the Michigan Department of Commerce.
MCA [16.] OFFICERS' CERTIFICATE for Mortgage Corporation of America, executed
by the President and Secretary of Mortgage Corporation of America
as to (a) the due incumbency of its officers authorized to execute
or attest to the Loan Documents, (b) resolutions duly adopted by
its directors approving and authorizing the execution of the Loan
Documents, (c) its corporate charter, and (d) bylaws, to which must
be attached
Exhibit A - Resolutions
Exhibit B - Charter
Exhibit C - Bylaws
MCA [17.] CERTIFICATES OF QUALIFICATION, GOOD STANDING, AND AUTHORITY for
Borrowers, issued as of Current Dates by the appropriate Tribunals
for the following jurisdictions:
SCHEDULE 5
10
<PAGE> 84
COMPANY JURISDICTION CERTIFICATE DATE
- ------- ------------ ----------- ----
MCA Financial Corp. MI Existence
- ------------------- -- ---------
Good Standing
-------------
MCA Mortgage Corporation MI Existence
- ------------------------ -- ---------
Good Standing
-------------
Mortgage Corporation of America MI Existence
- ------------------------------- -- ---------
Good Standing
-------------
LSZ [18.] LENDERS' AGREEMENT executed by Texas Commerce Bank National
Association, other Lenders, and consented to by Borrowers. (Not
required until other Lenders join.)
MCA [19.] CERTIFICATE of the Chief Financial Officer of MCA Financial Corp.,
certifying to a true and correct copy of the January 1, 1992,
Indenture relating to the 11% Asset-Backed Subordinated Debentures
Due March 15, 1997, accompanied by:
Exhibit A - Indenture
MCA [20.] CERTIFICATE of the Chief Financial Officer of MCA Financial Corp.,
certifying to a true and correct copy of the December 30, 1994,
Indenture relating to the 11% Asset-Backed Subordinated Debentures,
Series 1994, Due June 30, 2000, accompanied by:
Exhibit A - Indenture
MCA [21.] EVIDENCE of the establishment of agent for service of process in
Dallas, Texas.
MCA [22.] OPINION of Butzel Long, as counsel to Borrowers, addressed to
Agent, Collateral Agent, and Lenders, and in substantially the form
of Exhibit E.
23. Such other documents and items as Agent, Collateral Agent, or
any Lender may reasonably request.
SCHEDULE 5
11
<PAGE> 85
SCHEDULE 6.2
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
COMPANIES
- ---------------------------------------------------------------------------------------------------------------------------
STATE OF STATES QUALIFIED AS TRADE NAMES USED IN STILL USING NAME?
NAME OWNERSHIP INCORPORATION FOREIGN CORP. LAST FOUR MONTHS Y/N
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
MCA Financial Approximately Michigan None None No
Corporation 459,355 shares
owned by various
individuals and
entities disclosed
to Agent on a
separate schedule
- ---------------------------------------------------------------------------------------------------------------------------
MCA Mortgage MCA Financial Corp. Michigan Colorado, District None No
Corporation of Columbia,
Florida, Georgia,
Idaho, Illinois,
Indiana, Kentucky,
Maryland,
Minnesota,
Missouri, New
Mexico, Ohio,
Pennsylvania, South
Carolina, Virginia,
Washington, West
Virginia, Wisconsin
- ---------------------------------------------------------------------------------------------------------------------------
Mortgage MCA Financial Corp. Michigan Indiana None No
Corporation of
America
- ---------------------------------------------------------------------------------------------------------------------------
Mortgage MCA Financial Corp. Ohio Ohio, Indiana, None No
Corporation of Michigan
America, Inc.
- ---------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- --------------------------------------------
OTHER PRINCIPAL
CHIEF EXECUTIVE OFFICE OFFICES
- --------------------------------------------
<C> <C>
23999 Northwest Hwy None
Southfield, MI 48097
- --------------------------------------------
23999 Northwest Hwy None
Southfield, MI 48097
- --------------------------------------------
23999 Northwestern Hwy. None
Southfield, MI 48097
- --------------------------------------------
23999 Northwestern Hwy. None
Southfield, MI 48097
- --------------------------------------------
</TABLE>
SCHEDULE 6.2
<PAGE> 86
SCHEDULE 6.9
LITIGATION AND JUDGMENTS
None
SCHEDULE 6.9
<PAGE> 87
SCHEDULE 6.10
AFFILIATE TRANSACTIONS
1. MCA Financial Corp. purchases various real estate
parcels from unrelated third parties which are subsequently
sold to limited partnerships whose general partner is owned
by two MCA Financial Corp. shareholders. Gains are
recognized on these sales.
2. Borrowers pay commissions for the acquisition of
properties from unrelated third parties to a company owned
by three shareholders of MCA Financial Corp.
3. MCA Financial Corp. earns management fees for
administrative services provided to U.S. Mutual Financial
Corporation ("USMFC"). Certain shareholders of MCA
Financial Corp. are directors or major shareholders of
USMFC.
4. MCA Financial Corp. has made charitable
contributions to a non-profit organization, Detroit
Revitalization, Inc. ("DRI"), which is engaged in the
business of acquiring, renovating and selling affordable
homes in the City of Detroit to assist in reversing the
trend toward deterioration of the housing stock within the
city. Certain shareholders of MCA Financial Corp. are
directors of DRI.
5. From time to time, Borrowers have retained
Consulting Services America ("CSA") as consultants for
specific strategic planning and organizational development
projects. The major shareholder and chief executive
officer of CSA is a brother of two shareholder/directors of
MCA Financial Corp.
SCHEDULE 6.10
<PAGE> 88
SCHEDULE 8.1
PERMITTED DEBT
1. The Obligation.
2. Obligations to pay Taxes.
3. Liabilities for accounts payable, non-capitalized
equipment or operating leases, and similar liabilities if
in each case incurred in the ordinary course of business.
4. Accrued expenses, deferred credits, and loss
contingencies that are properly classified as liabilities
under GAAP.
5. Existing Debt (but not increases of this Debt), as
follows:
<TABLE>
<CAPTION>
MAXIMUM
AMOUNT
NAME AVAILABLE
<S> <C>
a. Comerica Bank-Revolving Credit Agreement $28,500,000
b. Comerica Bank-Term Note secured by land contracts 1,500,000
c. Paine Webber Warehouse Facility 25,000,000
d. MCA Funding Partnership 2,000,000
e. Funding Limited Partnership I 2,000,000
f. Funding Limited Partnership II 2,000,000
g. 11% Asset-Backed Subordinated Debentures
due March 15, 1997 4,921,000
h. Sterling Bank & Trust - Real Estate Financing 2,000,000
i. 11% Asset-Backed Subordinated Debentures
due June 30, 2000 10,000,000
j. Comerica Bank - Real Estate Financing 1,500,000
k. Land Contract - Building Acquisition 499,591
l. Capital Leases N/A
m. Comerica - Term Note secured by land contracts 500,000
</TABLE>
6. Debt (other than above) incurred after the date of
this agreement, never to exceed $250,000 unless approved by
Agent in writing.
SCHEDULE 8.1
<PAGE> 89
SCHEDULE 8.2
PERMITTED LIENS
1. Any interest or title of a lessor in assets being
leased under any noncapitalized equipment or operating
lease.
2. Pledges or deposits that (a) do not encumber any
Collateral and (b) are made to secure payment of workers'
compensation, unemployment insurance, or other forms of
governmental insurance or benefits or to participate in any
fund in connection with workers' compensation, unemployment
insurance, pensions, or other social security programs.
3. Good faith pledges or deposits that (a) do not cover
any Collateral and (b) are either (i) not in excess of ten
percent (10%) (excluding deposits put down for servicing
portfolio purchases in the ordinary course of business) of
the amounts due under, and made to secure, either Company's
performance of bids, tenders, contracts (other than for the
repayment of borrowed money), or leases, or (ii) made to
secure statutory obligations, surety or appeal bonds, or
indemnity, performance, or other similar bonds benefitting
any Company in the ordinary course of its business.
4. Zoning and similar restrictions on the use of real
property that do not materially impair the use of the real
property and that are not violated by existing or proposed
structures or land use.
5. The following if no Lien has been filed in any
jurisdiction or agreed to: (a) Liens for Taxes not yet due
and payable and (b) if, to the extent they cover any
Collateral, they are subordinate to the Lender Liens in
form and substance reasonably acceptable to Agent, (c)
mechanic's Liens and materialman's Liens for services or
materials for which payment is not yet due and payable and
(d) landlord's Liens for rent not yet due and payable.
6. The following if the validity or amount thereof is
being contested in good faith and by appropriate and lawful
proceedings diligently conducted, reserve or other
appropriate provision (if any) required by GAAP has been
made, levy and execution continue to be stayed, any of
which covering any Collateral must be subordinate to the
Lender Liens in form and substance reasonably acceptable to
Agent, and any of which do not in the aggregate materially
detract from the value of the property of the Company in
question, or materially impair the use of that property in
the operation of its business: (a) claims and Liens for
Taxes due and payable; (b) claims and Liens upon, and
defects of title to, real or personal property (other than
any Collateral), including any attachment of personal or
real property or other legal process before adjudication of
a dispute on the merits; (c) claims and Liens of mechanics,
materialmen, warehousemen, carriers, landlords, or other
like Liens; and (d) adverse judgments or orders on appeal
for the payment of money.
SCHEDULE 8.2
<PAGE> 90
7. Lender Liens.
8. Liens (a) evidenced by any financing statements reflected in
any UCC Search Reports described on SCHEDULE 5 to the extent
they are not required to be terminated, partially released,
amended, or subordinated as reflected in the conditions in
SCHEDULE 5 or (b) securing Permitted Debt.
SCHEDULE 8.2
<PAGE> 91
SCHEDULE 8.3
PERMITTED LOANS/INVESTMENTS
1. Extensions of trade credit and other payables in the
ordinary course of business.
2. Loans and advances to officers or employees of any Company that
are (a) in the ordinary course of business for travel,
entertainment, commission advances, or relocation or (b) not in the
ordinary course and are never more than a total outstanding of (i)
One Hundred Twenty-five Thousand Dollars ($125,000) for any one
officer, director, or employee or (ii) One Hundred Twenty-five
Thousand Dollars ($125,000) in the aggregate for all of the
Companies.
3. Advances to U.S. Mutual Financial Corporation
("USMFC") to the extent such advances are fully secured by
USMFC's real estate located in Mt. Clemens, Michigan, and
so long as the fair market value of such real estate
exceeds the aggregate amount of the advances made by the
Borrowers to USMFC.
4. Mortgage Loans and Mortgage Securities originated or
acquired by Borrowers in the ordinary course of business.
5. Loans and advances on servicing obligations with
regard to mortgage and land contract pools.
6. Loans and advances for reasonable rehabilitation and
for repair or maintenance expenses incurred from time to
time by real estate limited partnerships in which the
general partner is an affiliate of a Borrower.
7. Acquisition of securities or evidences of Debt of
others when acquired by Borrowers in settlement of accounts
receivable or other Debts arising in the ordinary course of
business so long as the total of all of those securities or
evidences of Debt is not material to Borrowers' financial
condition.
8. Investments in obligations, with maturities of one
year or less, issued or unconditionally guaranteed by, or
issued by any of its agencies and backed by the full faith
and credit of, the United States of America.
9. Demand deposit accounts maintained in the ordinary
course of business.
10. Certificates of deposit issued by (a) any Lender or
(b) any other commercial bank organized under the Laws of
the United States of America or one of its states that has
combined capital, surplus, and undivided profits of at
least Two Hundred Fifty Million Dollars ($250,000,000) and
a rating of C or better by Thompson Bank Watch, Inc.
SCHEDULE 8.3
<PAGE> 92
11. Eurodollar investments with (a) any Lender or (b)
any other financial institution that has (i) combined
capital, surplus, and undivided profits of at least One
Hundred Million Dollars ($100,000,000) and (ii) a
commercial paper rating of at least P-1 or A-1 or (if it
does not have a commercial paper rating) a bond rating of
at lest A-1 or A- by Moody's Investors Service, Inc., or
Standard & Poor's Corporation, respectively.
12. Investments in commercial paper (a) having a maturity of one
year or less and (b) given the highest rating by a nationally
recognized credit rating agency.
2 SCHEDULE 8.3
<PAGE> 93
EXHIBIT A
NOTE
$___________________ September 3, 1996
FOR VALUE RECEIVED, MCA FINANCIAL CORP., a Michigan
corporation, MCA MORTGAGE CORPORATION, a Michigan corporation, and MORTGAGE
CORPORATION OF AMERICA, a Michigan corporation (collectively, "MAKERS"),
jointly and severally promise to pay to the order of ("PAYEE") that portion of
the principal amount of $________________ that may from time to time be
disbursed and outstanding under this note together with interest.
This note is a "Note" under the Loan Agreement (as
renewed, extended, amended, or restated, the "LOAN AGREEMENT") dated as
of September 3, 1996, between Makers, certain Lenders, Texas Commerce Bank
National Association, as Agent for Lenders, and Texas Commerce Bank National
Association, as Collateral Agent for Lenders. All of the defined terms in the
Loan Agreement have the same meanings when used, unless otherwise defined, in
this note.
This note incorporates by reference the principal and
interest payment terms in the Loan Agreement for this note, including,
without limitation, the final maturity, which is the stated Termination Date.
This note also incorporates by reference all other provisions in the Loan
Agreement applicable to this note, such as provisions for disbursements of
principal, applicable interest rates before and after Default, voluntary and
mandatory prepayments, acceleration of maturity, exercise of Rights, payment of
attorneys' fees, court costs, and other costs of collection, certain waivers by
Makers and other obligors, assurances and security, choice of Texas and United
States federal Law, usury savings, and other matters applicable to Loan
Documents under the Loan Agreement.
MCA FINANCIAL CORP. MCA MORTGAGE CORPORATION
By:_____________________________ By:___________________________
Name: __________________________ Name: ________________________
Title: _________________________ Title: _______________________
MORTGAGE CORPORATION OF
AMERICA
By: _____________________________________
Name: ___________________________________
Title: __________________________________
EXHIBIT A
<PAGE> 94
EXHIBIT B
[INTENTIONALLY OMITTED]
EXHIBIT B
<PAGE> 95
EXHIBIT C-1
SECURITY AGREEMENT
THIS AGREEMENT is entered into as of September 3, 1996,
between MCA FINANCIAL CORP., a Michigan corporation, MCA MORTGAGE
CORPORATION, a Michigan corporation, MORTGAGE CORPORATION OF AMERICA, a
Michigan corporation and MORTGAGE CORPORATION OF AMERICA, INC., an Ohio
corporation (whether one or more, "DEBTOR"), certain Lenders, and TEXAS
COMMERCE BANK NATIONAL ASSOCIATION, as Collateral Agent (in that capacity,
"SECURED PARTY") for Lenders.
