Exhibit 10.1
Execution Copy
THIRD AMENDED AND RESTATED
WAREHOUSING CREDIT AGREEMENT
This THIRD AMENDED AND RESTATED WAREHOUSING CREDIT AGREEMENT dated as
of October 23, 2003, by and among HOMEAMERICAN MORTGAGE CORPORATION (the
"Company"), a Colorado corporation, the financial institutions which are
signatories hereto (each individually a "Bank" and collectively the "Banks") and
U.S. BANK NATIONAL ASSOCIATION, (formerly known as First Bank National
Association), a national banking association, one of the Banks, as
administrative agent for the Banks (in such capacity, the "Agent").
RECITALS
WHEREAS, the Company and the Banks have heretofore entered into a
Second Amended and Restated Warehousing Credit Agreement dated as of September
9, 2002, as amended by an Agreement to Increase Commitment Amount dated as of
December 5, 2002, an Agreement to Increase Commitment Amount dated as of
December 20, 2002, an Agreement to Increase Commitment Amount dated as of June
27, 2003, and a First Amendment dated as of September 29, 2003 (as so amended,
the "Existing Credit Agreement"), pursuant to which the Banks have made certain
credit facilities available to the Company, said credit facilities being further
evidenced by separate promissory notes of the Company in favor of the Banks
(collectively, the "Existing Notes"); and
WHEREAS, the Company and the Banks now desire to amend and restate the
Existing Credit Agreement in its entirety and to amend and restate the Existing
Notes in their entireties;
NOW THEREFORE, the Company and the Banks hereby agree that the Existing
Credit Agreement is hereby amended and restated in its entirety to read as
follows:
Section 1 DEFINITIONS AND ACCOUNTING TERMS.
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1.01 Certain Defined Terms. As used herein, the following
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terms shall have the following respective meanings (such meanings to be
equally applicable to both the singular and plural form of the terms
defined):
"Adjusted Consolidated Tangible Net Worth": as of a date of
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determination, the sum of (a) Consolidated Tangible Net Worth, plus (b)
Servicing Portfolio Value, minus (c) the aggregate principal amount of
all Intercompany Loans.
"Advance": a Prime Rate Advance, a Fixed Rate Advance, a
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Fixed Eurodollar Rate Advance or a Floating Eurodollar Rate Advance.
"Affiliate": the Parent and each corporation or other entity
---------
at least 20% of the shares of the outstanding capital stock or other
equity interests of which is owned directly or indirectly by the
Parent.
"Aggregate Commitment Amount": as of any determination,
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the total of the Commitment Amounts of the Banks.
"Aggregate Outstandings": as of any determination, the total
----------------------
of the unpaid principal balances of the Notes then outstanding.
"Agreement": this Warehousing Credit Agreement, as modified,
---------
amended, supplemented or restated and in effect from time to time.
"Applicable Margin": with respect to:
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(a) Prime Rate Advances -- 0%
(b) Fixed Rate Advances -- 0%, subject, however, to
the requirements set forth in any Side Letter entered into
pursuant to Section 2.08(b).
(c) Fixed Eurodollar Rate Advances -- 1.125%
(d) Floating Eurodollar Rate Advances -- 1.125%
"Approved Investor": (a) FNMA, FHLMC, GNMA, (b) any Person
-----------------
listed on Schedule 1.01(a) hereto (until such time as the Agent gives
the Company and the Banks notice that such Person is no longer an
"Approved Investor") and (c) any other Person designated in writing by
the Agent as an "Approved Investor" (until such time as the Agent gives
the Company and the Banks written notice that such designation has been
revoked); provided, that the Agent or any Bank may at any time, by
written notice to the Company, reject any Person designated by the
Company as an Approved Investor or designate any Person as no longer
acceptable as an Approved Investor. Upon receipt of such written
notice, any Person named in such notice to the Company shall not be
considered as an Approved Investor hereunder.
"Approved Repo Transactions": Any transaction or series of
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transactions whereunder the Company or a Subsidiary transfers Mortgage
Loans to an entity that is not an Affiliate of the Company and incurs
an obligation to repurchase such Mortgage Loans in certain
circumstances, provided that (a) the Required Banks have approved such
transaction or series of transactions in writing prior to the
consummation thereof and (b) USBNA has been appointed to act as
collateral agent with respect to the Mortgage Loans that are the
subject of such transaction.
"Board": The Board of Governors of the Federal Reserve System
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or any successor thereto.
"Borrowing Base": as of a date of determination, an amount
--------------
equal to one hundred percent (100%) of the Collateral Value of the
Collateral.
"Borrowing Base/Compliance Certificate": as such term is
-------------------------------------
defined in Section 4.01(e) hereof.
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"Business Day": a day on which the Banks, the Agent and the
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Collateral Agent are open for the transaction of business at the
addresses stated after their names on the signature pages of the Pledge
and Security Agreement.
"Closing Agent": with respect to any Mortgage Loan, the title
company, closing attorney or other Person performing the functions of a
title company or closing attorney in connection with the closing of
such Mortgage Loan.
"Code": The Internal Revenue Code of 1986, as amended.
----
"Collateral": as such term is defined in the Pledge and
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Security Agreement.
"Collateral Agent": as such term is defined in the Pledge and
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Security Agreement.
"Collateral Value": with respect to Collateral, as determined
----------------
in accordance with the formula contained in Exhibit A hereto.
"Commitment Amount": with respect to each Bank and any period
-----------------
of time, the amount set forth opposite such Bank's name on Schedule
1.01(b) to this Agreement for such period of time.
"Commitment Ending Date": with respect to any Bank, as
----------------------
defined in Section 2.14(a).
"Commitments": the obligation of the Banks to make Advances
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to the Company pursuant to Section 2.01(a) hereof.
"Confirmation of Borrowing/Paydown": a confirmation in the
---------------------------------
form of Exhibit B hereto.
"Consolidated Net Earnings": for any period of determination,
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the net earnings of the Company and its
Subsidiaries as included in the Company's financial statements referred
to in Section 3.04 or Section 4.01, as the case may be.
"Consolidated Tangible Net Worth": as of a date of
determination, the sum of the capital stock, paid-in surplus and earned
surplus of the Company and its Subsidiaries (excluding stock of the
Company held by the Company or a Subsidiary), less the book value of
all assets of the Company and its Subsidiaries (to the extent reflected
as an asset in the consolidated balance sheet of the Company and its
Subsidiaries at such date) which would be treated as intangibles under
GAAP, including, without limitation, such items as good will,
trademarks, trade names, service marks, copyrights, patents, licenses,
originated mortgage servicing rights, purchased mortgage servicing
rights, deferred excess mortgage servicing rights, rights with respect
to any of the foregoing, unamortized debt discount and expense and the
excess of the purchase price over the net assets of businesses acquired
by the Company and its Subsidiaries.
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"Effective Date": the date on or after the Signing Date on
which all of the conditions set forth in Section 5 shall have been met
or waived in writing by the Agent and the Banks.
"ERISA": the Employee Retirement Income Security Act of 1974,
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as amended, and any regulations promulgated thereunder.
"Eurodollar Business Day": a Business Day which is also a day
-----------------------
for trading by and between banks in United States dollar deposits in
the interbank Eurodollar market and a day on which banks are open for
business in New York City.
"Eurodollar Reserve Percentage": As of any day, that
-----------------------------
percentage (expressed as a decimal) which is in effect on such day, as
prescribed by the Board for determining the maximum reserve requirement
(including any basic, supplemental or emergency reserves) for a member
bank of the Federal Reserve System, with deposits comparable in amount
to those held by the Bank, in respect of "Eurocurrency Liabilities" as
such term is defined in Regulation D of the Board. The rate of interest
applicable to any outstanding Eurodollar Rate Advances shall be
adjusted automatically on and as of the effective date of any change in
the Eurodollar Reserve Percentage.
"Event of Default": as such term is defined in Section 6.01
----------------
hereof.
"Existing Credit Agreement": as such term is defined in the
-------------------------
first recital clause hereto.
"Existing Note": as such term is defined in the first recital
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clause hereto.
"Federal Funds Effective Rate": for any period of
----------------------------
determination, a fluctuating interest rate per annum (based on a 360
day year) equal for each day during such period to the weighted average
of the rates of interest charged on overnight federal funds
transactions, with member banks of the Federal Reserve System only, as
reasonably determined by the Agent.
"FHA": the Federal Housing Administration and any successor
---
thereto.
"FHLMC": Freddie Mac and any successor thereto.
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"Fixed Adjusted Eurodollar Rate": with respect to each
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Interest Period applicable to a Fixed Eurodollar Rate Advance, an
interest rate per annum (rounded upward, if necessary, to the next one
hundredth of one percent) determined by dividing the Fixed Eurodollar
Rate for such Interest Period by 1.00 minus the Eurodollar Reserve
Percentage.
"Fixed Eurodollar Rate": With respect to each Interest Period
---------------------
applicable to a Eurodollar Rate Advance, the average offered rate for
deposits in United States dollars (rounded upward, if necessary, to the
nearest 1/16 of 1%) for delivery of such deposits on the first day of
such Interest Period, for the number of days in such Interest Period,
which appears on the Telerate page 3750 as of 11:00 AM, London time (or
such other time as of
4
which such rate appears) two Eurodollar Business Days prior to the
first day of such Interest Period, or the rate for such deposits
determined by the Bank at such time based on such other published
service of general application as shall be selected by the Bank for
such purpose; provided, that in lieu of determining the rate in the
foregoing manner, the Bank may determine the rate based on rates at
which United States dollar deposits are offered to the Bank in the
interbank Eurodollar market at such time for delivery in Immediately
Available Funds on the first day of such Interest Period in an amount
approximately equal to the Advance by the Bank to which such Interest
Period is to apply (rounded upward, if necessary, to the nearest 1/16
of 1%). "Telerate Page 3750" means the display designated as such on
the Telerate reporting system operated by Telerate System Incorporated
(or such other page as may replace page 3750 for the purpose of
displaying London interbank offered rates of major banks for United
States dollar deposits).
"Fixed Eurodollar Rate Advance": an Advance with respect to
-----------------------------
which the interest rate is determined by reference to the Fixed
Adjusted Eurodollar Rate.
"Fixed Rate": 1.125% per annum.
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"Fixed Rate Advance": an Advance which bears interest at the
------------------
Fixed Rate.
"Floating Adjusted Eurodollar Rate": on any date of
---------------------------------
determination with respect to any Floating Eurodollar Rate Advance, the
rate (rounded upward, if necessary, to the next higher one hundredth of
one percent) determined by dividing the Floating Eurodollar Rate for
such date by 1.00 minus the Eurodollar Reserve Percentage.
"Floating Eurodollar Rate": on any date of determination with
------------------------
respect to any Floating Eurodollar Rate Advance, the interest rate per
annum (rounded upward, if necessary, to the next one-sixteenth of one
percent) at which United States dollar deposits are offered to the
Agent in the interbank Eurodollar market for delivery in Immediately
Available Funds in the interbank Eurodollar market on such date and in
an amount approximately equal to such Floating Eurodollar Rate Advance
as determined by the Agent and for a maturity of one month; provided,
that in lieu of determining the rate in the foregoing manner, the Agent
may substitute the per annum Eurodollar rate (LIBOR) for United States
dollars which appears on the Telerate page 3750 as of 11:00 AM, London
time (or such other time as of which such rate appears), on the first
day of such one month period.
"Floating Eurodollar Rate Advance": an advance with respect to
--------------------------------
which the interest rate is determined by reference to the Floating
Adjusted Eurodollar Rate.
"FNMA": Fannie Mae and any successor thereto.
----
"Funding Account": a non-interest bearing demand checking
---------------
account established with the Agent into which the proceeds of Advances
shall be deposited and from which funds shall be disbursed subject to
the requirements of this Agreement.
5
"GAAP": generally accepted accounting principles set forth in
----
the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements
and pronouncements of the Financial Accounting Standards Board or in
such other statements by such other entity as may be approved by a
significant segment of the accounting profession, which are applicable
to the circumstances as of the date of determination.
"GNMA": the Government National Mortgage Association and any
----
successor thereto.
"Guarantees": any obligation, contingent or otherwise, of any
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Person guaranteeing or having the economic effect of guaranteeing any
Indebtedness of any other Person (the "primary obligor") in any manner,
whether directly, indirectly, by issuance of a letter of credit or
otherwise, (i) to purchase or pay (or advance or supply funds for the
purchase or payment of) such Indebtedness or to purchase (or to advance
or supply funds for the purchase of) any direct or indirect security
therefor, (ii) to purchase property, securities, or services for the
purpose of assuring the owner of such Indebtedness of the payment of
such Indebtedness, (iii) to maintain working capital, equity capital,
or other financial statement condition of the primary obligor so as to
enable the primary obligor to pay such Indebtedness or otherwise to
protect the owner thereof against loss in respect thereof, or (iv)
entered into for the purpose of assuring in any manner the owner of
such Indebtedness of the payment of such Indebtedness or to protect
such owner against loss in respect thereof; provided, that the term
"Guarantee" shall not include endorsements for collection or deposit,
in each case in the ordinary course of business.
"Immediately Available Funds": funds with good value on the
---------------------------
day and in the city in which payment is received.
"Indebtedness": with respect to any Person at any time,
------------
without duplication, all obligations of such Person which, in
accordance with GAAP, consistently applied, should be classified as
liabilities on a consolidated balance sheet of such Person prepared in
accordance with GAAP, consistently applied, but in any event shall
include: (a) all obligations of such Person for borrowed money, (b) all
obligations of such Person evidenced by bonds, debentures, notes or
other similar instruments, (c) all obligations of such Person upon
which interest charges are customarily paid or accrued, (d) all
obligations of such Person under conditional sale or other title
retention agreements relating to property purchased by such Person, (e)
all obligations of such Person issued or assumed as the deferred
purchase price of property or services, (f) all obligations of others
secured by any lien, mortgage, security interest or other encumbrance
on property owned or acquired by such Person, whether or not the
obligations secured thereby have been assumed, (g) all capitalized
lease obligations of such Person, (h) all obligations of any
partnership or joint venture as to which such Person is or may become
personally liable, and (i) all Guarantees by such Person of
Indebtedness of others.
