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Exhibit 10-5
MORTGAGE LOAN WAREHOUSING AGREEMENT
THIS MORTGAGE LOAN WAREHOUSING AGREEMENT (the "Agreement") is
made and dated as of the 22nd day of July, 1999, by and among
FIRST MORTGAGE CORPORATION, a California corporation (the
"Company"); the lenders from time to time party hereto, together
with their respective successors and assigns (each a "Lender
and, collectively, the "Lenders"); and NATIONSBANK, N.A., a
national banking association, as administrative agent (in such
capacity, the "Administrative Agent").
RECITALS
A. The Company has requested the Lenders to extend credit to
the Company in the form of a revolving mortgage warehousing line
of credit and that the Administrative Agent agree to act as
administrative agent for the benefit of the Lenders with respect
thereto.
B. The Company, the Administrative Agent and the Lenders
desire to enter into this Agreement to evidence the willingness
of the Lenders to provide such credit facility and of the
Administrative Agent to act on their behalf with respect thereto
and to set forth the rights and obligations of the parties with
respect to such credit facility on the terms and subject to the
conditions set forth herein and in the other Loan Documents (as
that term and capitalized terms not otherwise defined herein are
used with the meanings given such terms in the Glossary attached
hereto as Appendix I and by this reference incorporated herein).
NOW, THEREFORE, in consideration of the above Recitals and for
other good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, the parties hereto hereby
agree as follows:
AGREEMENT
1. Tranche A Credit Facility (Standard Loans).
1(a) Tranche A Lending Limit. On the terms and subject to the
conditions set forth herein, the Lenders severally agree that
they shall from time to time to but not including the Maturity
Date make loans (the "Standard Loans" or a "Standard Loan"), pro
rata in accordance with their respective Percentage Shares, to
the Company in amounts not to exceed, in the aggregate at any
one time outstanding, the lesser of.'
(1) The Aggregate Credit Limit minus the aggregate dollar
amount of Gestation Loans and Swing Line Loans outstanding on
such date (including all Gestation Loans and Swing Line Loans to
be funded on the proposed date of funding of the requested
Standard Loans but excluding Loans which will be repaid with
proceeds of Loans to be funded on such date); and
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(2) The Collateral Value of the Warehouse Borrowing Base
minus the aggregate dollar amount of all Swing Line Loans
outstanding on such date (including all Swing Line Loans to be
funded on the proposed date of funding of the requested Standard
Loans but excluding Loans which will be repaid with the proceeds
of the Loans to be funded on such date).
1(b) Calculation and Payment of Interest. Standard Loans shall
bear interest from the date disbursed to but not including the
date of payment calculated on the principal amount of Standard
Loans outstanding from time to time hereunder at a per annum
rate equal to, at the option of and as selected by the Company
from time to time (subject to the provisions of Paragraphs 4(c),
4(d) and 4(e) below), (i) the Applicable Eurodollar Rate for the applicable
Interest Period, (ii) the daily average Applicable Effective Fed
Funds Rate during the applicable interest computation period, or
(iii) the Reference Rate during the applicable interest
computation period, said interest to be payable as provided more
particularly in Paragraph 4(b) below.
1 (c) Payment of Principal. Subject to the prepayment
requirements of Paragraph 5(f) below and the conversion and
continuation provisions of Paragraph 4(c) below, the Company
shall pay the principal amount of each Standard Loan being
maintained as a Eurodollar Loan on the last day of the
applicable Interest Period and shall pay the principal amount of
each Standard Loan being maintained as an Effective Fed Funds
Rate Loan or a Reference Rate Loan on the Maturity Date.
2. Tranche B Credit Facility (Gestation Loans).
2(a) Tranche B Lending Limit. On the terms and subject to the
conditions set forth herein, the Lenders severally agree that
they shall from time to time to but not including the Maturity
Date make loans (the "Gestation Loans" or a "Gestation Loan"),
pro rata in accordance with their respective Percentage Shares,
to the Company in amounts not to exceed, in the aggregate at any
one time outstanding, the least off
(1) The Aggregate Credit Limit minus the aggregate dollar
amount of Standard Loans and Swing Line Loans outstanding on
such date (including all Standard Loans and Swing Line Loans to
be funded on the proposed date of funding of the requested
Standard Loans but excluding Loans which will be repaid with
proceeds of Loans to be funded on such date);
(2) The Collateral Value of the Gestation Loans Borrowing Base;
and
(3) The Gestation Credit Sublimit.
2(b) Calculation and Payment of Interest. Gestation Loans shall
bear interest from the date disbursed to but not including the
date of payment calculated on the principal amount of Gestation
Loans outstanding from time to time hereunder at a per annum
rate equal to, at the option of and as selected by the Company
from time to time (subject to the provisions of Paragraphs 4(c),
4(d) and 4(e) below), the Applicable Eurodollar Rate for the
applicable Interest
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Period or the daily average Applicable Effective Fed Funds Rate
during the applicable interest computation period, said interest
to be payable as provided more particularly in Paragraph 4(b)
below.
2(c) Payment of Principal. Subject to the prepayment
requirements of Paragraph 5(f) below and the conversion and
continuation provisions of Paragraph 4(c) below, the Company
shall pay the principal amount of each Gestation Loan being
maintained as a Eurodollar Loan on the last day of the
applicable Interest Period and shall pay the principal amount of
each Gestation Loan being maintained as an Effective Fed Funds
Rate Loan on or before the Maturity Date.
3. Tranche C Credit Facility (Swing Loans).
3(a) Tranche C Lending Limit. On the terms and subject to the
conditions set forth herein, the Swing Line Lender agrees that
it shall from time to time to but not including the Maturity
Date make loans (the "Swing Line Loans" or a "Swing Line Loan")
to the Company in amounts not to exceed, in the aggregate at any
one time outstanding, the least of.'
(1) The Tranche C Credit Limit; and
(2) The Aggregate Credit Limit minus the aggregate dollar
amount of Standard Loans and Gestation Loans outstanding on such
date (including all Standard Loans and Gestation Loans to be
funded on the proposed date of funding of the requested Swing
Line Loans but excluding Loans which will be repaid with
proceeds of Loans to be funded on such date); and
(3) The Collateral Value of the Warehouse Borrowing Base
minus the aggregate dollar amount of all Standard Loans
outstanding on such date (including all Standard Loans to be
funded on the proposed date of funding of the requested Swing
Line Loans but excluding Loans which will be repaid with
proceeds of Loans to be funded on such date).
3(b) Funding of Swing Line Loans. Upon receipt by the
Administrative Agent or a Loan and/or Interest Rate Election
Request for a Swing Line Loan, it shall so notify the Swing Line
Lender thereof as provided in Paragraph 5(b) below, and the
Swing Line Lender shall advance the amount of the Swing Line
Loan or Loans requested for the purpose of funding the Company's
operations on a daily basis without requiring daily fundings
from the applicable Lenders.
3(c) Refunding of Swing Line Loans by Lenders. Swing Line Loans
shall be refunded by the Lenders to the Swing Line Lender upon
demand of the Swing Line Lender in its sole discretion through
the Administrative Agent, which demand will be made no less
frequently than weekly (and, in any event, on each Wednesday or,
if any Wednesday is not a Business Day, the immediately
preceding Business Day). All Swing Line Loans shall be
automatically designated as Standard Loans on and as of such
refunding date. Such refundings shall be made by the Lenders
(including the Swing Line Lender) in accordance with their
respective Percentage
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Shares and shall, thereafter, be reflected as Standard Loans of
the Lenders on the books and records of the Administrative Agent
and the Lenders. Subject to Paragraph 3(f) below, the
Administrative Agent shall, upon the occurrence of an Event of
Default and acceleration of the Obligations, request a refunding
hereunder of all Swing Line Loans outstanding as of such date.
3(d) Calculation and Payment of Interest. Swing Line Loans shall
bear interest from the date disbursed to but not including the
refunding date or the date of payment calculated on the
principal amount of Swing Line Loans outstanding from time to
time hereunder during the applicable interest calculation period
at the daily average Applicable Effective Fed Funds Rate, said
interest to be payable as provided more particularly in
Paragraph 4(b) below.
3(e) Payment of Principal. Subject to the prepayment
requirements of Paragraph 5(f) below and earlier refunding
pursuant to Paragraph 3(c) above, the Company shall pay the
principal amount of each Swing Line Loan on the Maturity Date.
3(f) Absolute Obligation to Refund. It is expressly acknowledged
and agreed by the Lenders and the Company that the obligation of
the Lenders to refund Swing Line Loans shall be absolute and
unconditional and shall be effected by the Lenders upon
telephonic request of the Administrative Agent regardless of
whether at the proposed refunding date there shall exist an
Event of Default or Potential Default hereunder; provided,
however, that the obligation of the Lenders to refund Swing Line
Loans made by the Swing Line Lender on any date on which the
Swing Line Lender's personnel responsible for administering the
credit facility hereunder had actual knowledge of the existence
of an Event of Default, shall be limited to those Swing Line
Loans made on such date with the consent (which may be
telephonic) of those Lenders with the authority to waive such
Event of Default. In the event for any reason the Lenders shall
be prohibited from refunding their respective ratable portion of
Swing Line Loans as Standard Loans as provided herein, then
instead of refunding Swing Line Loans as Standard
Loans, upon request of the Swing Line Lender and subject to the
proviso of the immediately preceding sentence, each Lender
(other than the Swing Line Lender) shall purchase and take from
the Swing Line Lender an individual participation interest in
all Swing Line Loans outstanding hereunder in the amount of such
Lender's Percentage Share thereof.
4. Interest Rate and Yield-Related Provisions.
4(a) Initial Rate. All Loans shall initially be funded as
Effective Fed Funds Rate Loans and, thereafter, shall be
maintained, at the election of the Company made from time to
time as permitted herein, as Effective Fed Funds Rate Loans,
Reference Rate Loans and/or Eurodollar Loans.
4(b) Payment of Interest and Fees. Interest accruing on
Effective Fed Funds Rate Loans and Reference Rate Loans shall be
payable monthly, in arrears, as provided hereinbelow; interest
accruing on Eurodollar Loans shall be payable at the end of the
applicable Interest Period. The Administrative Agent shall (1)
in the case of Effective Fed Funds Rate Loans and Reference Rate
Loans, on or before the fifth Business Day of each month, and
(2) in the case of Eurodollar Loans, on the last day of the
applicable Interest Period, deliver to the Company an interest
and fee billing for the immediately preceding month or Interest
Period, as
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the case may be, which billing shall set forth interest accrued
and payable on Loans and fees payable hereunder for such period
to be collected by the Administrative Agent for remittance to
the Lenders and which billing shall be payable, in the case of a
billing delivered pursuant to subparagraph (I) above, no later
than the second Business Day following receipt thereof by the
Company and, in the case of a billing delivered pursuant to
subparagraph (2) above, on the last day of the applicable
Interest Period.
4(c) Conversion and Continuation.
(1) The Company may elect from time to time to convert
Standard Loans and Gestation Loans outstanding as Effective Fed
Funds Rate Loans or Reference Rate Loans to Eurodollar Loans by
giving the Administrative Agent prior irrevocable notice of such
election no later than 9:00 a.m. (Los Angeles time) on the third
Eurodollar Business Day preceding the proposed conversion date
(which notice shall be provided by the Administrative Agent to
the Lenders no later than 9:30 a.m. (Los Angeles time) on such
date).
(2) The Company may elect from time to time to convert
Standard Loans and Gestation Loans outstanding as Effective Fed
Funds Rate Loans to Reference Rate Loans by giving the
Administrative Agent irrevocable notice of such election no
later than 9:00 a.m. (Los Angeles time) on the proposed
conversion date (which notice shall be provided by the
Administrative Agent to the Lenders no later than 9:30 a.m. (Los
Angeles time) on such date).