Debtor, Lenders, Texas Commerce Bank National
Association, as Agent for Lenders, and Secured Party have entered into
the Loan Agreement (as renewed, extended, amended, or restated, the "LOAN
AGREEMENT") dated as of September 3, 1996. As a continuing inducement to
Lenders to extend credit to Debtor under the Loan Agreement, and as a condition
precedent to that credit, Debtor is executing and delivering this agreement for
the benefit of Lenders and Secured Party.
ACCORDINGLY, for adequate and sufficient consideration,
Debtor and Secured Party agree as follows:
SECTION . DEFINITIONS AND REFERENCES. Unless stated
otherwise, (a) terms defined in the Loan Agreement or the UCC have the
same meanings when used in this agreement, and (b) to the extent permitted by
Law, if in conflict (i) the definition of a term in the Loan Agreement controls
over the definition of that term in the UCC, and (ii) the definition of a term
in Article 9 of the UCC controls over the definition of that term elsewhere in
the UCC.
COLLATERAL is defined in SECTION 2.2 of this agreement.
DEBTOR is defined in the preamble to this agreement and
includes, without limitation, Debtor, Debtor as a debtor-in-possession,
and any receiver, trustee, liquidator, conservator, custodian, or similar party
appointed for Debtor or for substantially all of Debtor's assets under any
Debtor Law.
OBLIGOR means any Person obligated with respect to any
Collateral (whether as an account debtor, obligor on an instrument,
issuer of securities, or otherwise).
SECURED PARTY is defined in the preamble to this
agreement and includes its successor appointed and acting as Collateral
Agent for Lenders under the Loan Documents.
SECURITY INTEREST means the security interest granted and
the pledge and assignment made under SECTION 2.1 of this agreement,
which is a Lender Lien under the Loan Agreement.
EXHIBIT C-1
<PAGE> 96
SECTION 2. SECURITY INTEREST AND COLLATERAL.
2.1 Security Interest. To secure the full payment and
performance of the Obligations, Debtor grants to Secured Party for Lenders a
security interest in the Collateral and pledges and assigns the Collateral to
Secured Party, all upon and subject to the terms and conditions of t his
agreement. The grant of the Security Interest does not subject Secured Party
or any Lender to the terms of any Collateral Document or in any way transfer,
modify, or otherwise affect (a) any of Debtor's obligations with respect to any
Collateral or (b) the Lender Liens under the Loan Agreement.
2.2 Collateral. As used in this agreement, the term
"Collateral" means the present and future items and types of property
described below, whether now owned or acquired in the future by Debtor. This
description of Collateral does not permit any action prohibited by and Loan
Document.
- Mortgage Loans from time to time identified to Secured
Party as Collateral.
- All Collateral Documents in any way related to any of the
above identified as Collateral, including, without limitation,
all promissory notes evidencing, and all mortgages, deeds of
trust, or trust deeds security those Mortgage Loans whether
deposited with or held by or for Secured party under this
agreement, identified by Debtor as Collateral for a Wet
Borrowing, or otherwise.
- Private mortgage insurance (including, without
limitation, all commitments to issue any such insurance)
covering, and all commitments issued by FHA to insure or issued
by VA to guarantee, any Mortgage Loans identified as
Collateral.
- Security of any kind pledged by a mortgagor for any
Mortgage Loans identified as Collateral.
- Casualty insurance assigned to Debtor in connection with
any Mortgage Loans identified as Collateral.
- Mortgage Securities deposited with or held by or for
Secured Party under the Loan Documents or registered by book
entry in Secured Party's name under the Loan Documents.
- Guaranties related to Mortgage Securities identified as
Collateral.
- Take-Out Commitments held by Debtor for any Mortgage Loans
or Mortgage Securities identified as collateral, Rights to
deliver those Mortgage Loans or Mortgage Securities, as the
case may be, to the
2
EXHIBIT C-1
<PAGE> 97
investors or other purchasers under those Take-Out
Commitments, and all proceeds resulting from the sale of any of
those Mortgage Loans or Mortgage Securities under those
Take-Out Commitments.
- Any Collateral otherwise described in this agreement
that may from time to time be delivered (a) to an investor
under SECTION 4.5 of the Loan Agreement until purchased and
paid for by that investor or (b) for correction under SECTION
4.6 of the Loan Agreement.
- The Funding Account, Settlement Account, all other
accounts that Debtor maintains with Secured Party, Agent, or
any Lender, and all amounts deposited in them or represented by
them.
- Personal property, contract rights, accounts, and general
intangibles of any kind whatsoever relating to any Collateral.
- All files, surveys, certificates, correspondence,
appraisals, tapes, discs, cards, accounting records, and other
information and data of Debtor relating to any collateral,
including, without limitation, all information, data, tapes,
discs, and cards necessary to administer and service any
Collateral.
- Cash and noncash proceeds of any Collateral.
SECTION 3. REPRESENTATIONS AND WARRANTIES. By entering into
this agreement, and by each subsequent delivery of additional Collateral
under this agreement, Debtor reaffirms the representations and warranties
contained in the Loan Agreement. Debtor further represents and warrants to
Secured Party for Lenders as follows:
3.1. Concerning the Collateral. All Collateral (a) is
genuine and in all respects what it purports to be, (b) is the legal,
valid, and binding obligation of each Obligor (except as enforceability may be
limited by Debtor Laws), (c) is free from any claim for credit, deduction, or
allowance of any Obligor and free from any defense, dispute, setoff, or
counterclaim (other than for payments made in respect of it), (d) if a Mortgage
Loan was originated and is in compliance with all Laws (including, without
limitation, all usury Laws, the Real Estate Settlement Procedures Act of 1974,
the Equal Credit Opportunity Act, the Federal Trust in Lending Act, Regulation
Z promulgated by the board of Governors of the Federal Reserve System, and all
applicable federal; and state consumer protection Laws, (e) if a Mortgage
Security, is duly authorized and validly issued, the transfer of which is not
subject to any restrictions other than under the Loan Documents, (f) if a
Take-Out commitment or other contract, is in full force and effect without any
material default having occurred by any party to it, and (g) conforms to the
applicable requirements of eligibility under SCHEDULE 4.1 to the Loan
Agreement.
3
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<PAGE> 98
3.2. Ownership and Priority. Debtor has full legal and
beneficial ownership of all Collateral, free and clear of all liens
except Permitted Liens.
3.3. Creation and Perfection. The Security Interest is
created and perfected on (a) each promissory note that evidences a
Mortgage Loan or Land Contract ever identified as Collateral and delivered to
Secured Party, (b) each promissory note that evidences a Mortgage Loan
identified by Debtor to Secured Party as supporting a Wet Borrowing for
twenty-one (21) days after the borrowing Date for that Borrowing, (c) each
Mortgage Security in certificated form that is delivered to Secured Party, (d)
each Mortgage Security in book entry form when notice of the Security Interest
is given to the financial institution in whose favor that security has been
issued and that institution confirms that notice, (e) all Collateral shipped to
any investor under SECTION 4.5 of the Loan Agreement (and the Security Interest
continues to be perfected until Secured Party receives either payment or
Mortgage Securities under that section), (f) all Collateral shipped to Debtor
for correction under SECTION 4.6 of the Loan Agreement (and the Security
Interest continues to be perfected for twenty-one (21) days after that
shipment), and (g) all other Collateral upon possession or the filing of
financing statements by Secured Party.
SECTION 4. COVENANTS. Until all commitments by Secured Party and Lenders to
extend credit under the Loan Agreement have been canceled or terminated and the
Obligation is fully paid and performed, Debtor covenants and agrees with
Secured Party for Lenders as follows:
4.1 Concerning the Collateral. Debtor (a) shall fully
perform all of its duties under and in connection with each transaction to
which any Collateral relates, (b) shall promptly notify Secured Party about any
change in any fact or circumstances represented or warranted by Debtor about
any Collateral, (c) shall promptly notify Secured Party of any claim, action,
or proceeding affecting title to any Collateral or the Security Interest and,
at Secured Party's request and Debtor's expense, appear in and defend that
action or proceeding, (d) shall hold in trust for Secured Party all collateral
not delivered to Secured Party (without excusing any failure to deliver
Collateral Documents to Secured Party as required by this agreement) and mark
that Collateral on Debtor's records that it is subject to the Security Interest
(but the failure to do so does not impair the Security Interest or its
priority), (e) other than collections under SECTION 4.3 below, Debtor shall pay
and deliver to Secured Party all items and types of property into which any
Collateral may be converted (all of which is subject to the Security Interest)
and properly endorse, assign, or take such other action as Secured Party may
request in order to maintain and continue the Security Interest in that
property, (f) may not compromise, extend, release, or adjust payments on any
Collateral, accept a conveyance of mortgaged property in full or partial
satisfaction of any Collateral, or release any mortgage, deed of trust, or
trust deed securing or underlying any Collateral, and (g) may not agree to the
amendment, termination, or substitution of any Take-Out Commitment covered by
the security interest if that amendment, termination, or substitution would be
a Material Adverse Event.
4.2 Insurance. Debtor shall keep the collateral fully
insured in the amounts, against the risks, and with insurers as may be
approved by Secured Party, with loss payable to Secured Party as its interest
(on behalf of Lenders) may appear.
4
EXHIBIT C-1
<PAGE> 99
4.3 Collections. Debtor shall, at its sole cost and
expense, whether requested to by Secured Party or in the absence of such
a request, take all actions reasonably necessary, to obtain payment, when due
and payable, of all amounts due or to become due from Obligers with respect to
any Collateral. Debtor may not agree to any rebate, refund, compromise, or
extension with respect to any Collateral or accept any prepayment on account of
any Collateral other than in a manner and to the extent consistent with or as
may otherwise be provided in various servicing agreements to which it is a
party or subject.
(a) No Default. While no Default exists, Debtor shall
make all of those collections, shall maintain such escrow accounts and
otherwise comply with the servicing agreements to which it is a party or
subject, and may otherwise comply with the servicing agreements to which it is
a party or subject, and may otherwise retain and use the proceeds of those
collections in the ordinary course of its business.
(b) Default. While a Default exists, and upon the request
of Secured Party, Debtor shall (i) notify and direct each Obligor to
make payments on the collateral to Secured Party for deposit into such accounts
as it may designate so as to be held as Collateral under this agreement and
(ii) otherwise turn over to Secured Party, in the form received and with any
necessary endorsements, all payments it receives in respect of any Collateral
for deposit into such accounts as Secured Party may designate to be held as
collateral under this agreement. Secured Party may at any time apply any
amounts in those accounts as a payment of the Obligation, other than mortgage
escrow payments that are deposited into escrow accounts in accordance with the
applicable Guide or servicing contract.
4.4 Concerning Debtor. Without first giving Secured Party
thirty (30) days notice (or fewer if agreed to in writing by Secured
Party) of the intention to do any of the following and performing such acts and
executing and delivering to Secured Party such additional documents as Secured
Party requests in order to continue or maintain the existence and priority of
the Security Interest, Debtor may not (a) use or transact business under any
corporate, assumed, or trade name, except as represented in the Loan Agreement,
(b) relocate its chief executive offices or principal place of business, or (c)
move or surrender possession of its books and records regarding the Collateral.
SECTION 5. DEFAULT AND REMEDIES. If a Default exists, then Secured
Party may, at its election (but subject to the terms and conditions of the Loan
Agreement), exercise any and all Rights available to a secured party under the
UCC, in addition to any and all other Rights afforded by the Loan Documents, at
law, in equity, or otherwise, including, without limitation (a) requiring
Debtor to assemble all or part of the collateral and make it available to
Secured Party at a place to be designated by Secured Party which is reasonably
convenient to Debtor and Secured Party, (b) surrendering any policies of
insurance on all or part of the Collateral and receiving and applying the
unearned premiums as a credit on the Obligation, (c) applying by appropriate
judicial proceedings for appointment of a receiver for all or part of the
Collateral (and Debtor hereby
5
EXHIBIT C-1
<PAGE> 100
consents to any such appointment), and (d) applying to the Obligation any
cash held by Secured Party or any Lender under the Loan Documents.
5.1 Notice. Reasonable notification of the time and place
of any public sale of the collateral, or reasonable notification of the
time after which any private sale or other intended disposition of the
Collateral is to be made, shall be sent to Debtor and to any other Person
entitled to notice under the UCC. If any Collateral threatens to decline
speedily in value or its of the type customarily sold on a recognized market,
Secured Party may sell or otherwise dispose of the collateral without
notification, advertisement, or other notice of any kind. Notice sent or given
not less than five (5) calendar days before the taking of the action to which
the notice relates is reasonable notification and notice for the purposes of
this section.
5.2 Application of Proceeds. Secured Party shall apply the
proceeds of any sale or other disposition of the collateral under this
SECTION 5 in the order and manner specified in SECTION 3.5 of the Loan
Agreement. Any surplus remaining shall be delivered to Debtor or as a court of
competent jurisdiction may direct. If the proceeds are insufficient to pay the
Obligation in full, Debtor remains liable for any deficiency.
SECTION 6. OTHER RIGHTS.
6.2 Performance. If Debtor fails to pay when due all Taxes
on any of the collateral, or to preserve the priority of the Security
Interest in any of the Collateral, or to keep the Collateral insured as
required by this agreement, or otherwise fail to perform any of its obligations
under any Loan Documents or Collateral Documents with respect to the
Collateral, the Secured Party many, at its option, but without being required
to do so, pay such Taxes, prosecute or defend any suits in relation to the
collateral, or insure and keep insured the collateral in any amount deemed
appropriate by Secured Party, or take all other action which Debtor is
required, but has failed or refused, to take under the Loan Documents or
Collateral Documents. Any sum which may be expended or paid by Secured Party
under this section (including, without limitation, court costs and attorneys'
fees) shall bear interest from the dates of expenditure or payment at the
Default Rate until paid and, together with such interest, shall be payable by
Debtor to Secured Party upon demand and is part of the Obligation.
6.2 Collection.
(a) Actions. When Secured Party is entitled under SECTION
4.3 above to make collection on any Collateral, it may in its own name
or in the name of Debtor (i) compromise or extend the time of payment with
respect to any Collateral for such amounts and upon such terms as Secured Party
may determine, (ii) demand, collect, receive, receipt for, sue form compound,
and give acquittance for any and all amounts due or to become due with respect
to Collateral, (iii) take control of cash and other proceeds of any Collateral,
(iv) endorse Debtor's name on any notes, acceptances, checks, drafts, money
orders, or other evidences of payment on Collateral that may come into Secured
Party's possession, (v) sign Debtor's name on any invoice or bill of lading
relating to any Collateral, on any drafts against Obligers or other Persons
making payment with
6
EXHIBIT C-1
<PAGE> 101
respect to Collateral, on assignments and verifications of accounts or
other Collateral and on notices to Obligers making payment with respect to
Collateral, (vi) send requests for verification or obligations to any Obligor,
(vii) do all other acts and things necessary to carry out the intent of this
agreement, and (viii) authorize any servicer in respect of any Collateral to
perform any one or more of the foregoing on Secured Party's behalf.
