Exhibit 10(m)
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WAREHOUSING CREDIT AND SECURITY AGREEMENT
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BETWEEN
UNIVERSAL AMERICAN MORTGAGE COMPANY, a Florida corporation,
EAGLE HOME MORTGAGE, INC., a Washington corporation,
AMERISTAR FINANCIAL SERVICES, INC., a California corporation,
UNIVERSAL AMERICAN MORTGAGE COMPANY OF CALIFORNIA,
a California corporation,
UAMC ASSET CORP. II, a Nevada corporation
the Lenders Party Hereto
AND
RESIDENTIAL FUNDING CORPORATION,
a Delaware corporation,
as Credit Agent
Dated as of June 25, 2001
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TABLE OF CONTENTS
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1. THE CREDIT.....................................................1
1.1. The Warehousing Commitment.....................................1
1.2. Expiration of Warehousing Commitment...........................2
1.3. Swingline Facility.............................................2
1.4. Notes..........................................................2
1.5. Non-Receipt of funds by Credit Agent...........................3
1.6. Replacement Notes..............................................3
2. ELIGIBLE ASSETS................................................4
2.1. Limitation on Warehousing Advances.............................4
2.2. Limitation on RFC Direct Advances..............................4
2.3. Eligibility as Seller/Servicer of Mortgage Loans...............5
2.4. Eligible Assets................................................6
3. PROCEDURES FOR OBTAINING ADVANCES..............................7
3.1. Warehousing Advances...........................................7
3.2. Wet Settlement Advances........................................8
4. INTEREST, PRINCIPAL AND FEES...................................9
4.1. Interest.......................................................9
4.2. Interest Limitation............................................9
4.3. Principal Payments............................................10
4.4. Agent's Fees..................................................12
4.5. Commitment Fees...............................................13
4.6. Miscellaneous Charges.........................................13
4.7. Method of Making Payments.....................................13
4.8. Illegality....................................................14
4.9. Increased Costs; Capital Requirements.........................14
5. COLLATERAL....................................................16
5.1. Grant of Security Interest....................................16
5.2. Release of Security Interest in Pledged Loans and
Pledged Securities............................................17
5.3. Collection and Servicing Rights...............................19
5.4. Return of Collateral at End of Warehousing Commitment.........19
5.5. Delivery of Collateral Documents..............................19
5.6. Borrower Remains Liable.......................................20
5.7. Further Assurance.............................................20
6. CONDITIONS PRECEDENT..........................................21
6.1. Initial Advance...............................................21
6.2. Each Advance..................................................24
7. GENERAL REPRESENTATIONS AND WARRANTIES........................26
7.1. Place of Business.............................................26
7.2. Organization; Good Standing; Subsidiaries.....................26
7.3. Authorization and Enforceability..............................27
7.4. Authorization and Enforceability of Lennar Undertaking........27
7.5. Approvals.....................................................27
7.6. Financial Condition...........................................27
7.7. Litigation....................................................28
7.8. Compliance with Laws..........................................28
7.9. Regulation U..................................................28
7.10. Investment Company Act........................................28
7.11. Payment of Taxes...............................................28
7.12. Agreements.....................................................29
7.13. Title to Properties............................................29
7.14. ERISA..........................................................29
7.15. No Retiree Benefits............................................29
7.16. Assumed Names..................................................29
8. AFFIRMATIVE COVENANTS..........................................31
8.1. Payment of Obligations.........................................31
8.2. Financial Statements...........................................31
8.3. Other Borrower Reports.........................................31
8.4. Maintenance of Existence; Conduct of Business..................32
8.5. Compliance with Applicable Laws................................32
8.6. Inspection of Properties and Books; Operational Reviews........32
8.7. Notice.........................................................33
8.8. Payment of Debt, Taxes and Other Obligations...................33
8.9. Insurance......................................................34
8.10. Closing Instructions...........................................34
8.11. Subordination of Certain Indebtedness..........................34
8.12. Other Loan Obligations.........................................34
8.13. ERISA..........................................................34
8.14. Use of Proceeds of Advances....................................35
9. NEGATIVE COVENANTS.............................................36
9.1. Contingent Liabilities.........................................36
9.2. Restrictions on Fundamental Changes............................36
9.3. Loss of Eligibility............................................36
9.4. Tangible Leverage Ratio........................................36
9.5. Minimum Tangible Net Worth.....................................36
9.6. Distributions to Shareholders..................................37
9.7. Transactions with Affiliates...................................37
9.8. Recourse Servicing Contracts...................................37
9.9. Deferral of Subordinated Debt..................................37
9.10. Limitation on Liens............................................37
9.11. Limitation on Debt.............................................38
10. SPECIAL REPRESENTATIONS, WARRANTIES AND COVENANTS..............39
CONCERNING COLLATERAL.........................................................39
10.1. Special Representations and Warranties Concerning Collateral...39
10.2. Special Affirmative Covenants Concerning Warehousing
Collateral.....................................................41
10.3. Special Negative Covenants Concerning Warehousing Collateral...42
10.4. Special Affirmative Covenants Concerning Builder
Construction Mortgage Loans....................................42
10.5. Special Representations Concerning Construction/Perm Mortgage
Loans and Third Party Builder Construction Mortgage Loans......42
10.6. Special Representations and Warranties Concerning Receivables..43
10.7. Special Representations Concerning Pledged Shares..............44
10.8. Voting Rights; Dividends; Etc..................................44
11. DEFAULTS; REMEDIES.............................................46
11.1. Events of Default..............................................46
11.2. Remedies.......................................................47
11.3. Application of Proceeds........................................50
11.4. Credit Agent Appointed Attorney-in-Fact........................51
11.5. Right of Set-Off...............................................52
11.6. Sharing of Payments............................................52
12. AGENT..........................................................53
12.1. Appointment....................................................53
12.2. Duties of Agent................................................53
12.3. Standard of Care..............................................53
12.4. Delegation of Duties..........................................54
12.5. Exculpatory Provisions........................................54
12.6. Reliance by Agent.............................................54
12.7. Non-Reliance on Agent or Other Lenders........................55
12.8. Agent in Individual Capacity..................................55
12.9. Successor Agent...............................................55
13. MISCELLANEOUS.................................................57
13.1. Notices.......................................................57
13.2. Reimbursement Of Expenses; Indemnity..........................57
13.3. Indemnification by Lenders....................................58
13.4. Financial Information.........................................58
13.5. Terms Binding Upon Successors; Survival of Representations....58
13.6. Lenders in Individual Capacity................................59
13.7. Assignment and Participations.................................59
13.8. Commitment Increases..........................................59
13.9. Amendments....................................................60
13.10. Governing Law................................................60
13.11. Relationship of the Parties..................................60
13.12. Severability.................................................61
13.13. Consent to Credit References.................................61
13.14. Counterparts.................................................61
13.15. Entire Agreement.............................................61
13.16. Consent to Jurisdiction......................................61
13.17. Waiver of Jury Trial.........................................62
13.18. Confidentiality..............................................62
14. DEFINITIONS...................................................63
14.1. Defined Terms.................................................63
14.2. Other Definitional Provisions; Terms of Construction..........72
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EXHIBITS
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Exhibit A Request for Advance
Exhibit B Procedures and Documentation for Warehousing Single Family
Mortgage Loans
Exhibit C Schedule of Servicing Portfolio
Exhibit D Subsidiaries
Exhibit E Officer's Certificate
Exhibit F Lines of Credit
Exhibit G Assumed Names
Exhibit H Eligible Assets
Exhibit I Commitment Summary Report
Exhibit J Commitment Amounts
Exhibit K Advance Certificate
Exhibit L Existing Liens
Exhibit M Existing Debt
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WAREHOUSING CREDIT AND
SECURITY AGREEMENT
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WAREHOUSING CREDIT AND SECURITY AGREEMENT, dated as of June 25, 2001,
between UNIVERSAL AMERICAN MORTGAGE COMPANY, a Florida corporation
("UAMC"), EAGLE HOME MORTGAGE, INC., a Washington corporation ("EHMI"),
AMERISTAR FINANCIAL SERVICES, INC., a California corporation ("AFSI"),
UNIVERSAL AMERICAN MORTGAGE CO. OF CALIFORNIA, a California corporation
("UAMCC"), UAMC ASSET CORP. II, a Nevada corporation ("UAMC Asset")
(UAMC, EHMI, AFSI, UAMCC and UAMC Asset, collectively, "Borrower"),
RESIDENTIAL FUNDING CORPORATION, a Delaware corporation ("RFC"), (RFC
and any Additional Lender as may from time to time become a party
hereto and their respective successors and permitted assigns being
referred to individually as a "Lender" and collectively as the
"Lenders"), and RFC as credit agent for Lenders (in such capacity, the
"Credit Agent").