(3) The Company may elect to convert Standard Loans and
Gestation Loans outstanding as Reference Rate Loans to Effective
Fed Funds Rate Loans by giving the Administrative Agent
irrevocable notice of such election no later than 9:00 a.m. (Los
Angeles time) on the proposed conversion date (which notice
shall be provided by the Administrative Agent to the Lenders no
later than 9:30 a.m. (Los Angeles time) on such date).
(4) The Company may elect to convert Standard Loans and
Gestation Loans outstanding as Eurodollar Loans to Effective Fed
Funds Rate Loans or Reference Rate Loans effective upon the last
day of the applicable Eurodollar Interest Period by giving the
Administrative Agent irrevocable notice of such election no
later than 9:00 a.m. (Los Angeles time) on the conversion
funding date (which notice shall be provided by the
Administrative Agent to the Lenders no later than 9:30 a.m.
(Los Angeles time) on such date).
(5) Any Eurodollar Loan may be continued as such upon the
expiration of the Interest Period with respect thereto by the
Company giving the Administrative Agent prior irrevocable notice
of such election no later than 9:00 a.m. on the third Eurodollar
Business Day preceding the proposed continuation date (which
notice shall be provided by the Administrative Agent to the
Lenders no later than 9:30 a.m. (Los Angeles time) on such
date). If the Company shall fail to give notice as provided
above, the Company shall be deemed to have elected to convert
any affected
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Eurodollar Loan to an Effective Fed Funds Rate Loan on the last
day of the applicable Interest Period.
(6) No Loan shall be funded or continued as a Eurodollar Loan
and no Loan shall be converted into a Eurodollar Loan if an
Event of Default or Potential Default has occurred and is
continuing on the day occurring three Eurodollar Business Days
prior to the date of, or on the date of, any requested funding,
continuation or conversion.
(7) All or any part of outstanding Standard Loans and
Gestation Loans may be converted pursuant to this paragraph
4(c); provided, however, that partial conversions shall be in
the principal amount of $5,000,000.00 or whole multiples of
$1,000,000.00 in excess thereof, and in the case of conversions
into Eurodollar Loans, after giving effect thereto to the
aggregate of the then number of Eurodollar Loans of each Lender
having a different Interest Period shall not exceed three (3).
(8) Each request for the funding, continuation or conversion of
a Loan shall be evidenced by the timely delivery by the Company
to the Administrative Agent of a duly executed Loan and/or Rate
Request (which delivery may be by facsimile transmission).
4(d) Inability to Determine Rate. In the event that the
Administrative Agent shall have determined (which determination
shall be conclusive and binding upon the Company) that by reason
of circumstances affecting the London interbank eurodollar
market adequate and reasonable means do not exist for
ascertaining the Eurodollar Rate for any Interest Period, the
Administrative Agent shall forthwith give facsimile notice of
such determination, confirmed in writing, to each Lender and to
the Company. If such notice is given: (1) any Standard Loan and
Gestation Loan that was to have been converted to a Eurodollar
Loan shall be continued as an Effective Fed Funds Rate Loan, and
(2) any outstanding Eurodollar Loan shall be converted, on the
last day of the then current Interest Period with respect
thereto, to an Effective Fed Funds Rate Loan. Until such notice
has been withdrawn by the Administrative Agent, the Company
shall not have the right to convert a Standard Loan or Gestation
Loan to a Eurodollar Loan or to continue a Eurodollar Loan.
4(e) Illegality. Notwithstanding any other provisions herein, if
any law, regulation, treaty or directive, or any change therein
or in the interpretation or application thereof, shall make it
unlawful for any Lender to make or maintain Eurodollar Loans as
contemplated by this Agreement: (1) the commitment of such
Lender hereunder to make or to continue Eurodollar Loans or to
convert Effective Fed Funds Rate Loans or Reference Rate Loans
to Eurodollar Loans shall forthwith be suspended, and (2) such
Lender's Standard Loans and Gestation Loans then outstanding as
Eurodollar Loans, if any, shall be converted automatically to
Effective Fed Funds Rate Loans at the end of their respective
Interest Periods or within such earlier period as is required by
law. In the event of a conversion of any Standard Loan or
Gestation Loan prior to the end of its applicable Interest
Period as provided herein, the Company hereby agrees promptly to
pay any Lender affected thereby, upon demand, the amounts
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required pursuant to Paragraph 4(h) below, it being agreed and
understood that such conversion shall constitute a prepayment
for all purposes hereof. The provisions hereof shall survive the
termination of this Agreement and payment of the outstanding
Loans and all other Obligations.
4(f) Requirements of Law; Increased Costs. In the event that any
applicable law, order, regulation, treaty or directive issued
after the Effective Date by any central bank or other
Governmental Authority, or any change after the Effective Date
in the governmental or judicial interpretation or application
thereof, or compliance by any Lender with any request or
directive (whether or not having the force of law) issued
subsequent to the date hereof by any central bank or other
Governmental Authority:
(1) Does or shall subject any Lender to any tax of any kind
whatsoever with respect to this Agreement or any Loans made
hereunder, or change the basis of taxation of payments to such
Lender of principal, fee, interest or any other amount payable
hereunder (except for a change in the rate of tax on the overall
net income of, or franchise taxes payable by, such Lender);
(2) Does or shall impose, modify or hold applicable any
reserve, capital requirement, special deposit, compulsory loan
or similar requirements against assets held by, or deposits or
other liabilities in or for the account of, advances or loans
by, or other credit extended by, or any other acquisition of
funds by, any applicable lending office of such Lender making
Loans hereunder which are not otherwise included in the
determination of the Effective Fed Funds Rate or the Eurodollar
Rate; or
(3) Does or shall impose on such Lender any other condition;
and the result of any of the foregoing is to increase the cost
to such Lender of making, renewing or maintaining any Loan or to
reduce any amount receivable in respect thereof or to reduce the
rate of return on the capital of such Lender or any Person
controlling such Lender, then, in any such case, the Company
shall promptly pay to the Administrative Agent for remittance to
such Lender, upon its receipt of the certificate described
below, any additional amounts necessary to compensate such
Lender for such additional cost or reduced amounts receivable or
rate of return as reasonably determined by such Lender with
respect to this Agreement or Loans made hereunder. If a Lender
becomes entitled to claim any additional amounts pursuant to
this Paragraph (f), it shall promptly notify the Company through
the Administrative Agent of the event by reason of which it has
become so entitled. A certificate as to any additional amounts
payable pursuant to the foregoing sentence containing the
calculation thereof in reasonable detail submitted by a Lender,
through the Administrative Agent, to the Company shall be
conclusive in the absence of manifest error. The provisions
hereof shall survive the termination of this Agreement and
payment of the outstanding Loans and all other Obligations.
4(g) Funding. Each Lender shall be entitled to fund all or any
portion of Loans held by it in any manner it may determine in
its sole discretion, including, without limitation, in the Grand
Cayman inter-bank market, the London inter-bank market and
within the United States, but all calculations and transactions
hereunder in respect of Eurodollar Loans shall be conducted as
though all Lenders actually fund all Eurodollar Loans through
the purchase in
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London of offshore dollar deposits in the amount of the relevant
Eurodollar Loan in maturities corresponding to the applicable
Interest Period.
4(h) Prepayment Premium. In addition to all other payment
obligations hereunder, in the event: (1) any Eurodollar Loan is
prepaid prior to the last day of the applicable Interest Period,
as applicable, whether following a voluntary prepayment,
mandatory prepayment, application of proceeds from the sale of
Collateral or otherwise, or (2) the Company shall fail to
continue or to make a conversion to a Eurodollar Loan after the
Company has given notice thereof as provided in Paragraph 4(c)
above, then the Company shall promptly pay to the Lenders
holding the Loans prepaid or not continued or converted, through
the Administrative Agent, an additional premium sum compensating
each Lender for losses, costs and expenses incurred by such
Lender in connection with such prepayment. The Company
acknowledges that such losses, costs and expenses are difficult
to quantify and that, in the case of the prepayment of or
failure to continue or convert to a Eurodollar Loan, the
following formula represents a fair and reasonable estimate of
such losses, costs and expenses:
Amount [Applicable Eurodollar Rate ] Days Remaining
Being [Eurodollar Rate for such Incre- ] in Interest
Prepaid or [for Increment ment for Days ]x Period
Being x [Being Prepaid Remaining in ] 360
Not Convened [or Not Interest ]
or Continued [Converted Period ]
[or Continued (as quoted on the first
Eurodollar Business
Day following Lenders'
receipt of notice thereof)
For purposes of calculating the current Eurodollar Rate for the
days remaining in the Interest Period for the increment being
prepaid or not converted or continued, said current Eurodollar
Rate shall be an interest rate interpolated between Eurodollar
Rates quoted for standard calendar periods for subsequent
months' maturities in accordance with normal conventions.
4(i) Buy-Down Provisions. Notwithstanding anything contained in
this Agreement, the Company and any individual Lender (as used
in this Paragraph 4(i), a "Buy-Down Lender") may notify the
Administrative Agent in writing that the Company and such Buy-
Down Lender have entered into a Buy-Down Agreement with respect
to all or a portion of the Loans from time to time outstanding
held by such Buy-Down Lender, and that, pursuant to said Buy-
Down Agreement, the interest otherwise payable by the Company to
such Buy-Down Lender during any interest calculation period
shall be reduced based on the amount of Available Deposits
maintained by the Company with such Buy-Down Lender. Prior to
the occurrence of an Event of Default and acceleration of the
Obligations, each Buy-Down Lender shall bill the Company
directly for all interest accrued and payable to such Buy-Down
Lender on account of Loans from time to time outstanding held by
such Buy-Down Lender. The Administrative Agent, in rendering any
monthly interest billing pursuant to Paragraph 4(b) above shall
have no obligation to bill any interest payable to a Buy-Down
Lender or to verify the amount of any
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Available Deposits supporting the pricing of Loans held by any
Buy-Down Lender or the monthly interest amount payable to any
Buy-Down Lender, including without limitation, any deficiency
fees or other amounts payable to such Lender by the Company
under the applicable Buy-Down Agreement. The Company shall pay
all interest, and any deficiency fees or other amounts payable
under its Buy-Down Agreement with each Buy-Down Lender, directly
to such Buy-Down Lender within ten (10) calendar days of receipt
of a billing statement from such Buy-Down Lender. Any Buy-Down
Lender may elect not to make demand for the payment of
deficiency fees accruing in respect of Available Deposits from
time to time and it is expressly agreed and understood that: (1)
any such deficiency fee shall not, by reason of such failure of
such Buy-Down Lender or otherwise, be deemed to have been waived
by such Buy-Down Lender (except as such waiver is expressly
acknowledged in writing by such Buy-Down Lender from time to
time), and (2) all deficiency fees accrued and unpaid hereunder
and not so expressly waived, whether or not previously declared
due and owing by any such Buy-Down Lender, shall automatically
be due and payable in full upon the Maturity Date.
4(j) Computations. All computations of interest and fees payable
hereunder shall be based upon a year of 360 days for the actual
number of days elapsed.
4(k) Post-Default Interest. Following the occurrence and during
the continuance of an Event of Default, the Obligations shall
bear interest from the date due until paid in full at a per
annum rate equal to three percent (3%) above the Effective Fed
Funds Rate.