(b) If any Obligor fails or refuses to make payment on any
Collateral when due, Secured party is authorized, in its sole discretion,
either in its name or in Debtor's name, to take such action as Secured Party
deems appropriate for the collection of any amounts owed with respect to
Collateral or upon which a delinquency exists. Regardless of any other
provision, however, Secured Party is never liable for its failure to collect,
or for its failure to exercise diligence in the collection of, any amounts owed
with respect to Collateral and its not under any duty whatever to anyone except
Debtor to account for funds that it actually receives. Without limiting the
generality of the foregoing, Secured Party has no responsibility for
ascertaining any maturities, calls, conversions, exchanges, offers, tenders, or
similar matters relating to any Collateral, or for informing Debtor with
respect to any of such matters (irrespective of whether Secured Party actually
has, or may be deemed to have, knowledge thereof). Secured Party's receipt to
any Obligor is a full and complete release, discharge, and acquittance to that
Obligor, to the extent of any amount so paid to Secured Party.
6.3 Power of Attorney. Debtor irrevocably appoints Secured
party, acting on behalf of Lenders, as its attorney-in-fact (with full
power of substitution) for, on behalf, and in the name of Debtor to (a) endorse
and deliver to any Person any check, instrument, or other document received by
Secured Party or any Lender that represents payment in respect of any
Collateral, (b) prepare, complete, execute, deliver, and record any assignment
of any mortgage, deed of trust, or trust deed securing any Collateral, (c)
endorse and deliver or otherwise transfer any promissory note evidencing any
Collateral and do every other thing necessary or desirable to effect transfer
of all or any Collateral, (d) take all necessary and appropriate action with
respect to any Obligation or any Collateral, (e) commence, prosecute, settle,
discontinue, defend, or otherwise dispose of any claim relating to any
Collateral, and (f) sign Debtor's name wherever appropriate to effect the
performance of this agreement and the Loan Agreement. This section shall be
liberally, not restrictively, construed to give the greatest latitude to
Secured Party's power as the Debtor's attorney-in-fact to collect, sell and
deliver any Collateral and all other documents relating to it. the powers and
authorities conferred on Secured Party in this section (w) are discretionary
and not obligatory on the part of Secured Party, (x) may e exercised by Secured
Party through any Person who, at the time of the execution of a particular
documents, is an officer of Secured party, (y) may not be exercised by Secured
Party unless a Default exists, and (z) is granted for a valuable consideration,
coupled with an interest, and irrevocable until, and all Persons dealing with
Secured Party, any of its officers acting under this section, or any substitute
are fully protected in treating the powers and authorities conferred by this
section as existing and continuing in full force and effect until advised by
Secured Party that, all commitments under the Loan Agreement to extend credit
under this agreement have been terminated or cancelled and the Obligation is
fully paid and performed.
7
EXHIBIT C-1
<PAGE> 102
SECTION 7. MISCELLANEOUS.
7.1 Miscellaneous. Because this agreement in a "Loan
Document" referred to in the Loan Agreement, the provisions relating to
Loan documents in SECTIONS 1 AND 11 of the Loan Agreement are incorporated into
this agreement by reference the same as if included in this agreement verbatim.
7.2 Term. This agreement terminates upon full payment and
performance of the Obligation. No Obligor is ever obligated to make inquiry
of the termination but is fully protected in making any payments on the
Collateral directly to Secured Party.
7.3 Matters Not Relevant. The Security Interest, Debtor's
obligations, and Secured Party's and Lenders' Rights under this agreement
are not released, diminished, impaired, or adversely affected by any one or
more of the following: (a) Secured Party's or any Lender taking or accepting
any additional, or any release, surrender, exchange, subordination, or loss of
any other, guaranty, assurance, or security for any of the Obligation; (b) any
full or partial release of any other Person obligated on any of the Obligation;
(c) the modification or assignment of, or waiver of compliance with, any other
Loan Document; (d) any present or future insolvency, bankruptcy, or lack of
corporate, partnership, or trust power of any other Person obligated on any of
the Obligation; (e) any renewal, extension or rearrangement of any of the
Obligation, or any adjustment, indulgence, forbearance, or compromise granted
to any Person obligated on any of the Obligation; (f) any Person's neglect,
delay, omission, failure, or refusal to take or prosecute any action in
connection with any of the Obligation; (g) any existing or future affect,
claim, or defense (other than the defense of full and final payment of the
Obligation) of Debtor or any other Person against Secured party or any Lender;
(h) the unenforceability of any of the Obligation against any Person obligated
or any of the Obligation because it exceeds the amount permitted by Law, the
act of creating it is ultra vires, or the officers, partners, or trustees
creating it exceeded their authority or violated their fiduciary duties, or
otherwise; (i) any payment of the Obligation is held to constitute a preference
under any Debtor Law or for any other reason Secured Party of any Lender is
required to refund any payment or make payment to another Person; or (i) any
Person's failure to notify Debtor about the foregoing events or occurrences,
and Debtor waives any notice of any kind under any circumstances whatsoever
with respect to this agreement or any of the Obligation other than as
specifically provided in this agreement.
7.4 Waivers. Except to the extent expressly otherwise
provided in the Loan Documents, Debtor waives (a) any Right to require Secured
Party or any Lender to proceed against any other Person, to exhaust its Rights
in the Collateral, or to pursue any other Right which Secured Party or any
Lender may have, and (b) all Rights of marshaling in respect of the Collateral.
7.5 Financing Statement. Secured Party may, at any time,
file this agreement of a carbon photographic, or other reproduction of this
agreement as a financing statement, but Secured Party's failure to do so does
not impair the validity or enforceability of this agreement.
8
EXHIBIT C-1
<PAGE> 103
7.6 Parties. This agreement binds and inures to Debtor,
Secured Party, and each Lender, and their respective successors and
permitted assigns. Only those Persons may rely or raise any defense about this
agreement.
(a) Assignments. Debtor may not assign any Rights or
obligations under this agreement without first obtaining the written consent
of Secured Party and all Lenders. Secured Party's Rights under this agreement
may be assigned to any successor agent appointed under the Loan Agreement.
(b) Secured Party. Secured Party is the agent for each
Lender. Secured Party may, without the joinder of any Lender, exercise
any Rights in favor of any of them under this agreement. The Rights of Secured
Party and Lenders vis-a-vis each other may be subject to other agreements
between them. Neither Debtor nor its successors or permitted assigns need to
inquire about any such agreement or be subject to the terms of it unless they
join in it and, therefore, are not entitled to the benefits of any such
agreement or entitled to rely upon or raise as a defense the failure of any
party to comply with it.
7.7 Entire Agreement. THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUSLY, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.
EXECUTED as of the date first stated above.
MCA FINANCIAL CORP., TEXAS COMMERCE BANK NATIONAL
MCA MORTGAGE CORPORATION, ASSOCIATION, in its capacity as
and MORTGAGE CORPORATION OF Collateral Agent and as Secured Party
AMERICA, as Debtor
By: By:
-------------------------- ---------------------------------
Name: Name:
------------------------ -------------------------------
Title: Title:
----------------------- ------------------------------
9
EXHIBIT C-1
<PAGE> 104
MCA MORTGAGE CORPORATION OF
AMERICA, INC., as Debtor
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
10
EXHIBIT C-1
<PAGE> 105
EXHIBIT C-2
FINANCING STATEMENT
THIS FINANCING STATEMENT IS PRESENTED TO A FILING OFFICER
FOR FILING UNDER THE UNIFORM COMMERCIAL CODE.
__________________________________________
__________________________________________
__________________________________________
DEBTOR'S NAME AND MAILING ADDRESS: FED. TAX ID NO. __________________________
- --------------------------------------------------------------------------------
Texas Commerce Bank National Association,
as Collateral Agent(1)
__________________________________________
SECURED PARTY'S NAME AND MAILING __________________________________________
ADDRESS: FED. TAX ID NO. __________________________
- --------------------------------------------------------------------------------
FOR FILING OFFICER:
- --------------------------------------------------------------------------------
THIS FINANCING STATEMENT COVERS THE FOLLOWING PRESENT AND FUTURE TYPES AND
ITEMS OF PROPERTY AND INTERESTS, WHETHER NOW OWNED OR ACQUIRED IN THE FUTURE BY
DEBTOR (THE "COLLATERAL"):
- - Mortgage Loans from time to time identified to Secured Party as Collateral.
- - Land Contracts from time to time identified to Secured Party as Collateral.
- - Construction Loan Contracts from time to time identified to
Secured Party as Collateral.
- - All Collateral Documents in any way related to any of the
above identified as Collateral, including, without limitation, all
promissory notes evidencing, and all mortgages, deeds of trust, or trust
deeds securing those Mortgage Loans or Construction Loans, and all Land
Contracts, whether deposited with or held by or for Secured Party under
this agreement, identified by Debtor as Collateral for a Wet Borrowing, or
otherwise.
- - Private mortgage insurance (including, without limitation,
all commitments to issue any such insurance) covering, and all
commitments issued by FHA to insure or issued by VA to guarantee, any
Mortgage Loans or Construction Loans identified as Collateral.
- - Security of any kind pledged by a mortgagor for any Mortgage
Loans or Construction Loans identified as Collateral.
- - Casualty insurance assigned to Debtor in connection with any
Mortgage Loans or Construction Loans identified as Collateral.
- -------------------
(1) Secured Party is serving as Collateral Agent under the Loan Agreement, and
the security interest evidenced by this financing statement, as amended
from time to time, is granted to Secured Party in that capacity on behalf
of Lenders.
EXHIBIT C-2
<PAGE> 106
- - Mortgage Securities deposited with or held by or for Secured
Party under the Loan Documents or registered by book entry in Secured
Party's name under the Loan Documents.
- - Guaranties related to Mortgage Securities identified as Collateral.
- - Take-Out Commitments held by Debtor for any Mortgage Loans,
Construction Loans or Mortgage Securities identified as Collateral,
Rights to deliver those Mortgage Loans, Construction Loans or Mortgage
Securities, as the case may be, to the investors or other purchasers under
those Take-Out Commitments, and all proceeds resulting from the sale of any
of those Mortgage Loans, Construction Loans or Mortgage Securities under
those Take-Out Commitments.
- - Any Collateral otherwise described in this agreement that
may from time to time be delivered (a) to an investor under Section 4.5 of
the Loan Agreement until purchased and paid for by that investor or (b) for
correction under Section 4.6 of the Loan Agreement.
- - The Funding Account, Settlement Account, all other accounts
that Debtor maintains with Secured Party, Agent, or any Lender, and all
amounts deposited in them or represented by them.
- - Personal property, contract rights, accounts, and general
intangibles of any kind whatsoever relating to any Collateral.
- - All files, surveys, certificates, correspondence,
appraisals, tapes, discs, cards, accounting records, and other
information and data of Debtor relating to any Collateral, including,
without limitation, all information, data, tapes, discs, and cards necessary
to administer and service any Collateral.
- - Cash and noncash proceeds of any Collateral.
DEBTOR: SECURED PARTY:
----------------------------------- TEXAS COMMERCE BANK NATIONAL
ASSOCIATION, as Collateral
Agent for Lenders
By By
----------------------------------- ---------------------------------
(Name) (Name)
-------------------------------- -----------------------------
(Title) (Title)
------------------------------ ----------------------------
2
EXHIBIT C-2
<PAGE> 107
SCHEDULE I
DEFINITIONS ATTACHED TO FINANCING STATEMENT FROM
____________________________, AS DEBTOR, TO TEXAS COMMERCE BANK
NATIONAL ASSOCIATION,
IN ITS CAPACITY AS COLLATERAL AGENT, AS SECURED PARTY
3
EXHIBIT C-2
<PAGE> 108
EXHIBIT C-3
SHIPPING REQUEST
COLLATERAL AGENT: Texas Commerce Bank DATE: ______________ , 199__
National Association
BORROWERS: MCA Financial Corp.,
MCA Mortgage Corporation, and
Mortgage Corporation of America
SHIPMENT # _____________________ SHIPMENT $_____________________
POOL # _________________________ # OF LOANS ____________________
This request is delivered under the Loan Agreement (as renewed,
extended, amended, or restated, the "LOAN AGREEMENT") dated as of September 3,
1996, between Borrowers, Texas Commerce Bank National Association, as Agent for
Lenders, Collateral Agent, and certain Lenders. Terms defined in the Loan
Agreement have the same meanings when used -- unless otherwise defined -- in
this request.
1. Borrowers request Collateral Agent to (a) forward the shiplist and
collateral files for the Mortgage Loans identified below to the following
Approved Investor or its custodian or servicer:
_______________________________
_______________________________
_______________________________
_______________________________
Borrowers also request that Collateral Agent complete the endorsement of the
related promissory notes from Borrowers to that Approved Investor or its
servicer or custodian as follows: ____________________________________________
______________________________________________________________________________
_________________________________.
Collateral Agent should ship the whole collateral file (consisting of
all Collateral Documents in Collateral Agent's possession for this Collateral)
by either Federal Express or such other courier service as Borrowers have
designated to Collateral Agent as "approved" for that purpose. The courier
used must be acting as an independent contractor bailee solely on behalf of
Collateral Agent for the benefit of Collateral Agent and Lenders, but
Collateral Agent is not responsible for any delays in shipment caused by any
actions or inactions by that courier. Borrowers' completed air bill for
shipment accompanies this request.
EXHIBIT C-3
<PAGE> 109
2. On and as of the date of this request, Borrowers certify, represent
and warrant to Collateral Agent for Lenders that (a) Borrowers' representations
and warranties in the Loan Documents are true and correct in all material
respects except to the extent that (i) a representation or warranty speaks to a
specific date or (ii) the facts on which a representation or warranty is based
have changed by transactions or conditions contemplated or permitted by the
Loan Documents, and (b) no Default, Potential Default, or Borrowing Excess
exists.
MCA FINANCIAL CORP.,
MCA MORTGAGE CORPORATION, and
MORTGAGE CORPORATION OF AMERICA,
as Borrowers
By _____________________________________
(Name) _________________________________
(Title(1) ______________________________
___________________
(1) Must be a Responsible Officer of all Three Borrowers.