"Intercompany Loans": at the time of any determination, the
------------------
aggregate principal amount of all loans and advances of the Company and
the Subsidiaries to, and
6
Guarantees by the Company and the Subsidiaries of the Indebtedness of,
an Affiliate (other than the Company and the Subsidiaries).
"Interest Period": (a) With respect to each Fixed Rate
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Advance, the period commencing on the date of such Advance or on the
last day of the immediately preceding Interest Period, if any,
applicable to an outstanding Advance and ending on the last day of any
calendar month thereafter, as the Company may elect; provided, that any
Interest Period that would otherwise end after the Commitment Ending
Date shall end on the Commitment Ending Date.
(b) With respect to each Fixed Eurodollar Rate
Advance, the period commencing on the date of such Advance or
on the last day of the immediately preceding Interest Period,
if any, applicable to an outstanding Advance and ending one,
two or three months thereafter, as the Company may elect in
the applicable notice of borrowing, continuation or
conversion; provided, that:
(1) Any Interest Period that would otherwise
end on a day which is not a Eurodollar Business Day
shall be extended to the next succeeding Eurodollar
Business Day unless such Eurodollar Business Day
falls in another calendar month, in which case such
Interest Period shall end on the next preceding
Eurodollar Business Day;
(2) Any Interest Period that begins on the
last Eurodollar Business Day of a calendar month (or
a day for which there is no numerically corresponding
day in the calendar month at the end of such Interest
Period) shall end on the last Eurodollar Business Day
of a calendar month; and
(3) Any Interest Period that would otherwise
end after the Commitment Ending Date shall end on the
Commitment Ending Date.
"Inventory/Pipeline Report": an inventory/pipeline position
-------------------------
report prepared each week showing with respect to each Take-Out
Commitment: the type, Investor type, expiration date, price, weighted
average commitment price, interest rate and/or required yield, the
original amount or aggregate thereof and the portions thereof that have
been utilized and the portions thereof that remain available, future
contracts, hedged positions, repurchase agreements and profit and loss,
indicating the number of Mortgage Loans owned by the Company, the
aggregate principal balance thereof and the warehouse and pipeline
balances (for purposes of this definition, "inventory" means Mortgage
Loans and Mortgage-backed Securities owned by the Company which have
been fully funded or with respect to which the Company has paid the
full purchase price and "pipeline" means the Mortgage Loans (or
applications for Mortgage Loans) as to which the Company has made firm
price quotes to purchase or fund but which have not been purchased or
funded by the Company).
"Investment": as applied to any Person, any direct or indirect
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purchase or other acquisition by that Person of, or a beneficial
interest in, stock or other securities of any
7
other Person, or any direct or indirect loan, advance (other than
advances to employees for moving and travel expenses, drawing accounts
and similar expenditures in the ordinary course of business) or capital
contribution by that Person to any other Person, including all
Indebtedness and accounts receivable from that other Person which are
not current assets or did not arise from sales to that other Person in
the ordinary course of business, but excluding all operating bank
accounts of such Person. The amount of any Investment shall be the
original cost of such Investment plus the cost of all additions
thereto, without any adjustments for increases or decreases in value,
or write-ups, write-downs or write-offs with respect to such
Investment.
"Leverage Ratio": as of a date of determination, the ratio of
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(a) Total Indebtedness to (b) Adjusted Consolidated Tangible Net Worth.
"Lien": any security interest, mortgage, pledge, lien, charge,
----
encumbrance, title retention agreement or analogous instrument, in, of,
or on any of the assets or properties, now owned or hereafter acquired,
of the Company or any Subsidiary, whether arising by agreement or
operation of law.
"Loan" or "Loans": Warehousing Loans and Swingline Loans.
---- -----
"Loan Date": the date of the making of any Loan hereunder,
---------
which shall be a Business Day.
"Loan Documents": this Agreement, the Notes, the Security
--------------
Documents, the Side Letters and all other agreements, instruments,
certificates and other documents executed and delivered pursuant to or
in connection therewith, as the same may be supplemented, amended or
otherwise modified from time to time hereafter.
"Minimum Consolidated Tangible Net Worth": as of any date of
---------------------------------------
determination, an amount equal to (a) $20,000,000 plus (b) 50% of
Consolidated Net Earnings calculated on a cumulative basis on the last
day of each fiscal quarter from June 30, 2003 to and including such
date of determination.
"Mortgage": a mortgage or deed of trust on the fee interest
--------
in real property which has been improved by a completed single family
(i.e., one to four family units) dwelling unit (i.e., a detached house,
townhouse or condominium).
"Mortgage Loan": a Mortgage Note and the related Mortgage.
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"Mortgage Note": a promissory note which has a term note
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exceeding 40 years which is secured by a Mortgage.
"Mortgage-backed Security": a security (including, without
------------------------
limitation, a participation certificate) that is an interest in a pool
of Mortgage Loans or is secured by such an interest and is guaranteed
by GNMA or is issued or guaranteed by FNMA or FHLMC.
8
"Multiemployer Plan": as such term is defined in Section
------------------
4001(a)(3) of ERISA which is maintained for employees of the Company or
an ERISA Affiliate of the Company.
"Notes": as such term is defined in Section 2.04.
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"Operating Account": a demand deposit account of the Company
-----------------
established with the Agent having the account number 1602-3449-3890.
"PBGC": the Pension Benefit Guaranty Corporation and any
----
successor thereto.
"Parent": M.D.C. Holdings, Inc., a Delaware corporation.
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"Percentage of the Aggregate Commitment Amount": at any time
---------------------------------------------
with respect to any Bank, the fraction (expressed) as a percentage)
obtained by dividing such Bank's Commitment Amount by the Aggregate
Commitment Amount.
"Percentage of the Aggregate Outstandings": at any time with
----------------------------------------
respect to any Bank, the fraction (expressed as a percentage) obtained
by dividing the unpaid principal balance outstanding on such Bank's
Note by the Aggregate Outstandings.
"Person": any natural person, corporation, partnership, joint
------
venture, firm, association, trust, unincorporated organization,
government or governmental agency or political subdivision or any other
entity, whether acting in an individual, fiduciary or other capacity.
"Plan": each employee benefit plan (whether now in existence
----
or hereafter instituted), as such term is defined in Section 3 of
ERISA, maintained for the benefit of employees, officers or directors
of the Company and any Subsidiary.
"Pledge and Security Agreement": the Third Amended and
-----------------------------
Restated Pledge and Security Agreement in the form of Exhibit C hereto,
as executed and delivered by the Company, the Banks, the Agent and the
Collateral Agent and as the same may be modified, amended, supplemented
or restated and in effect from time to time.
"Prime Rate": at the time of any determination thereof, the
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rate per annum which is most recently publicly announced by the Agent
as its "Prime Rate," which may be a rate at, above or below which the
Agent lends to other Persons. For purposes of determining any interest
rate hereunder or under the Notes that is based on the Prime Rate, such
interest rate shall change as and when the Prime Rate changes.
"Prime Rate Advance": an Advance with respect to which the
------------------
interest rate is determined by reference to the Prime Rate.
"Prohibited Transaction": the respective meanings assigned to
----------------------
such term in Section 4975 of the Code and Section 406 of ERISA.
9
"Regulatory Change": with respect to any Bank, any change
-----------------
after the Signing Date in federal or state laws or regulations or the
adoption or making after such date of any interpretations, directives
or requests applying to a class of banks including such Bank under any
federal or state laws or regulations (whether or not having the force
of law) by any court or governmental or monetary authority charged with
the interpretation or administration thereof.
"Reportable Event": a reportable event as defined in Section
----------------
4043 of ERISA and the regulations issued under such Section, with
respect to a Plan, excluding, however, such events as to which the PBGC
by regulation has waived the requirement of Section 4043(a) of ERISA
that it be notified within 30 days of the occurrence of such event.
"Required Banks": at any time of determination, Banks whose
--------------
Percentages of the Aggregate Commitment total at least 70%; provided,
that if there is more than one Bank, the "Required Banks" shall not
consist of fewer than two Banks.
"Security Documents": the Pledge and Security Agreement, all
------------------
agreements, instruments, documents and other papers creating,
evidencing or representing the Collateral and/or Security Interests
therein.
"Security Interest": each security interest, pledge, lien,
-----------------
hypothecation and other encumbrance now and hereafter granted by the
Company in favor of the Banks and the Agent in the Collateral.
"Servicing Portfolio": as of a date of determination, all
-------------------
Mortgage Loans owned by an investor and secured by a Mortgage serviced
by the Company for a fee, excluding (a) any Mortgage Loans held in
inventory by the Company and (b) any Mortgage Loans serviced by the
Company under a subservicing agreement.
"Servicing Portfolio Value": as of a date of determination, an
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amount equal to one percent (1%) of the aggregate unpaid principal
balance of all Mortgage Loans included in the Servicing Portfolio.
"Settlement Account": account number 190272059634 of the
------------------
Company with the Agent, which shall be under the Agent's sole dominion
and control.
"Side Letter": any written agreement relating to compensating
-----------
balances entered into between the Company and a Bank pursuant to
Section 2.08(b), and any written agreement relating to agent's fees
entered into between the Company and the Agent pursuant to Section
2.10.
"Signing Date": the date on which this Agreement is executed
------------
and delivered by the parties hereto.
"Subsidiary": any corporation or other entity of which
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securities or other ownership interests which have ordinary voting
power to elect a majority of the board of
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directors or other Persons performing similar functions are at the
time owned directly or indirectly by the Company.
"Swingline Facility": the discretionary revolving credit
------------------
facility provided by USBNA to the Company described in Section 2.01(b).
"Swingline Loan": a loan made by USBNA to the Company
--------------
pursuant to Section 2.01(b).
"Temporary Increase Termination Date": as such term is
-----------------------------------
defined in Section 8.05(c) hereof.
"Termination Date": as to any Bank, the earlier of (i) the
----------------
Commitment Ending Date applicable to such Bank's Commitment or (ii) the
date on which the Commitments terminate or are terminated pursuant to
Section 6.02 hereof.
"Total Indebtedness": all obligations, liabilities and
------------------
indebtedness of the Company and its Subsidiaries which in accordance
with GAAP should be included in determining total liabilities as shown
on the liabilities portion of a consolidated balance sheet of the
Company.
"Total Outstandings": As of the time of any determination
------------------
thereof, the sum of (a) Aggregate Outstandings at such time, (b) the
aggregate principal amount of Indebtedness of any Affiliate guaranteed
by the Company and outstanding at such time and (c) the aggregate
stated amount of any letters of credit issued by the Company to support
the obligations of Affiliates and outstanding at such time.
"Transferee": as such term is defined in Section 8.06 hereof.
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"Transferred Interest": as such term is defined in Section
--------------------
8.06 hereof.
"Unmatured Event of Default": any event which with the lapse
--------------------------
of time, or with notice to the Company and the lapse of time, would
constitute an Event of Default.
"USBNA": U.S. Bank National Association, a national banking
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association, its successors and assigns.
"VA": the Department of Veterans Affairs and any successor
--
thereto.
"Warehousing Loan": a loan or loans made by the Banks to the
----------------
Company pursuant to Section 2.01(a).
1.02 Terms. Except as provided to the contrary herein, all
accounting terms used herein shall be interpreted and all accounting
determinations hereunder shall be made in accordance with GAAP.
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1.03 Computation of Time Periods. In this Agreement, in the
---------------------------
computation of a period of time from a specified date to a later
specified date, unless otherwise stated the word "from" means "from and
including" and the word "to" or "until" each means "to but excluding".
1.04 Other Definitional Terms. The words "hereof", "herein"
------------------------
and "hereunder" and words of similar import when used in this Agreement
shall refer to this Agreement as a whole and not to any particular
provision of this Agreement, and section, schedule, exhibit and like
references are to this Agreement unless otherwise specified.
Section 2 TERMS OF LENDING.
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2.01 The Warehousing Facility and the Swingline Facility.
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(a) Warehousing Commitments. All "Loans" outstanding
under the Existing Credit Agreement shall constitute Loans
outstanding hereunder. Further, upon the terms and subject to
the conditions of this Agreement, each Bank agrees, severally
but not jointly, to make Loans to the Company on a revolving
basis at any time and from time to time from the Effective
Date to the Termination Date, during which period the Company
may borrow, repay and reborrow in accordance with the
provisions hereof at such times and in such amounts as the
Company shall request, up to an aggregate principal amount at
any time outstanding equal to such Bank's Commitment Amount,
subject to the following limitations:
(i) the aggregate principal amount of Loans at
any time outstanding shall not exceed the sum of the
Commitment Amounts of all the Banks; and
(ii) the aggregate principal amount of Loans at
any time outstanding shall not exceed the Borrowing
Base, as determined by the Agent from its records.
No Bank shall be obligated to make Warehousing Loans if, after
giving effect thereto, either of the foregoing limitations
would be exceeded. The failure of any one or more of the Banks
to make a Warehousing Loan in accordance with its Commitment
shall not relieve the other Banks of their several obligations
hereunder, but no Bank shall be liable with respect to the
obligation of any other Bank hereunder or be obligated in any
event to make Warehousing Loans which, together with its pro
rata share of outstanding Swingline Loans, would exceed its
Commitment Amount.
(b) Discretionary Swingline Facility. Upon the terms and
--------------------------------
subject to the conditions of this Agreement, until the
Termination Date, USBNA, in its sole discretion, may lend to
the Company loans (each such loan, a "Swingline Loan") at such
times and in such amounts as the Company shall request, up to
an aggregate principal amount at any time outstanding equal to
the amount by which USBNA's Commitment Amount exceeds the
principal amount outstanding under USBNA's Note; provided,
that USBNA will not make a Swingline Loan if (i) after giving
effect thereto, either of the limitations set forth in Section
2.01(a) would be exceeded or (ii) USBNA has received written
notice from the Company or any Bank that one or more of the
conditions precedent set forth in Section 5 for the making of
a Warehousing Loan have not been satisfied.
12
Loans may be obtained and maintained, at the election of the
Company and subject to the terms and conditions hereinafter
set forth, as Prime Rate Advances, Fixed Rate Advances
(subject, however, to Section 2.08(b)), Fixed Eurodollar Rate
Advances and Floating Eurodollar Rate Advances, or any
combination thereof.