5. Miscellaneous Lending Provisions.
5(a) Use of Proceeds. Other than the initial Loans funded
hereunder on the Effective Date which shall be utilized to pay
in full all Indebtedness of the Company outstanding under the
Existing Credit Facility, the proceeds of all Standard Loans
and/or Swing Line Loans shall be utilized by the Company solely
for the purpose of originating and/or acquiring Mortgage Loans
(and to repay Swing Line Loans) and to support working capital
needs. The proceeds of all Gestation Loans shall be utilized by
the Company solely for the purpose of financing the gestation of
Mortgage-Backed Securities after their initial certification.
5(b) Request For New Loans; Determination of Availability;
Making of New Loans.
(1) On any Business Day that the Company desires to borrow
hereunder, it shall deliver a Loan and/or Interest Rate Election
Request to the
Administrative Agent no later than: (i) in the case or a
Standard Loan or a Gestation Loan, 10:00 a.m. (Los Angeles
time), and (ii) in the case of a Swing Line Loan, 1:00 p.m. (Los
Angeles time) on such date. Except for a request for a Swing
Line Loan made after 10:00 a.m. (Los Angeles time) on a given
date, only one Loan and/or Interest Rate Election Notice per
tranche shall be submitted to the Administrative Agent on any
date.
(2) Upon receipt of a Loan and/or Interest Rate Election
Request, the Administrative Agent shall make a Determination of
Availability with respect to any requested Loans, which
Determination of Availability shall be based upon information
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provided to the Administrative Agent by the Collateral Agent
pursuant to Paragraph 5 of the Security Agreement. In the event
the Administrative Agent shall have determined that the
Collateral Value of the Warehouse Borrowing Base or the
Collateral Value of the Gestation Loans Borrowing Base, as
applicable, is sufficient to support the requested borrowings,
the Administrative Agent shall: (i) in the case of any Loan
other than a Swing Line Loan, so notify the Lenders (which
notification may be telephonic) no later than 11:30 a.m. (Los
Angeles time) on the date of the delivery of such Loan and/or
Interest Rate Election Request of each Lender's respective
Percentage Share thereof and (ii) in the case of a Swing Line
Loan, so notify the Swing Line Lender (which notification may be
telephonic) no later than 1:15 p.m. (Los Angeles time) on the
date of delivery of such Loan and/or Interest Rate Election
Request of the Swing Line Loan to be funded with respect
thereto. Thereafter, each Lender shall make its Percentage Share
and the Swing Line Lender shall make the amount of the requested
Swing Line Loan available by wiring such amount in immediately
available same day funds to the Administrative Agent no later
than: (i) in the case of Loans other Swing Line Loans, 12:00
p.m. (Los Angeles time) on the date of request therefor, and
(ii) in the case of Swing Line Loans, 1:30 p.m. (Los Angeles
time) on the proposed funding date.
(3) Unless the Administrative Agent shall have received
notice from a Lender prior to a proposed funding deadline that
such Lender will not make available to the Administrative Agent
such Lender's portion of the proposed Loan or Loans, the
Administrative Agent may assume that such Lender has made such
portion available on the proposed funding date in accordance
with this Paragraph 5(b) and the Administrative Agent may, in
reliance upon such assumption, make available to the Company on
such date a corresponding amount. If and to the extent such
Lender shall not have so made such portion available, such
Lender and the Company jointly and severally agree to repay to
the Administrative Agent forthwith on demand such corresponding
amount together with interest thereon, for each day from the
date such amount is made available to the Company until the date
such amount is repaid to the Administrative Agent, in the case
of the Company at the interest rate applicable at the time to
the subject Loan or Loans, and in the case of such Lender at the
Effective Fed Funds Rate. If such Lender shall repay to the
Administrative Agent such corresponding amount, such amount so
repaid shall constitute such Lender's applicable Percentage
Share of such Loan or Loans for all purposes of this Agreement
as of the date such amount is made available to the Company. The
failure of any Lender to make the advances to be made by it as
part of any borrowing shall not relieve any other Lender of its
obligation hereunder to advance its applicable Percentage Share,
but no Lender shall be responsible for the failure of any other
Lender to make any such advance.
(4) The Administrative Agent shall make the principal amount
of requested Loans approved in accordance with this Paragraph
5(b) available to the Company by wiring such amount in
immediately available same day funds to the Funding Account no
later than: (i) in the case of Loans other than Swing Line
Loans, 11:30 a.m. (Los Angeles time) on the date of such
request, and (ii) in the case of Swing Line Loans, 1:30 p.m.
(Los Angeles time) on the proposed funding date therefor.
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(5) Each request for a Standard Loan, a Gestation Loan or a
Swing Line Loan shall be in the minimum amount of $500,000.00.
(6) The Company may elect to convert or continue Effective
Fed Funds Rate Loans, Reference Rate Loans and/or Eurodollar
Loans outstanding on any date consistent with the timing
requirements set forth in Paragraph 4(c) above.
5(c) Notes. The obligation of the Company to repay the Loans
shall be evidenced by notes payable to the order of each Lender,
as applicable, in the forms of those attached hereto as Exhibit
A-I (the "Tranche A Notes"), Exhibit A-2 (the "Tranche B
Notes"), and Exhibit A-3 (the "Tranche C Note"). Upon any
advance, conversion or prepayment of a Loan as provided herein,
each Lender is hereby authorized to record the date and amount
of each such advance and conversion made by such Lender, or the
date and amount of each such payment or prepayment of principal
of such Loan, the applicable Interest Period, if any, and
interest rate with respect thereto, on the schedules annexed to
and constituting a part of its respective Notes (or by any
analogous method any Lender may elect consistent with its
customary practices) and any such recordation shall constitute
prima facie evidence of the accuracy of the information so
recorded absent manifest error. The failure of any Lender to
make any such notation or the inaccuracy of any notation shall
not affect in any manner or to any extent the obligations of the
Company under the Loan Documents.
5(d) Borrowing Base Conformity.
(1) In support of its obligation to repay Standard Loans and
Swing Line Loans, the Company shall cause the Collateral Value
of the Warehouse Borrowing Base to be not less than, at any
date, the aggregate principal amount of Standard Loans and Swing
Line Loans outstanding on such date (including any Standard
Loans and Swing Line Loans to be funded on such date but
excluding Loans which will be repaid with proceeds of Loans to
be advanced on such date).
(2) In support of its obligations to repay Gestation Loans
hereunder, the Company shall cause the Collateral Value of the
Gestation Loans Borrowing Base to be not less than, at any date,
the aggregate principal amount of Gestation Loans outstanding on
such date, including any Gestation Loans to be funded on such
date.
(3) The Company shall promptly prepay, upon telephonic demand
by the Administrative Agent: (i) Standard Loans and/or Swing
Line Loans to the Administrative Agent on behalf of the Lenders
on any day in the amount of any shortfall in the Collateral
Value of the Warehouse Borrowing Base, as determined pursuant to
subparagraph (1) above, and (ii) Gestation Loans to the
Administrative Agent on behalf of the Lenders on any day in the
amount of any shortfall in the Collateral Value of the Gestation
Loans Borrowing Base, as determined pursuant to subparagraph (2)
above.
(4) If, but only if, at such time as the Company shall be
required to prepay Loans under subparagraphs (3)(i) of this
Paragraph 5(d) there shall not have occurred and be continuing
an Event of Default or Potential Default, in lieu of prepaying
<PAGE>
the Standard Loans or Swing Line Loans, the Company may deliver
to the Collateral Agent additional Eligible Mortgage Loans with
an aggregate Unit Collateral Value such that the Company shall
be in compliance with the requirement of subparagraph (1) above.
(5) If, but only if, at such time as the Company shall be
required to prepay Loans under subparagraphs (3)(ii) of this
Paragraph 5(d) there shall not have occurred and be continuing
an Event of Default or Potential Default, in lieu of prepaying
the Gestation Loans, the Company may deliver to the Collateral
Agent additional Eligible Gestation Mortgage Loans with an
aggregate Unit Collateral Value such that the Company shall be
in compliance with the requirement of subparagraph (2) above.
5(e) Nature and Place of Payments. All payments made on account
of the Obligations shall be made without setoff or counterclaim
in lawful money of the United States of America in immediately
available same day funds, free and clear of and without
deduction for any taxes, fees or other charges of any nature
whatsoever imposed by any taxing authority and must be received
by the Administrative Agent (i) by 10:00 a.m. (Los Angeles time)
on the day of payment on account of Obligations other than Swing
Line Loans and (ii) by 2:00 p.m. (Los Angeles time) in the case
of payments on account of Swing Line Loans, it being expressly
agreed and understood that if a payment is received after 10:00
a.m. or 2:00 p.m. (Los Angeles time), as applicable, by the
Administrative Agent, such payment will be considered to have
been made on the next succeeding Business Day and interest
thereon shall be payable at the then applicable rate during such
extension. Except as otherwise provided in Paragraph 4(i) above,
all payments on account of the Obligations shall be made to the
Administrative Agent through its office located at the address
listed on Schedule I hereof. If any payment required to be made
by the Company hereunder becomes due and payable on a day other
than a Business Day, the due date thereof shall be extended to
the next succeeding Business Day and interest thereon shall be
payable at the then applicable rate during such extension. All
amounts received by the Administrative Agent on account of the
Obligations shall be disbursed by the Administrative Agent
promptly to the Lenders by wire transfer on the date of receipt
if received by the Administrative Agent before 10:00 a.m. or
2:00 p.m. (Los Angeles time), as applicable, or if received
later, by 12:00 noon (Los Angeles time) on the next succeeding
Business Day, without further interest payable by the
Administrative Agent.
5(f) Prepayments.
(1) Subject to the provisions of Paragraph 4(h), the Company
may prepay Effective Fed Funds Rate Loans and Reference Rate
Loans in whole or in part at any time and the Company may prepay
Eurodollar Loans in whole or in part upon three Business Days'
notice to the Administrative Agent.
(2) Loans are subject to mandatory prepayment pursuant to
Paragraph 5(d) above and, in addition, by application of
proceeds of the sale or other disposition of Collateral as
provided in the Security Agreement.
(3) The Company shall pay in connection with any prepayment
hereunder all interest accrued but unpaid on the Loans to which
such prepayment is
<PAGE>
applied (including any prepayment premium that may be due under
Paragraph 4(h) above) concurrently with payment to the
Administrative Agent of any principal amounts.
5(g) Allocation of Payments Received.
(1) Prior to the occurrence of an Event of Default and
acceleration of all Loans outstanding hereunder or termination
of the commitments of the Lenders to advance Loans hereunder,
amounts received by the Administrative Agent as proceeds of the
sale or other disposition of Eligible Mortgage Loans and
Eligible Mortgage-Backed Securities, including without
limitation all amounts from time to time deposited in the
Settlement Account, shall be allocated among the Lenders as
follows:
(i) First, to the Swing Line Lender to repay all outstanding
Swing Line Advances;
(ii) Then, pro rata to the Lenders in accordance with their
respective Percentage Shares, until the principal amount of the
Loan or Loans initially advanced against such Eligible Mortgage
Loans and/or Eligible Mortgage-Backed Securities has been paid
in full;
(iii) Then, the balance, if any, to the Company.