2 EXHIBIT C-3
<PAGE> 110
EXHIBIT C-4
BAILEE LETTER FOR INVESTORS
_________________________ ________________________
_________________________ ________________________
_________________________ ________________________
The enclosed notes and other documents (the "COLLATERAL"), as more
particularly described on the attached schedule, have been assigned and pledged
to Texas Commerce Bank National Association, as Collateral Agent ("COLLATERAL
AGENT") for itself and certain other lenders ("LENDERS"), as collateral under
the Loan Agreement (as renewed, extended, amended, or restated, the "LOAN
AGREEMENT") dated as of September 3, 1996, between MCA Financial Corp., MCA
Mortgage Corporation, Mortgage Corporation of America (collectively,
"BORROWERS"), certain Lenders, Texas Commerce Bank National Association, as
Agent for Lender, and Collateral Agent.
The Collateral is being delivered to you for purchase under an existing
Take-Out Commitment (as defined in the Loan Agreement). Either payment in full
for the Collateral or the Collateral itself must be received by Collateral
Agent within forty-five (45) calendar days after the date of this letter. Until
that time, you are deemed to be holding the Collateral in trust, subject to the
security interest granted to Collateral Agent and as Collateral Agent's bailee
in accordance with the applicable provisions of the applicable Uniform
Commercial Code. No property interest in the Collateral is transferred to you
until payment in full has been received by Collateral Agent. If you receive
conflicting instructions regarding the Collateral from Borrowers or Collateral
Agent, you agree to act in accordance with Collateral Agent's instructions.
COLLATERAL AGENT RESERVES THE RIGHT, AT ANY TIME BEFORE IT RECEIVES FULL
PAYMENT, TO NOTIFY YOU AND REQUIRE THAT YOU RETURN THE COLLATERAL TO COLLATERAL
AGENT.
If returning the Collateral, please return it to the address for Collateral
Agent listed above. If paying for the Collateral, payment must be made by
wire transfer of immediately available funds to:
Texas Commerce Bank National
Association, Collateral Agent Account Number _________________
ABA Number ________________________ Attn: _________________
Further Credit - __________________ TEL _________________
FAX _________________
BY ACCEPTING THE COLLATERAL DELIVERED TO YOU WITH THIS LETTER, YOU CONSENT TO
BE COLLATERAL AGENT'S BAILEE ON THE TERMS DESCRIBED IN THIS LETTER. If you
fail to make full payment to Collateral Agent for it within forty-five (45)
calendar days after the date of this letter, you are instructed to return
all of the Collateral to Collateral Agent. The preceding
EXHIBIT C-4
<PAGE> 111
provision in no way affects or impairs any claim or cause of action against
you in respect of your Take-Out Commitment.
This letter binds you and your successors, assigns, trustees, conservators, and
receivers and inures to Collateral Agent, Agent, Lenders, and their respective
successors and assigns.
Very truly yours,
TEXAS COMMERCE BANK NATIONAL
ASSOCIATION, as Collateral Agent
By _______________________________
(Name) ___________________________
(Title) __________________________
EXHIBIT C-4
2
<PAGE> 112
EXHIBIT C-5
BAILEE LETTER FOR POOL CUSTODIAN
_________________________ ________________________
_________________________ ________________________
_________________________ ________________________
The enclosed notes and other documents (the "COLLATERAL"), as more
particularly described on the attached schedule, have been assigned and pledged
to Texas Commerce Bank National Association, as Collateral Agent ("COLLATERAL
AGENT") for itself and certain other lenders ("LENDERS"), as collateral under
the Loan Agreement (as renewed, extended, amended, or restated, the "LOAN
AGREEMENT") dated as of September 3, 1996, between MCA Financial Corp., MCA
Mortgage Corporation, Mortgage Corporation of America (collectively,
"BORROWERS"), certain Lenders, Texas Commerce Bank National Association, as
Agent for Lender, and Collateral Agent.
The Collateral is being delivered to you for pooling in connection with
the issuance of Mortgage Securities (as defined in the Loan Agreement). Within
forty-five (45) calendar days after the date of this letter (a) payment in full
for the Collateral must be paid to Collateral Agent, (b) the Mortgage
Securities must be received by Collateral Agent if in certificated form or on
its behalf in respect of Mortgage Securities in book entry form, or (c) the
Collateral must be returned to and received by Collateral Agent. Until that
time, you are deemed to be holding the Collateral in trust, subject to the
security interest granted to Collateral Agent and as Collateral Agent's bailee
in accordance with the applicable provisions of the applicable Uniform
Commercial Code. No property interest in the Collateral is deemed to be
transferred to you until payment in full for the Collateral has been received
by Collateral Agent or Mortgage Securities have been received by Collateral
Agent or on its behalf in respect of Mortgage Securities in book entry form.
If you receive conflicting instructions regarding the Collateral from Borrowers
or Collateral Agent, you agree to act in accordance with Collateral Agent's
instructions. If you deliver any of the enclosures to another party, this
letter must accompany those items. COLLATERAL AGENT RESERVES THE RIGHT, AT ANY
TIME BEFORE IT RECEIVES FULL PAYMENT FOR THE COLLATERAL OR BEFORE THE MORTGAGE
SECURITIES HAVE BEEN ISSUED, TO NOTIFY YOU AND REQUIRE THAT YOU RETURN THE
COLLATERAL TO COLLATERAL AGENT.
If returning the Collateral, please return it to the address for Collateral
Agent listed above. If paying for the Collateral, payment must be made by wire
transfer of immediately available funds to:
Texas Commerce Bank National
Association, Collateral Agent Account Number ____________________
ABA Number ________________________ Attn: ____________________
Further Credit - __________________ TEL ____________________
FAX ____________________
EXHIBIT C-5
<PAGE> 113
If delivering certificated Mortgage Securities, they must be sent to:
Texas Commerce Bank National Association
________________________________
________________________________
________________________________
Attn:___________________________
BY ACCEPTING THE COLLATERAL DELIVERED TO YOU WITH THIS LETTER, YOU CONSENT
TO BE COLLATERAL AGENT'S BAILEE ON THE TERMS DESCRIBED IN THIS LETTER.
COLLATERAL AGENT REQUESTS THAT YOU ACKNOWLEDGE RECEIPT OF THE ENCLOSED
COLLATERAL AND THIS LETTER BY SIGNING AND RETURNING TO COLLATERAL AGENT THE
ENCLOSED COPY OF THIS LETTER, BUT YOUR FAILURE TO DO SO DOES NOT NULLIFY YOUR
CONSENT.
This letter binds you and your successors, assigns, trustees, conservators, and
receivers and inures to Collateral Agent, Agent, Lenders, and their respective
successors and assigns.
Very truly yours,
TEXAS COMMERCE BANK NATIONAL
ASSOCIATION, as Collateral Agent
By ______________________________
(Name) __________________________
(Title) _________________________
ACKNOWLEDGED AND AGREED as of _______________________, 199___.
[NAME OF POOL CUSTODIAN]
By _______________________________________
(Name) ___________________________________
(Title) __________________________________
2 EXHIBIT C-5
<PAGE> 114
EXHIBIT C-6
TRUST RECEIPT AND AGREEMENT
COLLATERAL AGENT: Texas Commerce Bank DATE: ___________, 199__
National Association
BORROWERS: MCA Financial Corp.,
MCA Mortgage Corporation, and
Mortgage Corporation of America
This trust receipt and agreement is delivered under the Loan Agreement
(as renewed, extended, amended, or restated, the "LOAN AGREEMENT") dated as of
September 3, 1996, between Borrowers, Texas Commerce Bank National Association,
as Agent for Lenders, Collateral Agent, and certain Lenders. Terms defined in
the Loan Agreement have the same meanings when used -- unless otherwise defined
- -- in this trust receipt and agreement.
In accordance with SECTION 4.6 of the Loan Agreement, Borrowers request
delivery by Collateral Agent to Borrower of the entire mortgage file of
Collateral Documents for the Mortgage Loans and for the purpose of making the
corrections described as follows:
Description of Collateral: ____________________________________
Original Amount: $ __________________________________
Corrections: ____________________________________
____________________________________
____________________________________
Borrowers agree that (a) these Collateral Documents are delivered to
Borrowers solely for the purpose of making these corrections, (b) these
Collateral Documents are and continue to be subject to Lender Liens under the
Loan Documents, (c) Borrowers shall hold these Collateral Documents as bailee
and trustee for Collateral Agent for Lenders, and (d) Borrowers may not deliver
any of these Collateral Documents to a third party unless (i) it is necessary
in order to complete the corrections, and (ii) Borrowers notify that third
party that the Collateral Documents are, and continue to be, subject to Lender
Liens under the Loan Documents, and obtain from that third party its agreement
to hold those Collateral Documents as bailee and trustee for Collateral Agent
for Lenders until they have been returned to Collateral Agent or the amount of
the Borrowing Base attributable to the related Mortgage Loan has been fully
paid to Collateral Agent to be applied to the Obligation.
EXHIBIT C-6
<PAGE> 115
On and as of the date of this receipt and agreement, Borrowers certify,
represent and warrant to Collateral Agent for Lenders that (a) Borrowers'
representations and warranties in the Loan Documents are true and correct in
all material respects except to the extent that (i) a representation or
warranty speaks to a specific date or (ii) the facts on which a representation
or warranty is based have changed by transactions or conditions contemplated or
permitted by the Loan Documents, (b) no Default, Potential Default, or
Borrowing Excess exists, and (c) this shipment will not result in Collateral
Documents with more than a total face amount of One Million Dollars
($1,000,000) being outstanding for correction.
Borrowers acknowledge receipt of the Collateral Documents referred to
above.
MCA FINANCIAL CORP.,
MCA MORTGAGE CORPORATION, and
MORTGAGE CORPORATION OF
AMERICA, as Makers
By _________________________
(Name) _____________________
(1)(Title) _________________
___________________
(1) Must be a Responsible Officer of all three Borrowers.
2 EXHIBIT C-6
<PAGE> 116
MCA FINANCIAL CORP.,
MCA MORTGAGE CORPORATION, and
MORTGAGE CORPORATION OF
AMERICA, as Borrowers
By _________________________
(Name) _____________________
(1)(Title) _________________
___________________
(1) Must be a Responsible Officer of all three Borrowers.
3 EXHIBIT C-6
<PAGE> 117
EXHIBIT C-7
RELEASE REQUEST
COLLATERAL AGENT: Texas Commerce Bank DATE: ____________, 199__
National Association
BORROWERS: MCA Financial Corp.,
MCA Mortgage Corporation, and
Mortgage Corporation of America
================================================================================
This request is delivered under the Loan Agreement (as
renewed, extended, amended, or restated, the "LOAN AGREEMENT")
dated as of September 3, 1996, between Borrowers, Texas
Commerce Bank National Association, as Agent for Lenders,
Collateral Agent, and certain Lenders. Terms defined in the
Loan Agreement have the same meanings when used -- unless
otherwise defined -- in this request.
Borrowers request Collateral Agent to release the Lender
Liens under the Loan Documents in the Collateral described on
the attached SCHEDULE 1.
On and as of the date of this request, Borrowers certify,
represent, and warrant to Collateral Agent for Lenders that
(a) Borrowers' representations and warranties in the Loan
Documents are true and correct in all material respects except
to the extent that (i) a representation or warranty speaks to
a specific date or (ii) the facts on which a representation or
warranty is based have changed by transactions or conditions
contemplated or permitted by the Loan Documents, and (b) no
Default, Potential Default, or Borrowing Excess exists or
occurs as a result of the requested release.
MCA FINANCIAL CORP.,
MCA MORTGAGE CORPORATION, and
MORTGAGE CORPORATION OF
AMERICA, as Borrowers
By________________________________
(Name)____________________________
(1)(Title)________________________
______________________
(1)
Must be a Responsible Officer of all three Borrowers.
EXHIBIT C-7
<PAGE> 118
EXHIBIT D-1
BORROWING REQUEST
COLLATERAL AGENT: Texas Commerce Bank DATE:__________, 199__
National Association
BORROWERS: MCA Financial Corp.,
MCA Mortgage Corporation, and
Mortgage Corporation of America
===============================================================================
This request is delivered under the Loan Agreement (as
renewed, extended, amended, or restated, the "LOAN AGREEMENT")
dated as of September 3, 1996, between Borrowers, Texas
Commerce Bank National Association, as Agent for Lenders,
Collateral Agent, and certain Lenders. Terms defined in the
Loan Agreement have the same meanings when used -- unless
otherwise defined -- in this request.
Borrowers request $__________________ in Borrowings
(collectively, the "REQUESTED BORROWING") to be funded on
_______________, 199__ (the "REQUESTED BORROWING DATE") in the
one or more Borrowing Purpose Categories indicated on the
attached schedule, which has been completed as to all other
relevant information.
Borrowers certify that as of the Requested Borrowing
Date, after giving effect to the Requested Borrowing, (a) the
representations and warranties of Borrowers in the Loan
Documents are true and correct in all material respects except
to the extent that (i) a representation or warranty speaks to
a specific date or (ii) the facts on which a representation or
warranty is based have changed by transactions or conditions
contemplated or permitted by the Loan Documents, (b) no
Default or Potential Default exists, (c) the extension of the
Requested Borrowing does not cause any Borrowing Excess to
exist, (d) Borrowers have timely delivered a Collateral
Delivery Notice, if applicable, (e) all Collateral Documents
required by the Loan Agreement to be delivered
EXHIBIT D-1
<PAGE> 119
to Collateral Agent in connection with the Requested Borrowing
have been delivered to Collateral Agent, and (f) Borrowers
have otherwise complied with all conditions of the Loan
Documents to permit the Requested Borrowing to be extended.
MCA FINANCIAL CORP.,
MCA MORTGAGE CORPORATION, and
MORTGAGE CORPORATION OF
AMERICA, as Borrowers
By_____________________________
(Name)_________________________
(1)(Title)_____________________
_____________________
(1)
Must be a Responsible Officer of all three Borrowers.
EXHIBIT D-1
2
<PAGE> 120
SCHEDULE TO BORROWING REQUEST
DATED ________________, 199___; FOR $________________________
[Complete EACH applicable box or mark N.A.]
(1)
BORROWING PURPOSE CATEGORY AMOUNT BORROWING PRICE CATEGORY
- -------------------------- ------- ------------------------
Dry Borrowing (not a Repurchase [ ] Base Rate
Borrowing or B/C Paper Borrowing) $ [ ] LIBOR Rate
- ---------------------------------- -------
Dry Borrowing (Repurchase [ ] Base Rate
Borrowing) $ [ ] LIBOR Rate
- ---------------------------------- -------
Dry Borrowing (B/C Paper [ ] Base Rate
Borrowing) $ [ ] LIBOR Rate
- ---------------------------------- -------
Wet Borrowing (not a B/C Paper [ ] Base Rate
Borrowing) $ [ ] LIBOR Rate
- ---------------------------------- -------
Wet Borrowing (B/C Paper [ ] Base Rate
Borrowing) $ [ ] LIBOR Rate
- ---------------------------------- -------
[ ] Base Rate
Gestation $ [ ] LIBOR Rate
- --------- -------
- ----------------------
(1)
Must be at least $100,000 and a $10,000 multiple.