A. Borrower has requested certain financing from
Lenders.
B. Lenders have agreed to provide that financing to
Borrower subject to the terms and conditions of this
Agreement.
C. The "Closing Date" for the transactions contemplated
by this Agreement is June 25, 2001.
NOW, THEREFORE, the parties to this Agreement agree as follows:
1. THE CREDIT
1.1. The Warehousing Commitment
On the terms and subject to the conditions of this Agreement, Lenders
agree, severally and not jointly, to make Warehousing Advances to
Borrower from the Closing Date to the Business Day immediately
preceding the Maturity Date, pro rata in accordance with their
respective Percentage Shares, during which period Borrower may borrow,
repay and reborrow in accordance with the provisions of this Agreement.
On the terms and subject to the conditions of this Agreement, RFC
agrees to make RFC Direct Advances to Borrower from the Closing Date to
the Business Day immediately preceding the Maturity Date, during which
period Borrower may borrow, repay and reborrow in accordance with the
provisions of this Agreement. Effective as of the Closing Date, Lenders
shall make Warehousing Advances and RFC shall make RFC Direct Advances
in an amount equal to all loans outstanding under the Existing U.S.
Home Agreement, and such Advances shall be applied by Credit Agent to
repay such outstanding loans. In Credit Agent's discretion, Warehousing
Advances and RFC Direct Advances may be made on or after June 30, 2001,
against Eligible Assets previously financed under the Existing
Universal Agreement, in connection with the repayment in full of
Borrower's Debt under the Existing Universal Agreement. The total
aggregate principal amount of all Warehousing Advances and Swingline
Advances outstanding at any one time may not exceed the Warehousing
Credit Limit, and the total aggregate principal amount of all RFC
Direct Advances outstanding at any one time will not exceed the RFC
Direct Commitment Amount. While a Default or Event of Default exists,
Lenders may refuse to make any additional Warehousing Advances and RFC
may refuse to make additional RFC Direct Advances to Borrower. All
Warehousing Advances, RFC Direct Advances
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and Swingline Advances under this Agreement constitute a single
indebtedness, and all of the Collateral is security for the Notes and
for the performance of all of the Obligations.
1.2. Expiration of Warehousing Commitment
The Commitments expire on the earlier of ("Maturity Date"): (a) with
respect to each Lender's Warehousing Commitment, June 24, 2002 or June
24, 2003, as set forth on Exhibit J, and with respect to the RFC Direct
Commitments, June 24, 2003, as such date(s) may be extended in writing
by the applicable Lenders, in their sole discretion, on which dates the
Commitments will expire of their own terms and the related Advances
will become due and payable, in each case without the necessity of
Notice or action by Lenders, and (b) the date the Commitments are
terminated and the Advances become due and payable under Section 11.2.
1.3. Swingline Facility
On the terms and subject to the conditions set forth herein, RFC may,
from time to time to, but not including, the Business Day immediately
preceding the Maturity Date, make Warehousing Advances ("Swingline
Advances") requested by Borrower, in an aggregate not to exceed the
Swingline Facility Amount, without requesting Warehousing Advances from
the other Lenders. Lenders hereby agree to purchase from RFC an
undivided participation interest in all outstanding Swingline Advances
at any time in an amount equal to each Lender's Percentage Share of
such Swingline Advances. RFC may at any time in its sole and absolute
discretion (and shall no less frequently than weekly and upon the
acceleration of the Obligations following an Event of Default) request
Lenders to make Warehousing Advances in principal amounts equal to
their Percentage Shares of outstanding Swingline Advances, and each
Lender absolutely and unconditionally agrees to fund such Warehousing
Advances, regardless of any Default or Event of Default or other
condition which would otherwise excuse such Lender from funding
Warehousing Advances, provided that no Lender shall be required to make
Advances to repay Swingline Advances which would cause such Lender's
aggregate Warehousing Advances then outstanding to exceed the amount of
such Lender's Warehousing Commitment Amount. Each Lender's Warehousing
Advances made pursuant to the preceding sentence shall be delivered
directly to RFC in immediately available funds at the office of Credit
Agent by 4:00 p.m. on the day of the request therefor by RFC if such
request is made on or before 3:00 p.m., or by 9:00 a.m. on the 1st
Business Day following such request if such request is made after 3:00
p.m., and shall be promptly applied against the outstanding Swingline
Advances. At the time of any request for Warehousing Advances from
Lenders pursuant to this Section 1.3, Credit Agent shall deliver to
each Lender a certificate in the form of Exhibit K attached hereto (the
"Advance Certificate"), certified by Credit Agent. For purposes of the
limitations set forth in Exhibit H hereto, Swingline Advances shall be
deemed to be Warehousing Advances.
1.4. Notes
Warehousing Advances made by each Lender against Eligible Assets other
than Agreements for Deed and Foreclosure Claim Receivables are
evidenced by Borrower's promissory note, payable to each Lender, in the
form prescribed by Credit Agent (each, a "Warehousing Note").
Warehousing Advances made by each Lender against Agreements for Deed or
Foreclosure Claim Receivables are evidenced by Borrower's promissory
note, payable to each Lender, in the form prescribed by the Credit
Agent (each, a "Sublimit Note"). RFC Direct Advances made by RFC are
evidenced by Borrower's promissory note, payable to RFC, in the form
prescribed by the Credit Agent (the "RFC Direct Note"). Swingline
Advances of Borrower in favor of RFC are evidenced by Borrower's
promissory note, payable to RFC, in the form prescribed by Credit Agent
(the "Swingline Note"). The terms "Warehousing Note," "Sublimit Note,"
"RFC Direct Note" and "Swingline Note," as used in this Agreement,
include all amendments, restatements,
Page 2
renewals or replacements of the original "Warehousing Notes," "Sublimit
Note," "RFC Direct Note" and "Swingline Note," and all substitutions
for any of them. All terms and provisions of the "Warehousing Notes,"
"Sublimit Note," "RFC Direct Note" and "Swingline Note" are
incorporated into this Agreement.
1.5. Non-Receipt of funds by Credit Agent.
If Credit Agent receives notice from a Lender that such Lender does not
intend to make its Percentage Share of any Warehousing Advances,
neither Credit Agent nor any other Lender shall have any obligation to
fund such Lender's Percentage Share. Notwithstanding the foregoing,
unless a Lender notifies Credit Agent by 3:00 p.m. on the date of a
proposed Warehousing Advance that it does not intend to make its
Percentage Share of such Warehousing Advance available to Credit Agent
at such time and on such date, Credit Agent may assume that such Lender
will make such amount available to Credit Agent to be advanced to
Borrower, and in reliance on such assumption, Credit Agent may, at its
option, make a corresponding amount available to Borrower.
1.5(a) If Credit Agent makes such corresponding amount available to
Borrower and such amount is not made available to Credit Agent
by such Lender by close of business on the date of the
Warehousing Advance, such Lender shall pay such amount to
Credit Agent upon demand plus interest to the date of payment
at a rate per annum equal to the Federal Funds Rate.
1.5(b) If a Lender fails to pay as provided herein, Borrower shall
pay such amount to Credit Agent upon demand plus interest (at
the rate applicable to Borrower for such Warehousing Advance)
to the date of repayment.
1.5(c) Nothing in this Section 1.5 shall relieve any Lender from its
obligation to fund its Percentage Share of any Advance, or
prejudice any rights Borrower may have against any Lender as a
result of such Lender's failure to make its Percentage Share
of any Advance
1.6. Replacement Notes.
Upon receipt by Credit Agent of an affidavit of an officer of any
Lender as to the loss, theft, destruction or mutilation of any Note,
and, in the case of any such mutilation, upon receipt by Credit Agent
of such Note, Borrower will issue, in lieu thereof, a replacement note
in the same principal amount thereof and otherwise of like tenor.