(2) Following the occurrence of an Event of Default and
acceleration of all Loans outstanding hereunder or termination
of the commitments of the Lenders to advance Loans hereunder,
all amounts received by the Administrative Agent on account of
the Obligations shall be disbursed by the Administrative Agent
as follows:
(i) First, to the payment of fees owing to and expenses incurred
by the Administrative Agent and the Collateral Agent in the
performance of their respective duties and enforcement of their
respective rights under the Loan Documents, including, without
limitation, all costs and expenses of collection, attorneys'
fees, court costs and foreclosure expenses;
(ii) Then, to the repayment of all outstanding Swing Line
Advances;
(iii) Then, to the Lenders, pro rata in accordance with their
respective Percentage Shares, until the principal amount of all
Loans outstanding are paid in full;
(iv) Then, to the Lenders, pro rata in accordance with their
respective Percentage Shares, until all interest accrued on all
Loans is paid in full;
(v) Then, to the Lenders, pro rata in accordance with their
respective Percentage Shares, until all fees and any other
Obligations accrued by and due each Lender and the
Administrative Agent are paid in full; and
<PAGE>
(vi) Then, to such Persons as may be legally entitled thereto.
6. Collateral Security; Additional Documents.
6(a) Security Agreement. As collateral for the Obligations the
Company shall execute and deliver to the Administrative Agent:
(1) a security agreement in the form of that attached hereto as
Exhibit B (the "Security Agreement"), pursuant to which the
Company shall pledge, assign and grant to the Collateral Agent
for the pro rata, pari passu benefit of the Lenders a first
priority, perfected security interest in and lien upon the
Collateral, and (2) such UCC-1 financing statements as the
Administrative Agent may reasonably require.
6(b) Further Documents. The Company agrees to execute and
deliver and to cause to be executed and delivered to the
Administrative Agent on behalf of the Lenders from time to time
such confirmatory or supplementary security agreements,
financing statements and other documents, instruments and
agreements as the Administrative Agent may reasonably request,
which are in the Administrative Agent's judgment reasonably
necessary or desirable to obtain and maintain for the Lenders
and the Administrative Agent the benefit of the Loan Documents
and the Collateral.
7. Conditions to Making of Loans.
7(a) First Loan. As conditions precedent to any Lender's
obligation to fund the first Loan hereunder:
(1) The Company shall have delivered or shall have had delivered
to the Administrative Agent, in form and substance reasonably
satisfactory to the Lenders and their counsel, each of the
following:
(i) A duly executed copy of this Agreement;
(ii) A duly executed copy of the Security Agreement;
(iii) Duly executed originals of each of the Notes;
(iv) Duly executed copies of all financing statements and other
documents, instruments and agreements, properly executed, deemed
necessary or appropriate by the Administrative Agent, in its
reasonable discretion, to create and/or continue in favor of the
Collateral Agent for the pari passu benefit of the Lenders a
first priority perfected security interest in and lien upon the
Collateral;
(v) Certified copies of resolutions of the Board of Directors
of the Company approving the execution and delivery of the Loan
Documents, the performance of the Obligations and the
consummation of the transactions contemplated thereby;
<PAGE>
(vi) A certificate of the Secretary or an Assistant Secretary of
the Company certifying the names and true signatures of the
officers of the Company authorized to execute the Loan
Documents;
(vii) [Intentionally Omitted]
(viii) A copy of the Articles of Incorporation of the Company,
certified by the Secretary of State of the State of California
as of a recent date;
(ix) A copy of the Bylaws of the Company, certified by the
Secretary or an Assistant Secretary of the Company as of the
date of this Agreement as being accurate and complete;
(x) A certificate of the Secretary of State of the State of
California certifying that the Company is in good standing as of
a recent date;
(xi) A certificate of an executive officer of the Company in the
form of that attached hereto as Exhibit D dated as of the date
of this Agreement;
(xii) A certificate of a Responsible Financial Officer of the
Company, demonstrating in detail satisfactory to the
Administrative Agent the Company's compliance with the financial
covenants set forth in Paragraph 10(m) below at and as of
December 31, 1998 and the financial covenants set forth in
Paragraphs 10(i), (j), (k) and (1) at and as of April 30, 1999;
(xiii) A Loan Request requesting Loans hereunder in an amount
not less than all Indebtedness of the Company under the Existing
Credit Facilities as if such date; and
(xiv) Evidence reasonably satisfactory to the Administrative
Agent that upon the funding of the first Loan hereunder all
Indebtedness of the Company outstanding under the Existing
Credit Facility will be paid in full and the credit facility
evidenced thereby terminated.
(2) All acts and conditions precedent (including, without
limitation, the obtaining of any necessary regulatory approvals
and the making of any required filings, recordings or
registrations) required to be done and performed and to have
happened prior to the execution, delivery and performance of the
Loan Documents and to constitute the same legal, valid and
binding obligations of the Company, enforceable in accordance
with their respective terms, shall have been done and performed
and shall have happened in due and strict compliance with all
applicable laws.
(3) All documentation, including, without limitation,
documentation for corporate and legal proceedings in connection
with the transactions contemplated by the Loan Documents, shall
be satisfactory in form and substance to the Lenders and their
counsel.
<PAGE>
(4) All fees required to be paid pursuant to Paragraph 40) above
on the Effective Date shall have been paid.
7(b) Ongoing Loans. As conditions precedent to each Lender's
obligation or agreement to make any Loan hereunder (other than
any Standard Loan advanced by the Lenders to repay Swing Line
Loans), including the first Loan and including the conversion of
any Loan from or into a Eurodollar Loan or the continuation of
any Eurodollar Loan after the end of the applicable Interest
Period, at and as of the date of the funding, conversion or
continuation:
(1) There shall have been delivered to the Administrative Agent
a Loan and/or Interest Rate Election Request therefor;
(2) The representations and warranties of the Company
contained in the Loan Documents shall be accurate and complete
in all respects as if made on and as of the date of such
funding, conversion or continuance;
(3) There shall not have occurred an Event of Default or
Potential Default; and
(4) Following the funding of the requested Loan:
(i) the aggregate principal amount of Loans advanced by any
Lender will not exceed its respective Maximum Commitment; and
(ii) a. the aggregate principal amount of Loans outstanding will
not exceed the Aggregate Credit Limit; b. the applicable
limitations of Paragraphs l(a), 2(a), 3(a) and 5(d) above will
not be exceeded; c. the aggregate principal amount of Standard
Loans and/or Swing Line Loans outstanding will not exceed the
Collateral Value of the Warehouse Borrowing Base, and d. the
aggregate principal amount of Gestation Loans outstanding will
not exceed the Collateral Value of the Gestation Loans Borrowing
Base.
By delivering a Loan and/or Interest Rate Election Request to
the Administrative Agent hereunder, the Company shall be deemed
to have represented and warranted the accuracy and completeness
of the statements set forth in subparagraphs (b)(2) through
(b)(4) above.
8. Representations and Warranties of the Company and the Company.
As an inducement to the Administrative Agent and each Lender to
enter into this Agreement and to make Loans as provided herein,
the Company represents and warrants to the Administrative Agent
and each Lender that:
8(a) Financial Condition. The financial statements dated the
Statement Date and the Interim Date, copies of which have
heretofore been furnished to each Lender, are complete and
correct and present fairly in accordance with GAAP the financial
condition of the Company and its consolidated Subsidiaries at
such dates and the consolidated (and, in the case of the
financial statements dated the Interim Date, consolidating)
results of their operations and
<PAGE>
changes in financial position for the fiscal periods then ended,
subject, in the case of the Interim Date financial statements,
to normal year-end adjustments.
8(b) No Change. Since the Statement Date there has been no
material adverse change in the business, operations, assets or
financial or other condition of the Company or the Company and
its consolidated Subsidiaries taken as a whole.
8(c) Corporate Existence; Compliance with Law. The Company: (1)
is duly organized, validly existing and in good standing as a
corporation under the laws of the State of California and is
qualified to do business in the State of California and in each
other jurisdiction where its ownership of property or conduct of
business requires such qualification and where failure to
qualify could have a Material Adverse Effect, (2) has the
corporate power and authority to own and operate its property
and to conduct business in the manner in which it does and
proposes so to do, and (3) is in compliance with all
Requirements of Law and Contractual Obligations, the failure to
comply with which is reasonably likely to have a Material
Adverse Effect.
8(d) Corporate Power; Authorization; Enforceable Obligations.
The Company has the corporate power and authority to execute,
deliver and perform the Loan Documents and to obtain extensions
of credit hereunder, and has taken all necessary corporate
action to authorize the execution, delivery and performance of
the Loan Documents, and the borrowing hereunder. The Loan
Documents have been duly executed and delivered on behalf of the
Company and constitute legal, valid and binding obligations of
the Company, enforceable against the Company in accordance with
their respective terms, subject to the effect of applicable
bankruptcy and other similar laws affecting the rights of
creditors generally and the effect of equitable principles
whether applied in an action at law or a suit in equity.
8(e) No Legal Bar. The execution, delivery and performance of
the Loan Documents, the borrowing hereunder and the use of the
proceeds thereof, will not violate any Requirement of Law
applicable to, or any Contractual Obligation of, the Company or
create or result in the creation of any Lien (except the Lien
created by the Security Agreement) on any assets of the Company.
8(f) No Material Litigation. Except as disclosed on Exhibit E
hereto, no litigation, investigation or proceeding of or before
any arbitrator, court or Governmental Authority is pending (or,
to the knowledge of the Company, threatened) by or against the
Company or any of its Subsidiaries or against any of such
parties' properties or revenues which is reasonably likely to be
adversely determined and which, if adversely determined, is
reasonably likely to have a Material Adverse Effect.
8(g) Taxes. The Company and each of its Subsidiaries have filed
or caused to be filed in a timely manner all tax returns that
are required to be filed and have paid all taxes shown to be due
and payable on said returns or on any assessments made against
them or any of their property prior to the time that a penalty
arises with respect thereto, other than taxes which are being
contested in good faith by appropriate proceedings and as to
which the Company or applicable Subsidiary has established
adequate reserves in conformity with GAAP.
<PAGE>
8(h) Investment Company Act. The Company is not an "investment
company" or a company "controlled" by an "investment company"
within the meaning of the Investment Company Act of 1940, as
amended.
8(i) Subsidiaries. Attached hereto as Exhibit F is an accurate
and complete list of all Subsidiaries of the Company existing on
the Effective Date, their respective jurisdictions of
incorporation and the percentage of their capital stock owned by
the Company or other Subsidiaries. All of the issued and
outstanding shares of capital stock of such Subsidiaries have
been duly authorized and issued and are fully paid and non-
assessable.
8(j) Federal Reserve Board Regulations. Neither the Company nor
any of its Subsidiaries is engaged or will engage, principally
or as one of its important activities, in the business of
extending credit for the purpose of "purchasing" or "carrying"
any "margin stock" within the respective meanings of such terms
under Regulation U. No part of the proceeds of any Loan will be
used for "purchasing" or "carrying" "margin stock" as so defined
or for any purpose which violates, or which would be
inconsistent with, the provisions of the Regulations of the
Board of Governors of the Federal Reserve System.
8(k) ERISA. The Company and each of its Subsidiaries are in
compliance in all respects with the requirements of ERISA and no
Reportable Event has occurred under any Plan maintained by the
Company or any of its Subsidiaries which is likely to result in
the termination of such Plan for purposes of Title IV of ERISA.
8(l) Assets. The Company and each of its Subsidiaries have good
and marketable title to all property and assets reflected in the
financial statements referred to in Paragraph 8(a) above, except
property and assets sold or otherwise disposed of in the
ordinary course of business subsequent to the respective dates
thereof. Except as reflected in the financial statements
referred to in Paragraph 8(a) above or as permitted under
Paragraph 10(a) below, neither the Company nor any of its
Subsidiaries has outstanding Liens on any of its properties or
assets nor are there any security agreements to which the
Company or any of its Subsidiaries is a party, or title
retention agreements, whether in the form of leases or
otherwise, of any personal property.