EXHIBIT D-1
<PAGE> 121
EXHIBIT D-2
COLLATERAL DELIVERY NOTICE
COLLATERAL AGENT: Texas Commerce Bank DATE:________, 199____
National Association
BORROWERS: MCA Financial Corp.,
MCA Mortgage Corporation, and
Mortgage Corporation of America
===============================================================================
This notice is delivered under the Loan Agreement (as
renewed, extended, amended, or restated, the "LOAN AGREEMENT")
dated as of September 3, 1996, between Borrowers, Texas Commerce
Bank National Association, as Agent for Lenders, Collateral
Agent, and certain Lenders. Terms defined in the Loan Agreement
have the same meanings when used -- unless otherwise defined --
in this request.
Under SECTION 4.3 and other applicable provisions of the
Loan Agreement, Borrowers submit the following Collateral under,
and subject to the Lender Liens created by, the Loan Documents
[check applicable box(es)]:
[ ] MORTGAGE LOANS FOR DRY BORROWING (NOT A
REPURCHASE BORROWING OR B/C PAPER BORROWING).
Borrowers (a) are delivering to Collateral Agent the
Collateral Documents required by PART A of SCHEDULE
4.3 to the Loan Agreement for the Mortgage Loans
described on the attached ANNEX 1, which is a data
processing print-out meeting the requirements of PART
A.8 on that SCHEDULE 4.3 -- and (b) confirm that those
Mortgage Loans and all related Collateral Documents
are subject to the Lender Liens created in connection
with the Loan Agreement.
[ ] MORTGAGE LOANS FOR DRY BORROWING (REPURCHASE
BORROWING). Borrowers (a) are delivering to
Collateral Agent the Collateral Documents required by
PART A of SCHEDULE 4.3 to the Loan Agreement for the
Mortgage Loans described on the attached ANNEX 2,
which is a data processing print-out meeting the
requirements of PART A.8 on that SCHEDULE 4.3 -- and
(b) confirm that those Mortgage Loans and all related
Collateral Documents are subject to the Lender Liens
created in connection with the Loan Agreement.
[ ] MORTGAGE LOANS FOR DRY BORROWING (B/C PAPER
BORROWING). Borrowers (a) are delivering to
Collateral Agent the Collateral Documents required by
PART A of SCHEDULE 4.3 to the Loan Agreement for the
Mortgage Loans described on the attached ANNEX 3,
which is a data processing print-out meeting the
requirements
EXHIBIT D-2
<PAGE> 122
of PART A.8 on that SCHEDULE 4.3 -- and (b) confirm that those
Mortgage Loans and all related Collateral Documents are subject
to the Lender Liens created in connection with the Loan
Agreement.
[ ] CONSTRUCTION LOANS FOR DRY BORROWING. Borrowers (a) are
delivering to Collateral Agent the Collateral Documents required
by PART A of SCHEDULE 4.3 to the Loan Agreement for the
Construction Loans described on the attached ANNEX 4, which is a
data processing print-out meeting the requirements of PART A.8 on
that SCHEDULE 4.3 -- and (b) confirm that those Construction
Loans and all related Collateral Documents are subject to the
Lender Liens created in connection with the Loan Agreement.
[ ] MORTGAGE LOANS FOR WET BORROWING (NOT B/C PAPER BORROWING).
Borrowers (a) are delivering to Collateral Agent the Collateral
Documents required by PART B of SCHEDULE 4.3 to the Loan
Agreement for the Mortgage Loans described on the attached ANNEX
5, which is a data processing print-out meeting the requirements
of PART B.3 on that SCHEDULE 4.3, (b) shall deliver to Collateral
Agent the Collateral Documents required by PART A of that
SCHEDULE 4.3 for -- and before the expiration of the Wet Period
for the Borrowings made on the basis of, those Mortgage Loans,
and (c) confirm that those Mortgage Loans and all related
Collateral Documents are subject to the Lender Liens created in
connection with the Loan Agreement.
[ ] MORTGAGE LOANS FOR WET BORROWING (B/C PAPER BORROWING).
Borrowers (a) are delivering to Collateral Agent the Collateral
Documents required by PART B of SCHEDULE 4.3 to the Loan
Agreement for the Mortgage Loans described on the attached ANNEX
6, which is a data processing print-out meeting the requirements
of PART B.3 on that SCHEDULE 4.3, (b) shall deliver to Collateral
Agent the Collateral Documents required by PART A of that
SCHEDULE 4.3 for -- and before the expiration of the Wet Period
for the Borrowings made on the basis of, those Mortgage Loans,
and (c) confirm that those Mortgage Loans and all related
Collateral Documents are subject to the Lender Liens created in
connection with the Loan Agreement.
[ ] LAND CONTRACTS FOR DRY BORROWING. Borrowers (a) are delivering
to Collateral Agent the Collateral Documents required by PART A
of SCHEDULE 4.3 to the Loan Agreement for the Land Contracts
described on the attached ANNEX 8, which is a data processing
print-out meeting the requirements of PART D.4 on that SCHEDULE
4.3 -- and (b) confirm that those Land Contracts and all related
Collateral Documents are subject to the Lender Liens created in
connection with the Loan Agreement.
EXHIBIT D-2
2
<PAGE> 123
[ ] MORTGAGE SECURITIES FOR DRY BORROWING. Borrowers (a) are
delivering to Collateral Agent the Collateral Documents required
by PART C of SCHEDULE 4.3 to the Loan Agreement for the Mortgage
Securities described on the attached ANNEX 9 (the Mortgage Pools
for which consist of Mortgage Loans that were, before issuance of
those Mortgage Securities, Eligible Mortgage Loans constituting
part of the Collateral) and (b) confirm that those Mortgage
Securities and all related Collateral Documents are subject to
the Lender Liens created in connection with the Loan Agreement.
On and as of the date of this notice, Borrowers certify, represent,
warrant, and covenant to or with Collateral Agent for Lenders that:
(a) For any Collateral described above, Borrowers
(i) hold each of the items required by SECTION 4.3 of
the Loan Agreement, (ii) hold those items in trust for
Collateral Agent on behalf of Lenders, (iii) upon
written request or instructions from Collateral Agent
from time to time and at any time, shall deliver those
items to Collateral Agent or any other Person designated
by Collateral Agent, and (iv) may not deliver those
items, or grant, transfer, or assign any interest in any
of them, to any Person except Collateral Agent without
first obtaining Collateral Agent's written consent.
(b) All of the items that Borrowers are
required to furnish to Collateral Agent under the Loan
Agreement in connection with this notice accompany it,
all of those items are accurate and what they purport
to be, and all of the Collateral described in this
notice or its schedules or annexes conform in all
respects to the requirements of the Loan Agreement,
including, without limitation, the requirements of
eligibility applicable to that Collateral on SCHEDULE
4.1 to the Loan Agreement.
(c) The representations and warranties of
Borrowers in the Loan Documents are true and correct in
all material respects except to the extent that (i) a
representation or
EXHIBIT D-2
3
<PAGE> 124
warranty speaks to a specific date or (ii) the facts
on which a representation or warranty is based have
changed by transactions or conditions contemplated or
permitted by the Loan Documents.
(d) No Default or Potential Default exists.
MCA FINANCIAL CORP.,
MCA MORTGAGE CORPORATION, and
MORTGAGE CORPORATION OF
AMERICA, as Borrowers
By__________________________
(Name)______________________
(1)(Title)__________________
_____________________
(1)
Must be a Responsible Officer of all three Borrowers.
EXHIBIT D-2
4
<PAGE> 125
EXHIBIT D-3
BORROWING BASE REPORT
AGENT: Texas Commerce Bank DATE:______________, 199__
National Association
COLLATERAL AGENT: Texas Commerce Bank National Association
BORROWERS: MCA Financial Corp.,
MCA Mortgage Corporation, and
Mortgage Corporation of America
===============================================================================
This report is delivered to Agent, Borrowers, and Lenders
under the Loan Agreement (as renewed, extended, amended, or
restated, the "LOAN AGREEMENT") dated as of September 3, 1996,
between Borrowers, Agent, Collateral Agent, and certain Lenders.
Terms defined in the Loan Agreement have the same meanings when
used -- unless otherwise defined -- in this report. Collateral
Agent has calculated the Borrowing Base and its various
components as of the date of this report.
[TCB BORROWING BASE REPORT FORM TO BE INSERTED HERE]
TEXAS COMMERCE BANK NATIONAL
ASSOCIATION, Collateral Agent
By___________________________
(Name)_______________________
(Title)______________________
EXHIBIT D-3
<PAGE> 126
EXHIBIT D-4
TAKE-OUT REPORT
COLLATERAL AGENT: Texas Commerce Bank DATE:____________, 199___
National Association
BORROWERS: MCA Financial Corp.,
MCA Mortgage Corporation, and
Mortgage Corporation of America
===============================================================================
This report is delivered under the Loan Agreement (as
renewed, extended, amended, or restated, the "LOAN AGREEMENT")
dated as of September 3, 1996, between Borrowers, Texas Commerce
Bank National Association, as Agent for Lenders, Collateral
Agent, and certain Lenders. Terms defined in the Loan Agreement
have the same meanings when used -- unless otherwise defined --
in this report.
The following is accurate and complete as of the date of
this report in respect of Take-Out Prices, determined in
accordance with each attached SCHEDULE 1, and the total weighted
average Take-Out Price is _________% of par:
<TABLE>
<CAPTION>
MORTGAGE COLLATERAL GROUP INTEREST RATE TAKE-OUT PRICE
- --------------------------------------------------------------------------------
<S> <C> <C>
(a) % %
- --------------------------------------------------------------------------------
(b) % %
- --------------------------------------------------------------------------------
(c) % %
- --------------------------------------------------------------------------------
(d) % %
- --------------------------------------------------------------------------------
(e) % %
- --------------------------------------------------------------------------------
</TABLE>
By_______________________
(Name)___________________
(1)(Title)_______________
______________________
(1)
Must be a Responsible Officer of all three Borrowers.
EXHIBIT D-4
<PAGE> 127
SCHEDULE 1
TAKE-OUT PRICE DETERMINATION
Complete the following table for each Mortgage Collateral
Group for Mortgage Loans and each Mortgage Collateral Group for
Mortgage Securities, in each case indicating the group letter
designation from the report to which this schedule is attached.
The following table relates to the Mortgage Collateral
Group designated as ___________ on the attached report.
<TABLE>
<CAPTION>
(a) PRINCIPAL (c) TAKE-OUT PRICE*
BALANCE OF TAKE-OUT -- COLUMN (a) TIMES
INVESTOR COMMITMENT NUMBER COMMITMENTS (b) PERCENTAGE OF PAR COLUMN (b)
==============================================================================================
<S> <C> <C> <C> <C>
$ % $
- ----------------------------------------------------------------------------------------------
$ % $
- ----------------------------------------------------------------------------------------------
$ % $
- ----------------------------------------------------------------------------------------------
$ % $
- ----------------------------------------------------------------------------------------------
Totals $ $
- ----------------------------------------------------------------------------------------------
</TABLE>
The total weighted average Take-Out Price (determined by
dividing the total in Column (c) above by the total in Column
(a) above) is _______% of par.
__________________________
* For each commitment price stated as a yield rather
than as a percentage of par, convert the yield to a
percentage price by the use of the "Net Yield Tables for
GNMA Mortgage-Backed Securities" published by Financial
Publishing Company or the "Mortgage Yield Conversion
Tables" published by FNMA, as applicable.
EXHIBIT D-4
<PAGE> 128
EXHIBIT D-5
MANAGEMENT REPORT
AGENT: Texas Commerce Bank DATE:____________, 199___
National Association
BORROWERS: MCA Financial Corp.,
MCA Mortgage Corporation, and
Mortgage Corporation of America
================================================================================
This report is delivered under the Loan Agreement (as
renewed, extended, amended, or restated, the "LOAN AGREEMENT")
dated as of September 3, 1996, between Borrowers, Agent, Texas
Commerce Bank National Association, as Collateral Agent for
Lenders, and certain Lenders. Terms defined in the Loan
Agreement have the same meaning when used, unless otherwise
defined, in this report.
I certify to Agent and Lenders that on the date of this
report:
1. I am the undersigned officer of Borrowers and deliver
this certificate on their behalf.
2. The attached SCHEDULE 1 is an accurate list of
Borrowers' Mortgage Loan production for the Calendar Month
before the date of this report, describing in reasonable detail
the geographic mix of all retail and correspondent production
for both the Calendar Month before the date of this certificate
and for the year to date, and such other matters as Agent may
have reasonably requested.
3. The attached SCHEDULE 2 is an accurate and complete
schedule of Borrowers' "open commitment and pipeline positions"
(as commonly understood in the industry) for Mortgage Loans,
describing in reasonable detail (i) with regard to "open
commitment" positions, the names of investors, type, original
principal amount, rate, price/yield, and expiration date, and
(ii) with regard to "open pipeline" positions, the amount of the
pipeline, the total locked amount and rate of price committed
Mortgage Loans in the pipeline, the percentage of the locked
amount that is covered, the types of coverage (mandatory or
optional), future contracts, hedged positions, repurchase
agreements, the profit or loss, and such other matters as Agent
may have reasonably requested.
4. The attached SCHEDULE 3 is an accurate and complete
schedule of Borrowers' Servicing Portfolio, describing in
reasonable detail the number of Mortgage Loans being serviced,
the total unpaid principal balance of those Mortgage Loans
(total and by investor), investor type,
EXHIBIT D-5
<PAGE> 129
geographic concentration, weighted average coupon, foreclosure experience, and
such other matters as Agent may have reasonably requested.
By
-----------------------------
(Name)
-------------------------
(1)(Title)
----------------------
- -----------------------
(1)
Must be a Responsible Officer of all three Borrowers.
EXHIBIT D-5
2
<PAGE> 130
EXHIBIT D-6
COMPLIANCE CERTIFICATE
AGENT: Texas Commerce Bank DATE:____________, 199___
National Association
BORROWERS: MCA Financial Corp.,
MCA Mortgage Corporation, and
Mortgage Corporation of America
SUBJECT PERIOD: ________________________ ended _________________, 199___
================================================================================
This certificate is delivered under the Loan Agreement (as
renewed, extended, amended, or restated, the "LOAN AGREEMENT")
dated as of September 3, 1996, between Borrowers, Agent, Texas
Commerce Bank National Association, as Collateral Agent for
Lenders, and certain Lenders. Terms defined in the Loan
Agreement have the same meaning when used, unless otherwise
defined, in this certificate.