2.02 Manner of Borrowing.
-------------------
(a) Warehousing Loans. The Company shall give the
-----------------
Agent telephonic notice of each request for Warehousing Loans
not later than 11:00 a.m. (Denver time) two Eurodollar
Business Days prior to the requested Loan Date, in the case of
Warehousing Loans which are to be made as Fixed Eurodollar
Rate Advances, and not later than 12:00 noon (Denver time) on
the requested Loan Date, in the case of Warehousing Loans to
be made in any other form of Advance.
(b) Swingline Loans. The Company shall give USBNA
---------------
telephonic notice of each request for Swingline Loans not
later than 2:00 p.m. (Denver time) on the requested Loan Date.
Each request for Warehousing Loans or Swingline Loans shall
specify (a) the Loan Date for such Loans, (b) whether such
Loan is to be made as a Prime Rate Advance, a Fixed Rate
Advance (subject, however, to Section 2.08(b)), a Fixed
Eurodollar Rate Advance and/or a Floating Eurodollar Rate
Advance, (c) the amount of each such Advance (which amount
shall not be less than $100,000) and (d) in the case of a
Fixed Rate Advance or a Fixed Eurodollar Rate Advance, the
Interest Period therefor, and shall promptly confirm any such
request by delivering to the Agent a duly completed and
executed Confirmation of Borrowing/Paydown.
The Agent shall notify each Bank by not later than 1:00 p.m.
(Denver time) on the date it receives such request of each
request for Warehousing Loans received from the Company, of
the type and amount of Warehousing Loans to be made by such
Bank and, in the case of Fixed Rate Advances and Fixed
Eurodollar Rate Advances, the applicable Interest Period. Each
Bank shall deposit into the Settlement Account in Immediately
Available Funds by not later than 3:00 p.m. (Denver time) on
the Loan Date the total amount of the Warehousing Loans to be
made by such Bank. On the Loan Date of requested Swingline
Loans, USBNA may deposit into the Funding Account in
Immediately Available Funds by not later than 4:00 p.m.
(Denver time) on the requested Loan Date the amount of the
requested Swingline Loans. Unless the Agent shall have
received notice from a Bank prior to 2:00 p.m. (Denver time)
on any Loan Date that such Bank will not make available to the
Agent the Warehousing Loans to be made by such Bank on such
date, the Agent may assume that such Bank has made such
Warehousing Loan available to the Agent on such date and the
Agent in its sole discretion may, in reliance upon such
assumption, make available to the Company on such date a
corresponding amount on behalf of such Bank. If a Bank shall
not have timely given such a notice, and to the extent such
Bank shall not have so made available to the Agent the
Warehousing Loans to be made by such Bank on such date and the
Agent shall have so made available to the Company a
corresponding amount on behalf of such Bank, such Bank shall,
on demand, pay to the Agent such corresponding amount together
with
13
interest thereon, at the Federal Funds Effective Rate,
for each day from the date such amount shall have been so made
available by the Agent to the Company until the date such
amount shall have been repaid to the Agent. If such Bank does
not pay such corresponding amount promptly upon the Agent's
demand therefor, the Agent shall promptly notify the Company
and the Company shall immediately repay such corresponding
amount to the Agent together with accrued interest thereon at
the applicable rate or rates provided in Section 2.08. Each
request for Warehousing Loans or Swingline Loans shall be
deemed to be a representation by the Company that (i) no Event
of Default or Unmatured Event of Default has occurred or will
exist upon the making of the requested Warehousing Loans and
(ii) the representations and warranties contained in Section 3
hereof and in Section 5 of the Pledge and Security Agreement
are true and correct with the same force and effect as if made
on and as of the date of such request.
2.03 Refinancing of Swingline Loans.
------------------------------
(a) Permitted Refinancings of Swingline Loans. USBNA,
-----------------------------------------
at any time in its sole and absolute discretion, may,
upon notice given to each other Bank by not later than 1:00
p.m. (Denver time) on any Business Day, request that each Bank
(including USBNA) make a Warehousing Loan in an amount equal
to its pro rata share of a portion of the aggregate unpaid
principal amount of any outstanding Swingline Loans for the
purpose of refinancing such Swingline Loans. Such Warehousing
Loans shall be made as Floating Eurodollar Rate Advances,
unless the Company specifies otherwise.
(b) Mandatory Refinancings of Swingline Loans. Not
-----------------------------------------
later than 1:00 p.m. (Denver time) at least on a weekly basis,
USBNA will notify each other Bank of the aggregate amount of
Swingline Loans which are then outstanding and the amount of
Warehousing Loans required to be made by each Bank (including
USBNA) to refinance such outstanding Swingline Loans (which
shall be in the amount of each Bank's pro rata share of such
outstanding Swingline Loans). Such Warehousing Loans shall be
made as Floating Eurodollar Rate Advances, unless the Company
specifies otherwise.
(c) Banks' Obligation to Fund Refinancings of
-----------------------------------------
Swingline Loans. Upon the giving of notice by USBNA under
---------------
Section 2.03(a) or 2.03(b), each Bank (including USBNA) shall
make a Warehousing Loan in an amount equal to its pro rata
share of the aggregate principal amount of Swingline Loans to
be refinanced, and provide proceeds of such Warehousing Loans,
in Immediately Available Funds, by not later than 3:00 p.m.
(Denver time) on the date such notice was received; provided,
however, that a Bank shall not be obligated to make any such
Warehousing Loan unless (A) USBNA believed in good faith that
all conditions to making the subject Swingline Loan were
satisfied at the time such Swingline Loan was made, or (B) if
the conditions to such Swingline Loan were not satisfied, such
Bank had actual knowledge, by receipt of the statements
furnished to it pursuant to Section 4.01 or otherwise, that
any such condition had not been satisfied and failed to notify
USBNA in a writing received by USBNA prior to the time it made
such Swingline Loan that USBNA was not authorized to make a
Swingline Loan until such condition had been satisfied, or
USBNA was obligated to give notice of the occurrence of an
Event of Default or an Unmatured Event of Default to the Banks
pursuant to Section 6.01 and failed to do so, or (C) any
conditions to the making of such
14
Swingline Loan that were not satisfied had been waived in
writing by the Required Banks prior to or at the time such
Swingline Loan was made. The proceeds of Warehousing Loans
made pursuant to the preceding sentence shall be paid to USBNA
(and not to the Company) and applied to the payment of
principal of the outstanding Swingline Loans, and the Company
authorizes the Agent to charge the Settlement Account or any
other account (other than escrow or custodial accounts)
maintained by the Company with the Agent (up to the amount
available therein) in order to immediately pay USBNA the
principal amount of such Swingline Loans to the extent
Warehousing Loans made by the Banks are not sufficient to
repay in full the principal of the outstanding Swingline Loans
requested or required to be refinanced. Upon the making of a
Warehousing Loan by a Bank pursuant to this Section 2.03(c),
the amount so funded shall become due under such Bank's Note
and the outstanding principal amount of the Swingline Loans
shall be correspondingly reduced. If any portion of any
Warehousing Loan made by the Banks pursuant to this Section
2.03(c) should be recovered by or on behalf of the Company
from USBNA in bankruptcy or otherwise, the loss of the amount
so recovered shall be ratably shared among all the Banks in
the manner contemplated by Section 7.11. Each Bank's
obligation to make Warehousing Loans referred to in this
Section 2.03(c) shall, subject to the proviso to the first
sentence of this Section 2.03(c), be absolute and
unconditional and shall not be affected by any circumstance,
including, without limitation, (1) any setoff, counterclaim,
recoupment, defense or other right which such Bank may have
against USBNA, the Company or anyone else for any reason
whatsoever; (2) the occurrence or continuance of a Default or
an Event of Default; (3) any adverse change in the condition
(financial or otherwise) of the Company; (4) any breach of
this Agreement by the Company, the Agent or any Bank; or (5)
any other circumstance, happening or event whatsoever, whether
or not similar to any of the foregoing; provided, that in no
event shall a Bank be obligated to make a Warehousing Loan if,
after giving effect thereto, the outstanding principal balance
of such Bank's Note would exceed its Commitment Amount.
2.04 Notes. Warehousing Loans made by each Bank shall be
-----
evidenced by the Company's promissory note in the form of Schedule 2.04
(each, together with any promissory note subsequently executed and
delivered by the Company to evidence any Bank's Loans, a "Note"), which
shall be made payable to the order of such Bank in an amount equal to
such Bank's Commitment Amount, shall be dated the Effective Date and
shall mature on the Termination Date. USBNA's Note shall also evidence
the Swingline Loans made by it hereunder. The aggregate amount of the
Warehousing Loans made by a Bank and, in the case of USBNA, Swingline
Loans, less all repayments of principal thereof shall be the principal
amount owing and unpaid on such Bank's Note. The principal amount of
each Loan made by a Bank and all principal payments and prepayments
thereof may be noted by such Bank on a schedule attached to its Note
and shall be entered by such Bank on its ledgers and computer records.
The failure of any Bank to make such notations or entries shall not
affect the principal amount owing and unpaid on its Note. The entries
made by a Bank on its ledgers and computer records and any notations
made by a Bank on any such schedule annexed to its Note shall be
presumed to be accurate until the contrary is established.
2.05 Payment and Prepayment of Warehousing Loans and Swingline
---------------------------------------------------------
Loans. The Company shall pay the principal of the Warehousing Loans and
-----
Swingline Loans as follows:
15
(a) Mandatory Payments. The entire unpaid principal
------------------
balance of each Bank's Note shall be due and payable on the
Termination Date.
(b) Mandatory Prepayments. If, at any time, the
---------------------
aggregate principal amount of all Loans outstanding exceeds
the Borrowing Base, the Company shall immediately either (A)
pledge additional Mortgage Loans with a Collateral Value not
less than the amount of such excess to the Agent for the
benefit of the Banks pursuant to the Pledge and Security
Agreement, or (B) make principal prepayments of the Notes in
an aggregate amount equal to the amount of such excess, which
amount shall be paid to the Agent and distributed (y) first,
to USBNA as a prepayment on the outstanding principal balance
of any Swingline Loans and (z) after repayment in full of any
Swingline Loans, to the Banks ratably on the basis of each
Bank's pro rata share. In addition, all Swingline Loans shall
also be prepayable on demand therefor by USBNA as provided
pursuant to Section 2.03(c).
(c) Optional Prepayments. The Company shall have the
--------------------
right to prepay, without penalty, the outstanding principal
balance of the Notes in whole or in part at any time and from
time to time, each such principal prepayment to be paid to the
Agent and distributed (A) first, to USBNA as a prepayment on
the outstanding principal balance of any Swingline Loans and
(B) after repayment in full of any Swingline Loans, to the
Banks ratably on the basis of each Bank's pro rata share.
(d) Confirmation. The Company shall promptly send the
------------
Agent a Confirmation of Borrowing/Paydown confirming any
payment or prepayment of principal made on the Notes.
2.06 Use of Proceeds. Except as otherwise provided in Section
---------------
2.03(c) with respect to refinancing Swingline Loans, the proceeds of
the Swingline Loans and the Warehousing Loans shall be used to make,
originate or acquire Mortgage Loans, to finance Mortgage Loans
previously made, originated or acquired or, in the case of Warehousing
Loans made on the Effective Date, to repay in full the Existing
Warehousing Loans.
2.07 Conversions and Continuations. On the terms and subject
-----------------------------
to the limitations hereof, the Company shall have the option at any
time and from time to time to convert all or any portion of the
Warehousing Loans or Swingline Loans into Prime Rate Advances, Fixed
Rate Advances (subject, however, to Section 2.08(b)), Fixed Eurodollar
Rate Advances or Floating Eurodollar Rate Advances , or to continue a
Fixed Rate Advance or a Fixed Eurodollar Rate Advance as such;
provided, however that a Fixed Rate Advance or a Fixed Eurodollar Rate
Advance may be converted or continued only on the last day of the
Interest Period applicable thereto and no Advance may be converted or
continued as a Fixed Eurodollar Rate Advance if an Event of Default or
Unmatured Event of Default has occurred and is continuing on the
proposed date of continuation or conversion; and provided, further,
that no more than three (3) Fixed Eurodollar Rate Advances shall be
outstanding under any Bank's Note at any time. Advances may be
converted or continued only in amounts of $100,000 or more. The Company
shall give the Agent and the Banks written notice of any continuation
or conversion of any Advance and such notice must be given so as to be
received by the Agent and the Banks not later than 11:00 a.m. (Denver
time) two Eurodollar Business Days prior to the date of such
continuation or
16
conversion, in the case of continuation of, or conversion to, a Fixed
Eurodollar Rate Advance, and not later than 11:00 a.m. (Denver time) on
the date of such continuation or conversion, in the case of
continuation of, or conversion to, any other type of Advance. Each such
notice shall specify (a) the amount to be continued or converted, (b)
the date for the continuation or conversion (which must be (i) the last
day of the preceding Interest Period for any continuation or conversion
of Fixed Rate Advances or Fixed Eurodollar Rate Advances and (ii) a
Business Day, in the case of Fixed Rate Advances, and a Eurodollar
Business Day, in the case of Fixed Eurodollar Rate Advances), and (c)
in the case of conversions to or continuations as Fixed Rate Advances
or Fixed Eurodollar Rate Advances, the Interest Period applicable
thereto. Any notice given by the Company under this Section shall be
irrevocable. If the Company shall fail to notify the Agent and the
Banks of the continuation of any Fixed Rate Advance or Fixed Eurodollar
Rate Advance or of the conversion of a Fixed Rate Advance to a
Eurodollar Rate Advance or vice versa within the time required by this
Section, such Advance shall, on the last day of the Interest Period
applicable thereto, automatically be converted into a Prime Rate
Advance of the same principal amount.
2.08 Interest Rates; Default Interest; Interest Payment Dates.
--------------------------------------------------------
Interest shall accrue and be payable as follows:
(a) Each Prime Rate Advance shall bear interest on
the unpaid principal amount thereof at a floating rate per
annum equal to the Prime Rate.
(b) Each Fixed Rate Advance shall bear interest on
the unpaid principal amount thereof at a rate per annum equal
to the Fixed Rate; provided, however, that Fixed Rate Advances
shall not be made by a Bank unless the Company and such Bank
shall have entered into a written agreement ("Side Letter")
which provides for the making of Fixed Rate Advances, which
Side Letter may contain provisions relating to the maintenance
of compensating balances and/or the effect of failure to
maintain such compensating balances (including the payment of
additional interest or deficiency fees).