8(m) Securities Acts. Neither the Company nor any of its
Subsidiaries has issued any unregistered securities in violation
of the registration requirements of Section 5 of the Securities
Act of 1933, as amended (the "Act"), or any other law, and is
not violating any rule, regulation or requirement under the Act
or the Securities Exchange Act of 1934, as amended. The Company
is not required to qualify an indenture under the Trust
Indenture Act of 1939, as amended, in connection with its
execution and delivery of the Notes.
8(n) Consents, etc. Except for consents, approvals and
authorizations previously obtained, no consent, approval or
authorization of, or registration, declaration or filing with,
any Person is required in connection with the execution and
delivery by the Company of the Loan Documents or the borrowing
hereunder (other than filings to perfect the Liens granted by
the Company pursuant to the Security Agreement) or the
performance by the Company of or compliance by the Company with
the terms, provisions and conditions hereof or thereof.
<PAGE>
8(o) Year 2000 Compliance. The Company has conducted a
comprehensive review and assessment of the Company's computer
applications and made inquiry of the Company's key suppliers and
vendors with respect to the 'year 2000 problem' (that is, the
risk that computer applications may not be able to properly
perform date-sensitive functions after December 31, 1999) and,
based on that review and inquiry, the Company does not believe
the year 2000 problem will result in a material adverse change
in the Company's business condition (financial or otherwise),
operations, properties or prospects, or ability to repay the
Obligations.
9. Affirmative Covenants. The Company hereby covenants and
agrees with the Administrative Agent and each Lender that, as
long as any Obligations remain unpaid or any Lender has any
obligation to make Loans hereunder and thereafter as provided in
Paragraphs 9(g) and 9(j) below, the Company shall:
9(a) Financial Statements. Furnish or cause to be furnished to
the Administrative Agent and each Lender directly:
(1) Within ninety (90) days after the last day of each fiscal
year of the Company and its Subsidiaries, consolidated and
consolidating statements of income and statements of changes in
financial position for such year and balance sheets as of the
end of such year presented fairly in accordance with GAAP and,
in the case of the Company, the requirements of HUD Handbook IG
4000.3 REV and accompanied, in all cases, by an unqualified
report of a firm of independent certified public accountants
acceptable to the Administrative Agent; accompanied in each case
by a certificate of the chief financial officer of the Company
demonstrating in detail satisfactory to the Administrative Agent
the Company's compliance with the financial covenants set forth
in Paragraphs 10 (i), 0), (k), (1) and (m) below as of and at
the end of such fiscal year; and
(2) Within thirty (30) days after the last day of each fiscal
quarter except the last fiscal quarter of each fiscal year of
the Company, consolidated and consolidating statements of income
for such fiscal quarter and balance sheets as of the end of such
fiscal quarter of the Company accompanied in each case by a
certificate of the chief financial officer of the Company
stating that such financial statements are presented fairly in
accordance with GAAP and demonstrating in detail satisfactory to
the Administrative Agent the Company's compliance with the
financial covenants set forth in Paragraphs 10 (i), (j), (k),
(1) and (m) below as of and at the end of such fiscal quarter.
9(b) Certificates; Reports; Other Information. Furnish or cause
to be furnished to the Administrative Agent and each of the
Lenders directly (and in the case of item (4) below, to the
Administrative Agent and the Collateral Agent directly):
(1) If so requested by the Administrative Agent, no later
than the fifth and twentieth calendar days of each month as of
the last day of the immediately preceding month and the
fifteenth day of such month, respectively, and at such other
times as the Administrative Agent may reasonably request, a
Borrowing Base Certificate;
<PAGE>
(2) No later than the thirtieth day of each calendar month a
Collateral Status Report; and no later than the thirtieth day
after the last day of each fiscal quarter, a warehouse and
commitment position report, a pipeline report and a delinquency
report, all in form and substance satisfactory to the
Administrative Agent;
(3) At the time any such report is filed with the Securities
and Exchange Commission, a copy of each of the Company's annual
10K and quarterly 10Q reports as so filed;
(4) No later than 9:00 a.m. (Los Angeles time) on each
Business Day in which any Eligible Mortgage-Backed Security is
included in the Warehouse Borrowing Base, a report on the face
amount of each Eligible Mortgage-Backed Security included in the
Warehouse Borrowing Base, and the purchase price thereof
pursuant to page 305 of the Knight-Ridder report for such day
(with a copy of a print-out of such page); and
(5) Promptly, such additional financial and other
information, including, without limitation, financial statements
of the Company, any Affiliate or any Approved Investor (other
than FNMA or FHLMC), and information regarding the Collateral as
any Lender, through the Administrative Agent, may from time to
time reasonably request, including, without limitation, such
information as is necessary for any Lender to participate out
any of its interests in Loans hereunder or to enable another
financial institution to become a signatory hereto.
9(c) Payment of Indebtedness. Pay, discharge or otherwise
satisfy at or before maturity or before it becomes delinquent,
defaulted or accelerated, as the case may be, all its
Indebtedness (including taxes), except: (1) Indebtedness being
contested in good faith and for which provision is made to the
satisfaction of the Administrative Agent for the payment thereof
in the event the Company is found to be obligated to pay such
Indebtedness and which Indebtedness is thereupon promptly paid
by the Company, and (2) Indebtedness consisting of taxes so long
as the same are paid prior to the time that a penalty arises
with respect thereto and that the failure to have paid such
taxes has not resulted in the existence of a Lien on any
Collateral included in the computation of the Collateral Value
of the Warehouse Borrowing Base or the Collateral Value of the
Gestation Loans Borrowing Base.
9(d) Maintenance of Existence and Properties. Maintain its
corporate existence and obtain and maintain all rights,
privileges, licenses, approvals, franchises, properties and
assets necessary or desirable in the normal conduct of its
business, including, without limitation, all approvals with
respect to GNMA, FNMA, FHLMC, FHA and VA, and comply with each
Contractual Obligation of and Requirement of Law applicable to
the Company, the failure to comply with which is reasonably
likely to have a Material Adverse Effect. The Company will at
all times be a FNMA, GNMA and FHLMC approved Seller/Servicer and
an approved issuer of GNMA Mortgage-Backed Securities.
9(e) Inspection of Property; Books and Records; Audits.
<PAGE>
(1) Keep proper books of record and account in which full,
true and correct entries in conformity with GAAP and all
Requirements of Law applicable to the Company shall be made of
all dealings and transactions in relation to its business and
activities; and
(2) Permit representatives of the Administrative Agent or any
Lender to: (i) visit and inspect any of its properties and
examine and make abstracts from any of its books and records at
any reasonable time during business hours and upon not less than
twenty four (24) hours prior notice (which may be telephonic)
and as often as may reasonably be desired by the Administrative
Agent or any Lender, (ii) discuss the business, operations,
properties and financial and other condition of the Company and
its Subsidiaries with officers and employees of such parties,
and with their independent certified public accountants, and
(iii) conduct periodic operational audits of the Company's
business and/or operations.
9(f) Notices. Promptly give written notice to the Administrative
Agent and each Lender directly of:
(1) The occurrence of any Potential Default or Event of
Default;
(2) Any litigation or proceeding affecting the Company or any
of its Subsidiaries or the Collateral which is reasonably likely
to be adversely determined and is reasonably likely to have a
Material Adverse Effect.
(3) The incurrence by the Company of any obligation in
connection with any derivatives transaction outside of the
normal course of business of the Company;
(4) Any event or anticipated event, including, without
limitation, the unavailability of pool insurance or other forms
of credit enhancement, which the Company anticipates is likely
to adversely affect the timely planned issuance of any Mortgage-
Backed Security which would have been supported by Mortgage
Loans owned by the Company;
(5) Receipt by the Company of written notice from any Person
that any pooling and servicing contract under which the Company
acts as servicer has been or may in the future be terminated
"for cause;" and
(6) Any changes in the President, Chief Executive Officer or
Chief Financial Officer of the Company.
9(g) Expenses. Pay all reasonable out-of-pocket costs and
expenses (including reasonable fees and disbursements of
counsel) of: (1) the Administrative Agent incident to the
preparation, negotiation and administration of the Loan
Documents and the protection of the rights of the Lenders and
the Administrative Agent under the Loan Documents, and (2)
following the occurrence and during the continuance of an Event
of Default, the Administrative Agent, the Collateral Agent and
each of the Lenders incident to the enforcement of payment of
the
<PAGE>
Obligations, whether by judicial proceedings or otherwise,
including, without limitation, in connection with bankruptcy,
insolvency, liquidation, reorganization, moratorium or other
similar proceedings involving the Company or a "workout" of the
Obligations; provided, however, that in no event shall the
Company be liable hereunder for any cost or expense relating to
the sale of participations or assignments pursuant to Paragraph
13 below. The obligations of the Company under this Paragraph
9(g) shall be effective and enforceable whether or not any Loan
is advanced by any Lender hereunder and shall survive payment of
all other Obligations.
9(h) Loan Documents. Comply with and observe all terms and
conditions of the Loan Documents.
9(i) Insurance. Obtain and maintain insurance with responsible
companies in such amounts and against such risks as are usually
carried by corporations engaged in similar businesses similarly
situated, including, without limitation, errors and omissions
coverage and fidelity coverage, and furnish the Administrative
Agent on request full information as to all such insurance.
9(j) Indemnification. Indemnify, defend and hold harmless the
Administrative Agent, each Lender and their respective
directors, officers, employees, attorneys and agents (each, an
"Indemnified Party") from and against any and all claims,
obligations, penalties, actions, suits, judgments, reasonable
costs and disbursements, losses, liabilities and damages
(including, without limitation, reasonable attorneys' fees) of
any kind whatsoever (collectively and severally, "Claims") which
may at any time be imposed on, assessed against or incurred by
such Indemnified Party in any way relating to or arising out of
the Loan Documents or the transactions contemplated thereby or
any action reasonably taken or omitted to be taken by such
Indemnified Party in connection with the foregoing; provided,
however, that the Company shall not be liable for any portion of
any Claims arising out of or resulting from the gross negligence
or willful misconduct of such Indemnified Party. Each
Indemnified Party agrees that it will promptly notify the
Company of any claim, action or suit asserted or commenced
against it and that the Company may assume the defense thereof
with counsel reasonably satisfactory to such Indemnified Party
at the Company's sole expense, that such Indemnified Party will
cooperate with the Company on such defense, and that such
Indemnified Party will not settle any such claim, action or suit
without the consent of the Company; provided, however, that in
the event such Indemnified Party is not reasonably satisfied
with such defense, such Indemnified Party may assume such
defense with counsel satisfactory to such Indemnified Party at
the Company's sole expense. Notwithstanding the foregoing, the
Company shall not be liable to any Indemnified Party for any
claim (i) arising from lawsuits relating to claims of any
Indemnified Party against any other Indemnified Party, (ii)
arising from disputes among the Indemnified Parties regarding
the allocation among any of such Persons of any payment properly
made by the Company in accordance with the Loan Documents or
(iii) relating to the sale of participations or assignments
pursuant to Paragraph 13 below. The indemnification obligations
of the Company under this Paragraph 90) shall survive
termination of this Agreement and payment in full of the
Obligations.
9(k) Shipment of Collateral. Direct the Collateral Agent to ship
Mortgage Loans and Mortgage-Backed Securities included in the
Warehouse Borrowing Base or the
<PAGE>
Gestation Loans Borrowing Base only to Approved Investors or
otherwise consistent with the provisions of the Loan Documents.