The undersigned officer certifies to Agent and Lenders that
on the date of this certificate:
1. The undersigned officer is the officer of Borrowers
designated below.
2. The financial statements that are attached to this
certificate were prepared in accordance with GAAP and present
fairly the Companies' consolidated (if applicable) financial
condition and results of operations as of, and for the fiscal
year or portion of the fiscal year ending on, the last day of
the Subject Period.
3. The undersigned officer supervised a review of the
Companies' activities during the Subject Period in respect of
the following matters and has determined the following: (a) The
representations and warranties in the Loan Agreement are true
and correct in all material respects, except (i) to the extent
that a representation or warranty speaks to a specific date or
the facts on which it is based have changed by transactions or
conditions contemplated or permitted by the Loan Documents and
(ii) for the changes, if any, described on the attached SCHEDULE
1; (b) each Company has complied with all of its obligations
under the Loan Documents, other than for the deviations, if any,
described on the attached SCHEDULE 1; (c) no Default or
Potential Default exists
EXHIBIT D-6
<PAGE> 131
or is imminent, other than those, if any, described on the
attached SCHEDULE 1; and (d) the Companies' compliance with the
financial covenants in SECTIONS 8 AND 9 of the Loan Agreement is
accurately calculated on the attached SCHEDULE 1.
By
---------------------------
(Name)
-----------------------
(1)(Title)
-------------------
- -------------------
(1)
Must be a Responsible Officer of all three Borrowers.
EXHIBIT D-6
2
<PAGE> 132
SCHEDULE 1
A. Describe any deviations from compliance with CLAUSE 3(a) and 3(b) of
the attached Compliance Certificate, if none, so state:
B. As required by CLAUSE 3(c) of the attached Compliance Certificate,
describe any Potential Defaults or Defaults, if none, so state:
C. As required by CLAUSE 3(d) of the attached Compliance Certificate,
calculate compliance with SECTIONS 8 and 9 of the Loan Agreement as of the end
of the Subject Period (on a consolidated basis, if applicable).
<TABLE>
<CAPTION>
COVENANT AT END OF SUBJECT PERIOD
=======================================================================================
<S> <C> <C>
1. DISTRIBUTIONS--Section 8.4
- ---------------------------------------------------------------------------------------
(a) year-to-date cash Distributions $
- ---------------------------------------------------------------------------------------
(b) year-to-date MCA Financial Corp. debt service and $
required preferred stock dividends
- ---------------------------------------------------------------------------------------
(c) Line 1(a) may not exceed Line 1(b) $
- ---------------------------------------------------------------------------------------
2. NET WORTH -- Section 9.1
- ---------------------------------------------------------------------------------------
(a) MCA Financial Corporation (Net Worth plus $
Subordinated Debt) -- may never be less
than $16,000,000
- ---------------------------------------------------------------------------------------
(b) MCA Mortgage Corporation (Net Worth) -- may not $
be less than $8,500,000 plus 90% of corporate
parent's capital contributions since 30 days before
Loan Agreement's effective date
- ---------------------------------------------------------------------------------------
(c) Mortgage Corporation of America (Net Worth) -- may $
not be less than $5,000,000 plus 90% of corporate
parent's capital contributions since 30 days before
Loan Agreement's effective date
- ---------------------------------------------------------------------------------------
3. LEVERAGE -- Section 9.2
- ---------------------------------------------------------------------------------------
(a) MCA Financial Corporation
- ---------------------------------------------------------------------------------------
(1) Total Debt $
- ---------------------------------------------------------------------------------------
(2) Net Worth $
- ---------------------------------------------------------------------------------------
</TABLE>
EXHIBIT D-6
<PAGE> 133
<TABLE>
<S> <C> <C>
(3) Subordinated Debt $
- ------------------------------------------------------------------------
(4) Line 3(a)(2) plus Line 3(a)(3) $
- ------------------------------------------------------------------------
(5) Ratio of Line 3(a)(1) to Line 3(aa)(4) _____ to _____
- ------------------------------------------------------------------------
(6) Maximum 10.0 to 1.0
- ------------------------------------------------------------------------
(b) MCA Mortgage Corporation
- ------------------------------------------------------------------------
(1) Total Debt $
- ------------------------------------------------------------------------
(2) Net Worth $
- ------------------------------------------------------------------------
(3) Ratio of Line 3(b)(1) to Line 3(b)(2) _____ to _____
- ------------------------------------------------------------------------
(4) Maximum 10.0 to 1.0
- ------------------------------------------------------------------------
(c) Mortgage Corporation of America
- ------------------------------------------------------------------------
(1) Total Debt $
- ------------------------------------------------------------------------
(2) Net Worth $
- ------------------------------------------------------------------------
(3) Ratio of Line 3(c)(1) to Line 3(c)(2) _____ to _____
- ------------------------------------------------------------------------
(4) Maximum 10.0 to 1.0
- ------------------------------------------------------------------------
4. SERVICING PORTFOLIO -- Section 9.3
- ------------------------------------------------------------------------
(a) Servicing Portfolio $
- ------------------------------------------------------------------------
(b) Minimum $1,200,000,000
- ------------------------------------------------------------------------
</TABLE>
EXHIBIT D-6
2
<PAGE> 134
EXHIBIT D-7
COLLATERAL CONVERSION NOTICE
COLLATERAL AGENT: Texas Commerce Bank DATE:____________, 199___
National Association
BORROWERS: MCA Financial Corp.,
MCA Mortgage Corporation, and
Mortgage Corporation of America
================================================================================
This notice is delivered under the Loan Agreement (as renewed,
extended, amended, or restated, the "LOAN AGREEMENT") dated as of September 3,
1996, between Borrowers, Texas Commerce Bank National Association, as Agent for
Lenders, Collateral Agent, and certain Lenders. Terms defined in the Loan
Agreement have the same meanings when used -- unless otherwise defined -- in
this notice.
Borrowers notify Collateral Agent that (a) Collateral Agent has issued
its initial certification for inclusion of the Eligible Mortgage Loans
described on the attached ANNEX 1 in one or more Mortgage Pools and (b)
Borrowers are delivering to Collateral Agent one or more valid and enforceable
Take-Out Commitments that comply with PART B.2 on SCHEDULE 4.1 to the Loan
Agreement for those Eligible Mortgage Loans.
On and as of the date of this notice, Borrowers certify, represent, and
warrant to Collateral Agent that (a) all of the items that Borrowers are
required to furnish to Collateral Agent under the Loan Agreement in connection
with this notice accompany it, all of those items are accurate and what they
purport to be, and all of the Eligible Mortgage Loans described on the attached
ANNEX 1 comply with all requirements necessary to constitute Eligible Gestation
Collateral, (b) the representations and warranties of Borrowers in the Loan
Documents are true and correct in all material respects except to the extent
that (i) a representation or warranty speaks to a specific date
EXHIBIT D-7
<PAGE> 135
or (ii) the facts on which a representation or warranty is based have
changed by transactions or conditions contemplated or permitted by the Loan
Documents, and (c) no Default or Potential Default exists.
MCA FINANCIAL CORP.,
MCA MORTGAGE CORPORATION, and
MORTGAGE CORPORATION OF
AMERICA, as Borrowers
By
-----------------------------
(Name)
-------------------------
(1)(Title)
---------------------
- -----------------------
(1)
Must be a Responsible Officer of all three Borrowers.
EXHIBIT D-7
2
<PAGE> 136
EXHIBIT E
OPINION OF COUNSEL
The opinion delivered by counsel to the Companies must be in form and
substance acceptable to Agent and its special counsel and cover the following
matters:
1. Each Company is duly organized, validly existing, and in good
standing under the Laws of the jurisdiction in which it is incorporated as
stated on SCHEDULE 6.2 to the Loan Agreement.
2. Each Company is duly qualified to transact business and is in good
standing as a foreign corporation or other entity in each jurisdiction so
indicated on SCHEDULE 6.2 to the Loan Agreement and in each other jurisdiction
where, to the best of that counsel's knowledge, the nature and extent of that
Company's business and properties require due qualification and good standing.
3. To the best of that counsel's knowledge, except as described on
SCHEDULE 6.2 to the Loan Agreement (a) no Company has any Subsidiaries and (b)
no Company has used or transacted business under any other corporate or trade
name in the six-month period preceding the date of this agreement.
4. Each Company possesses all requisite corporate power and authority
to conduct its business as is now being, or is contemplated by the Loan
Agreement to be, conducted.
5. The execution and delivery of each Company of each Loan Document to
which it is a party and the performance by it of its related obligations (a)
are within its corporate power, (b) have been duly authorized by all necessary
corporate action on its behalf, (c) except for any action or filing that has
been taken or made on or before the date f this opinion, require no action by
or filing with any Tribunal, (d) do not violate any provision of its articles
of incorporation, charter or bylaws, (e) do not violate any provision of Law
applicable to it or any material agreements to which it is a party and of which
that counsel is aware, and (f) except for Lender Liens, do not result in the
creation or imposition of any Lien or any asset of any Company.
6. Upon execution and delivery by all parties to it, each Loan Document
constitutes a legal and binding obligation of each Company party to it,
enforceable against it in accordance with its terms, except as enforceability
may be limited by applicable Debtor Laws and general principles of equity.
7. Except as disclosed on SCHEDULE 6.9 to the Loan Agreement (a) no
Company is subject to, or aware of the threat of, any Litigation that is
reasonably likely to be determined adversely to it or, if so adversely
determined, would be a Material Adverse Event, and (b) no outstanding or unpaid
judgments against any Company exist.
EXHIBIT E
<PAGE> 137
8. No Company is subject to regulation under the Investment Company Act
of 1940, as amended, or the Public Utility Holding Company Act of 1935,
amended.
9. Each Borrower is approved and qualified and in good standing as an
issuer, mortgagee, or seller/servicer, as described below, and meets all
requirements applicable to its status as such: (a) GNMA approved issuer of
Mortgage Securities guaranteed by GNMA; (b) FNMA approved seller/servicer of
Mortgage Loans, eligible to originate, purchase, hold, sell, and service
Mortgage Loans to be sold to FNMA; (c) FHLMC approved seller/servicer of
Mortgage Loans, eligible to originate, purchase, hold, sell and service
Mortgage Loans to be sold to FHLMC; (d) FHA approved mortgagee, eligible to
originate, purchase, hold, sell and service FHA Loans; and (e) VA approved
mortgagee, eligible to originate, purchase, hold, sell and service VA Loans.
10. Lender Liens are created and perfected upon (a) each note that is
delivered to Collateral Agent, (B) each Land Contract that is delivered to
Collateral Agent, (b) each Mortgage Security in certificated form that is
delivered to Collateral Agent or its bailee, (c) each note and related Take-Out
Commitment provided as Collateral for a Wet Borrowing for twenty-one (21) days
after the applicable Borrowing Date, (d) all Mortgage Collateral shipped to any
investor under a Bailee Letter, which perfection continues until Collateral
Agent receives Mortgage Securities or payment is made to Collateral Agent under
that Bailee Letter, (e) all Mortgage Collateral shipped to any Borrower for
correction, which perfection continues for twenty-one (21) days, and (f) the
Funding Account and Settlement Account upon the execution and delivery of the
Security Agreement by Borrowers.
11. With respect to FNMA and FHLMC Mortgage Securities that are held in
book entry form and are identified on a Collateral Delivery Notice or are
otherwise designated by any Borrowers as Collateral under the Loan Agreement, a
Lender Lien is created and perfected upon those Mortgage Securities (a) when
written notification is sent to the securities depositary (on whose books the
appropriate Borrowers' ownership of those Mortgage Securities is entered) of
the assignment and pledge of those Mortgage Securities to Collateral Agent on
behalf of Lenders, and (b) that securities depositary sends to Collateral Agent
confirmation of that notice and identifies those Mortgage Securities as
belonging to Collateral Agent on behalf of Lenders. As used in this paragraph,
"SECURITIES DEPOSITARY" means a depositary institution that regularly accepts
in the course of its business FNMA and FHLMC Mortgage Securities as a custodial
service for its customers, and maintains accounts in the names of those
customers reflecting ownership of or interests in those Mortgage Securities.
12. With respect to the GNMA Mortgage Securities that are identified on
a Collateral Delivery Notice or are otherwise designated by any Borrowers as
Collateral under the Loan Agreement and are held in book entry form through
Participants Trust Company ("PTC"), a Lender Lien is created and perfected upon
those Mortgage Securities when (a) PTC, by making the appropriate entries to
its books. transfers those Mortgage Securities to the account of Chemical Bank
(acting as a participant in PTC, and as agent/custodian for Collateral Agent on
behalf of
EXHIBIT E
2
<PAGE> 138
Lenders pursuant to a custodian agreement, ("Custodian"), and
(b) Custodian, by book entry or otherwise, identifies the GNMA
Mortgage Securities as belonging to, or subjected to a security
interest of, Collateral Agent on behalf of Lenders and provides
to Collateral Agent confirmation of that action.
3 EXHIBIT E
<PAGE> 139
EXHIBIT F-1
[ NUMBER ] AMENDMENT TO LOAN AGREEMENT
THIS AMENDMENT is entered into as of
_________________________, 199___, between MCA FINANCIAL CORP.,
a Michigan corporation, MCA MORTGAGE CORP., a Michigan
corporation, and MORTGAGE CORPORATION OF AMERICA, a Michigan
corporation ("BORROWERS"), certain lenders ("LENDERS"), TEXAS
COMMERCE BANK NATIONAL ASSOCIATION (in its capacity as Agent for
Lenders, "AGENT"), and TEXAS COMMERCE BANK NATIONAL ASSOCIATION
(in its capacity as Collateral Agent for Lenders, "COLLATERAL
AGENT").
Borrowers, Agent, Collateral Agent, and Lenders are party
to the Loan Agreement (as renewed, extended, amended, or
restated, the "LOAN AGREEMENT") dated as of September 3, 1996,
providing for loans to Borrowers on a revolving basis.
Borrowers have requested an amendment to the Loan Agreement in
order to, among other things, [STATE PURPOSE OF AMENDMENT].
Accordingly, for adequate and sufficient consideration, the
parties to this amendment agree as follows:
1. DEFINITIONS. Unless stated otherwise, (a) each term
defined in the Loan Agreement has the same meaning when used in
this amendment and (b) all references to "Sections",
"Schedules", and "Exhibits" are references to the Loan
Agreement's sections, schedules and exhibits.