End of Article 1
Page 3
2. Eligible Assets
2.1. Limitation on Warehousing Advances
Lenders will make Warehousing Advances upon the request of Borrower, in
the manner provided in Article 3, solely for the purpose of funding
Eligible Assets, other than Land Loans and Other Construction Loans,
and against the pledge of those Eligible Assets as Collateral. Lenders'
obligations to make Warehousing Advances are subject to the limitations
set forth in Exhibit H and to the following limitations:
2.1(a) No Warehousing Advance will be made against any Eligible Asset
that has been previously sold or pledged to obtain financing
(whether or not such financing constitutes Debt) under another
warehousing financing arrangement, other than one of the
Existing Agreements, or a Gestation Agreement.
2.1(b) No Warehousing Advance will be made against an Eligible Asset
if the Warehousing Advance will exceed the amount applicable
to that type of Eligible Asset at the time it is pledged, as
set forth in Exhibit H.
2.1(c) No Warehousing Advance shall be made against a Mortgage Loan,
other than a Foreclosure Mortgage Loan, an Investment Mortgage
Loan, or a Construction/Perm Mortgage Loan, closed more than
90 days before the date of such Warehousing Advance, except to
the extent such Warehousing Advance refinances a loan under an
Existing Agreement.
2.1(d) No Advance shall be made against a Agreement for Deed,
Foreclosure Mortgage Loan or Foreclosure Claim Receivable that
is not owned by UAMC Asset.
2.2. Limitation on RFC Direct Advances
RFC will make RFC Direct Advances against Land Loans and Other
Construction Loans upon the request of Borrower, in the manner provided
in Article 3, solely for the purpose of funding Land Loans and Other
Construction Loans and against the pledge of those Eligible Assets as
Collateral. RFC's obligation to make Warehousing Advances against Land
Loans and Other Construction Loans is subject to the limitations set
forth in Exhibit H and to the following limitations:
2.2(a) No Warehousing Advance will be made against any Eligible Asset
that has been previously sold or pledged to obtain financing
(whether or not such financing constitutes Debt) under another
warehousing financing arrangement, other than one of the
Existing Agreements or a Gestation Agreement.
2.2(b) No Warehousing Advance will be made against an Eligible Asset
if the Warehousing Advance will exceed the amount applicable
to that type of Eligible Asset at the time it is pledged, as
set forth in Exhibit H.
2.2(c) No Warehousing Advance shall be made against a Mortgage Loan,
other than a Third Party Builder Construction Mortgage Loan,
closed more than 90 days before the date of such Warehousing
Advance, except to the extent such Warehousing Advance
refinances a loan under an Existing Agreement.
Page 4
2.3. Eligibility as Seller/Servicer of Mortgage Loans
2.3(a) UAMC is approved and qualified and in good standing as a
lender or seller/servicer, as set forth below, and meets all
requirements applicable to its status as:
(i) An FHA-approved mortgagee, eligible to originate,
purchase, hold, sell and service FHA fully insured
Mortgage Loans.
(ii) A Ginnie Mae-approved seller/servicer of Mortgage
Loans and issuer of Mortgage-backed Securities
guaranteed by Ginnie Mae.
(iii) A lender in good-standing under the VA loan guarantee
program eligible to originate, purchase, hold, sell
and service VA-guaranteed Mortgage Loans.
(iv) A Fannie Mae-approved seller/servicer of Mortgage
Loans, eligible to originate, purchase, hold, sell
and service Mortgage Loans to be sold to Fannie Mae.
(v) A Freddie Mac-approved seller/servicer of Mortgage
Loans, eligible to originate, purchase, hold, sell
and service Mortgage Loans to be sold to Freddie Mac.
(vi) A RFC-approved seller/servicer of Mortgage Loans,
eligible to originate, purchase, hold, sell and
service Loans to be sold to RFC.
2.3(b) EHMI is approved and qualified and in good standing as a
lender or seller/servicer, as set forth below, and meets all
requirements applicable to its status as:
(i) FHA-approved mortgagee, eligible to originate,
purchase, hold, sell and service FHA fully insured
Mortgage Loans.
(ii) A Ginnie Mae-approved seller/servicer of Mortgage
Loans and issuer of Mortgage-backed Securities
guaranteed by Ginnie Mae.
(iii) A lender in good-standing under the VA loan guarantee
program eligible to originate, purchase, hold, sell
and service VA-guaranteed Mortgage Loans.
(iv) A Fannie Mae-approved seller/servicer of Mortgage
Loans, eligible to originate, purchase, hold, sell
and service Mortgage Loans to be sold to Fannie Mae.
(v) A Freddie Mac-approved seller/servicer of Mortgage
Loans, eligible to originate, purchase, hold, sell
and service Mortgage Loans to be sold to Freddie Mac.
(vi) A RFC-approved seller/servicer of Mortgage Loans,
eligible to originate, purchase, hold, sell and
service Loans to be sold to RFC.
2.3(c) AFSI is approved and qualified and in good standing as a
lender or seller/servicer, as set forth below, and meets all
requirements applicable to its status as:
(i) FHA-approved mortgagee, eligible to originate,
purchase, hold, sell and service FHA fully insured
Mortgage Loans.
(ii) A lender in good-standing under the VA loan guarantee
program eligible to originate, purchase, hold, sell
and service VA-guaranteed Mortgage Loans.
2.3(d) UAMCC is approved and qualified and in good standing as a
lender or seller/servicer, as set forth below, and meets all
requirements applicable to its status as:
Page 5
(i) FHA-approved mortgagee, eligible to originate,
purchase, hold, sell and service FHA fully insured
Mortgage Loans.
(ii) A lender in good-standing under the VA loan guarantee
program eligible to originate, purchase, hold, sell
and service VA-guaranteed Mortgage Loans.
2.4. Eligible Assets
Subject to compliance with the terms, covenants and representations set forth in
this Agreement, each of the Mortgage Loans described on Exhibit H is an Eligible
Asset for the purposes of this Agreement.
End of Article 2
Page 6
3. PROCEDURES FOR OBTAINING ADVANCES
3.1. Warehousing Advances
3.1(a) To obtain a Warehousing Advance or an RFC Direct Advance under
this Agreement, Borrower must deliver to Credit Agent, either
a completed and signed request for an Advance on the then
current form approved by Credit Agent or an Electronic Advance
Request, together with a list of Mortgage Loans for which the
request is being made and a completed and signed RFConnects
Pledge Agreement sent by facsimile ("Advance Request"), not
later than (i) in the case of Electronic Advance Requests,
3:30 p.m. on the Business Day on which Borrower desires the
Advance, and (ii) in all other cases, unless the Credit Agent
agrees otherwise, one Business Day before the Business Day on
which Borrower desires the Advance. Subject to the delivery of
a Advance Request, Borrower may obtain an Advance under this
Agreement upon compliance with the procedures set forth in
this Section and in the applicable Exhibit B, including
delivery to Credit Agent of all required Collateral Documents.
Credit Agent's current form of Advance Request is set forth in
the applicable Exhibit A. Upon not less than 3 Business Days'
prior Notice to Borrower, Credit Agent may modify its form of
Advance Request and any other Exhibit referred to in this
Section to conform to either current legal requirements or
Credit Agent practices and, as so modified, those Exhibits
will be deemed a part of this Agreement.
3.1(b) Credit Agent has a reasonable time to examine Borrower's
Advance Request and the Collateral Documents to be delivered
by Borrower before funding the requested Advance, and may
reject any Eligible Asset that does not meet the requirements
of this Agreement or of the related Purchase Commitment.
3.1(c) Borrower must hold or cause its custodian to hold, in trust
for Credit Agent, those original Collateral Documents of which
only copies are required to be delivered to Credit Agent under
Exhibit B. Unless a Pledged Loan is being held by an Investor
for purchase or has been redeemed from pledge by Borrower,
promptly upon request by Credit Agent or, if the recorded
Collateral Documents have not yet been returned from the
recording office, immediately upon receipt by Borrower or its
custodian of those recorded Collateral Documents, Borrower
must deliver or cause its custodian to deliver to Credit Agent
any or all of the original Collateral Documents.
3.1(d) To fund Warehousing Advances, RFC Direct Advances and
Swingline Advances under this Agreement, Credit Agent will
cause the Funding Bank to credit either the Wire Disbursement
Account or Check Disbursement Account upon compliance by
Borrower with the terms of the Loan Documents. Credit Agent
will determine, in its sole discretion, the method by which
Advances and other amounts on deposit in the Wire Disbursement
Account or Check Disbursement Account are disbursed by the
Funding Bank to or for the account of Borrower.