(c) Each Fixed Eurodollar Rate Advance shall bear
interest on the unpaid principal amount thereof during the
Interest Period applicable thereto at a rate per annum equal
to the sum of (i) the Fixed Adjusted Eurodollar Rate for such
Interest Period, plus (ii) the Applicable Margin
(d) Each Floating Eurodollar Rate Advance shall bear
interest on the unpaid principal amount thereof at a floating
rate per annum equal to the sum of (i) the Floating Adjusted
Eurodollar Rate, plus (ii) the Applicable Margin.
(e) Effective upon notice from the Agent, at the
direction of the Required Banks, whenever any Event of Default
shall have occurred and be continuing (whether or not the
maturity of the Notes shall have been accelerated), interest
shall accrue on each Advance until such Event of Default shall
have been cured to the written satisfaction of the Required
Banks or, if such Event of Default consists of the Company's
failure to pay the Agent or any Bank any amount owing under
any Loan Document, until such amount shall have been paid in
full, (i) with respect to any Fixed Rate Advance or Fixed
Eurodollar Rate Advance, during the balance of any Interest
Period applicable to such
17
Advance, at a rate per annum equal to the sum of the rate
applicable to such Advance during such Interest Period plus
2.0% per annum, (ii) with respect to any Floating Eurodollar
Rate Advance, at a rate per annum equal to the sum of (A) the
Floating Adjusted Eurodollar Rate applicable to such Advance,
plus (B) the Applicable Margin, plus (C) 2% per annum, and
(iii) otherwise, at a rate per annum equal to the sum of the
Prime Rate, plus 2.0% per annum.
(f) Interest shall be payable in arrears on the fifth
Business Day of each month and on the Termination Date;
provided that interest under Section 2.08(e) shall be payable
on demand.
2.09 Facility Fees. The Company shall pay each Bank a facility
-------------
fee for the period beginning on the Signing Date and ending on the
Termination Date at a per annum rate of one-fourth of one percent
(0.25%) on such Bank's Commitment Amount, payable for each month in
arrears on the first Business Day of the following month and on the
Termination Date.
2.10 Agent's Fees. The Company shall pay to the Agent, agent's
------------
fees at such times and in such amounts as may be agreed upon from time
to time in a written agreement ("Side Letter") between the Company and
the Agent.
2.11 Payments and Computations.
-------------------------
(a) Payment of Principal, Fees and Expenses. All
---------------------------------------
payments and prepayments by the Company of principal on the
Notes and all fees, expenses and other obligations payable to
the Banks under this Agreement (other than interest and fees
payable on the Notes and additional interest or deficiency
fees payable under any Side Letter entered into pursuant to
Section 2.08(b), which shall be payable in accordance with
Section 2.11(b)) shall be paid in Immediately Available Funds
not later than 12:00 noon (Denver time) on the dates called
for under this Agreement at the main office of the Agent in
Minneapolis, Minnesota. Funds received after such hour shall
be deemed to have been received by the Banks on the next
Business Day. The Company irrevocably authorizes the Agent to
charge the Operating Account in an amount equal to any such
payment or permitted prepayment of principal or any such fees,
expenses or other obligations, as the case may be, which are
due and payable.
(b) Payment of Interest and Deficiency Fees. All
---------------------------------------
payments of interest on the Notes and all additional interest
or deficiency fees payable to a Bank under any Side Letter
entered into pursuant to Section 2.08(b) shall be billed to
the Company by each Bank with respect to its Notes and shall
be paid by the Company, (i) prior to the occurrence of an
Event of Default, directly to each such Bank, and (ii) upon
and during the continuance of an Event of Default, to the
Agent, in either case by not later than 1:00 p.m. (Denver
time) on the dates called for under this Agreement at the
respective offices of the Banks or the Agent, as the case may
be, designated on the signature pages of this Agreement. The
Company irrevocably authorizes the Agent and each Bank to
charge the Operating Account or any other demand account of
the Company maintained with the Agent or such Bank (other than
an account of the Company with such Bank which the Company
holds in escrow or in trust for the benefit of other Persons)
in an
18
amount equal to any such payment of interest, additional
interest or deficiency fees, as the case may be, which are due
and payable.
(c) Computations. Fees and interest on the Notes
------------
shall be computed on the basis of actual days elapsed and a
year of 360 days.
2.12 Setoff. Whenever an Event of Default shall have occurred
------
and be continuing, the Company hereby irrevocably authorizes each Bank
to set off the Indebtedness of the Company to such Bank under this
Agreement (including any Indebtedness owing under any Side Letter), the
Notes and the other Loan Documents against all deposits and credits of
the Company with, and any and all claims of the Company against, such
Bank (excluding deposits of the Company with such Bank which the
Company holds in escrow or in trust for the benefit of other Persons),
whether or not said Indebtedness of the Company to such Bank, or any
part thereof, shall be then due.
2.13 Collateral. To secure the payment of Aggregate
----------
Outstandings and all other liabilities of the Company under any Loan
Document, the Company from time to time shall grant to the Agent and
the Banks a Security Interest in such of its Mortgage Loans,
Mortgage-backed Securities and other assets as the Company shall
select. All Collateral shall be subject to, and be governed by, the
terms and conditions of the Pledge and Security Agreement.
If no Event of Default or Unmatured Event of Default has occurred and
is continuing, the Agent and the Banks, at the request of the Company, shall
release their Security Interest in any item of Collateral; provided, that after
giving effect to any such requested release, the Borrowing Base (including that
attributable to any Collateral given in substitution of the Collateral requested
to be released) shall not be less than the Total Outstandings.
2.14 Termination of Commitments; Reduction of Commitment
---------------------------------------------------
Amounts.
-------
(a) Termination. The Company and each Bank shall have
-----------
the right, prior to any termination of the Commitments
pursuant to Section 6.02, to terminate, with respect to the
Company, any Commitment, and with respect to a Bank, its
Commitment, by giving the Agent notice in writing, specifying
the date on which the applicable Commitment is to terminate
(as to such Commitment, the "Commitment Ending Date"), which
Commitment Ending Date shall be no less than 120 days after
the Agent gives notice as set forth in the following sentence.
The Agent shall give telephonic notice (confirmed in writing)
to each Bank of the Agent's receipt of a notice of termination
of a Commitment or Commitments given by the Company by not
later than the Agent's close of business on the third Business
Day following the date of receipt of such notice by the Agent
and shall give telephonic notice (confirmed in writing) to the
Company and each other Bank of the Agent's receipt of a notice
of termination by a Bank of its Commitment by not later than
the Agent's close of business on the third Business Day
following the date of receipt of such notice by the Agent.
After receipt from the Agent of a party's termination of a
Commitment or Commitments, each other party hereto who has not
initially given notice of termination may, in the case of a
Bank, terminate its Commitment, and, in the case of the
Company, terminate a Commitment or Commitments, by giving the
Agent telephonic notice (promptly confirmed in writing) of
such termination, specifying the
19
applicable Commitment Ending Date (which may be any date on or
after the Commitment Ending Date specified by the party which
gave the initial notice of termination pursuant to the
preceding sentence), within four Business Days after receipt
by such party of notice from the Agent of the Agent's receipt
of the initial notice of termination pursuant to the preceding
sentence. Notwithstanding the foregoing, any termination of
the Commitments pursuant to Section 6.02 hereof shall
supersede any notice of termination under this Section
2.14(a).
(b) Reduction. The Company shall have the right at
---------
any time upon at least seven days prior written notice to the
Agent and the Banks to reduce the Commitment Amounts;
provided, that the aggregate amount of each such reduction in
the Commitment Amounts shall be in a minimum amount of
$1,000,000 or an integral multiple in excess thereof for each
Bank's Commitment and shall be apportioned among the Bank's
Commitments in accordance with their respective Percentage of
the Aggregate Commitment Amounts; and provided, further, that
no such reduction shall reduce the Aggregate Commitment Amount
to less than Aggregate Outstandings.
(c) Effect. Once the Commitments have been terminated
------
pursuant to Section 6.02 or the Commitment Amounts have been
reduced, they may not be reinstated.
2.15 Interest Rate Not Ascertainable, Etc. If, on or prior to
------------------------------------
the date for determining the Fixed Adjusted Eurodollar Rate in respect
of the Interest Period for any requested Fixed Eurodollar Rate Advance,
a Bank determines (which determination shall be conclusive and binding,
absent manifest error) that:
(a) deposits in dollars (in the applicable amount)
are not being made available to such Bank in the relevant
market for such Interest Period, or
(b) the Fixed Adjusted Eurodollar Rate, as the case
may be, will not adequately and fairly reflect the cost to
such Bank of funding or maintaining Fixed Eurodollar Rate
Advances, as the case may be, for such Interest Period, such
Bank shall forthwith give notice to the Company and the Agent
of such determination, whereupon the obligation of such Bank
to make or continue, or to convert any Advances to, Fixed
Eurodollar Rate Advances, as the case may be, shall be
suspended until such Bank notifies the Company and the Agent
that the circumstances giving rise to such suspension no
longer exist. No such suspension shall affect the interest
rate then in effect during the applicable Interest Period for
any Fixed Eurodollar Rate Advance outstanding at the time such
suspension is imposed.
2.16 Increased Cost. If any Regulatory Change:
--------------
(a) shall subject a Bank to any tax, duty or other
charge with respect to Fixed Eurodollar Rate Advances, the
Note payable to such Bank to the extent it evidences Fixed
Eurodollar Rate Advances, or its obligation to make Fixed
Eurodollar Rate Advances, or shall change the basis of
taxation of payment to such Bank of the principal of or
interest on Fixed Eurodollar Rate Advances or any other
amounts due under this Agreement in respect of Fixed
Eurodollar Rate Advances or its obligation to make Fixed
20
Eurodollar Rate Advances (except for changes in the rate of
tax on the overall net income of such Bank imposed by the laws
of the United States or any jurisdiction in which such Bank's
principal office is located); or
(b) shall impose, modify or deem applicable any
reserve, special deposit, capital requirement or similar
requirement (including any such requirement imposed by the
Board of Governors of the Federal Reserve System, but
excluding with respect to any Fixed Eurodollar Rate Advance
any such requirement to the extent included in calculating the
applicable Fixed Adjusted Eurodollar Rate, as the case may be)
against assets of, deposits with or for the account of, or
credit extended by, such Bank or shall impose on such Bank or
on the United States market for certificates of deposit any
other condition affecting Fixed Eurodollar Rate Advances, its
Note or its obligation to make Fixed Eurodollar Rate Advances;
and the result of any of the foregoing is to increase the cost
to such Bank of making or maintaining any Fixed Eurodollar
Rate Advance, or to reduce the amount of any sum received or
receivable by such Bank under this Agreement or under its
Note, then, within 30 days after demand by such Bank, the
Company shall pay to such Bank such additional amount or
amounts as will compensate such Bank for such increased cost
or reduction. Such Bank will promptly notify the Company of
any event of which it has knowledge, occurring after the date
hereof, which will entitle such Bank to compensation pursuant
to this Section. A certificate of such Bank claiming
compensation under this Section, setting forth the additional
amount or amounts to be paid to it hereunder and stating in
reasonable detail the basis for the charge and the method of
computation, shall be conclusive in the absence of manifest
error. In determining such amount, such Bank may use any
reasonable averaging and attribution methods. Failure on the
part of such Bank to demand compensation for any increased
costs or reduction in amounts received or receivable with
respect to any Interest Period shall not constitute a waiver
of such Bank's rights to demand compensation for any increased
costs or reduction in amounts received or receivable in any
subsequent Interest Period.
2.17 Illegality. If any Regulatory Change shall make it
----------
unlawful or impossible for a Bank to make, maintain or fund Fixed
Eurodollar Rate Advances, such Bank shall notify the Company, whereupon
the obligation of such Bank to make Fixed Eurodollar Rate Advances, as
the case may be, shall be suspended until such Bank notifies the
Company that the circumstances giving rise to such suspension no longer
exist. If such Bank determines that it may not lawfully continue to
maintain any outstanding Fixed Eurodollar Rate Advances to the end of
the applicable Interest Periods, all of the affected Advances shall be
automatically converted to Prime Rate Advances as of the date of such
Bank's notice, and upon such conversion the Company shall indemnify
such Bank in accordance with Section 2.19.
2.18 Capital Adequacy. In the event that any Regulatory Change
----------------
reduces or shall have the effect of reducing the rate of return (by an
amount such Bank deems material) on the capital of a Bank or on the
capital of such Bank's parent corporation as a consequence of such
Bank's Commitment and/or the Loans made by such Bank to a level below
that which the Bank or its parent could have achieved but for such
Regulatory Change (taking into account the policies of such Bank and
its parent corporation with respect to capital adequacy), then the
Company shall,
21
within 30 days after written notice and demand from such
Bank, pay to such Bank additional amounts sufficient to compensate such
Bank or its parent corporation for such reduction; provided, however,
that the Company shall not be obligated to pay any such amount or
amounts (i) unless such Bank shall have first notified the Company in
writing that it intends to seek compensation from the Company pursuant
to this sentence, and (ii) which are attributable to periods exceeding
180 days prior to the date of receipt by the Company of such notice. A
certificate as to the amount of any such reduction (including
calculations in reasonable detail showing how such Bank computed such
reduction and a statement that the Bank has not allocated to its
Commitment or its outstanding Advances a proportionately greater amount
of such reduction than is attributable to each of its other commitments
to lend or to each of its other outstanding credit extensions that are
affected similarly by such compliance by such Bank, whether or not such
Bank allocates any portion of such reduction to such other commitments
or credit extensions) shall be furnished promptly by such Bank to the
Company. Any determination by a Bank under this Section and any
certificate as to the amount of such reduction given to the Company by
such Bank shall be final, conclusive and binding for all purposes,
absent manifest error.