2. AMENDMENTS.
[INSERT AMENDMENTS]
3. CONDITIONS PRECEDENT. The foregoing is not effective
unless (a) Agent receives counterparts of this amendment
executed by Borrowers, Agent, Collateral Agent, and Lenders, and
(b) STATE OTHER CONDITIONS PRECEDENT].
4. RATIFICATIONS. This amendment modifies and supercedes
all inconsistent terms and provisions of the other Loan
Documents. Except as expressly modified and superseded by this
amendment, the terms and provisions of the other Loan Documents
are ratified and confirmed and continue in full force and
effect. Borrowers, Agents, Collateral Agent, and all Lender
agree that the Loan Documents, as amended by this amendment,
continue to be legal, valid and binding, and enforceable in
accordance with their respective terms. Borrowers ratify and
confirm that all Liens granted to Collateral Agent on behalf of
Lenders, were intended to, do, and continue to secure the full
payment and performance of the Obligation. Borrowers shall
perform such acts and duly authorize, execute, acknowledge,
deliver, file, and record such additional documents as Agent,
Collateral Agent, or any Lender may reasonably request in order
to perfect such Liens and
EXHIBIT F-1
<PAGE> 140
perserve and protect the rights of Agent, Collateal Agent, and
Lenders in respect of all present and future Collateral.
5. REPRESENTATIONS AND WARRANTIES. Borrowers represent and
warrant to Agent, Collateral Agent, and Lenders that (a) this
amendment and the other Loan Documents to be delivered under
this amendment have been duly authorized, executed, and
delivered by Borrowers, (b) no action of, or filing with, any
Tribunal is required to authorize, or is otherwise required in
connection with, the execution, delivery, and performance by
Borrowers of this amendment and those other Loan Documents, (c)
this amendment and those other Loan Documents are valid and
binding upon Borrowers and are enforceable against Borrowers in
accordance with their respective terms, except as limited by the
Bankruptcy Code of the United States of America and all other
similar Laws affecting the rights of creditors generally, (d)
the execution, delivery, and performance by Borrowers of this
amendment and those other Loan Documents do not require the
consent of any other Person and do not and will not constitute a
violation of any Laws, agreements, or understandings to which
any Borrowers is a party or by which any Borrower is bound, (e)
the representations and warranties in the Loan Agreement, as
amended by this amendment, and each other Loan Document are true
and correct in all material respects on and as of the date of
this amendment as though made as of the date of this amendment,
and (f) as of the date of this amendment, no Default or
Potential Default exists.
6. REFERENCES. All references in the Loan Documents to the
"Loan Agreement" refer to the Loan Agreement as amended by this
amendment. Because this amendment is a "Loan Document" referred
to in the Loan Agreement, the provisions relating to Loan
Documents in SECTION 11 are incorporated into this amendment by
reference, the same as if those provisions were set forth in
this amendment verbatim.
7. COUNTERPARTS. This amendment may be executed in any
number of counterparts with the same effect as if all
signatories had signed the same document, and all of those
counterparts must be construed together to constitute one and
the same document; but in making proof of this amendment, it
shall not be necessary to produce or account for more than one
such counterpart.
8. PARTIES BOUND. This amendment binds and inures to
Borrowers, Agent, Collateral Agent, each Lender, and (subject to
SECTION 11) their respective successors and assigns.
9. ENTIRETY. THIS AMENDMENT, THE LOAN AGREEMENT AS AMENDED
BY IT, AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
2 EXHIBIT F-1
<PAGE> 141
Executed on ______________ __, 1996, and effective as of
the date first stated above.
MCA FINANCIAL CORP, TEXAS COMMERCE BANK NATIONAL
MCA MORTGAGE CORPORATION, ASSOCIATION, as Agent and a Lender
and
MORTGAGE CORPORATION OF
AMERICA, as Borrowers
By ______________________________
Pamela E. Skinner,
Vice President
By ___________________________ TEXAS COMMERCE BANK NATIONAL
(Name) _______________________ ASSOCIATION, as Collateral Agent
(Title)_______________________
By ______________________________
Name ____________________________
Title ___________________________
3 EXHIBIT F-1
<PAGE> 142
EXHIBIT F-2
ASSIGNMENT AND ASSUMPTION AGREEMENT
THIS AGREEMENT is entered into effective as of
______________ __, 1996, between _________________ ("ASSIGNOR"),
and ___________________________________ ("ASSIGNEE").
MCA FINANCIAL CORP., a Michigan corporation, MCA MORTGAGE
CORPORATION, a Michigan corporation, and MORTGAGE CORPORATION OF
AMERICA, a Michigan corporation ("BORROWERS"), certain lenders
("LENDERS"), TEXAS COMMERCE BANK NATIONAL ASSOCIATION (in its
capacity as Administrative Agent for Lenders, "AGENT"), and
TEXAS COMMERCE BANK NATIONAL ASSOCIATION (in its capacity as
collateral agent for Lenders, "COLLATERAL AGENT"), are party to
the Loan Agreement (as renewed, extended, amended, or restated,
the "LOAN AGREEMENT") dated as of September 3_, 1996, all of the
defined terms in which have the same meanings when used, unless
otherwise defined, in this agreement. This agreement is entered
into as required by SECTIONS 11.12(B) and 11.14 of the Loan
Agreement and is not effective unless the conditions of those
sections of the Loan Agreement are satisfied and this agreement
is consented to by Borrowers and Agent.
ACCORDINGLY, for adequate and sufficient consideration,
Assignor and Assignee agree as follows:
1. ASSIGNMENT AND ASSUMPTION. By this agreement, and
effective as of _____________________, 199__, (the "EFFECTIVE
DATE"), Assignor sells and assigns to Assignee (without resource
to Assignor) and Assignee purchases and assumes from Assignor a
_____% interest (the "ASSIGNED INTEREST") in and to all of
Assignor's Rights and obligations under the Loan Agreement
(except any Rights and obligations pertaining to Assignor's role
as Agent or Collateral Agent, if applicable) as of the Effective
Date, including, without limitation, the Assigned Interest in
(a) Assignor's Commitment as of the Effective Date, (b) Notes
held by Assignor as of the Effective Date, (c) all Principal
Debt owed to Assignor on the Effective Date, (d) all interest
accruing in respect of the Assigned Interest after the Effective
Date, and (e) all commitment fees accruing in respect of the
Assigned Interest under SECTION 3.14) of the Loan Agreement
after the Effective Date.
2. ASSIGNOR PROVISIONS. Assignor (a) represents and
warrants to Assignee that as of the Effective Date (i)
$________________ is outstanding (without reduction for any
assignments that have not yet become effective) under the Loan
Agreement, (ii) Assignor is the legal and beneficial owner of
the Assigned Interest, which is free and clear of any adverse
claim, and (iii) Assignor has not yet been notified of an
existing Default or Potential Default, and (b) makes no
representation or warranty to Assignee and assumes no
responsibility to Assignee with respect to (i) any statements,
warranties, or representations made in or in connection with any
Loan Document, (ii) the execution, legality, validity,
enforceability, genuineness, sufficiency, or value of any Loan
Document, or (iii) the financial condition of any Company or the
performance or observance by any Company of any of its
obligations under any Loan Document.
EXHIBIT F-2
<PAGE> 143
3. ASSIGNEE PROVISIONS. Assignee (a) represents and
warrants to Assignor, Borrowers, Agent, Collateral Agent, and
Lenders that Assignee is legally authorized to enter into this
agreement, (b) confirms that it has received a copy of the Loan
Agreement, copies of the Current Financials, and such other
documents and information as it deems appropriate to make its
own credit analysis and decision to enter into this agreement,
(c) agrees with Assignor, Borrowers, Agent, Collateral Agent,
and Lenders that Assignee shall, independently and without
reliance upon Agent, Collateral Agent, Assignor, or any other
Lender, and based on such document and information as Assignee
deems appropriate at the time, continue to make its own credit
decisions in taking or not taking action under the Loan
Documents, (d) appoints and authorizes Agent and Collateral
Agent to take such action as agents on its behalf and to
exercise such powers under the Loan Documents as are delegated
to Agent and Collateral Agent by the terms of the Loan Documents
and all other reasonably incidental powers, (e) agrees with
Assignor, Borrowers, Agent, Collateral Agent and Lenders that
Assignee shall perform and comply with all provisions of the
Loan Documents applicable to Lenders in accordance with their
respective terms, and (f) if Assignee is not organized under the
Laws of the United States of America or one of its states, it
represents and warrants to Assignor, Borrowers, Agent,
Collateral Agent and Lenders that each statement in SECTION 3.13
of the Loan Agreement is true and correct, and agrees to be
bound by the terms of that section.
4. LOAN AGREEMENT AND COMMITMENTS. From and after the
Effective Date (a) Assignee shall be a party to the loan
Agreement and (to the extent provided in this agreement) have
the Rights and obligations of a Lender under the Loan Documents
and (b) Assignor shall (to the extent provided in this
agreement) relinquish its Rights and be released from its
obligations under the Loan Documents. On the Effective Date,
after giving effect to this and certain other assignment and
assumption agreements that become effective on the Effective
Date, but without giving effect to any other assignments that
have not yet become effective, Assignor's Total Commitment and
Assignee's total Commitment will be as follows:
Lender Commitment
---------------------------
Assignor $
---------------------------
Assignee $
===========================
5. NOTES. Assignor and Assignee request Borrowers to issue
new Notes to Assignor and Assignee in the amounts of their
respective Commitments under PARAGRAPH 4 above and otherwise
issued in accordance with the Loan Agreement. Upon delivery of
those Notes, Assignor shall return to Borrowers all Notes
previously delivered to Assignor under the Loan Agreement.
6. PAYMENTS AND ADJUSTMENTS. From and after the Effective
Date, Collateral Agent shall make all payments in respect of the
Assigned Interest (including payments of principal, interest,
fees, and other amounts) to Assignee. Assignor and Assignee
shall make all appropriate
2 EXHIBIT F-2
<PAGE> 144
adjustments in payments for periods before the Effective Date by
Collateral Agent or with respect to the making of this
assignment directly between themselves. Assignor agrees to pay
any payments and proceeds with respect to the Obligation ratably
with Assignee.
7. CONDITIONS PRECEDENT. PARAGRAPH 1 through 6 above are
not effective until (i) counterparts of this agreement are
executed and delivered by Assignor and Assignee to, and are
executed in the spaces below by, Borrowers and Agent, and (ii)
Assignor, Assignee, Borrowers, and Agent comply with each of the
requirements of SECTION 11.12 and 11.14 of the Loan Agreement.
If the Assignor is the Agent, the requirement of SECTION
11.14(A)(II) is waived with regard to this agreement.
8. INCORPORATED PROVISIONS. Although this agreement is not
a Loan Document, the provisions of SECTIONS 1 and 11 of the Loan
Agreement applicable to Loan Documents are incorporated into
this agreement by reference the same as if this agreement were a
Loan Document and those provisions were set forth in this
agreement verbatim.
9. COMMUNICATIONS. For purposes of SECTION 11.2 of the Loan
Agreement, Assignee's address, telephone number and telecopy
number, until changed under that section, are set out under its
signature below.
10. AMENDMENTS, ETC. No amendment, waiver, or discharge to
or under this agreement is valid unless it is in writing, signed
by the party against whom it is sought to be enforced, and is
otherwise in conformity with the requirements of the Loan
Agreement.
11. ENTIRETY. THIS AGREEMENT REPRESENTS THE FINAL AGREEMENT
BETWEEN ASSIGNOR AND ASSIGNEE ABOUT ITS SUBJECT MATTER AND MAY
NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS OF ASSIGNOR AND ASSIGNEE. THERE ARE
NO UNWRITTEN ORAL AGREEMENTS BETWEEN ASSIGNOR AND ASSIGNEE.
12. PARTIES. This agreement binds and benefits Assignor,
Assignee, and their respective successors and assigns that are
permitted under the Loan Agreement
EXECUTED as of _________ __, 199_, but effective as of the
date first stated above.
_________________________, as Assignor _________________________, as Assignee
By ________________________________ By _________________________________
(Name) ____________________________ (Name) _____________________________
(Title) ___________________________ (Title) ____________________________
3 EXHIBIT F-2
<PAGE> 145
(Address) _______________________
_______________________
_______________________
Attn: _________________
(Telephone No.) (___) ___-______
(Telecopy No.) (___) ___-______
As of the Effective Date, Borrowers and Agent consent to this
agreement and the transactions contemplated in it.
MCA FINANCIAL CORP., TEXAS COMMERCE BANK NATIONAL
MCA MORTGAGE CORPORATION, ASSOCIATION, as Agent
and MORTGAGE CORPORATION
OF AMERICA, as Borrowers
By _____________________________ By ___________________________________
(Name) _________________________ Pamela E. Skinner, Vice President
(1)(Title) _____________________
_________________________________
(1) Must be a Responsible Officer of all three Borrowers
4 EXHIBIT F-2
<PAGE> 146
LENDERS' AGREEMENT
THIS AGREEMENT is entered into as of September 3_, 1996,
between the Lenders described below, TEXAS COMMERCE BANK
NATIONAL ASSOCIATION, as Agent for Lenders, and TEXAS COMMERCE
BANK NATIONAL ASSOCIATION, as Collateral Agent for Lenders, and
is consented to by MCA MORTGAGE CORPORATION, a Michigan
corporation, and MORTGAGE CORPORATION OF AMERICA, a Michigan
corporation (collectively, "BORROWERS").
Borrowers, Lenders, Agent, and Collateral Agent have
entered into the Loan Agreement (as renewed, extended, amended,
or restated, the "LOAN AGREEMENT") dated as of September 3_,
1996, providing for revolving loans to Borrowers. Collateral
Agent and Agent (collectively, "AGENTS") and Lenders are
entering into this agreement to further memorialize their Rights
and obligations between each other in respect of the Loan
Agreement, the other Loan Documents, and the transactions
contemplated by them.
ACCORDINGLY, for adequate and sufficient consideration,
Agents and Lenders agree as follows:
1. DEFINTIONS. Term defined in the Loan Agreement have the
same meaning when used, unless otherwise defined, in this
agreement.
2. APPOINTMENT AUTHORIZATION.
(a) In its name and on behalf, each Lender appoints Texas
Commerce Bank National Association ("TCB") as Agent to act as
administrative agent under the Loan Documents and, in that
capacity, to (i) receive certain documents furnished for Lenders
under the Loan Documents, (ii) deliver to Lenders
communications, information, and item received from Borrowers
and other appropriate Persons under the Loan Documents and not
otherwise delivered to Lenders, (iii) deliver to Borrowers and
other appropriate Persons communications, information, and other
items received from Lenders under the Loan Documents and not
otherwise delivered to Borrowers or such other Persons, and (iv)
take action and exercise powers that are delegated to Agent in
any Loan Document or that are incidental to those delegated
actions and powers.