3.1(e) If, under the authorization given by Borrower in the Funding
Bank Agreement, Credit Agent (i) debits Borrower's Operating
Account to cover a wire to be initiated by Credit Agent for
the purpose of financing a Pledged Asset against which Lenders
have made Warehousing Advances, or (ii) directs the Funding
Bank to honor a check drawn by Borrower's on its Check
Disbursement Account at the Funding Bank, and that debit or
direction results in an overdraft, RFC may make an additional
Swingline Advance to fund that overdraft.
Page 7
3.2. Wet Settlement Advances
Collateral Documents not required for a Wet Settlement Advance must be
delivered by Borrower to Credit Agent within 7 Business Days after the
date of the Wet Settlement Advance.
End of Article 3
Page 8
4. INTEREST, PRINCIPAL AND FEES
4.1. Interest
4.1(a) Except as provided in Sections 4.1(b), 4.1(d) and 4.1(e),
Borrower must pay interest on the unpaid amount of each
Advance from the date the Advance is made until it is paid in
full at the Interest Rate specified in Exhibit H.
4.1(b) Borrower and any Lender may enter into an agreement (a
"Balance Funded Agreement") pursuant to which Borrower agrees
to maintain Deposit Balances on deposit with such Lender or a
Designated Bank in consideration of the funding of all or a
portion of such Lender's Advances against Prime Mortgage Loans
at a Balance Funded Rate. Borrower may give written notice to
any Lender with which it has a Balance Funded Agreement, as
and when provided in such Balance Funded Agreement, of
Borrower's election to have a portion (the "Balance Funded
Portion") of the principal amount of Lender's Advances against
Prime Mortgage Loans bear interest at the Balance Funded Rate
during any calendar month. In the event Borrower elects to
have all or a portion of any Lender's Advances against Prime
Mortgage Loans bear interest at the Balance Funded Rate during
any month, such Lender shall notify Credit Agent no later than
12:00 Noon on the second Business Day of the following month
of the estimated amount by which the interest to be paid by
Borrower on such Lender's Advances during such month was
reduced as a result of the application of such Balance Funded
Agreement. If the Deposit Balances maintained by Borrower with
such Lender or its Designated Bank during such month are less
than the Balance Funded Portion, or if the estimate provided
by Lender pursuant to the previous sentence is not accurate,
Lender may charge and separately bill Borrower a deficiency
fee (a "Balance Deficiency Fee"), or credit Borrower with any
amount by which interest billed exceeded interest actually
due, the amount of which shall be set forth in the Balance
Funded Agreement between Borrower and such Lender.
4.1(c) Credit Agent computes interest on the basis of the actual
number of days elapsed in a year of 360 days. Interest is
payable monthly in arrears, as provided in Section 4.7.
4.1(d) After an Event of Default occurs and upon Notice to Borrower
by Credit Agent, the unpaid amount of each Warehousing Advance
or RFC Direct Advance will bear interest at the Default Rate
until the Event of Default has been waived or cured, as
provided herein, or the Warehousing Advance has been paid in
full.
4.1(e) The rates of interest provided for in this Agreement will be
adjusted as of the effective date of each change in the
applicable index. Credit Agent's determination of such rates
of interest as of any date of determination are conclusive and
binding, absent manifest error.
4.2. Interest Limitation
Lenders do not intend, by reason of this Agreement, the Notes or any
other Loan Document, to receive interest in an amount in excess of that
permitted by applicable law. If Lenders receive any interest in excess
of the amount permitted by applicable law, whether by reason of
acceleration of the maturity of this Agreement, the Notes or otherwise,
Lenders will apply the excess to the unpaid principal balance of the
Advances and not to the payment of interest. If all Advances have been
paid in full and the Commitments have expired or have been terminated,
Lenders will remit any excess to Borrower. This Section controls every
other provision of all
Page 9
agreements between Borrower and Lenders and is binding upon and
available to any subsequent holder of the Notes.
4.3. Principal Payments
4.3(a) Borrower must pay the outstanding principal amount of all
Warehousing Advances and RFC Direct Advances on the applicable
Maturity Date, and the outstanding principal amount of all
Swingline Advances on the final Maturity Date.
4.3(b) Borrower may prepay any portion of the Advances without
premium or penalty at any time.
4.3(c) Borrower must pay to Credit Agent for the pro rata benefit of
Lenders, without the necessity of prior demand or Notice from
Credit Agent, and Borrower authorizes Credit Agent to cause
the Funding Bank to charge Borrower's Operating Account for,
or reduce the Buydown by, the amount of any outstanding
Advance against a specific Pledged Loan upon the earliest
occurrence of any of the following events:
(1) One (1) Business Day elapses from the date an Advance
was made if the Pledged Loan that was to have been
funded by that Advance is not closed and funded.
(2) Fifteen (15) Business Days elapse without the return
of a Collateral Document delivered by Credit Agent to
Borrower under a Trust Receipt for correction or
completion.
(3) On the date on which a Pledged Loan is determined to
have been originated based on untrue, incomplete or
inaccurate information or otherwise to be subject to
fraud, whether or not Borrower had knowledge of the
misrepresentation, incomplete or incorrect
information or fraud, or on the date on which
Borrower knows, or has reason to know, or receives
Notice from Credit Agent, that one or more of the
representations and warranties set forth in Article
10 were inaccurate or incomplete in any material
respect on any date when made or deemed made.
(4) Except in the case of Foreclosure Claim Receivables
and Foreclosure Mortgage Loans, on the date the
Pledged Loan or a Lien prior to the Pledged Loan is
defaulted and remains in default for a period of 60
days or more.
(5) Upon the sale, other disposition or prepayment of any
Pledged Asset or, with respect to a Pledged Loan
included in an Eligible Mortgage Pool, upon the sale
or other disposition of the related Agency Security.
(6) One (1) Business Day immediately preceding the date
scheduled for the foreclosure or trustee sale of the
premises securing a Mortgage Loan, unless such
foreclosure or trustee sale will give rise to a
Foreclosure Claim Receivable against which the
related Advance may remain outstanding hereunder.
4.3(d) Upon telephonic Notice to Borrower by Credit Agent, Borrower
must pay to Credit Agent, and Borrower authorizes Credit Agent
to cause the Funding Bank to charge Borrower's Operating
Account for, or reduce the Buydown, the amount of any
outstanding Advance against a specific Pledged Loan upon the
earliest occurrence of any of the following events:
(1) For any Pledged Loan, the Warehouse Period elapses.
Page 10
(2) Forty-five (45) days elapse from the date a Pledged
Loan was delivered to an Investor or Approved
Custodian for examination and purchase or for
inclusion in a Mortgage Pool, without the purchase
being made or an Eligible Mortgage Pool being
initially certified, or upon rejection of a Pledged
Loan as unsatisfactory by an Investor or Approved
Custodian.
(3) Seven (7) Business Days elapse from the date a Wet
Settlement Advance was made against a Pledged Loan
without receipt by Credit Agent of all Collateral
Documents relating to the Pledged Loan, or the
Collateral Documents, upon examination by Credit
Agent, do not comply with the requirements of this
Agreement.
(4) With respect to any Pledged Loan, any of the
Collateral Documents, upon examination by Credit
Agent, are found not to be in compliance with the
requirements of this Agreement or the related
Purchase Commitment, unless such non-compliance is,
in Credit Agent's reasonable judgement, readily
curable.
4.3(e) Borrower must pay the outstanding amount of any Overdraft
Advance in full within 1 Business Day after the date of the
Overdraft Advance.
4.3(f) In addition to the payments required pursuant to Sections
4.3(c) and 4.3(d), if the principal amount of any Pledged Loan
is prepaid in whole or in part while Advances are outstanding
against the Pledged Loan, Borrower must pay to Credit Agent,
without the necessity or prior demand or Notice from Credit
Agent, and Borrower authorizes Credit Agent to cause the
Funding Bank to charge Borrower's Operating Account for, the
amount of the prepayment, to be applied against such Advances.