2.19 Funding Losses. Upon the written request of a Bank, the
Company shall compensate such Bank for all losses, expenses and
liabilities (including any interest paid by such Bank to lenders of
funds borrowed by it to make or carry Fixed Eurodollar Rate Advances to
the extent not recovered by such Bank in connection with the
re-employment of such funds and including loss of anticipated profits)
which such Bank may sustain: (a) if for any reason, other than a
default by such Bank, a funding of a Fixed Eurodollar Rate Advance does
not occur on the date specified therefor in the Company's request or
notice as to such Advance under Section 2.02 or 2.05, or (b) if, for
whatever reason (including acceleration of the maturity of such Bank's
Note following an Event of Default), any repayment of a Fixed
Eurodollar Rate Advance, or a conversion pursuant to Section 2.07,
occurs on any day other than the last day of the Interest Period
applicable thereto. The Bank's request for compensation shall set forth
the basis for the amount requested and shall be final, conclusive and
binding, absent manifest error.
2.20 Discretion of Banks as to Manner of Funding. Each Bank
shall be entitled to fund and maintain its funding of Fixed Eurodollar
Rate Advances in any manner it may elect, it being understood, however,
that for the purposes of this Agreement all determinations hereunder
(including determinations under Section 2.19) shall be made as if the
Bank had actually funded and maintained each Fixed Eurodollar Rate
Advance during the Interest Period for such Advance through the
issuance of its certificates of deposit, or the purchase of deposits,
having a maturity corresponding to the last day of the Interest Period.
Section 3 REPRESENTATIONS AND WARRANTIES.
------------------------------
To induce the Banks to grant the Commitments, the Company represents
and warrants that:
3.01 Corporate Existence. The Company is a corporation duly
-------------------
organized and validly existing in good standing under the laws of the
State of Colorado, has the requisite power to own its properties and to
carry on its business as now being conducted, and is duly qualified and
22
authorized to do business in each jurisdiction in which the nature
of its business or properties makes such qualification necessary.
3.02 Corporate Power and Authority. The Company has full power
-----------------------------
and authority (corporate and other) to enter into this Agreement, to
make the borrowings herein contemplated, to execute and deliver the
Notes and the other Loan Documents and to perform its obligations
hereunder and thereunder, all of which have been duly authorized by all
proper and necessary corporate action and will not contravene or
conflict with any provision of any law or regulation or of the Articles
of Incorporation or bylaws of the Company or any agreement to which the
Company is a party or which is binding upon it or its properties; this
Agreement is, and the Notes, the Side Letters and the other Loan
Documents, when delivered for value, will be the valid and binding
obligations of the Company, enforceable in accordance with their
respective terms (subject to limitations as to enforceability which
might result from bankruptcy, reorganization, arrangement, insolvency
or other similar laws affecting creditors' rights generally).
3.03 Subsidiaries. Schedule 3.03 hereto correctly sets forth
------------
as to each Subsidiary its name, the jurisdiction of its incorporation,
the name of its immediate parent and the percentage of its capital
stock that is directly or indirectly owned by the Company. Each such
Subsidiary is a corporation duly organized and validly existing in good
standing under the laws of the jurisdiction of its incorporation, has
the requisite power to own its properties and to carry on its business
as now being conducted, and is duly qualified and authorized to do
business in each jurisdiction in which the nature of its business or
properties makes such qualification necessary.
3.04 Financial Condition. The Company's audited consolidated
-------------------
financial statements as at December 31, 2002, and its unaudited
financial statements as at June 30, 2003, copies of which have been
furnished to the Banks, have been prepared in conformity with GAAP
applied on a basis consistent with that of the preceding fiscal year
and present fairly the consolidated financial condition of the Company
and its Subsidiaries as at such dates and the results of their
operations for the periods then ended and there has been no material
adverse change in said consolidated financial condition except as
disclosed in Schedule 3.04 hereto. Neither the Company nor any
Subsidiary has any contingent obligations, liabilities for taxes or
other outstanding financial obligations which are material in the
aggregate, except as described in such statements or Schedule 3.04
hereto.
3.05 Properties. The Company and each Subsidiary has good and
----------
marketable title to all of its properties and assets and, with the
exception of properties acquired by foreclosure or by deed in lieu of
foreclosure, none of the assets of the Company and its Subsidiaries is
subject to any Lien, except for those permitted by Section 4.08 hereof.
3.06 Litigation. No litigation, tax claim, proceeding, dispute
----------
or governmental proceeding is pending or, to its knowledge, threatened
against the Company which (a) involves an uninsured claim of over
$500,000 against the Company, or (b) may have a material adverse effect
on the business or condition (financial or other), affairs or
operations of the Company except those referred to in Schedule 3.06
hereto.
23
3.07 Regulations U and X. No part of the proceeds of the
-------------------
borrowings hereunder will be used to purchase or carry any margin stock
(within the meaning of Regulation U of the Board of Governors of the
Federal Reserve System) or to extend credit to others for the purpose
of purchasing or carrying any margin stock, and the Company is not
engaged principally, or as one of its important activities, in the
business of extending credit for the purposes of purchasing or carrying
any such margin stock. If requested by the Agent or any Bank, the
Company will furnish the Agent or such Bank with a statement in
conformity with the requirements of Federal Reserve Form U-1 referred
to in said Regulation. The Company also warrants that no part of the
proceeds of the borrowing hereunder will be used by it for any purpose
which violates, or which is inconsistent with, the provisions of
Regulation X of said Board of Governors.
3.08 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.
3.09 Securities Acts. The Company has not issued any
---------------
unregistered securities in violation of the registration requirements
of Section 5 of the Securities Act of 1933, as amended, or any other
law, and is not violating any rule, regulation or requirement under the
Securities Act of 1933, as amended, or the Securities and 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.
3.10 Other Governmental Regulation. Neither the Company nor
-----------------------------
any of the Subsidiaries is subject to regulation under the Public
Utility Holding Company Act of 1935, the Federal Power Act or the
Interstate Commerce Act or to any Federal or state statute or
regulation limiting its ability to incur Indebtedness for money
borrowed.
3.11 Consents, etc. No consent, approval, authorization of, or
-------------
registration, declaration or filing with any governmental authority
(except for a disclosure the Parent may make in periodic securities
filings) is required on the part of the Company in connection with the
execution and delivery of this Agreement, the Notes, the Side Letters
or the Security Documents (other than filings to perfect the Security
Interest) or the performance of or compliance with the terms,
provisions and conditions hereof.
3.12 ERISA. No fact or circumstance, including but not limited
-----
to any Reportable Event, exists in connection with any Plan of the
Company which is guaranteed by PBGC which might constitute grounds for
the termination of any such Plan by PBGC or for the appointment by the
appropriate United States District Court of a trustee to administer any
such Plan. The Company has no knowledge of any event which could result
in a liability of the Company or any Affiliate or Subsidiary to PBGC.
For purposes of this representation and warranty, the Company shall be
deemed to have knowledge of all facts attributable to the Plan
administrator designated pursuant to ERISA.
3.13 Principal Office, etc. The principal office, chief
----------------
executive office and principal place of business of the Company is at
3600 South Yosemite Street, Denver, Colorado 80237.
24
3.14 No Default. The Company is not in default under any loan
----------
agreement, mortgage, security agreement or other material agreement or
obligation to which it is a party or by which any of its property is
bound.
3.15 Full Disclosure. There is no material fact that the
---------------
Company has not disclosed to the Agent and the Banks which could
adversely affect the properties, business, prospects or financial
condition of the Company or could adversely affect the Collateral or
the Company's servicing rights with respect to the Servicing Portfolio
or any portion thereof. Neither the financial statements referred to in
Section 3.04, nor any borrowing request, Confirmation of
Borrowing/Paydown, officer's certificate or statement delivered by the
Company to the Agent or any Bank contains any untrue statement of
material fact.
3.16 Survival of Representations. All representations and
---------------------------
warranties by the Company herein shall survive delivery of the Notes
and the making of the Loans and Advances, and any investigation at any
time made by or on behalf of the Agent or any Bank shall not diminish
the right of the Agent or any Bank to rely thereon.
Section 4 COMPANY'S COVENANTS.
-------------------
From the date hereof and until the Termination Date and
thereafter until the Commitments are terminated and the Aggregate
Outstandings and other liabilities of the Company under any Loan
Document are paid in full, the Company agrees that, unless the Required
Banks shall otherwise consent in writing, it will:
4.01 Financial Statements and Other Reports. Furnish to the
--------------------------------------
Agent and the Banks (a) as soon as available and in any event within
100 days after the end of each fiscal year of the Company, audited
consolidated financial statements of the Company and the Subsidiaries
consisting of a statement of income and reconciliation of capital
accounts of such year and related balance sheets as of year-end,
setting forth in each case in comparative form the corresponding
figures for the preceding year, prepared in conformity with GAAP,
applied on a basis consistent with that of the preceding year,
certified, without qualification, by the accounting firm of Ernst &
Young LLP or by any other independent certified public accountants
reasonably satisfactory to the Banks; (b) as soon as available and in
any event within 30 days after the end of each monthly accounting
period of the Company, a copy of the unaudited financial statements of
the Company and the Subsidiaries as of the end of each such period,
prepared in conformity with GAAP (but without footnotes and subject to
normal year-end adjustments) consisting of a balance sheet and a
statement of income and surplus for the period from the beginning of
the current fiscal year to the end of such accounting period, certified
by the chief financial officer or chief accounting officer of the
Company on behalf of the Company; (c) as soon as available and in any
event within 100 days after the end of each fiscal year of the Parent,
a copy of the audited consolidated financial statement of the Parent
and its consolidated subsidiaries, including the opinion of the
accounting firm of Ernst & Young LLP or of any other independent
certified public accountants reasonably satisfactory to the Banks, and
a copy of the 10-K report filed by the Parent with the Securities and
Exchange Commission for such fiscal year; (d) as soon as available and
in any event within 60 days after the close of each quarterly
accounting period in each fiscal year of the Parent, a copy of the 10-Q
report filed by the Parent with the Securities and Exchange Commission
for such quarter; (e) as soon as available and in
25
any event within 20 days after the end of each month, a certificate in
the form of Schedule 4.01(e) hereto ("Borrowing Base/Compliance
Certificate"), prepared as of the last Business Day of such month; (f)
as soon as available and in any event within 30 days after the end of
each calendar month a servicing/delinquency report prepared as of the
end of such month and showing with respect to the Servicing Portfolio:
the number of Mortgage Loans (including Mortgage Loans subject to
Mortgage-backed Securities) included therein, the total principal
amount thereof, Investor type, geographic concentration, weighted
average coupon, weighted average maturity, weighted average servicing
fee, delinquency status and foreclosure experience; (g) within five
Business Days after the end of each calendar month, an
Inventory/Pipeline Report satisfactory to the Required Banks; (h)
promptly upon their becoming available, copies of all audit reports
prepared for FNMA, GNMA or FHLMC with respect to the Company or any
subservicer of the Company; (i) as promptly as practicable (but in any
event not later than five Business Days) after the President, Vice
President-Finance or Treasurer of the Company obtains actual knowledge
of the occurrence of any Event of Default or Unmatured Event of
Default, notice of such occurrence, together with a detailed statement
by an officer of the Company on behalf of the Company of the steps
being taken by the Company to cure the Event of Default or Unmatured
Event of Default; and (j) from time to time, with reasonable
promptness, such further information regarding the business, affairs
and financial condition of the Company as the Agent or any Bank may
reasonably request.
4.02 Corporate Existence. Maintain its corporate existence in
-------------------
good standing under the laws of the State of Colorado, maintain the
corporate existence of each Subsidiary in good standing under the laws
of the respective jurisdiction of its incorporation, and maintain its
and each Subsidiary's right to transact business in each jurisdiction
where its assets or the nature of its activities makes such
qualification necessary.
4.03 Taxes. Duly and punctually pay all taxes, assessments and
-----
governmental charges or levies imposed on it or on its income or
profits or on any of its properties prior to the date on which
penalties attach thereto (except insofar as contested in good faith by
appropriate proceedings, and adequate reserves are maintained therefor
in accordance with GAAP) and cause the Subsidiaries to do likewise.
4.04 Insurance. Maintain or require to maintain, and cause
---------
each Subsidiary to maintain or require to maintain, in full force and
effect (a) an adequate errors and omissions insurance policy, (b) such
other insurance coverage by financially sound and respectable insurers,
on all properties of a character usually insured by organizations
engaged in the same or similar business (including, without limitation,
all real property covered by mortgages, deeds of trust or similar
security deeds securing Mortgage Loans owned by the Company to the
extent normally required by prudent mortgagees) against loss or damage
of a kind customarily insured against by such organizations, (c)
adequate public liability insurance against tort claims which may be
asserted against the Company, and (d) a mortgage bankers blanket bond
insurance policy in an amount customarily maintained by organizations
engaged in the same or similar business and under similar circumstances
as the Company.
4.05 Litigation. Give prompt written notice to the Agent and
----------
the Banks of any litigation or governmental proceeding pending or, to
its actual knowledge, threatened against the Company or any Subsidiary
which (i) involves an uninsured claim of over $500,000 or (ii) if
26
adversely determined, may have a material adverse effect on the
business or condition (financial or other) affairs or operations of the
Company or any Subsidiary.
4.06 Access to Books and Inspection. Upon application by the
------------------------------
Agent or any Bank, give any representative of the Agent or such Bank
access during normal business hours to, and permit such representative
to examine, copy or make extracts from, any and all books, records and
documents in the possession of the Company or under its control
relating to its affairs, and to inspect any of the properties of the
Company.
4.07 Debt. Not incur, assume or permit to exist, or allow any
----
Subsidiary to incur or permit to exist, any Indebtedness, except:
(a) borrowings under the Notes;
(b) current liabilities (other than Indebtedness for
borrowed money), not overdue unless contested in good faith,
incurred by the Company or a Subsidiary in the ordinary course
of business;
(c) Indebtedness secured by Liens permitted under Section
4.08;
(d) Guarantees permitted under Section 4.09; and
(e) Indebtedness under hedging transactions with respect
to Mortgage Loans and Mortgage-backed Securities owned by the
Company or such Subsidiary and Indebtedness under reverse
repurchase agreements entered into with Investors in the
normal course of the Company's business.
(f) Indebtedness incurred in connection with any Approved
Repo Transaction.