10. Negative Covenants. The Company hereby agrees that, as
long as any Obligations remain unpaid or any Lender has any
obligation to make Loans hereunder, the Company shall not, nor
shall the Company permit any Subsidiary of the Company to, at
any time, directly or indirectly:
10(a) Liens. Create, incur, assume or suffer to exist, any Lien
upon the Collateral except as contemplated by the Security
Agreement or create, incur, assume or suffer to exist any Lien
upon any of its other property and assets (including servicing
rights) except:
(1) Liens or charges for current taxes, assessments or other
governmental charges which are not delinquent or which remain
payable without penalty, or the validity of which are contested
in good faith by appropriate proceedings upon stay of execution
of the enforcement thereof, provided the Company or the
Subsidiary, as applicable, shall have set aside on its books and
shall maintain adequate reserves for the payment of same in
conformity with GAAP;
(2) Liens, deposits or pledges made to secure statutory
obligations, surety or appeal bonds, or bonds for the release of
attachments or for stay of execution, or to secure the
performance of bids, tenders, contracts (other than for the
payment of borrowed money), leases or for purposes of like
general nature in the ordinary course of the Company's or the
Subsidiary's business;
(3) Purchase money security interests for property hereafter
acquired, conditional sale agreements, or other title retention
agreements, with respect to property hereafter acquired;
provided, however, that no such security interest or agreement
shall affect any servicing rights or extend to any property
other than the property acquired; and
(4) Liens securing Permitted Other Secured Debt.
10(b) Mandatory Commitments. Fail to hold Take-Out Commitments
in an aggregate amount necessary to provide for the sale of all
Mortgage Loans included in the Warehouse Borrowing Base and the
Gestation Loans Borrowing Base other than Eligible Uncommitted
Mortgage Loans.
10(c) Indebtedness. Create, incur, assume or suffer to exist, or
otherwise become or be liable in respect of, any Indebtedness
except:
(1) The Obligations;
(2) Indebtedness reflected in the financial statements
referred to in Paragraph 8(a) above other than pursuant to the
Existing Credit Facilities;
(3) Trade debt incurred in the ordinary course of business, paid
within forty five (45) days after the same has become due and
payable or which is being
<PAGE>
contested in good faith, provided provision is made to the
satisfaction of the Administrative Agent for the eventual
payment thereof in the event it is found that such contested
trade debt is payable by the Company;
(4) Indebtedness secured by Liens permitted under Paragraph
10(a) above; and
(5) Permitted Other Debt, including Permitted Other Secured
Debt.
10(d) Consolidation and Merger. Liquidate or dissolve, or enter
into any consolidation, merger, partnership, joint venture,
syndicate or other combination unless: (1) the Company involved
therewith remains as a separate surviving corporation following
any such consolidation, merger, partnership, joint venture,
syndicate or other combination, and (2) no Potential Default or
Event of Default exists immediately prior to, or will occur as a
result of, such consolidation, merger, partnership, joint
venture, syndicate or other combination.
10(e) Acquisitions. Purchase or acquire or incur liability for
the purchase or acquisition of any or all of the assets or
business of any Person other than in the ordinary course of
business (it being expressly agreed and understood that
acquisitions if servicing and mortgage loan inventory are normal
course of business activities).
10(f) Payment of Dividends. Declare or pay any dividends upon
any shares of the Company's stock now or hereafter outstanding,
except dividends payable in the capital stock of the Company, or
make any distribution of assets to its stockholders as such,
whether in cash, property or securities if upon the payment
thereof there would exist an Event of Default or Potential
Default.
10(g) Investments; Advances. Make or commit to make any advance,
loan or extension of credit or capital contribution to, or
purchase any stock, bonds, notes, debentures or other securities
of, or make any other investment in, any Person.
10(h) Sale of Assets. Sell, lease, assign, transfer or otherwise
dispose of any of its assets (other than obsolete or worn out
property), whether now owned or hereafter acquired, other than
in the ordinary course of business and at fair market value (it
being expressly agreed and understood that the sale or other
disposition of Mortgage Loans with or without servicing released
or Mortgage Backed Securities is in the ordinary course of
business).
10(i) Minimum Net Worth Tests. Permit at any date the Company's
(1) Adjusted Tangible Net Worth be less than $25,000,000.00, or
(2) GAAP Net Worth to be less than $15,000,000.00.
10(j) Debt to Net Worth Ratio. Permit its ratio at any date of
Total Debt to Adjusted Tangible Net Worth to be more than
5.0:1.0.
10(k) Current Ratio. Permit its ratio at any date of Current
Assets to Current Liabilities to be less than 1.08:1.0.
<PAGE>
10(l) Servicing Portfolio. Fail to maintain a servicing
portfolio with respect to residential mortgage loans with an
aggregate outstanding principal balance of at least
$1,000,000,000.00, the servicing rights with respect to which
are subject only to the Lien created by the Security Agreement
and other Liens permitted under Paragraph 10(a) above, excluding
for purposes of determining compliance herewith all Company and
Affiliate-owned residential mortgage loans.
10(m) Net Loss Limitation. Permit its net losses (determined in
accordance with GAAP) for any fiscal year of the Company to
exceed $2,000,000.
10(n) Modification of Policies and Procedures. Make any material
change in (1) its underwriting policies and procedures which
would, due to reduced standards of creditworthiness for
potential Obligors or reduced standards of approval for Property
securing a Mortgage Loan, result in the expansion of the pool of
potential Obligors on Mortgage Loans originated or purchased by
the Company or such Subsidiary, or (2) its hedging policies
relating to Mortgage Loans and Mortgage-Backed Securities, as
such are in effect on the Effective Date.
10(o) Subsidiaries. Create or permit the creation of any
Subsidiary not in existence as of the Effective Date.
10(p) Transactions with Affiliates. Purchase, acquire or lease
any property from, or sell, transfer or lease any property to,
lend or advance any money to, borrow any money from, guarantee
any obligation of, acquire any stock, obligations or securities
of, or enter into any management or similar fee arrangement
with, any Affiliate, other than on an arms-length basis upon
terms and conditions comparable to those that could be reached
with a third party.
10(q) Change in Control. Permit any change to occur in the
Company's senior management, or in the ownership or control of
the Company.
11. Events of Default. Upon the occurrence of any of the
following events (an "Event of Default"):
11(a) The Company shall fail to pay any Obligation on the date
when due; or
11(b) Any representation or warranty made or deemed made by the
Company in any Loan Document or in connection with any Loan
Document shall be inaccurate or incomplete in any respect on or
as of the date made or deemed made; or
11(c) The Company shall fail to maintain its corporate existence
or shall default in the observance or performance of any
covenant or agreement contained in Paragraph 10 above or in the
Security Agreement; or
11(d) The Company shall fail to observe or perform any other
term or provision contained in the Loan Documents and such
failure shall continue for ten (10) days; or
11(e) The Company or any of its Subsidiaries shall default in
any payment of principal of or interest on any Indebtedness
(other than the Obligations) or any other event shall
<PAGE>
occur, the effect of which other event is to permit such
Indebtedness to be declared or otherwise to become due prior to
its stated maturity; or
11(f) (1) The Company or any of its Subsidiaries shall commence
any case, proceeding or other action (i) under any existing or
future law of any jurisdiction, domestic or foreign, relating to
bankruptcy, insolvency, reorganization or relief of debtors,
seeking to have an order for relief entered with respect to it,
or seeking to adjudicate it a bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, winding-up,
liquidation, dissolution, composition or other relief with
respect to it or its debts, or (ii) seeking appointment of a
receiver, trustee, custodian or other similar official for it or
for all or any substantial part of its assets, or the Company or
any of its Subsidiaries shall make a general assignment for the
benefit of its creditors; or (2) there shall be commenced
against the Company or any of its Subsidiaries any case,
proceeding or other action of a nature referred to in clause (1)
above which (i) results in the entry of an order for relief or
any such adjudication or appointment, or (ii) remains
undismissed, undischarged or unbonded for a period of sixty (60)
days; or (3) there shall be commenced against the Company or any
of its Subsidiaries any case, proceeding or other action seeking
issuance of a warrant of attachment, execution, distraint or
similar process against all or substantially all of its assets
which results in the entry of an order for any such relief which
shall not have been vacated, discharged, stayed, satisfied or
bonded pending appeal within sixty (60) days from the entry
thereof; or (4) the Company or any of its Subsidiaries shall
take any action in furtherance of, or indicating its consent to,
approval of, or acquiescence in (other than in connection with a
final settlement), any of the acts set forth in clauses (1), (2)
or (3) above; or (5) the Company or any of its Subsidiaries
shall generally not, or shall be unable to, or shall admit in
writing its inability to, pay its debts as they become due; or
11(g) (1) Any Person shall engage in any "prohibited
transaction" (as defined in Section 406 of ERISA or Section 4975
of the Internal Revenue Code) involving any Plan,
(2) any "accumulated funding deficiency" (as defined in Section
302 of ERISA), whether or nor waived, shall exist with respect
to any Plan, (3) a Reportable Event shall occur with respect to,
or proceedings shall commence to have a trustee appointed, or a
trustee shall be appointed, to administer or to terminate, any
Single Employer Plan, which Reportable Event or institution of
proceedings is, in the reasonable opinion of the Administrative
Agent, likely to result in the termination of such Plan for
purposes of Title IV of ERISA, and, in the case of a Reportable
Event, the continuance of such Reportable Event unremedied for
ten days after notice of such Reportable Event pursuant to
Section 4043(a), (c) or (d) of ERISA is given or the continuance
of such proceedings for ten days after commencement thereof, as
the case may be, (4) any Single Employer Plan shall terminate
for purposes of Title IV of ERISA, (5) any withdrawal liability
to a Multiemployer Plan shall be incurred by the Company or any
of its Subsidiaries or (6) any other event or condition shall
occur or exist; and in each case in clauses (1) through (6)
above, such event or condition, together with all other such
events or conditions, if any, is likely to subject the Company
or any of its Subsidiaries to any tax, penalty or other
liabilities in the aggregate material in relation to the
business, operations, property or financial or other condition
of the Company or any of its Subsidiaries; or
11(h) Any judgment or decree shall be entered against the
Company or any of its Subsidiaries and shall not have been
vacated, discharged, stayed, satisfied or bonded pending appeal
within sixty (60) days from the entry thereof; or
11(i) Ten percent (10%) or more by number of Mortgage Loans held
by the Collateral Agent as Collateral under the Security
Agreement shall cease to be Eligible Mortgage Loans during any
consecutive sixty (60) day period; or
11(j) A material adverse change occurs, or is reasonably likely
to occur, in the Company's business condition (financial or
otherwise), operations, properties or prospects, or ability to
repay the Obligations;
THEN,
(1) Automatically upon the occurrence of an Event of Default
under Paragraph 11(f) above,
(2) At the option of any Lender upon the occurrence of an Event
of Default under Paragraph 11 (a) above, and
(3) In all other cases, at the option of the Majority Lenders,
each Lender's obligation to make Loans hereunder shall terminate
and/or the principal balance of outstanding Loans and interest
accrued but unpaid thereon and all other Obligations shall
become immediately due and payable, without demand upon or
presentment to the Company, which are expressly waived by the
Company.
12. The Administrative Agent.
12(a) Appointment. Each Lender hereby irrevocably designates and
appoints the Administrative Agent as the agent of such Lender
under the Loan Documents and such Lender hereby irrevocably
authorizes the Administrative Agent, as the agent of such
Lender, to take such action on its behalf under the provisions
of the Loan Documents and to exercise such powers and perform
such duties as are expressly delegated to the Administrative
Agent by the terms of the Loan Documents, together with such
other powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary elsewhere in the
Loan Documents, the Administrative Agent shall not have any
duties or responsibilities, except those expressly set forth
herein or therein, or any fiduciary relationship with any
Lender, and no implied covenants, functions, responsibilities,
duties, obligations or liabilities shall be read into the Loan
Documents or otherwise exist against the Administrative Agent.