4.3(g) The proceeds of the sale, other disposition or collection of
Pledged Assets must be paid directly by the Investor or other
Obligor to the Cash Collateral Account. Borrower must give
Notice to Credit Agent (by RFConnects) of the Pledged Assets
for which proceeds have been received. Upon receipt of
Borrower's Notice, Credit Agent will apply any proceeds
deposited into the Cash Collateral Account to the payment of
the Advances related to the Pledged Assets identified by
Borrower in its Notice, and those Pledged Assets will be
considered to have been redeemed from pledge. Credit Agent is
entitled to rely upon Borrower's affirmation that deposits in
the Cash Collateral Account represent payments from Investors
or other Obligor for the purchase of or in payment of the
Pledged Assets specified by Borrower in its Notice. If the
payment from an Investor or other Obligor for the purchase of
or in payment of Pledged Assets is less than the outstanding
Advances against the Pledged Assets identified by Borrower in
its Notice, Borrower authorizes Credit Agent to cause the
Funding Bank to charge Borrower's Operating Account, or to
charge the Buydown, in an amount equal to that deficiency. As
long as no Default or Event of Default exists, Credit Agent
will return to Borrower any excess payment from an Investor or
other Obligor for Pledged Assets.
4.3(h) Amounts received by Credit Agent as proceeds of the sale or
other disposition of Pledged Mortgages or Pledged Securities
and applicable to the principal amount of Warehousing Advances
and Swingline Advances, including without limitation, amounts
from time to time deposited in the Cash Collateral Account,
shall be allocated among Lenders as follows:
(1) First, to RFC until the principal amount of the
Swingline Advances have been paid in full; and
(2) Second, pro rata to Lenders in accordance with their
respective Percentage Shares, for application to the
Warehousing Advances.
Page 11
Amounts applied to the Swingline Advances as set forth above
shall, unless the Advances outstanding against such Pledged
Mortgages or Pledged Securities were Swingline Advances, shall
be deemed to be (i) a repayment of the Warehousing Advances
outstanding against such Pledged Mortgages or Pledged
Securities and (ii) a refunding of the Swingline Advances
repaid as Warehousing Advances made by Lenders in accordance
with Section 1.3 hereof.
4.3(i) Credit Agent reserves the right to revalue any Pledged Loan
that is not covered by a Purchase Commitment from Fannie Mae
or Freddie Mac. Credit Agent reserves the right to revalue any
Pledged Loan that is to be exchanged for an Agency Security if
that Agency Security is not covered by a Purchase Commitment.
Credit Agent reserves the right to revalue any other Eligible
Asset. Borrower must pay to Credit Agent, without the
necessity of prior demand or Notice from Credit Agent, and
Borrower authorizes Credit Agent to cause the Funding Bank to
charge Borrower's Operating Account for, any amount required
after any such revaluation to reduce the principal amount of
the Warehousing Advances, Swingline Advance or RFC Direct
Advance outstanding against the revalued Eligible Asset to an
amount equal to the Advance Rate for the applicable Eligible
Asset type multiplied by the Fair Market Value of the Eligible
Asset.
4.3(j) Upon the occurrence of any event described in Section 11.1(f)
with respect to Lennar, Borrower shall, at the request of the
Credit Agent or the Majority Lenders, repay all Advances
outstanding against Agreements for Deed, Construction/Perm
Mortgage Loans and Unimproved Land Loans.
4.3(k) Borrower may prepay a portion of the RFC Direct Advances,
Swingline Advances and Warehousing Advances made by RFC
(collectively, the "RFC Advances") outstanding under this
Agreement (a "Buydown"). A Buydown is a reduction in the
aggregate amount of the RFC Advances outstanding under this
Agreement, but does not represent the prepayment of any
particular RFC Advance, and does not entitle Borrower to the
release of any Collateral. Unless a Default or Event of
Default exists, all or any portion of a Buydown may be
reborrowed upon Notice to Credit Agent not later than 3:30
p.m. on the Business Day that Borrower desires to reborrow
such amount. If Credit Agent receives a payment of Advances
that would, as a result of Buydowns by Borrower, reduce the
outstanding principal balance of the RFC Advances to an amount
less than zero, the Buydowns, or a portion of the Buydowns
equal to such excess, will be re-advanced to Borrower. RFC may
apply Buydowns to reduce interest payable by Borrower on
outstanding RFC Advances in any order that Lender determines
in its sole discretion. Upon application by RFC of any Buydown
to RFC's Warehousing Advances, RFC shall be deemed to have
purchased from each Lender an undivided participation interest
in such Lender's outstanding Warehousing Advances in an amount
equal to such Lender's Percentage Share of the amount so
applied. The Lenders may at any time, in their sole and
absolute discretion request RFC to make Warehousing Advances
in a principal amount equal to the amount so applied. RFC's
Warehousing Advances made pursuant to the preceding sentences
shall be delivered directly to the Lenders, in their
respective Percentage Shares, and shall be promptly applied by
each Lender against its outstanding Warehousing Advances.
4.3(l) In addition to the payments required pursuant to Sections
4.3(a) - 4.3(j), Borrower shall repay the Warehousing
Advances, RFC Direct Advances and Swingline Advances as set
forth in Exhibit H.
4.4. Agent's Fees
Borrower shall pay to Credit Agent, for its own account, such fees as
shall be separately agreed between Borrower and Credit Agent.
Page 12
4.5. Commitment Fees
To each Lender, through Credit Agent, a non-refundable Commitment Fee
in an amount equal to the percentage set forth below of such Lender's
Warehousing Commitment Amount (plus, in the case of RFC, the RFC Direct
Commitment Amount), based on the amount and tenor of such Lender's
Warehousing Commitment (plus, in the case of RFC, the RFC Direct
Commitment), for the period from the Closing Date through the
applicable Maturity Date, payable on the Closing Date, calculated as
follows:
Lender's Warehousing
Initial Maturity Date Commitment Amount Commitment Fee Percentage
--------------------- ----------------- -------------------------
May 31, 2002 $20,000,000 to $45,000,000 .02%
May 31, 2002 $50,000,000 or more .10%
May 31, 2003 $20,000,000 to $45,000,000 .035%
May 31, 2003 $50,000,000 or more .10%
If any Lender increases its Warehousing Commitment Amount, if the
Warehousing Credit Limit is increased by an Additional Lender becoming
a party hereto, or if RFC increases the RFC Direct Commitment Amount,
Borrower shall pay the prorated portion of the applicable Commitment
Fee on the amount of such increase or the amount of such Additional
Lender's Warehousing Commitment Amount from the effective date thereof
to the applicable Maturity Date. If, at any time, the Maturity Date of
any Commitment is extended, Borrower shall pay an additional Commitment
Fee in the prorated amount determined pursuant to the above calculation
of the extended Commitment Amount from the day after the original
Maturity Date to the extended Maturity Date. Borrower shall not be
entitled to a reduction in the amount of the Commitment Fee in the
event the amount of any Lender's Warehousing Commitment is reduced at
the request of Borrower, or in the event that any Lender's Warehousing
Commitment is terminated prior to its stated expiration date as a
result of an Event of Default hereunder.
4.6. Miscellaneous Charges
Borrower must reimburse Credit Agent for all Miscellaneous Charges.
Miscellaneous Charges are due when incurred, but will not be considered
delinquent if Borrower pays them within 10 days after the date of
Credit Agent's invoice or account analysis statement.
4.7. Method of Making Payments
4.7(a) Credit Agent shall, on or before the 5th Business Day of each
month, deliver to Borrower billings for interest due and
payable on Advances, Agent's Fees, Miscellaneous Charges and
other fees and charges calculated through the end of the
preceding month. On or before the 10th Business Day of each
month, Borrower shall pay to Credit Agent the full amount of
interest, fees and charges billed as described above.
4.7(b) All payments made on account of the Obligations shall be made
by Borrower to Credit Agent for distribution to Lenders,
except for Balance Deficiency Fees, which shall be made
directly to the applicable Lender, and fees and charges
payable to Credit Agent for its own account. All payments made
on account of the Obligations shall be made without setoff or
counterclaim, free and clear of and without deduction for any
taxes, fees or other charges of any nature whatsoever imposed
by any taxing authority, and must be received by Credit Agent
by 4:00 p.m. on the day of payment, it being expressly agreed
and
Page 13
understood that if a payment is received after 4:00 p.m. by
Credit Agent such payment will be considered to have been made
on the next succeeding Business Day and interest thereon shall
be payable by Borrower at the then applicable rate during such
extension. No principal payments resulting from the sale of
Pledged Mortgages or Pledged Securities shall be deemed to
have been received by Credit Agent until Credit Agent has also
received the Notice required under Section 4.3(g). All
payments shall be made in lawful money of the United States of
America in immediately available funds transferred via wire to
the Cash Collateral Account. If any payment required to be
made by Borrower hereunder becomes due and payable on a day
other than a Business Day, the due date thereof shall be
extended to the next succeeding Business Day and interest
shall be payable on Advances so extended at the then
applicable rate during such extension.