(b) In its name and on its behalf, each Lender appoints TCB
Collateral Agent to act as custodian in respect of Collateral
under the Loan Documents, and in that capacity, to (i) review
the Collateral delivered to it and verify (to the extent
information is reasonably available to it) that such Collateral
complies with the applicable requirements of Schedules 4.1
through 4.3 to the Loan Agreement, (ii) store that Collateral in
an area standard in the industry for that purpose, (iii) prepare
periodic reports under reasonably requested by any Lender
regarding the status of the Collateral, (iv) ship Collateral
under Sections 4.5 and 4.6 of the Loan Agreement, (v) release
Collateral under Section 4.7 of the Loan Agreement and (vi)
arrange the means of distributing funds to Borrowers and Lenders
under the Loan Documents that are not otherwise paid directly to
Borrowers or Lenders.
<PAGE> 147
(c) If Agent exercises the remedies provided under Section
10 of the Loan Agreement and Collateral Agent does not have, and
Collateral Agent has no obligation to develop, adequate
facilities to service any Collateral required to be serviced,
then Collateral Agent may contract with one or more other
Persons to service that Collateral. The fees paid for these
services are a prior charge against the Collateral under Section
3.5(b)(ii) of the Loan Agreement.
(d) Collateral Agent is authorized to (i) settle,
compromise, and release claims against the makers of, and any
Person obligated with respect to, any Collateral, (ii) foreclose
or otherwise enforce Liens on any Collateral or property
securing any Collateral, (iii) sell Collateral and property
acquired as the result of foreclosure under the Loan documents,
and (iv) do all other acts and things as Collateral Agent, in
its sole discretion, deems necessary or appropriate to protect
the Rights and interests of Agents and Lenders and to realize
the benefits of the Collateral.
(e) Except as specifically provided in this agreement, Agent
is never required to exercise any discretion or take any action
and is only required to act or to refrain from acting (and is
fully protected in so acting or refraining) upon the
instructions of either Determining Lenders or, in respect of the
matters covered by Section 11.11(c) of the Loan Agreement all
Lenders. However, Agent is never required to take any action
that in its judgment might be expected to expose it to liability
or that is contrary to the Loan Documents or applicable Law.
3. EXCULPATORY PROVISIONS.
(a) In whatever capacity it may be acting, neither any Agent
nor its Representatives are now or in the future liable for any
action taken or omitted to be taken by it or them in connection
with the Loan Documents except for its or their own gross
negligence or willful misconduct.
(b) Each Agent (i) may consult with legal counsel,
independent public accountants, and other experts selected by it
and is not liable for any action taken or omitted to be taken in
good faith by it in accordance with their advice, (ii) makes no
warranty or representation to any other Agent or any Lender,
(iii) except to the extent provided for Collateral Agent acting
as custodian in PARAGRAPH 2(B) above, is never responsible to
any other Agent or any Lender for any statements, warranties, or
representations made in or in connection with any Loan Document
and has not duty to ascertain or to inquire as to the
performance or observance of any provision of any Loan Document
by any other Person or to inspect any Borrower's or other
Person's books, records, or other property, (iv) has not
responsibility to any other Agent or any Lender for the due
execution (by any other Person), legality, validity,
enforceability, genuineness, sufficiency, or value of any Loan
Document or any document furnished under any Loan Document, and
(v) never incurs liability under or in respect of any Loan
Document by acting in accordance with this agreement upon any
notice, consent, certificate, or other instrument or writing
(which may be by telecopy, electronic data transmission,
telegram, cable, or telex) believed by it or its Representatives
to be genuine and signed or sent by the appropriate one or more
Persons.
2
<PAGE> 148
(c) Agent may not be compelled to do any act or to take any
action toward the execution or enforcement of the powers created
by any Loan Document or to prosecute or defend any suit unless
Agent is first indemnified to its satisfaction against any and
all loss, cost, liability, and expenses it may incur. Subject
to the foregoing limitations and to any direction of the
Determining Lenders to take action in accordance with Section 10
of the Loan Agreement, each Agent shall perform the duties
imposed upon it under this agreement with respect to the
Collateral with the same amount of diligence and using the same
amount of judgment and discretion as if that Agent were acting
solely for its own account.
4. AGENTS AS LENDERS. The term "Lender" in the Loan
Agreement includes each Agent acting in its individual capacity.
In that capacity, each Agent has the same Rights under the Loan
Documents as any other Lender.
5. OTHER DEALINGS. Each Agent, each Lender, and their
respective Affiliates may accept deposits from, lend money to,
act as trustee under indentures of, and generally engage in any
kind of business with, any Borrower, any of its Subsidiaries,
and any Person who may do business with or own securities of any
Borrower or its Subsidiaries, in each case as if it were not
otherwise an Agent or a Lender under the Loan Documents and
without any duty to account for any of the foregoing to any
other Agent or Lender except as may be specifically provided in
any Loan Document.
6. CREDIT DECISIONS. Each Agent and each Lender
acknowledges and agrees that it, independently and without
reliance upon any other Agent or Lender and based on the Current
Financials and such other documents and information as it has
deemed appropriate, has made its own credit analysis and
decision to enter into the Loan Documents and shall continue to
make its own credit analyses and decisions in taking or not
taking action under the Loan Document.
7. INDEMNIFICATION. LENDERS SHALL INDEMNIFY AGENTS
SEVERALLY AND NOT JOINTLY (TO THE EXTENT NOT REIMBURSED BY
BORROWERS), RATABLY ACCORDING TO THEIR RESPECTIVE COMMITMENT
PERCENTAGES FROM AND AGAINST ANY AND ALL LIABILITIES,
OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS,
SUITS, COSTS, EXPENSES, OR DISBURSEMENTS OF ANY OR NATURE
WHATSOEVER THAT MAY BE IMPOSED ON, INCURRED BY, OR ASSERTED
AGAINST AGENTS IN ANY WAY RELATING TO OR ARISING OUT OF ANY LOAN
DOCUMENT OR ANY ACTION TAKEN OR OMITTED BY AGENTS UNDER ANY LOAN
DOCUMENTS, PROVIDED THAT NO LENDER SHALL BE LIABLE FOR ANY
PORTION OF SUCH LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES,
PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES, OR
DISBURSEMENTS RESULTING FROM ANY AGENT'S GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT. WITHOUT LIMITING THE FOREGOING, EACH LENDER
SHALL REIMBURSE AGENTS SEVERALLY AND NOT JOINTLY (TO THE EXTENT
NOT REIMBURSE BY BORROWERS) PROMPTLY UPON DEMAND FOR ITS RATABLE
SHARE OF ANY OUT-OF- POCKET EXPENSES (INCLUDING COUNSEL FEES)
INCURRED BY AGENTS IN CONNECTION WITH THE PREPARATION,
EXECUTION, DELIVERY, ADMINISTRATION, MODIFICATION, AMENDMENT, OR
ENFORCEMENT (WHETHER THROUGH NEGOTIATIONS, LEGAL PROCEEDINGS, OR
OTHERWISE) OF, OR LEGAL ADVISE IN RESPECT OF RIGHTS OR
RESPONSIBILITIES UNDER, THE LOAN DOCUMENTS. AFTER
3
<PAGE> 149
THOSE AMOUNTS HAVE BEEN IMPOSED UPON OR INCURRED BY ANY LENDER,
THEY ARE PAYABLE BY BORROWERS UPON DEMAND AND BEAR INTEREST,
FROM THE DATE OF DEMAND UNTIL PAID, AT A FLUCTUATING INTEREST
RATE PER ANNUM EQUAL FOR EACH DAY DURING THAT PERIOD TO THE
DEFAULT RATE.
8. SUCCESSOR AGENT.
(a) Agent may resign at any time by giving written notice to
Collateral Agent, Lenders, and Borrowers, and may be removed at
any time for cause by Determining Lenders giving written notice
to Agent, Collateral Agent, and Borrowers.
(b) Upon any such resignation or removal, Determining
Lenders shall appoint the successor Agent (the "Successor
Agent"). If that appointment is not made and accepted within
thirty (30) days after Agent's (the "Predecessor Agent") notice
of resignation or Determining Lenders' notice of removal, then
the Predecessor Agent shall appoint the Successor Agent. In
either case, the Successor Agent must be a commercial or savings
bank organized under the Laws of the United States of America or
any of its states and having a combined capital and surplus of
at least $1 billion.
(c) The Successor Agent shall execute and deliver to
Collateral Agent, Borrowers, and the Predecessor Agent an
instrument accepting the appointment, at which time the
resignation or removal of the Predecessor Agent becomes
effective, and the Successor Agent (without any further act,
deed, or conveyance) becomes vested with all the Rights and
obligations of the Predecessor Agent under the Loan Documents
the same as if originally named as Agent. However, at the
written request of Agent, Borrowers, or the Successor Agent, the
Predecessor Agent shall execute and deliver an instrument
transferring to the Successor Agent all the Rights of the
Predecessor Agent. Upon request of the Successor Agent, Agent,
Collateral Agent, and Borrowers shall execute any and all
instruments in writing for more fully and certainly vesting in
and confirming to the Successor Agent all of those Rights. No
Successor Agent may accept appointment as provided in this
paragraph unless at the time of that acceptance it is eligible
under the requirements of clause (b) above.
(d) Any Person into which Agent may be merged or converted
or with which it may be consolidated, or any Person surviving or
resulting from any merger, conversion, or consolidation to which
Agent shall be a party, or any Person succeeding to the
corporate trust business of Agent, shall be the Successor Agent
under this agreement without the execution or filing of any
paper or any further act on the part of any of the parties to
this agreement.
(e) After any Predecessor Agent's resignation or removal as
Agent, the provisions of this agreement continue to inure to its
benefit as to any actions taken or omitted to be taken by it
while it was Agent.
4
<PAGE> 150
9. SUCCESSOR COLLATERAL AGENT.
(a) Collateral Agent may resign at any time by giving
written notice to Agent, Lenders, and Borrowers, and may be
removed at any time for cause by Determining Lenders giving
written notice to Agent, Collateral Agent, and Borrowers.
(b) Upon any such resignation or removal, Determining
Lenders shall appoint the successor Collateral Agent (the
"Successor Collateral Agent"). If that appointment is not made
and accepted within thirty (30) days after Collateral Agent's
(the "Predecessor Collateral Agent") notice of resignation or
Determining Lender's notice of removal, then the Predecessor
Collateral Agent shall appoint the Successor Collateral Agent.
In either case, the Successor Collateral Agent must be a
commercial or savings bank organized under the Laws of the
United States of America or of any of its states and having a
combined capital and surplus of at least $1 billion.
(c) The Successor Collateral Agent shall execute and deliver
to Agent, Borrowers, and the Predecessor Collateral Agent an
instrument accepting the appointment, at which time the
resignation or removal of the Predecessor Collateral Agent
becomes effective, and the Successor Collateral Agent (without
any further act, deed, or conveyance) becomes vested with all
the Rights and obligations of the Predecessor Collateral Agent
under the Loan Documents the same as if originally named as
Collateral Agent. However, at the written request of Agent,
Borrowers, or the Successor Collateral Agent, the Predecessor
Collateral Agent shall execute and deliver an instrument
transferring to the Successor Collateral Agent all the Rights of
the Predecessor Collateral Agent and shall execute and deliver
to the Successor Collateral Agent such instruments as are
necessary (including assignments of all Collateral and Loan
Documents) to transfer the Collateral to the Successor
Collateral Agent. Upon request of the Successor Collateral
Agent, Agent, and Borrowers shall execute any and all
instruments in writing for more fully and certainly vesting in
and confirming to the Successor Collateral Agent all of those
Rights. No Successor Collateral Agent may accept appointment as
provided in this paragraph unless at the time of that acceptance
it is eligible under the requirements of clause (b) above.
(d) Any Person into which Collateral Agent may be merged or
converted or with which it may be consolidated, or any Person
surviving or resulting from any merger, conversion, or
consolidation to which Collateral Agent shall be a party, or any
Person succeeding to the corporate trust business of Collateral
Agent, shall be the Successor Collateral Agent under this
agreement without the execution or filing of any paper or any
further act on the part of any of the parties to this agreement.
(e) After any Predecessor Collateral Agent's resignation or
removal as Collateral Agent, the provisions of this agreement
continue to inure to its benefit as to any actions taken or
omitted to be taken by it while it was Collateral Agent.
5
<PAGE> 151
10. RELATIONSHIP. Nothing in this agreement is intended or
may be construed to create a partnership, joint venture, or
similar relationship between any Agent or any Lender with any
other Agent or Lender.
11. TERM. This agreement terminates upon expiration or
termination of all agreements, if any, by Lenders to extend
credit under the Loan Documents, termination of the Loan
Agreement, and full payment and performance of the Obligation.
12. MISCELLANEOUS. The provisions relating to Loan Documents
in Section 1 and 11 of the Loan Agreement are incorporated into
this agreement by reference.
REMAINDER OF PAGE INTENTIONALLY BLANK.
SIGNATURE PAGE FOLLOWS.
6
<PAGE> 152
EXECUTED as of the date first stated above.
TEXAS COMMERCE BANK TEXAS COMMERCE BANK
NATIONAL ASSOCIATION, as Agent NATIONAL ASSOCIATION,
as Collateral Agent and a Lender
By ____________________________ By ________________________________
Pamela E. Skinner, Pamela E. Skinner,
Vice President Vice President
_______________________________ ___________________________________
_________________, as a Lender __________________, as a Lender
By ____________________________ By ________________________________
(Name) ________________________ (Name) ____________________________
(Title) _______________________ (Title) ___________________________
Each Borrower consents and agrees in all respects to this agreement.
MCA FINANCIAL CORP.,
MCA MORTGAGE CORPORATION, AND
MORTGAGE CORPORATION OF AMERICA
as Borrowers
By ___________________________________
(Name) _______________________________
(Title) ______________________________
7
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED STATEMENTS OF OPERATIONS AND CONSOLIDATED BALANCE SHEETS AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-31-1997
<PERIOD-START> FEB-01-1996
<PERIOD-END> JUL-31-1996
<CASH> 2,855
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 6,840
<DEPRECIATION> (1,644)
<TOTAL-ASSETS> 120,802
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
5,396
<COMMON> 5
<OTHER-SE> 4,805
<TOTAL-LIABILITY-AND-EQUITY> 120,802
<SALES> 0
<TOTAL-REVENUES> 26,439
<CGS> 0
<TOTAL-COSTS> 26,326
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,096
<INCOME-PRETAX> 113
<INCOME-TAX> (30)
<INCOME-CONTINUING> 83
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 83
<EPS-PRIMARY> .18
<EPS-DILUTED> .18
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