4.08 Liens. Not create or permit to exist, or allow any
-----
Subsidiary to create or permit to exist, any Lien with respect to any
assets (including, without limitation, servicing rights with respect to
the Servicing Portfolio) now owned or hereafter acquired by the Company
or any Subsidiary except:
(a) the Security Interest;
(b) materialmen's, mechanics', suppliers', tax or
warehousemen's liens, statutory liens of landlords and other
like liens arising in the ordinary course of business securing
obligations which are not yet due and payable or which are
being contested in good faith by appropriate proceedings;
(c) Liens incurred or deposits made in the ordinary
course of business in connection with workers' compensation,
unemployment insurance and other types of social security or
to secure the performance of statutory obligations, surety or
appeal bonds, bids, leases, performance and return of money
bonds and similar obligations (exclusive of obligations for
the payment of borrowed money);
27
(d) encumbrances consisting of zoning regulations,
easements, rights of way, survey exceptions and other similar
restrictions on the use of real property and minor
irregularities in titles thereto which do not materially
impair their use in the operation of its business;
(e) Liens on Mortgage-backed Securities which secure the
repurchase obligations of the Company or any Subsidiary to
brokers with respect to such Mortgage-backed Securities;
(f) lease purchase liens in an aggregate amount less than
$1,000,000;
(g) existing Liens described in Schedule 4.08 hereto; and
(h) Liens incurred in connection with any Approved Repo
Transaction.
4.09 Guarantees. Not, and not allow any Subsidiary to, enter
----------
into any Guarantee or endorse, assume, become surety for, indemnify or
otherwise in any way become or be responsible for the obligations of
any other Person except Guarantees of, or letters of credit issued by,
the Company guaranteeing or supporting the obligations of its
Affiliates in the residential home development business in an aggregate
amount not exceeding $10,000,000 at any time outstanding, provided that
no Event of Default or Unmatured Event of Default shall exist upon or
immediately after the issuance by the Company of any such Guarantee or
letter of credit.
4.10 Leases. Not, and not allow any Subsidiary to, enter into
------
or permit to exist any arrangement involving the leasing from any
lessor of real or personal property (or any interest therein) except
under:
(a) leases of automobiles, office furniture and
equipment, and computer and related equipment used in the
ordinary course of business of the Company and the
Subsidiaries; and
(b) leases of offices occupied by the Company or any
Subsidiary.
4.11 Merger, etc. Not, and not permit any Subsidiary to, (a)
-----------
sell, transfer or otherwise dispose of all or any substantial part of
its assets to any other Person except in the ordinary course of
business or (b) merge or consolidate into or with any corporation
except that any Subsidiary may merge or consolidate with or be
liquidated into the Company (provided that the Company is the surviving
entity) or may merge or consolidate with another Subsidiary and except
as the Required Banks may otherwise consent in writing, which consent
will not be unreasonably withheld.
4.12 Net Worth. Not at any time permit (a) Consolidated
---------
Tangible Net Worth to be less than Minimum Consolidated Tangible Net
Worth, or (b) Adjusted Consolidated Tangible Net Worth to be less than
(i) $17,000,000 plus (ii) 50% of Consolidated Net Earnings calculated
on a cumulative basis on the last day of each fiscal quarter from June
30, 2003 to and including the relevant date of determination.
28
4.13 Leverage Ratio. Not permit the Leverage Ratio to exceed 8
--------------
to 1 at any time.
4.14 ERISA Contributions. At all times, make prompt payment of
-------------------
contributions required to meet the minimum funding standards set forth
in ERISA with respect to any Plan.
4.15 VA Guaranties and FHA Insurance. Not, and not permit any
-------------------------------
Subsidiary to, commit or suffer to be committed any act which would
invalidate the guaranty of the VA or the insurance by the FHA or cause
any impairment to the validity of or priority of the lien securing any
Mortgage Loan pledged to the Banks under the Pledge and Security
Agreement.
4.16 Maintenance of Qualifications. Not, and not permit any
-----------------------------
Subsidiary to, commit or suffer to be committed any act which either
(a) would adversely affect its eligibility to participate as an
FHA-approved mortgagee, as an approved lender under the VA loan
guaranty program, as an approved seller-servicer of mortgage notes to
FNMA and to FHLMC in the FHLMC regions in which it operates, or its
eligibility to issue Mortgage-backed Securities or to service the
mortgage pools formed with respect to Mortgage-backed Securities or (b)
results in a loss of such eligibility.
4.17 Servicing Portfolio. Not, and not permit any Subsidiary
-------------------
to, commit or suffer to be committed any act which would constitute a
material breach of any material contract to which the Company now is or
hereafter becomes a party under which the Company is obligated to
service Mortgage Loans for another Person.
4.18 [Reserved]
4.19 Compliance with Laws. Comply with the requirements of all
--------------------
applicable laws, rules, regulations and orders of any governmental
authority, a breach of which might materially adversely affect its
business, affairs, properties, financial condition or ability to obtain
credit except where contested in good faith and by appropriate
proceedings.
4.20 Collateral. (i) Defend the right, title, and interest of
----------
the Agent and the Banks in the Collateral against the claims and
demands of all Persons; (ii) not amend, modify, or waive any of the
terms and conditions of, or settle or compromise any claim in respect
of, any Collateral in a manner which would materially adversely affect
the interests of the Agent and the Banks; and (iii) not sell, assign,
transfer, or otherwise dispose of, or grant any option with respect to,
or pledge or otherwise encumber, any of the Collateral or any interest
therein except in a manner whereby the Agent alone would be entitled to
receive the proceeds therefrom.
4.21 Material Adverse Change. Not create, permit to occur or
-----------------------
suffer to exist any material adverse change in its condition or
operations.
4.22 Investments. Not, and not permit any Subsidiary to,
-----------
directly or indirectly, make or own any Investment in any Person
except:
(a) Investments in (i) certificates of deposit and
bankers acceptances issued by, and time deposits on deposit
with, a Bank or any other domestic commercial bank which has,
or the holding company of which has, a long-term debt rating
of at least AA" from either Standard & Poor's Corporation or
Moody's Investors Service, Inc., or a short-term
29
debt rating of at least AA-1" from Standard & Poor's
Corporation or AP-1" from Moody's Investors Service, Inc., in
each case having a maturity not exceeding 90 days from the
date of issuance thereof, (ii) marketable direct obligations
issued or unconditionally guaranteed by the United States
Government or issued by any agency thereof and backed by the
full faith and credit of the United States, in each case
maturing within 90 days from the date of acquisition thereof,
and (iii) commercial paper maturing no more than 90 days from
the date of creation thereof and which is rated at least AA-1"
by Standard & Poor's Corporation or at least AP-1" by Moody's
Investors Service, Inc.;
(b) Mortgage Loans and Mortgage-backed Securities
acquired, in each case, in the ordinary course of business;
(c) repurchase agreements fully collateralized by
Investments of the types described in Sections 4.22(a) and/or
4.22(b);
(d) money market and cash accounts which are invested
entirely in Investments of the types described in Sections
4.22(a) and/or 4.22(b) above;
(e) securities or evidences of indebtedness of others
acquired by the Company in settlement of accounts receivable
or other debts arising in the ordinary course of business, so
long as the aggregate amount of any such securities or
evidences of indebtedness is not material to the business or
condition of the Company or any Subsidiary;
(f) loans and advances to employees, officers and
directors of the Company or any Subsidiary in an aggregate
principal amount outstanding at any one time not to exceed
$100,000;
(g) Investments of the Company in Subsidiaries in an
aggregate amount not exceeding $1,000,000 at any time
outstanding; and
(h) loans, advances or extensions of credit to the Parent
or any of its Affiliates if no Event of Default or Unmatured
Event of Default exists or would exist immediately after
giving effect to the making of any such loan, advance or
extension of credit.
4.23 Transactions with Affiliates. Not, and not permit any
----------------------------
Subsidiary to, enter into any transactions, including, without
limitation, any purchase, sale, lease or exchange of property or
services with or the incurring of any Indebtedness to any Affiliate
unless such transactions are otherwise permitted under this Agreement,
are in the ordinary course of business and are upon fair and reasonable
terms.
4.24 Closing Procedures. The Company will provide closing
------------------
instructions to each Closing Agent which (a) require, in connection
with Mortgage Loans tablefunded by the Company, that (i) the Mortgage
Note evidencing each such Mortgage Loan shall be endorsed to the
Company, (ii) the assignment of the applicable Mortgage to the Company
shall be recorded simultaneously with but separate from the related
Mortgage and (iii) the Mortgage Note evidencing each such Mortgage Loan
and other related loan documents shall be delivered to the Company
promptly upon the closing of such Mortgage Loan, and (b) in the case of
Mortgage Loans funded by a wire transfer of funds in accordance with
Section 4.02(b)(i) of the Pledge and
30
Security Agreement, contain a statement substantially in the form set
forth in Exhibit D hereto. The Company shall review for accuracy and
completeness each Mortgage Note, Mortgage, assignment and other
document evidencing or securing each Mortgage Loan originated or
purchased by the Company.
4.25 Independence of Covenants. All covenants hereunder shall
-------------------------
be given independent effect so that if a particular action or condition
is not permitted by any of such covenants, the fact that it would be
permitted by an exception to, or be otherwise within the limitations
of, another covenant shall not avoid the occurrence of an Event of
Default or Unmatured Event of Default if such action is taken or
condition exists.
Section 5 CONDITIONS PRECEDENT.
--------------------
5.01 Effectiveness. This Agreement shall not become effective
-------------
until, and shall become effective when, each of the following
conditions precedent shall have been satisfied:
(a) The Agent shall have received the following, in form
and substance satisfactory to the Banks:
(i) This Agreement, duly executed by the Company
and each Bank.
(ii) The Pledge and Security Agreement, duly
executed by the Company, the Collateral Agent and each
Bank.
(iii) The Notes, duly executed by the Company,
which shall constitute amendments and restatements of the
Existing Notes.
(iv) A Uniform Commercial Code financing
statement or statements prepared for filing in all
appropriate filing offices and duly executed by the
Company.
(v) A copy of the resolutions of the Board of
Directors of the Company authorizing the execution,
delivery and performance of this Agreement, the other
Loan Documents and the borrowing hereunder, certified by
the Secretary or an Assistant Secretary of the Company on
behalf of the Company, together with such other documents
as the Agent or the Banks shall reasonably request.
(vi) A certificate, signed by the Secretary or
an Assistant Secretary of the Company on behalf of the
Company, as to the incumbency and signatures of the
person or persons authorized to execute and deliver this
Agreement and the other Loan Documents.
(vii) A favorable written opinion of counsel to
the Company, addressed to the Bank and covering the
matters set forth in Schedule 5.01(a)(x) hereto.
(b) All legal matters incident hereto and to the
satisfaction of the foregoing conditions precedent shall be
reasonably satisfactory to counsel to the Banks.
31
(c) Upon execution of this Agreement, each Bank will make
Loans as calculated by the Agent so that each Bank's
outstanding Loans are equal to the respective Percentage of
the Aggregate Commitment Amount for such Bank of all Loans
outstanding on such date and the Agent shall distribute the
proceeds of such Loans to the other Banks in accordance with
their Percentage of the Aggregate Commitment Amount of all
Loans outstanding on the date of execution of this Agreement,
but prior to any additional Loans requested by the Company to
be made upon execution of this Agreement.
5.02 Each Extension of Credit. The obligations of the Banks to
------------------------
make the Loans are subject to the following further conditions
precedent that at each time the Banks are requested to make Loans:
(a) no Event of Default and no Unmatured Event of Default
shall have occurred and be continuing or will exist upon the
making of the requested Loans; and
(b) the representations and warranties contained in
Section 3 hereof and in Section 5 of the Pledge and Security
Agreement shall be true and correct in all material respects
with the same force and effect as if made on and as of the
date of such request.
Section 6 EVENTS OF DEFAULT; REMEDIES.
---------------------------
6.01 Events of Default. The occurrence of one or more of the
-----------------
following events shall constitute an "Event of Default" if not cured
within the applicable notice and grace periods specified, if any:
(a) Default for one Business Day in the payment when due
of any principal of a Bank's Note, except upon maturity, in
which case default in the payment when due of such principal
of a Note; or
(b) Default for five Business Days in the payment when
due of interest on a Bank's Note; or
(c) Default in the performance of the Company's covenants
contained in Sections 4.07, 4.08, 4.09, 4.11, 4.18, 4.20, 4.22
or 4.23 or in the Pledge and Security Agreement; or
(d) Default by the Company in the performance of any
other covenant contained herein or in any Loan Document (and
not constituting a default under Sections 6.01(a), 6.01(b) or
6.01(c)) which shall remain unremedied for 15 days after the
earliest of (i) the date on which the Agent, at the request of
any Bank, gives written notice of such default to the Company,
(ii) the date on which the Company gives written notice of
such default to the Agent or (iii) the latest date by which
the Company is required to give notice of such default to the
Agent and the Banks pursuant to Section 4.01(i); or
(e) Any warranty made by the Company herein is untrue in
any material respect, or any certificate, schedule, statement,
report, notice or writing furnished by or on behalf
32
of the Company to a Bank, the Agent or the Collateral Agent is
untrue in any material respect on the date as of which the
facts set forth therein are stated or certified; or
(f) Any creditor or representative of any creditor of the
Company or any Subsidiary shall become entitled to declare any
Indebtedness in excess of $1,000,000 owing on any bond,
debenture, note or other evidence of indebtedness for borrowed
money of the Company or such Subsidiary to be due and payable
prior to its expressed maturity, whether or not such
Indebtedness is actually declared to be immediately due and
payable, or any such Indebtedness becomes due and payable
prior to its expressed maturity by reason of any default by
the Company, or any Subsidiary in the performance or
observance of any obligation or condition and such default
shall not have been effectively waived or shall not have been
cured within any grace period allowed therefor or any such
Indebtedness shall have become due by its terms and shall not
have been promptly paid or extended; or
(g) Any creditor or representative of any creditor of the
Parent shall declare any Indebtedness of the Parent owing on
any bond, debenture, note or other evidence of indebtedness
for borrowed money in excess of $5,000,000 (other than
Indebtedness which by its terms is without recourse to the
Parent) to be due and payable prior to its expressed maturity
by reason of any default by the Parent in the performance or
observance of any obligation or condition and such default
shall not have been effectively waived or shall not have been
cured within any grace period allowed therefor or any such
Indebtedness shall have become due by its terms and shall not
have been promptly paid or extended; or
(h) The Company, any Subsidiary or the Parent becomes
insolvent or generally does not pay its debts as they become
due or applies for, consents to, or acquiesces in the
appointment of a trustee or receiver of the Company, such
Subsidiary or the Parent or any of their respective property;
or, in the absence of such application, consent or
acquiescence, a trustee or receiver is appointed for the
Company, any Subsidiary or the Parent or for a substantial
part of their respective property and is not discharged within
sixty (60) days; or any bankruptcy, reorganization, debt
arrangement or other proceedings under any bankruptcy or
insolvency law is instituted by or against the Company, any
Subsidiary or the Parent, and if instituted against the
Company, any Subsidiary or the Parent is consented to or
acquiesced in by the Company, such Subsidiary or the Parent or
remains for 60 days unstayed or undismissed; or
(i) Any dissolution or liquidation proceeding (other than
as permitted by this Agreement) is instituted by or against
the Company, any Subsidiary or the Parent and, if instituted
against the Company, any Subsidiary or the Parent, is
consented to or acquiesced in by the Company, such Subsidiary
or the Parent or remains for 60 days unstayed or undismissed;
or
(j) Any material adverse change in the condition of the
Company, financial or otherwise which has not been cured,
corrected or remedied to the reasonable satisfaction of the
Required Banks within fifteen (15) days after the Agent, at
the direction of the
33
Required Banks, shall have given the Company written
notice of the occurrence thereof; or
(k) Any Reportable Event or any other fact or
circumstance, which the Required Banks determine in good faith
constitutes grounds for the termination of any Plan of the
Company or any Subsidiary by PBGC or for the appointment by an
appropriate United States District Court of a trustee to
administer any such Plan, shall have occurred and be
continuing 60 days after written notice of such determination
shall have been given to the Company by the Agent, at the
direction of the Required Banks, or any Plan of the Company or
any Subsidiary shall be terminated within the meaning of Title
IV of ERISA, or a trustee shall be appointed by the
appropriate United States District Court to administer any
Plan of the Company, or PBGC shall institute proceedings to
terminate any Plan of the Company or any Subsidiary or to
appoint a trustee to administer any such Plan and, upon the
occurrence of any of the foregoing, the aggregate amount of
the vested unfunded liability under all such Plans exceeds Two
Hundred Fifty Thousand Dollars ($250,000) and such liability
is not covered by insurance.