4.7(c) All amounts received by Credit Agent on account of the
Obligations (except amounts received in respect of fees,
Miscellaneous Charges or expenses payable hereunder to Credit
Agent for its own account or amounts payable to RFC for RFC
Direct Advances or Swingline Advances) shall be disbursed to
Lenders by wire transfer by 12:00 noon on the Business Day
after the date of receipt.
4.7(d) Without limiting any other right that Credit Agent or any
Lender may have under applicable law or otherwise, while a
Default or Event of Default exists, Borrower authorizes Credit
Agent to cause the Funding Bank to charge Borrower's Operating
Account for any Obligations due and owing, without the
necessity of prior demand or Notice from Credit Agent.
4.8. Illegality
In the event that any Lender shall have determined (which determination
shall be conclusive and binding absent manifest error) at any time that
the introduction of, or any change in, any applicable law, rule,
regulation, order or decree or in the interpretation or the
administration thereof by any Person charged with the interpretation or
administration thereof, or compliance by such Lender with any request
or directive (whether or not having the force of law) of any such
Person, shall make it unlawful or impossible for such Lender to charge
interest at the Balance Funded Rate based on Borrower's Eligible
Balances as contemplated by this Agreement, then such Lender shall
forthwith give Notice thereof to Credit Agent and Borrower describing
such illegality in reasonable detail. Upon the giving of such Notice,
the obligation of such Lender to charge interest at the Balance Funded
Rate based on Borrower's Eligible Balances shall be immediately
suspended for the duration of such illegality and with respect to
Advances bearing interest at the Balance Funded Rate, each such Advance
of such Lender shall bear interest at the applicable Interest Rate
described in Exhibit H. If and when such illegality ceases to exist,
such Lender shall notify Credit Agent and Borrower thereof and such
suspension shall cease.
4.9. Increased Costs; Capital Requirements
In the event any applicable law, order, regulation or directive issued
by any governmental or monetary authority, or any change therein or in
the governmental or judicial interpretation or application thereof, or
compliance by any Lender with any request or directive (whether or not
having the force of law) by any governmental or monetary authority:
4.9(a) Does or shall subject any Lender to any tax of any kind
whatsoever with respect to this Agreement or any Advances made
hereunder, or change the basis of taxation on payments to such
Lender of principal, fees, interest or any other amount
payable hereunder (except for change in the rate of tax on the
overall gross or net income of such Lender by the jurisdiction
in which such Lender's principal office is located);
Page 14
4.9(b) Does or shall impose, modify or hold applicable any reserve,
capital requirement, special deposit, compulsory loan or
similar requirement against assets held by, or deposits or
other liabilities in or for the account of, advances or loans
by, or other credit extended by, or any other acquisition of
funds by, such Lender which are not otherwise included in the
determination of the interest rate as calculated hereunder;
and the result of any of the foregoing is to increase the cost to such
Lender of making, renewing or maintaining any Advance or to reduce any
amount receivable in respect thereof or to reduce the rate of return on
the capital of such Lender or any Person controlling such Lender as it
relates to credit facilities in the nature of that evidenced by this
Agreement, then, in any such case, Borrower shall promptly pay any
additional amounts necessary to compensate such Lender for such
additional cost or reduced amounts receivable or reduced rate of return
as determined by such Lender with respect to this Agreement or Advances
made hereunder. If a Lender becomes entitled to claim any additional
amounts pursuant to this Section, it shall notify Borrower through
Credit Agent of the event by reason of which it has become so entitled
and Borrower shall pay such amount within 15 days thereafter. A
certificate as to any additional amount payable pursuant to the
foregoing sentence containing the calculation thereof in reasonable
detail submitted by a Lender, through Credit Agent, to Borrower shall
be conclusive in the absence of manifest error.
End of Article 4
Page 15
5. COLLATERAL
5.1. Grant of Security Interest
As security for the payment of the Notes and for the performance of all
of Borrower's Obligations, Borrower grants a security interest to
Credit Agent, for the benefit of Lenders, in all of Borrower's right,
title and interest in and to the following described property
("Collateral"):
5.1(a) All amounts advanced by Credit Agent to or for the account of
Borrower under this Agreement to fund a Mortgage Loan until
that Mortgage Loan is closed and those funds disbursed.
5.1(b) All Mortgage Loans, including all Mortgage Notes and Mortgages
evidencing or securing those Mortgage Loans, that are
delivered or caused to be delivered to Credit Agent or any
Lender (including delivery to a third party on behalf of
Credit Agent), come into the possession, custody or control of
Credit Agent or any Lender for the purpose of pledge, or in
respect of which Advances have been made under this Agreement,
including all Mortgage Loans in respect of which Wet
Settlement Advances have been made (collectively, "Pledged
Loans").
5.1(c) All Agreements for Deed in respect of which Advances have been
made under this Agreement (collectively, "Pledged Agreements
for Deed").
5.1(d) All Mortgage-backed Securities that are created in whole or in
part on the basis of Pledged Loans or are delivered or caused
to be delivered to Credit Agent or any Lender, or are
otherwise in the possession of Credit Agent or any Lender, or
its agent, bailee or custodian as assignee, or pledged to
Credit Agent, or for such purpose are registered by book-entry
in the name of Credit Agent (including delivery to or
registration in the name of a third party on behalf of Credit
Agent) under this Agreement or in respect of which an Advance
has been made (collectively, "Pledged Securities").
5.1(e) All private mortgage insurance and all commitments issued by
the VA or FHA to insure or guarantee any Mortgage Loans
included in the Pledged Loans; all Purchase Commitments held
by Borrower covering Pledged Loans, Pledged Agreements for
Deed or Pledged Securities or proposed permanent Pledged
Loans, and all proceeds from the sale of Pledged Loans,
Pledged Agreements for Deed or Pledged Securities to Investors
pursuant to those Purchase Commitments; and all personal
property, contract rights, servicing and servicing fees and
income or other proceeds, amounts and payments payable to
Borrower whether as compensation or reimbursement, accounts or
general intangibles of whatsoever kind relating to Pledged
Loans, Pledged Agreements for Deed, Pledged Securities, VA
commitments, FHA commitments and the Purchase Commitments, and
all other documents or instruments relating to Pledged Loans,
Pledged Agreements for Deed and Pledged Securities, including
any interest of Borrower in any fire, casualty or hazard
insurance policies and any awards made by any public body or
decreed by any court of competent jurisdiction for a taking or
for degradation of value in any eminent domain proceeding as
the same relate to Pledged Loans or Pledged Agreements for
Deed.
5.1(f) All accounts and general intangibles owned by Borrower
("Receivables") for the payment of money against (1) VA under
a VA Guaranty of, FHA or a private mortgage insurer under an
FHA or private insurer's mortgage insurance policy insuring
payment of, or any other Person under any other agreement
(including a Servicing Contract) relating to, all or part of a
Page 16
defaulted Mortgage Loan (A) repurchased by Borrower from an
investor or out of a pool of Mortgage Loans serviced by
Borrower or (B) being serviced by Borrower, (2) obligors and
their accounts, Fannie Mae, Freddie Mac, Ginnie Mae or any
other investor under a Servicing Contract covering, or out of
the proceeds of any sale of or foreclosure sale in respect of,
any Mortgage Loan (A) repurchased by Borrower out of a pool of
Mortgage Loans serviced by Borrower or (B) being serviced by
Borrower, in either case, for the reimbursement of real estate
taxes or assessments, or casualty or liability insurance
premiums, paid by Borrower in connection with Mortgage Loans
and (3) obligors and their accounts, or Fannie Mae, Freddie
Mac, Ginnie Mae or any other investor under or in respect of
any Mortgage Loans serviced by Borrower for repayment of
advances made by Borrower to cover shortages in principal and
interest payments.
5.1(g) All escrow accounts, documents, instruments, files, surveys,
certificates, correspondence, appraisals, computer programs,
tapes, discs, cards, accounting records (including all
information, records, tapes, data, programs, discs and cards
necessary or helpful in the administration or servicing of the
Collateral) and other information and data of Borrower
relating to the Collateral.