12(b) Delegation of Duties. The Administrative Agent may execute
any of its duties under the Loan Documents by or through agents
or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The
Administrative Agent shall not be responsible for the negligence
or misconduct of any agents or attorneys-in-fact selected by it
with reasonable care.
<PAGE>
12(c) Exculpatory Provisions. Neither the Administrative Agent
nor any of its officers, directors, employees, agents, attorneys-
in-fact or Affiliates shall be (1) liable for any action
lawfully taken or omitted to be taken by it or such Person under
or in connection with the Loan Documents (except for its or such
Person's own gross negligence or willful misconduct)~ or (2)
responsible in any manner to any of the Lenders for any
recitals, statements, representations or warranties made by the
Company or any officer thereof contained in the Loan Documents
or in any certificate, report, statement or other document
referred to or provided for in, or received by the
Administrative Agent under or in connection with, the Loan
Documents or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of the Loan Documents
or for any failure of the Company to perform its obligations
hereunder. The Administrative Agent shall be under no obligation
to any Lender to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions
of, the Loan Documents or to inspect the properties, books or
records of the Company.
12(d) Reliance by Administrative Agent. The Administrative Agent
shall be entitled to rely, and shall be fully protected in
relying, upon any note, writing, resolution, notice, consent,
certification, affidavit, letter, cablegram, telegram, telecopy,
telex or teletype message, statement, order or other document or
conversation reasonably believed by it to be genuine and correct
and to have been signed, sent or made by the proper Person or
Persons and upon advice and statements of legal counsel
(including, without limitation, counsel to the Company),
independent accountants and other experts selected by the
Administrative Agent. The Administrative Agent may deem and
treat the payee of any note as the owner thereof for all
purposes. As to the Lenders: (1) the Administrative Agent shall
be fully justified in failing or refusing to take any action
under the Loan Documents unless it shall first receive such
advice or concurrence of the Majority Lenders or all of the
Lenders, as appropriate, or it shall first be indemnified to its
satisfaction by the Lenders ratably in accordance with their
respective Percentage Shares against any and all liability and
expense which may be incurred by it by reason of taking or
continuing to take any action (except for liabilities and
expenses resulting from the Administrative Agent's gross
negligence or willful misconduct), and (2) the Administrative
Agent shall in all cases be fully protected in acting, or in
refraining from acting, under the Loan Documents in accordance
with a request of the Majority Lenders or all of the Lenders, as
appropriate, and such request and any action taken or failure to
act pursuant thereto shall be binding upon all the Lenders.
12(e) Notice of Default. The Administrative Agent shall not be
deemed to have knowledge or notice of the occurrence of any
Potential Default or Event of Default hereunder unless the
Administrative Agent has received notice from a Lender or the
Company referring to the Loan Documents, describing such
Potential Default or Event of Default and stating that such
notice is a "notice of default." In the event that the
Administrative Agent receives such a notice, the Administrative
Agent shall give notice thereof to the Lenders. The
Administrative Agent shall take such action with respect to such
Potential Default or Event of Default as shall be reasonably
directed by the Majority Lenders (or any Lender with respect to
an Event of Default under Paragraph 11 (a) above)), provided
that, unless and until the Administrative Agent shall have
received such directions, the Administrative Agent may (but
shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Potential Default or
Event of Default as it shall deem advisable in the best interest
of the Lenders.
<PAGE>
12(f) Non-Reliance on Administrative Agent or Other Lenders.
Each Lender expressly acknowledges that neither the
Administrative Agent nor any of its officers, directors,
employees, agents, attorneys-in-fact or Affiliates has made any
representations or warranties to it and that no act by the
Administrative Agent hereafter taken, including any review of
the affairs of the Company, shall be deemed to constitute any
representation or warranty by the Administrative Agent to any
Lender. Each Lender represents to the Administrative Agent that
it has, independently and without reliance upon the
Administrative Agent or any other Lender, and based on such
documents and information as it has deemed appropriate, made its
own appraisal of and investigation into the business,
operations, property, financial and other condition and
creditworthiness of the Company and made its own decision to
make its Loans hereunder and enter into this Agreement. Each
Lender also represents that it will, independently and without
reliance upon the Administrative Agent or any other Lender, and
based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit
analysis, appraisals and decisions in taking or not taking
action under this Agreement, and to make such investigation as
it deems necessary to inform itself as to the business,
operations, property, financial and other condition and
creditworthiness of the Company. Except for notices, reports and
other documents expressly required to be furnished to the
Lenders by the Administrative Agent hereunder or furnished to
the Administrative Agent for distribution to the Lenders, the
Administrative Agent shall have no duty or responsibility to
provide any Lender with any credit or other information
concerning the business, operations, property, financial and
other condition or creditworthiness of the Company which may
come into the possession of the Administrative Agent or any of
its officers, directors, employees, agents, attorneys-in-fact or
Affiliates.
12(g) Back-Up Indemnification. The Lenders agree to indemnify
the Administrative Agent in its capacity as such (to the extent
not reimbursed by the Company and without limiting the
obligation of the Company to do so), ratably according to the
respective amounts of their Percentage Shares, from and against
any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind whatsoever which may at any time
(including without limitation at any time following the payment
of the Obligations) be imposed on, incurred by or asserted
against the Administrative Agent in any way relating to or
arising out of the Loan Documents or any documents contemplated
by or referred to herein or the transactions contemplated hereby
or any action taken or omitted by the Administrative Agent under
or in connection with any of the foregoing; provided that no
Lender shall be liable for the payment of any portion of such
liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting
from the Administrative Agent's gross negligence or willful
misconduct. The agreements in this subsection shall survive the
payment of the Obligations.
12(h) Administrative Agent in Its Individual Capacity. The
Administrative Agent and its Affiliates may make loans to,
accept deposits from and generally engage in any kind of
business with the Company as though the Administrative Agent
were not the Administrative Agent hereunder. With respect to
such loans made or renewed by it and any Note issued to it, the
Administrative Agent shall have the same rights and powers under
the Loan Documents as any Lender and may exercise the same as
though it were not the Administrative Agent, and the terms
"Lender" and "Lenders'~ shall include the Administrative Agent
in its individual capacity.
<PAGE>
12(i) Successor Administrative Agent. The Administrative Agent
may resign as Administrative Agent under the Loan Documents upon
ninety (90) days' notice to the Lenders and agrees that it will
so resign in the event it ceases to hold any Percentage Share of
the Obligations. If the Administrative Agent shall resign, then
the Majority Lenders shall appoint from among the Lenders a
successor agent or, if the Majority Lenders are unable to agree
on the appointment of a successor agent, the retiring
Administrative Agent shall appoint a successor agent for the
Lenders (which successor agent, assuming that there does not
exist a Potential Default or Event of Default, shall be subject
to approval by the Company, which approval shall not be
unreasonably withheld), whereupon such successor agent shall
succeed to the rights, powers and duties of the retiring
Administrative Agent, and the term "Administrative Agent" shall
mean such successor agent effective upon its appointment, and
the former Administrative Agent's rights, powers and duties as
Administrative Agent shall be terminated, without any other or
further act or deed on the part of such former Administrative
Agent or any of the parties to this Agreement or any of the
other Loan Documents or successors thereto. After any retiring
Administrative Agent's resignation hereunder as Administrative
Agent, the provisions of this Paragraph 12 shall inure to its
benefit as to any actions taken or omitted to be taken by it
while it was Administrative Agent under the Loan Documents.
13. Additional Lenders; Assignments and Participations;
Increases in Availability.
13(a) Addition of New Lender.
(1) Subject to the limitation on the Maximum Aggregate Credit
Limit, the Company or any Lender may at any time propose that
one or more financial institutions (each, an "Applicant
Financial Institution") become an additional Lender hereunder.
At such time, the Company or such Lender, as applicable, shall
notify the other parties hereto, including the Administrative
Agent, of the identity of such Applicant Financial Institution
and such Applicant Financial Institution's proposed Maximum
Commitment. The addition of any Applicant Financial Institution
shall be subject to:
(i) If such Applicant Financial Institution is proposed for
inclusion as a Lender hereunder by an existing Lender, the prior
written consent of the Company and the Administrative Agent, and
if such Applicant Financial Institution is proposed for
inclusion as a Lender hereunder by the Company, the prior
written consent of the Administrative Agent, none of which
consents shall be unreasonably withheld and which, if given,
shall be given in writing to the other parties hereto no later
than the tenth day following receipt by the Company and/or the
Administrative Agent of a written request for the inclusion of
such Applicant Financial Institution as a Lender hereunder; and
(ii) Delivery of each of the items and the occurrence of each of
the events described in subparagraph (2) below.
(2) Assuming delivery of the consent of the Company and/or
the Administrative Agent as required pursuant to subparagraph
(1)(i) above, the Administrative Agent, the Company and, if such
Applicant Financial Institution will be
<PAGE>
acquiring a portion of an existing Lender's Maximum Commitment
by way of assignment from such existing Lender, such existing
Lender, shall mutually agree on the Adjustment Date on which
such Applicant Financial Institution shall become a party hereto
and a Lender hereunder. On such Adjustment Date:
(i) The Administrative Agent shall deliver to the Company and
each of the Lenders a replacement Commitment Schedule to be
effective as of such Adjustment Date, reflecting the Aggregate
Credit Limit and the Lenders' respective Maximum Commitments and
Percentage Shares.
(ii) No later than 11:30 a.m. (Los Angeles time) on such
Adjustment Date, such Applicant Financial Institution shall pay
to the Administrative Agent an amount equal to such Applicant
Financial Institution's Percentage Share of Loans outstanding.
The Administrative Agent shall thereupon remit to the Lenders
their Percentage Shares of such funds. Following such Adjustment
Date, fees and interest accrued on the Obligations to but not
including such Adjustment Date shall be payable to the Lenders
in accordance with their respective Percentage Shares prior to
such Adjustment Date before giving effect to the readjustment
thereof pursuant to the Commitment Schedule provided by the
Administrative Agent on such Adjustment Date.
(iii) If such Applicant Financial Institution is acquiring a
portion of an existing Lender's Maximum Commitment and
Percentage Share by way of assignment from such existing Lender,
the Administrative Agent, the Company, the assigning Lender and
the Applicant Financial Institution shall execute and deliver an
Assignment Agreement, or if such Applicant Financial Institution
is becoming a Lender hereunder as a result of an increase in the
Aggregate Credit Limit, the Administrative Agent, the Company
and the Applicant Financial Institution shall execute and
deliver an Additional Lender Agreement, either of which
Assignment Agreement or Additional Lender Agreement shall
constitute an amendment to this Agreement and the other Loan
Documents to the extent necessary to reflect the inclusion of
the Applicant Financial Institution as a Lender hereunder.
(iv) The Company shall execute and deliver to such Applicant
Financial Institution a Tranche A Note and a Tranche B Note.
(v) The Applicant Financial Institution shall pay to the
Administrative Agent a registration fee of $3,500.00.
Subject to the requirements described above, on the Adjustment
Date the Applicant Financial Institution shall become a party
hereto and a Lender hereunder and shall be entitled to all
rights, benefits and privileges accorded a Lender under the Loan
Documents and shall be subject to all obligations of a Lender
under the Loan Documents.