6.02 Remedies. If any Event of Default described in Sections
--------
6.01(h) or 6.01(i) shall occur, the Commitments shall immediately
terminate and the principal of and accrued interest on the Notes shall
become immediately due and payable all without further notice of any
kind. If any other Event of Default shall occur, the Agent, at the
direction of the Required Banks, shall terminate the Commitments and
shall declare the principal of and accrued interest on the Notes to be
immediately due and payable, whereupon the Commitments shall terminate
immediately and the Notes shall become immediately due and payable, all
without further notice of any kind.
Section 7 THE AGENT.
---------
7.01 Appointment and Authorization. Each Bank appoints and
-----------------------------
authorizes the Agent to take such action as agent on its behalf and to
exercise such powers under this Agreement and the other Loan Documents
as are delegated to the Agent by the terms thereof, together with such
powers as are reasonably incidental thereto. Neither the Agent nor any
of its directors, officers or employees shall be liable for any action
taken or omitted to be taken by it or them under or in connection with
this Agreement or the other Loan Documents, except for its or their own
gross negligence or willful misconduct. The Agent shall act as an
independent contractor in performing its obligations as Agent hereunder
and under the other Loan Documents and nothing herein contained shall
be deemed to create a fiduciary relationship among or between the
Agent, the Company or the Banks.
7.02 Note Holders. The Agent may treat the payee of any Note
------------
as the holder thereof until written notice of transfer shall have been
filed with it signed by such payee and in form satisfactory to the
Agent.
7.03 Consultation With Counsel. The Agent may consult with
-------------------------
legal counsel selected by it and shall not be liable for any action
taken or suffered in good faith by it in accordance with the advice of
such counsel.
34
7.04 Documents. The Agent shall not be under a duty to examine
---------
into or pass upon the validity, effectiveness, genuineness or value of
the Notes, the Loan Documents or any other instrument or document
furnished pursuant thereto or thereunder, and the Agent shall be
entitled to assume that the same are valid, effective and genuine and
what they purport to be.
7.05 Agent and Affiliates. With respect to its Commitment and
--------------------
the Loans and Advances made by it in its capacity as a Bank, the Agent
shall have the same rights and powers under this Agreement and the
other Loan Documents as any other Bank and may exercise the same as
though it were not the Agent consistent with the terms thereof, and the
Agent and its affiliates may accept deposits from, lend money to and
generally engage in any kind of business with the Company or any
Subsidiary as if it were not the Agent.
7.06 Action by Agent. The Agent shall be entitled to use its
---------------
discretion with respect to exercising or refraining from exercising any
rights which may be vested in it by, or with respect to taking or
refraining from taking any action or actions which it may be able to
take under or in respect of, this Agreement and the Loan Documents. The
Agent shall incur no liability under or in respect of this Agreement or
any of the Loan Documents by acting upon any notice, consent,
certificate, warranty or other paper or instrument believed by it to be
genuine or authentic or to be signed by the proper party or parties, or
with respect to anything which it may do or refrain from doing in the
reasonable exercise of its judgment, or which may seem to it to be
necessary or desirable in the premises.
7.07 Credit Analysis. Each Bank has made, and shall continue
---------------
to make, its own independent investigation or evaluation of the
operations, business, property and condition, financial and otherwise,
of the Company, in connection with the making of its Commitment and has
made its own appraisal of the creditworthiness of the Company. Except
as explicitly provided herein, the Agent has no duty or responsibility,
either initially or on a continuing basis, to provide any Bank with any
credit or other information with respect to such operations, business,
property, condition or creditworthiness, whether such information comes
into its possession on or before the Effective Date or at any time
thereafter.
7.08 Notices of Event of Default, etc. In the event that any
--------------------------------
Bank shall have acquired actual knowledge of any Event of Default or
Unmatured Event of Default, such Bank shall promptly give notice
thereof to the Agent and the other Banks. Upon receipt from any Bank of
a request that the Agent give notice to the Company of the occurrence
of an Event of Default or Unmatured Event of Default under Section 6,
the Agent shall promptly forward such request to the other Banks and
will take such action and assert such rights under this Agreement and
the other Loan Documents as the Required Banks shall direct in writing.
7.09 Indemnification. Each Bank agrees to indemnify the Agent
---------------
(to the extent not reimbursed by the Company), ratably according to its
Percentage of the Aggregate Commitment Amount, from and against any and
all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by or asserted
against the Agent in any way relating to or arising out of this
Agreement or the Loan Documents or any action taken or omitted by the
Agent under this Agreement or the Loan Documents provided that no Bank
shall be liable for any portion of such
35
liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from the
Agent's gross negligence or willful misconduct.
7.10 Payments. All payments of principal of the Notes and all
--------
other funds received by the Agent in respect of any payments made by
the Company pursuant to this Agreement, the Notes or the other Loan
Documents (other than payments of interest payable on the Banks' Notes,
payments of agent fees made to the Agent under its Side Letter,
payments of additional interest or deficiency fees made to the Banks
pursuant to Section 2.08(b) and the provisions of any Side Letter)
shall be distributed forthwith by the Agent (in like currency and funds
and on the same day received, provided that any such payment is
received by the Agent prior to 12:00 noon (Denver time) on such day) to
the Banks ratably in accordance with each Bank's Percentage of the
Aggregate Outstandings and in like currency and funds and on the same
day as received.
7.11 Sharing of Payments. If any Bank shall receive and retain
-------------------
any payment during the persistence of an Event of Default or Unmatured
Event of Default, whether by setoff, application of deposit balance or
security, or otherwise, in respect of indebtedness under this Agreement
or the Notes in excess of such Bank's share based on its Percentage of
the Aggregate Outstandings, then such Bank shall purchase from the
other Banks for cash and at face value and without recourse, such
participation in the Notes 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 Bank, the related purchases
from the other Bank shall be rescinded ratably and the purchase price
restored as to the portion of such excess payment so recovered, but
without interest. Each Bank agrees to exercise any and all rights of
setoff, counterclaim or bankers' lien first fully against any such
Notes and participations therein held by such Bank, and only then to
any other indebtedness of the Company to such Bank.
7.12 Advice to Banks. The Agent shall forward to the Banks
---------------
copies of all notices, financial reports and other communications
received from the Company hereunder. In addition, the Agent will
provide monthly collateral and collateral aging reports to each of the
Banks.
7.13 Resignation and Removal.
-----------------------
(a) The Agent may resign at any time by giving 30 days
written notice thereof to the Banks and the Company. Upon any
such resignation, the Required Banks shall have the right to
appoint a successor Agent, which successor Agent shall (unless
an Event of Default has then occurred and is continuing) be
reasonably acceptable to the Company. If no successor Agent
shall have been so appointed and shall have accepted such
appointment within 30 days after the retiring Agent's giving
of notice of its resignation, then the retiring Agent may, on
behalf of the Banks, appoint an Agent or custodian which shall
be a Bank or a commercial bank organized under the laws of the
United States of America or of any State thereof and having a
combined capital and surplus of at least $100,000,000 and
which shall be reasonably acceptable to the Company (unless an
Event of Default has occurred and is continuing). Any such
resignation shall be effective upon the appointment of a
successor Agent. Upon the acceptance of any appointment as the
Agent hereunder by a successor Agent, such successor Agent
shall thereupon succeed to
36
and become vested with all the rights, powers, privileges and
duties of the retiring Agent, and the retiring Agent shall be
discharged from its duties and obligations, under this
Agreement and the other Loan Documents. After any retiring
Agent's resignation or removal hereunder as the Agent, the
provisions of this Section 7 shall inure to its benefit as to
any actions taken or omitted to be taken by it while it was
acting as the Agent under this Agreement and any other Loan
Document.
(b) If the Agent is placed in receivership or
conservatorship or ceases to be eligible to serve as
depository or document custodian on behalf of FNMA, FHLMC or
GNMA, the Required Banks (excluding the Agent in its capacity
as a Bank) shall have the right to remove the Agent upon
written notice to the Agent. Upon submission of such notice,
such Required Banks may designate a successor agent.
Section 8 MISCELLANEOUS.
-------------
8.01 Non-Waiver. No failure on the part of the Agent or the
----------
Banks to exercise and no delay in exercising, and no course of dealing
with respect to, any right, power or privilege under this Agreement
shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, power or privilege under this Agreement preclude
any other or further exercise thereof or the exercise of any other
right, power or privilege. The remedies provided herein are cumulative
and not exclusive of any remedies provided by law.
8.02 Notices. Except as otherwise specifically provided for
-------
herein, all notices and other communications provided for herein shall
be by telex, telecopier, telegraph, cable or in writing and telexed,
telecopied, telegraphed, cabled, mailed or delivered to the intended
recipient at the address specified on the signature pages hereto; or,
as to any party, at such other address as shall be designated by such
party in a notice to the other parties. All notices and other
communications hereunder shall be deemed to have been duly given when
transmitted by telex or telecopier, delivered to the telegraph or cable
office or personally delivered or, in the case of a mailed notice, upon
receipt thereof as conclusively evidenced by the signed receipt
therefor, in each case given or addressed as aforesaid.
8.03 Expenses; Indemnification.
-------------------------
(a) Expenses. The Company agrees to pay: (i) the
--------
reasonable fees and expenses of counsel for the Agent and the
Banks in connection with the preparation, execution and
delivery of this Agreement, the Notes and the other Loan
Documents and in connection with the Loans hereunder, whether
or not any Loan is made hereunder, (ii) the reasonable fees
and expenses of counsel for the Agent and the Banks in
connection with any amendment, modification or waiver of any
of the terms of this Agreement, the Notes and the other Loan
Documents and (iii) all reasonable costs and expenses of the
Agent and the Banks (including reasonable counsels' fees) in
connection with the enforcement of this Agreement, the Notes
and the other Loan Documents.
(b) Indemnification.
---------------
(i) The Company will indemnify and hold harmless
the Agent and each Bank, the Agent's and each Bank's
directors, officers, employees, agents
37
and attorneys and each Person, if any, who is deemed to
control the Agent or any Bank (any and all of whom are
referred to as the "Indemnified Party") from and against
any and all losses, claims, damages and liabilities,
joint or several (including all losses, claims, damages
and liabilities resulting from the negligence, but not
the gross negligence of such Indemnified Party, and
including all legal fees or other expenses reasonably
incurred by any Indemnified Party in connection with the
preparation for or defense of any pending or threatened
claim, action or proceeding, whether or not resulting in
any liability), to which such Indemnified Party may
become subject (whether or not such Indemnified Party is
a party thereto) under any applicable Federal, state or
local law or otherwise caused by or arising out of, or
allegedly caused by or arising out of, this Agreement or
any transaction contemplated hereby, except for losses,
claims, damages or liabilities resulting from the gross
negligence, willful misconduct or fraud of such
Indemnified Party or the failure of such Indemnified
Party to fulfill its obligations under this Agreement.
(ii) Promptly after receipt by an Indemnified
Party of notice of any claim, action or proceeding with
respect to which an Indemnified Party is entitled to
indemnity hereunder, such Indemnified Party will notify
the Company of such claim or the commencement of such
action or proceeding, provided that the failure of an
Indemnified Party to give notice as provided herein shall
not relieve the Company of its obligations under this
Section 8.03(b) with respect to such Indemnified Party,
except to the extent that the Company is actually
prejudiced by such failure. The Company will assume the
defense of such claim, action or proceeding and will
employ counsel reasonably satisfactory to the Indemnified
Party and will pay the fees and expenses of such counsel.
Notwithstanding the preceding sentence, the Indemnified
Party will be entitled, at the expense of the Company, to
employ counsel separate from counsel for the Company and
for any other party in such action if the Indemnified
Party reasonably determines that a conflict of interest
or other reasonable basis exists which makes
representation by counsel chosen by the Company not
advisable, provided that the Company shall not be
obligated to pay for the fees and expenses of more than
one counsel for all Indemnified Parties in respect of a
particular controversy. In the event an Indemnified Party
appears as a witness in any action or proceeding brought
against the Company or any of its Subsidiaries (or any of
its officers, directors or employees) in which an
Indemnified Party is not named as a defendant, the
Company agrees to reimburse such Indemnified Party for
all expenses incurred by it (including fees and expenses
of counsel) in connection with its appearing as a
witness.