5.1(h) All cash, whether now existing or acquired after the date of
this Agreement, delivered to or otherwise in the possession of
Credit Agent, the Funding Bank or any agent, bailee or
custodian of Credit Agent or designated on the books and
records of Borrower as assigned and pledged to Credit Agent,
including all cash deposited in the Cash Collateral Account
and the Settlement Account.
5.1(i) All Hedging Arrangements related to the Collateral ("Pledged
Hedging Arrangements") and Borrower's accounts in which those
Hedging Arrangements are held ("Pledged Hedging Accounts"),
including all rights to payment arising under the Pledged
Hedging Arrangements and the Pledged Hedging Accounts, except
that Credit Agent's security interest in the Pledged Hedging
Arrangements and Pledged Hedging Accounts is limited to
benefits, including rights to payment, related to the
Collateral.
5.1(j) All shares of the capital stock of UAMC Asset now owned or
hereafter acquired by any Borrower (collectively, the "Pledged
Shares"); all certificates representing the Pledged Shares;
and all dividends, cash, instruments and other property from
time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of the Pledged
Shares.
5.1(k) All cash and non-cash proceeds of the Collateral, including
all dividends, distributions and other rights in connection
with, and all additions to, modifications of and replacements
for, the Collateral, and all products and proceeds of the
Collateral, together with whatever is receivable or received
when the Collateral or proceeds of Collateral are sold,
collected, exchanged or otherwise disposed of, whether such
disposition is voluntary or involuntary, including all rights
to payment with respect to any cause of action affecting or
relating to the Collateral or proceeds of Collateral.
5.2. Release of Security Interest in Pledged Loans and Pledged Securities
5.2(a) Except as provided in Section 5.2(b), Pledged Loans will be
released from Credit Agent's security interest only against
payment of the Release Amount in connection with those Pledged
Loans. Pledged Agreements for Deed will be released from
Credit Agent's security interest only against payment of the
Release Amount in connection with those Pledged Agreements for
Deed. If Pledged Loans are transferred to a pool custodian or
an investor for inclusion in a Mortgage Pool and Credit
Agent's security interest in the Pledged Loans included in the
Mortgage Pool is not released before the issuance of the
related Mortgage-backed Security, then that Mortgage-backed
Security, when issued, is
Page 17
a Pledged Security. Credit Agent's security interest continues
in the Pledged Loans backing that Pledged Security and Credit
Agent is entitled to possession of the Pledged Security in the
manner provided in this Agreement.
5.2(b) If Pledged Loans are transferred to an Approved Custodian and
included in an Eligible Mortgage Pool, Credit Agent's security
interest in the Pledged Loans included in the Eligible
Mortgage Pool will be released upon the delivery of the Agency
Security (including delivery to or registration in the name of
a third party on behalf of Credit Agent), and that Agency
Security is a Pledged Security. Credit Agent's security
interest in that Pledged Security will be released only
against payment to Credit Agent of the Release Amount in
connection with the Mortgage Loans backing that Pledged
Security.
5.2(c) Credit Agent has the exclusive right to possession of all
Pledged Securities or, if Pledged Securities are issued in
book-entry form or issued in certificated form and delivered
to a clearing corporation (as such term is defined in the
Uniform Commercial Code of Minnesota) or its nominee, Credit
Agent has the right to have the Pledged Securities registered
in the name of a securities intermediary (as such term is
defined in the Uniform Commercial Code of Minnesota) in an
account containing only customer securities and credited to an
account of Credit Agent. Credit Agent has no duty or
obligation to deliver Pledged Securities to an Investor or to
credit Pledged Securities to the account of an Investor or the
Investor's designee except against payment for those Pledged
Securities. Borrower acknowledges that Credit Agent may enter
into one or more standing arrangements with securities
intermediaries with respect to Pledged Securities issued in
book entry form or issued in certificated form and delivered
to a clearing corporation or its designee, under which the
Pledged Securities are registered in the name of the
securities intermediary, and Borrower agrees, upon request of
Credit Agent, to execute and deliver to those securities
intermediaries Borrower's written concurrence in any such
standing arrangements.
5.2(d) If no Default or Event of Default occurs, Borrower may redeem
a Pledged Loan, a Pledged Agreement for Deed or Pledged
Security from Credit Agent's security interest by notifying
Credit Agent of its intention to redeem the Pledged Loan, a
Pledged Agreement for Deed or Pledged Security from pledge and
either (1) paying, or causing an Investor to pay, to Credit
Agent, for application to prepayment on the principal balance
of the Advances, the Release Amount in connection with the
Pledged Loan, the Pledged Agreements for Deed or the Pledged
Loans backing that Pledged Security, or (2) delivering
substitute Collateral that, in addition to being acceptable to
Credit Agent in its sole discretion will, when included with
the remaining Collateral, result in a Fair Market Value of all
Eligible Assets held by Credit Agent that is at least equal to
the aggregate outstanding Swingline Advances, Warehousing
Advances and RFC Direct Advances.
5.2(e) After a Default or Event of Default occurs, Credit Agent may,
with no liability to Borrower, any Lender or any Person,
continue to release its security interest in any Pledged Loan,
Pledged Agreement for Deed or Pledged Security against payment
of the Release Amount in connection with that Pledged Loan,
the Pledged Agreements for Deed or the Pledged Loans backing
that Pledged Security.
5.2(f) The amount ("Release Amount") to be paid by Borrower to obtain
the release of Credit Agent's security interest in a Pledged
Loan or Pledged Agreement for Deed will be (a) the payment
required in any bailee letter pursuant to which Credit Agent
ships a Pledged Loan or Pledged Agreement for Deed to an
Investor or Approved Custodian, and (b) otherwise, until an
Event of Default occurs, the principal amount of the Advances
outstanding against the Pledged Loan or Pledged Agreement for
Deed, and while an Event of Default exists, the amount paid to
Credit Agent in a commercially reasonable disposition of that
Pledged Loan or Pledged Agreement for Deed.
Page 18
5.3. Collection and Servicing Rights
All proceeds of any Purchase Commitment or any other sale of
Collateral, and all amounts paid on any Receivable, shall be paid
directly to the Cash Collateral Account, for application as provided in
this Agreement. If no Event of Default exists, Borrower may service and
receive and collect directly all other sums payable in respect of the
Collateral.
After an Event of Default, Credit Agent or its designee are entitled to
service and receive and collect all sums payable to Borrower in respect
of the Collateral, and in such case (1) Credit Agent or its designee in
its discretion may, in its own name, in the name of Borrower or
otherwise, demand, sue for, collect or receive any money or property at
any time payable or receivable on account of or in exchange for any of
the Collateral, but Credit Agent has no obligation to do so, (2)
Borrower must, if Credit Agent requests it to do so, hold in trust for
the benefit of Credit Agent and immediately pay to Credit Agent at its
office designated by Notice, all amounts received by Borrower upon or
in respect of any of the Collateral, advising Credit Agent as to the
source of such funds and (3) all amounts so received and collected by
Credit Agent will be held by it as part of the Collateral.
5.4. Return of Collateral at End of Warehousing Commitment
If (a) the Warehousing Commitment has expired or been terminated, and
(b) no Advances, interest or other Obligations are outstanding and
unpaid, Credit Agent will release its security interest and deliver all
Collateral in its possession to Borrower at Borrower's expense.
Borrower's acknowledgement or receipt for any Collateral released or
delivered to Borrower under any provision of this Agreement is a
complete and full acquittance for the Collateral so returned, and
Credit Agent is discharged from any liability or responsibility for
that Collateral.
5.5. Delivery of Collateral Documents
5.5(a) Credit Agent may deliver documents relating to the Collateral
to Borrower for correction or completion under a Trust
Receipt.
5.5(b) If no Default or Event of Default exists, upon delivery by
Borrower to Credit Agent of shipping instructions by
RFConnects on the Business Day prior to transmission, Credit
Agent will transmit Pledged Loans, Pledged Agreements for Deed
or Pledged Securities, together with all related loan
documents and pool documents in Credit Agent's possession, to
the applicable Investor, Approved Custodian or other party
acceptable to Credit Agent in its sole discretion.
5.5(c) If a Default or Event of Default exists, Credit Agent may,
without liability to Borrower or any other Person, continue to
transmit Pledged Loans, Pledged Agreements for Deed or Pledged
Securities, together with all related loan documents and pool
documents in Credit Agent's possession, to the applicable
Investor, Approved Custodian or other party acceptable to
Credit Agent in its sole discretion.