<PAGE>
13(b) Assignments Among Existing Lenders. Any Lender may, with
the consent of the Company, such consent not to be unreasonably
withheld, at any time agree to assign a portion of such Lender's
Maximum Commitment and Percentage Share to an existing Lender (a
"Transferee Lender"). In such event, such Lender and the
Transferee Lender shall so notify the Administrative Agent and
the Company of the Adjustment Date on which such assignment is
to be effective. On such Adjustment Date:
(1) The Company shall deliver to the Administrative Agent and
each of the Lenders a Commitment Schedule to be effective as of
such Adjustment Date, reflecting the Aggregate Credit Limit and
the Lenders' respective Maximum Commitments and Percentage
Shares.
(2) The Administrative Agent, the Company, the assigning
Lender and the Transferee Lender shall execute and deliver an
Assignment Agreement, which shall constitute an amendment to
this Agreement and the other Loan Documents to the extent
necessary to reflect such transfer.
(3) No later than 12:30 p.m. (Los Angeles time) on such
Adjustment Date, the Transferee Lender shall pay to the
Administrative Agent an amount equal to such Transferee Lender's
Percentage Share of Loans outstanding in excess of such
Transferee Lender's previous Percentage Share thereof. The
Administrative Agent shall thereupon remit to the transferring
Lender the amount thereof.
13(c) Minimum Loan Commitment. Notwithstanding anything to the
contrary contained herein, the inclusion of any Applicant
Financial Institution as a Lender hereunder pursuant to
Paragraph 13(a) above and the assignment by an existing Lender
of a portion of such Lender's Maximum Commitment to a Transferee
Lender pursuant to Paragraph 13(b) above shall be subject to the
following restrictions:
(1) If an Applicant Financial Institution is acquiring a
portion (but not all) of an existing Lender's Maximum Commitment
by way of an assignment from such existing Lender, then such
assignment of Maximum Commitment must be in the minimum amount
of $10,000,000.00 (or if in a higher amount, in integral
multiples of $5,000,000.00 in excess thereof) and such existing
Lender must continue to hold a Maximum Commitment of not less
than $15,000,000.00 following the consummation of the
contemplated assignment;
(2) If an existing Lender is assigning a portion (but not
all) of its Maximum Commitment to a Transferee Lender, such
assignment of Maximum Commitment is in the minimum amount of
$10,000,000.00 (or if in a higher amount, in integral multiples
of $5,000,000.00 in excess thereof) and such existing Lender
shall continue to hold a Maximum Commitment of not less than
$15,000,000.00 following the consummation of the contemplated
assignment.
<PAGE>
13(d) Sub-Participations by Lenders. Any Lender may at any time
sell participating interests in any of the Obligations held by
such Lender and its Maximum Commitment hereunder; provided,
however, that:
(1) No participation contemplated by this Paragraph 13(d) shall
relieve such Lender from its obligations hereunder or under any
other Loan Document;
(2) Such Lender shall remain solely responsible for the
performance of such obligations;
(3) The Company, the Administrative Agent, and the other
Lenders shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations
under the Loan Documents;
(4) Such Lender shall not enter into participation agreements
with any participants (other than Affiliates of such Lender)
involving the sale of a participation interest in less than
$10,000,000.00 of such Lender's Maximum Commitment for each
$10,000,000.00 of Maximum Commitment held by such Lender;
(5) The participant under the participation agreement shall
have no rights under the Loan Documents or to control the
actions of the Lender selling such participation other than with
respect to any amendment, modification or waiver which extends
the due date for payment of any principal, interest or fees
payable under the Loan Documents or reduces the interest rate or
the amount of principal or fees applicable to the Obligations
(except reductions contemplated by the Loan Documents);
provided, however, that if such participation agreement grants
rights to participants to approve such amendments, modifications
and waivers, such participation agreement shall contain a voting
mechanism whereby a majority of the portion of the Obligations
owing to the Lender selling such participation (whether held by
such Lender or participated) shall control the vote for all of
that Lender's portion of the Obligations; and
(6) Except in the case of a sale of a participation to
another Lender (which agrees to be bound by the participation
terms hereof), any such participation agreement shall not permit
the participant thereunder to transfer, pledge, assign, sell sub-
participations in, or otherwise encumber its participation
interest in the Obligations.
13(e) Federal Reserve Bank. Notwithstanding the provisions of
Paragraphs 13(a) and 13(b) above, any Lender may at any time
pledge or assign all or any portion of such Lender's rights
under this Agreement and the other Loan Documents to a Federal
Reserve Bank.
13(f) Increases in Availability. From time to time the Company
and any Lender (an "Increasing Lender") may agree, with the
prior written consent of the Administrative Agent, to
permanently or temporarily increase such Lender's Maximum
Commitment and Percentage Share, the dollar amount of any such
increase to be, subject to the Maximum Aggregate Credit Limit
limitation, in the minimum dollar amount of $10,000,000.00 and
integral multiples of $5,000,000.00 in excess thereof. The
Company and the Increasing Lender shall agree on the
<PAGE>
Adjustment Date for said increase and, if the increase is a
temporary rather than permanent increase, the date on which said
increase shall terminate (the "Temporary Increase Termination
Date"). The Company shall deliver to the Administrative Agent
and each of the Lenders a Commitment Schedule to be effective as
of such Adjustment Date, and the Lenders shall purchase and sell
among themselves Loans in amounts necessary to effect the new
Percentage Shares as of such Adjustment Date. On the Temporary
Increase Termination Date the aggregate amount of such
Increasing Lender's Percentage Share of outstanding Standard
Loans and Gestation Loans held by the Increasing Lender in
excess of its Maximum Commitment after giving effect to the
termination of the subject increase shall, if but only if at
such Temporary Increase Termination Date there does not exist an
Event of Default, be payable in full. If at the Temporary
Increase Termination Date there exists an Event of Default, the
temporary increase of the Increasing Lender shall continue in
effect and, unless otherwise agreed by one hundred percent
(100%) of the Lenders, shall be treated thereafter as a
permanent increase in said Increasing Lender's Maximum
Commitment.
14. Miscellaneous Provisions.
14(a) No Assignment. The Company may not assign its rights or
obligations under this Agreement or the other Loan Documents
without the prior written consent of one hundred percent (100%)
of the Administrative Agent and the Lenders. Any purported
assignment in violation of this Paragraph 14(a) shall
automatically be deemed null and void. Subject to the foregoing,
all provisions contained in this Agreement and the other Loan
Documents or any document or agreement referred to herein or
relating hereto shall inure to the benefit of each Lender, its
successors and assigns, and shall be binding upon the Company
and its respective successors and assigns.
14(b) Amendment. This Agreement may not be amended or terms or
provisions hereof waived unless such amendment or waiver is in
writing and signed by the Majority Lenders, the Administrative
Agent and the Company; provided, however, that without the prior
written consent of one hundred percent (100%) of the
Administrative Agent and the Lenders and (other than with
respect to subparagraph (4) below) the Company, no amendment or
waiver shall: (1) waive or amend any term or provision of
Paragraphs 10 (i), (j), (k), (1) or (m) above or the definition
of any Type of Collateral, (2) reduce the principal of, or
interest on, the Loans, (3) modify the Aggregate Credit Limit or
the Maximum Aggregate Credit Limit, (4) modify any Lender's
Percentage Share, (5) modify the definition of "Majority
Lenders," (6) extend the Maturity Date, or (7) amend this
Paragraph 14(b) or any provision of this Agreement which by its
terms requires the consent or approval of one hundred percent
(100%) of the Lenders. It is expressly agreed and understood
that the failure by the required Lenders to elect to accelerate
amounts outstanding hereunder and/or to terminate the obligation
of the Lenders to make Loans hereunder shall not constitute an
amendment or waiver of any term or provision of this Agreement.
14(c) Cumulative Rights; No Waiver. The rights, powers and
remedies of the Administrative Agent and the Lenders hereunder
and under the other Loan Documents are cumulative and in
addition to all rights, powers and remedies provided under any
and all agreements among the Company, the Administrative Agent
and the Lenders relating hereto and
<PAGE>
thereto, at law, in equity or otherwise. Any delay or failure by
the Administrative Agent and the Lenders to exercise any right,
power or remedy shall not constitute a waiver thereof by the
Administrative Agent and the Lenders, and no single or partial
exercise by the Administrative Agent and the Lenders of any
right, power or remedy shall preclude any other or further
exercise thereof or any exercise of any other rights, powers or
remedies.
14(d) Entire Agreement. This Agreement and the other Loan
Documents and the documents and agreements referred to herein
embody the entire agreement and understanding between the
parties hereto and supersede all prior agreements and
understandings relating to the subject matter hereof and
thereof.
14(e) Survival. All representations, warranties, covenants and
agreements contained in this Agreement and the other Loan
Documents on the part of the Company shall survive the
termination of this Agreement and shall be effective until the
Obligations are paid and performed in full or longer as
expressly provided herein.
14(f) Notices. All notices given by any party to the others to
be given under the Loan Documents shall be in writing (including
facsimile transmission) unless otherwise provided for herein,
delivered personally or by depositing the same in the United
States mail, registered, with postage prepaid, addressed to the
party at the address set forth on Schedule I attached hereto.
Any party may change the address to which notices are to be sent
by notice of such change to each other party given as provided
herein. Such notices shall be effective on the date received or,
if mailed, on the third Business Day following the date mailed.
14(g) Governing Law. This Agreement and the other Loan Documents
shall be governed by and construed in accordance with the laws
of the State of California without giving effect to choice of
law rules.
14(h) Counterparts. This Agreement and the other Loan Documents
may be executed in any number of counterparts, all of which
together shall constitute one agreement.
14(i) Sharing of Payments. Subject to the provisions of
Paragraph 5(g) above, if any Lender shall receive and retain any
payment, whether by setoff, application of deposit balance or
security, or otherwise, in respect of the Obligations in excess
of such Lender's Percentage Share or, as applicable, Post-
Default Percentage Share, then such Lender shall purchase from
the other Lenders for cash and at face value and without
recourse, such participation in the Obligations held by them as
shall be necessary to cause such excess payment to be shared
ratably as aforesaid with each of them; provided, that if such
excess payment or part thereof is thereafter recovered from such
purchasing Lender, the related purchases from the other Lenders
shall be rescinded ratably and the purchase price restored as to
the portion of such excess payment so recovered, but without
interest. Each Lender agrees to exercise any and all rights of
setoff, counterclaim or bankers' lien first fully against the
Obligations held by such Lender, and only then to any other
Indebtedness of the Company to such Lender.
14(j) Waiver of Jury Trial. EACH OF THE PARTIES HERETO WAIVES
ITS RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE
OF ACTION
<PAGE>
BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE
OTHER LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY
TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY,
WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR
OTHERWISE. EACH OF THE PARTIES HERETO AGREES THAT ANY SUCH CLAIM
OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A
JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE
THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY
OPERATION OF THIS PARAGRAPH 14(j) AS TO ANY ACTION, COUNTERCLAIM
OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO
CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT OR ANY PROVISION HEREOF OR THEREOF. THIS
WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND THE OTHER
LOAN DOCUMENTS.
14(k) Limitation on Interest. The Lenders, the Company and the
other parties to the Loan Documents intend to contract in strict
compliance with applicable usury law from time to time in
effect. In furtherance thereof, such Persons stipulate and agree
that none of the terms and provisions contained in the Loan
Documents shall ever be construed to create a contract to pay,
for the use, forbearance or detention of money, interest in
excess of the maximum amount of interest permitted to be charged
by applicable law from time to time.
[SIGNATURE PAGE FOLLOWS]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the day and year first above
written.
FIRST MORTGAGE CORPORATION, a California corporation
By
Name
Title
NATIONSBANK, N.A., as Administrative Agent and as a Lender
By
Name
Title
AGNES J. MCALPINE
Vice President
SANWA BANK CALIFORNIA, as a Lender
By
Name
Title