8.04 Taxes. The Company agrees to pay, and save the Agent, the
-----
Collateral Agent and the Banks harmless from all liability for, any
stamp or other taxes which may be payable with respect to the execution
or delivery of this Agreement or the issuance of the Notes and the
Security Documents, which obligation of the Company shall survive the
termination of this Agreement.
8.05 Amendments, Etc.
---------------
38
(a) Except as provided in Sections 8.05(b) and 8.05(c),
no amendment or waiver of any of the provisions of this
Agreement, the Notes or the Loan Documents, nor any consent to
any departure by the Company from the provisions hereof or
thereof, shall be effective unless the same shall be in
writing and signed by the Required Banks, and then any such
waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given;
provided, however, that no such amendment, waiver or consent
shall, unless in writing and signed by all of the Banks, do
any of the following: (i) waive any of the conditions
specified in Section 2, (ii) increase the Commitment Amounts
of the Banks, except as provided in Sections 8.05(b) and
8.05(c), or subject the Banks to any additional obligations,
(iii) reduce the principal of, or interest on the Notes or any
fees payable to the Banks hereunder, (iv) postpone any date
fixed for any payment in respect of principal of, or interest
on, the Notes or any fees payable to the Banks hereunder, (v)
change the Percentage of the Aggregate Commitment Amount or
the Percentage of the Aggregate Outstandings as to any Bank,
except as provided in Sections 8.05(b) and 8.05(c), or the
number or identity of the Banks which shall be required for
the Banks or any of them to take any action hereunder, (vi)
amend this Section 8.05, Section 2.08(b), Section 6, Section
8.06 or Exhibit A hereto, (vii) release any Collateral, except
as is provided in Sections 9 and 10 of the Pledge and Security
Agreement, (viii) amend the definitions of "Collateral" set
forth in the Pledge and Security Agreement, or (ix) permit the
release of Collateral not otherwise permitted to be released
under the terms of the Loan Documents as constituted prior to
such amendment; and provided, further, that no such amendment,
waiver or consent shall, unless in writing and signed by the
Agent, and, if applicable, the Collateral Agent, in addition
to the Banks required hereinabove to take such action, affect
the rights or duties of the Agent or the Collateral Agent
under this Agreement, any Note or the other Loan Documents.
(b) From time to time, so long as no Event of Default is
then continuing, the Company may agree, with the prior written
consent of the Agent, to add a bank chartered under the laws
of the United States or any State thereof, an insurance
company, another lender or a mutual fund (a "New Bank") as a
"Bank" under this Agreement with a Commitment, for the purpose
of increasing the aggregate amount of the Commitments;
provided, however, that upon giving effect to any such new
Commitment, the Commitment Amount of the New Bank shall not be
less than $10,000,000; and provided, further, that the
aggregate Commitment Amounts, after giving effect to any such
increase, shall not exceed $225,000,000. The Company, the
Agent and each New Bank shall agree on the date as of which
the New Bank's Commitment Amount shall become effective, and
each New Bank shall execute and deliver an instrument in the
form prescribed by the Agent to evidence its agreement to be
bound by this Agreement and the other Loan Documents. Upon the
effective date of the inclusion of a New Bank as a lender
under this Agreement, the Agent shall deliver to the Company
and each of the Banks a revised Schedule 1.01(b) reflecting
the revised aggregate Commitment Amounts and the Company shall
execute and deliver to the New Bank a Note in the amount of
the New Bank's Commitment Amount. Any reallocation of Loans
outstanding on the date that the New Bank's Commitment Amount
shall become effective necessitated by the addition of the New
Bank as a Bank under this Agreement shall be effected on and
as of such date by the purchase and sale among the Banks of
the Obligations outstanding on such date.
39
(c) From time to time, so long as no Event of Default is
then continuing, the Company may agree, with the prior written
consent of the Agent, to permit a Bank to permanently or
temporarily increase its Commitment Amount for the purpose of
increasing the aggregate amount of the Commitments; provided,
however, that the aggregate Commitment Amounts, after giving
effect to any such increase, shall not exceed $225,000,000.
The Company, the Agent and each Bank increasing its Commitment
Amount shall agree on the date as of which the increased
Commitment Amount shall become effective and, if such increase
is a temporary rather than a permanent increase, the date on
which that increase shall terminate (the "Temporary Increase
Termination Date"). Upon the effective date of an increase in
any Bank's Commitment Amount under this Agreement, the Agent
shall deliver to the Company and each of the Bank's a revised
Schedule 1.01(b) reflecting the revised aggregate Commitment
Amounts and the Company shall execute and deliver to the Bank
increasing its Commitment Amount a Note in the amount of such
Bank's increased Commitment Amount. Any reallocation of Loans
outstanding on the date that an increase in a Bank's
Commitment Amount shall become effective shall be effected on
and as of such date by the purchase and sale among the Banks
of the Loans outstanding on such date. If an increase in a
Bank's Commitment Amount was a temporary rather than a
permanent increase, the Company shall, on the Temporary
Increase Termination Date, repay the Loans by the amount by
which the outstanding principal balance of all Loans on such
date exceeds the sum of the Commitment Amounts, after giving
effect to the termination of such temporary increase.
Notwithstanding the existence of any Event of Default or
Unmatured Event of Default or any other failure to satisfy the
conditions pursuant to Warehousing Loans under this Agreement,
each of the Banks (other than the Bank that temporarily
increased its Commitment Amount) shall make Warehousing Loans
on such date in the amount, if any, required to increase its
outstanding Warehousing Loans to its Percentage of the
Aggregate Commitment Amount, and shall deliver the proceeds of
such Warehousing Loans to the Agent. The Agent shall
distribute to the Bank that temporarily increased its
Commitment Amount on such date, out of any payments made by
the Company as set forth above and the proceeds of Warehousing
Loans made by the other Banks as set forth above, the amount
required to reduce such Bank's outstanding Warehousing Loans
to its Percentage of the Aggregate Commitment Amount.
8.06 Successors and Assigns; Disposition of Advances;
-----------------------------------------------
Transferees.
-----------
(a) This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors
and assigns, except that the Company may not assign its rights
or obligations hereunder or under the Notes without the prior
consent of all of the Banks.
(b) Any Bank may at any time sell, assign, transfer,
grant participations in, or otherwise dispose of any portion
of its Notes and the Loans made by such Bank (each such
interest so disposed of being herein called a "Transferred
Interest") to banks or other entities which meet the minimum
financial rating requirements established by FNMA, FHLMC and
GNMA for custodial depositories that are FDIC-insured
("Transferees"). Without in any way limiting the rights of
Transferees hereunder, the Company agrees that each Transferee
shall be entitled to the benefits of Sections 2.16, 2.17,
2.18, 2.19 and
40
2.20 to the extent of its Transferred Interest as if it were
the "Bank" which has made Loans in an aggregate amount equal
to such Transferred Interest. The Company agrees that each
Transferee may exercise any and all rights of banker's lien,
setoff as provided in Section 2.12 and counterclaim available
pursuant to law with respect to its Transferred Interest as
fully as if such Transferee were a direct lender to the
Company.
(c) Each Bank may pledge any portion of its Note for
security purposes to any Federal Reserve Bank.
8.07 Confidentiality. Any information which the Agent or any
---------------
Bank receives from the Company which is designated proprietary or
confidential at the time of receipt thereof by the Agent or such Bank
shall not be disclosed by the Agent or such Bank to any other Person,
if such information is not otherwise in the public domain, other than
(a) to its independent accountants and legal counsel, (b) pursuant to
statutory or regulatory requirements, (c) pursuant to any mandatory
court order or (d) to any Transferee or prospective Transferee and to
the independent accountants and legal counsel of any such Transferee or
prospective Transferee.
8.08 Survival. The obligations of the Company under Sections
--------
2.09, 2.16, 2.18 and 8.03 shall survive the repayment of the Notes and
the termination of the Commitments; provided, however, that the
obligations of the Company under Sections 2.16 and 2.18 shall survive
only with respect to the payment of compensation for increased costs,
reduction in amounts received or receivable or reduced return
attributable to periods prior to the repayment of the Notes and the
termination of the Commitments.
8.09 Counterparts. This Agreement may be executed in any
------------
number of counterparts, and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be
deemed an original, but all of which taken together shall constitute
one and the same instrument.
8.10 GOVERNING LAW. THIS AGREEMENT AND THE NOTES SHALL BE
-------------
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAW, AND
NOT THE LAW OF CONFLICTS, OF THE STATE OF MINNESOTA, BUT GIVING EFFECT
TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS. Whenever possible, each
provision of this Agreement and the Notes and any other statement,
instrument or transaction contemplated hereby or thereby or relating
hereto or thereto shall be interpreted in such manner as to be
effective and valid under such applicable law, but, if any provision of
this Agreement or the Notes or any other statement, instrument or
transaction contemplated hereby or thereby or relating hereto or
thereto shall be held to be prohibited or invalid under such applicable
law, such provision shall be ineffective only to the extent of such
prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement and the Notes
and any other statement, instrument or transaction contemplated hereby
or thereby or relating hereto or thereto.
8.11 WAIVER OF JURY TRIAL; JURISDICTION.
----------------------------------
(a) THE COMPANY, BY ITS EXECUTION AND DELIVERY HEREOF,
AND EACH OF THE AGENT AND THE BANKS, BY THEIR ACCEPTANCE
HEREOF,
41
HEREBY EXPRESSLY WAIVES ANY RIGHT TO A TRIAL BY JURY
IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS
UNDER THIS AGREEMENT, THE NOTES OR THE LOAN DOCUMENTS OR UNDER
ANY AMENDMENT, INSTRUMENT OR DOCUMENT DELIVERED OR WHICH MAY
IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR ARISING
FROM ANY CREDIT RELATIONSHIP EXISTING IN CONNECTION WITH THIS
AGREEMENT, THE NOTES OR THE LOAN DOCUMENTS, AND AGREES THAT
ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT
AND NOT BEFORE A JURY.
(b) THE COMPANY HEREBY IRREVOCABLY SUBMITS TO THE
JURISDICTION OF ANY MINNESOTA STATE OR FEDERAL COURT SITTING
IN HENNEPIN OR RAMSEY COUNTY, MINNESOTA OVER ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE
NOTES OR THE LOAN DOCUMENTS. THE COMPANY HEREBY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO, THE
DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH
ACTION OR PROCEEDING. NOTHING IN THIS SECTION 8.11(b) SHALL
AFFECT THE RIGHT OF THE AGENT AND THE BANKS TO BRING ANY
ACTION OR PROCEEDING AGAINST THE COMPANY OR ITS PROPERTY IN
THE COURTS OF ANY OTHER JURISDICTION.
8.12 Highest Lawful Rate. Anything herein to the contrary
-------------------
notwithstanding, the obligations of the Company on each Bank's Note
shall be subject to the limitation that payments of interest shall not
be required, for any period for which interest is computed hereunder,
to the extent that contracting for or receipt thereof would be contrary
to provisions of any law applicable to such Bank limiting the highest
rate of interest which may be lawfully contracted for, charged or
received by such Bank.
8.13 Section Titles. The section titles contained in this
--------------
Agreement shall be without substantive meaning or content of any kind
whatsoever and shall not govern the interpretation of any of the
provisions of this Agreement.
8.14 Reliance by the Agent and the Banks. All covenants,
-----------------------------------
agreements, representations and warranties made herein by the Company
shall, notwithstanding any investigation by the Agent and the Banks, be
deemed to be material to and to have been relied upon by the Agent and
the Banks and shall survive the execution and delivery of this
Agreement.
8.15 Severability. Any provision of this Agreement which is
------------
prohibited or unenforceable shall be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining
provisions hereof.
8.16 ENTIRE AGREEMENT. THIS AGREEMENT AND ALL LOAN DOCUMENTS
----------------
EMBODY THE FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO AND
SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS
AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE SUBJECT
MATTER HEREOF, AND MAY NOT BE CONTRADICTED
42
OR VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OR DISCUSSIONS OF THE PARTIES HERETO.
[The remainder of this page is intentionally left blank.]
43
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
HOMEAMERICAN MORTGAGE CORPORATION
By: /s/ John J. Heaney
-------------------------------
Its: Sr. Vice President
and Treasurer
-------------------------
Address:
HomeAmerican Mortgage Company
3600 South Yosemite Street
Denver, Colorado 80237
Attention: John J. Heaney
Telecopier: (303) 804-7988
S-1
U.S. BANK NATIONAL
ASSOCIATION
By: /s/ Edwin D. Jenkins
-------------------------------
Its: Senior Vice President
-------------------------
Address:
U.S. Bank National Association
Mortgage Banking Services
BC-MN-H03B
U.S. Bancorp Center
800 Nicollet Mall
Minneapolis, Minnesota 55402-7020
Attention: Edwin D. Jenkins
Telecopier: (612) 303-2253
S-2
BANK ONE, N.A.
(successor by merger to Bank One, Texas,
N.A.)
By: /s/ Rodney Davis
-------------------------------
Its: Associate Director
-------------------------
Address:
c/o Bank One, NA
Mail Code IL1-0315
1 Bank One Plaza
Chicago, IL 60670
Attention: Rodney Davis
Telecopier: (312) 325-3122
S-3
GUARANTY BANK, F.S.B.
By: /s/ Randall S. Reid
-------------------------------
Its: Senior Vice President
-------------------------
Address:
Guaranty Bank, F.S.B.
8333 Douglas Avenue
Dallas, Texas 75225
Attention: Randall S. Reid
Telecopier: (214) 360-1660
S-4
COMERICA BANK
By: /s/ Heather D. Hogle
-------------------------------
Its: Assistant Vice President
-------------------------
Address:
Comerica Tower at Detroit Center
500 Woodward Avenue, MC-3256
Detroit, Michigan 48226
Attention: Heather Hogle
Telecopier: (313) 222-9295
S-5
WASHINGTON MUTUAL BANK, FA
By: /s/ Michael Arnold
-------------------------------
Its: Vice President
-------------------------
Address:
6011 Connection Drive
6th Floor
Irving, Texas 75039
Attn: Michael Arnold
Telecopier: (469) 549-8722
S-6