5.5(d) Upon receipt of Notice from Borrower under Section 4.3(g), and
payment of the Release Amount with respect to a Pledged Asset
identified by Borrower, Credit Agent will, at Borrower's
request, release to Borrower any Collateral Documents relating
to the redeemed Pledged Asset or the Pledged Loans backing a
Pledged Security that Credit Agent has in its possession and
that have not been delivered to an Investor or Approved
Custodian; provided, that Credit Agent shall, if requested by
an Investor or Approved Custodian or consistent with past
practices, provide the Collateral Documents for any Pledged
Asset purchased to such Investor, and the Collateral Documents
for any Pledged Loan backing Mortgage-backed Securities to the
Approved Custodian.
Page 19
5.6. Borrower Remains Liable
Anything herein to the contrary notwithstanding, Borrower shall remain
liable under each item of the Collateral to observe and perform all the
conditions and obligations to be observed and performed by it
thereunder, all in accordance with the terms thereof and any other
agreement giving rise thereto, and in accordance with and pursuant to
the terms and provisions thereof. Whether or not Credit Agent has
exercised any rights in any of the Collateral, neither Credit Agent nor
any Lender shall have any obligation or liability under any of the
Collateral (or any agreement giving rise thereto) by reason of or
arising out of this Agreement or the receipt by Credit Agent of any
payment relating thereto, nor shall Credit Agent nor any Lender be
obligated in any manner to perform any of the obligations of Borrower
under or pursuant to any of the Collateral (or any agreement giving
rise thereto) to make any payment, to make any inquiry as to the nature
or the sufficiency of any payment received by it or as to the
sufficiency of any performance by any party under any of the Collateral
(or any agreement giving rise thereto), to present or file any claim,
to take any action to enforce any performance or to collect the payment
of any amounts which may have been assigned to it or to which it may be
entitled at any time or times.
5.7. Further Assurance
Borrower agrees to execute such financing statements and to take
whatever other actions are reasonably requested by Credit Agent
(including, without limitation, amending this Agreement to take account
of the adoption of Revised Article 9 of the Uniform Commercial Code) to
perfect and continue Credit Agent's security interest in the
Collateral, and authorizes Credit Agent to file financing statements
(including financing statements containing a broader description of the
Collateral than the description set forth herein). Borrower will
execute and cooperate with Credit Agent in obtaining from third parties
Control Agreements in form satisfactory to Credit Agent with respect to
collateral consisting of investment property, deposit accounts,
letter-of-credit rights, and electronic chattel paper.
End of Article 5
Page 20
6. CONDITIONS PRECEDENT
6.1. Initial Advance
The obligation of Credit Agent to make the initial Advance under this
Agreement is subject to the satisfaction, in the sole discretion of
Credit Agent, of the following conditions precedent:
6.1(a) Credit Agent must receive the following, all of which must be
satisfactory in form and content to Credit Agent, in its sole
discretion:
(1) The Notes and this Agreement, duly executed by
Borrower.
(2) The Lennar Undertaking, on the form prescribed by
Lender, duly executed by Lennar.
(3) All certificates and instruments representing or
evidencing the Pledged Shares, together with stock
powers or other instruments of assignment, duly
completed in blank
(4) UAMC's articles of incorporation, together with all
amendments, as certified by the Secretary of State of
Florida; UAMC's bylaws, together with all amendments,
certified by the corporate secretary or assistant
secretary of UAMC; and certificates of good standing
dated within 60 days of the date of this Agreement.
(5) A resolution of the board of directors of UAMC
authorizing the execution, delivery and performance
of this Agreement and the other Loan Documents, each
Advance Request and all other agreements, instruments
or documents to be delivered by UAMC under this
Agreement.
(6) A certificate as to the incumbency and authenticity
of the signatures of the officers of UAMC executing
this Agreement and the other Loan Documents, and of
the officers and employees of UAMC delivering each
Advance Request and all other agreements, instruments
or documents to be delivered under this Agreement
(Credit Agent being entitled to rely on that
certificate until a new incumbency certificate has
been furnished to Credit Agent).
(7) Assumed Name Certificates dated within 30 days of the
date of this Agreement for any assumed name used by
UAMC in the conduct of its business.
(8) EHMI's articles of incorporation, together with all
amendments, as certified by the Secretary of State of
Washington; EHMI's bylaws, together with all
amendments, certified by the corporate secretary or
assistant secretary of EHMI; and certificates of good
standing dated within 30 days of the date of this
Agreement.
(9) A resolution of the board of directors of EHMI
authorizing the execution, delivery and performance
of this Agreement and the other Loan Documents, each
Advance Request and all other agreements, instruments
or documents to be delivered by EHMI under this
Agreement.
(10) A certificate as to the incumbency and authenticity
of the signatures of the officers of EHMI executing
this Agreement and the other Loan Documents, and of
the officers and employees of EHMI delivering each
Advance Request and all other agreements, instruments
or documents to be delivered under this
Page 21
Agreement (Credit Agent being entitled to rely on
that certificate until a new incumbency certificate
has been furnished to Credit Agent).
(11) Assumed Name Certificates dated within 30 days of the
date of this Agreement for any assumed name used by
EHMI in the conduct of its business.
(12) AFSI's articles of incorporation, together with all
amendments, as certified by the Secretary of State of
California; AFSI's bylaws, together with all
amendments, certified by the corporate secretary or
assistant secretary of AFSI; and certificates of good
standing dated within 30 days of the date of this
Agreement.
(13) A resolution of the board of directors of AFSI
authorizing the execution, delivery and performance
of this Agreement and the other Loan Documents, each
Advance Request and all other agreements, instruments
or documents to be delivered by AFSI under this
Agreement.
(14) A certificate as to the incumbency and authenticity
of the signatures of the officers of AFSI executing
this Agreement and the other Loan Documents, and of
the officers and employees of AFSI delivering each
Advance Request and all other agreements, instruments
or documents to be delivered under this Agreement
(Credit Agent being entitled to rely on that
certificate until a new incumbency certificate has
been furnished to Credit Agent).
(15) Assumed Name Certificates dated within 30 days of the
date of this Agreement for any assumed name used by
AFSI in the conduct of its business.
(16) UAMCC's articles of incorporation, together with all
amendments, as certified by the Secretary of State of
California; UAMCC's bylaws, together with all
amendments, certified by the corporate secretary or
assistant secretary of UAMCC; and certificates of
good standing dated within 30 days of the date of
this Agreement.
(17) A resolution of the board of directors of UAMCC
authorizing the execution, delivery and performance
of this Agreement and the other Loan Documents, each
Advance Request and all other agreements, instruments
or documents to be delivered by UAMCC under this
Agreement.
(18) A certificate as to the incumbency and authenticity
of the signatures of the officers of UAMCC executing
this Agreement and the other Loan Documents, and of
the officers and employees of UAMCC delivering each
Advance Request and all other agreements, instruments
or documents to be delivered under this Agreement
(Credit Agent being entitled to rely on that
certificate until a new incumbency certificate has
been furnished to Credit Agent).
(19) Assumed Name Certificates dated within 30 days of the
date of this Agreement for any assumed name used by
UAMCC in the conduct of its business.
(20) UAMC Asset's articles of incorporation, together with
all amendments, as certified by the Secretary of
State of Nevada; UAMC Asset's bylaws, together with
all amendments, certified by the corporate secretary
or assistant secretary of UAMC Asset; and
certificates of good standing dated within 30 days of
the date of this Agreement.
(21) A resolution of the board of directors of UAMC Asset
authorizing the execution, delivery and performance
of this Agreement and the other Loan Documents,
Page 22
each Advance Request and all other agreements,
instruments or documents to be delivered by UAMC
Asset under this Agreement.
(22) A certificate as to the incumbency and authenticity
of the signatures of the officers of UAMC Asset
executing this Agreement and the other Loan
Documents, and of the officers and employees of UAMC
Asset delivering each Advance Request and all other
agreements, instruments or documents to be delivered
under this Agreement (Credit Agent being entitled to
rely on that certificate until a new incumbency
certificate has been furnished to Credit Agent).
(23) Assumed Name Certificates dated within 30 days of the
date of this Agreement for any assumed name used by
UAMC Asset in the conduct of its business.
(24) Lennar's articles or certificate of incorporation,
together with all amendments, as certified by the
Secretary of State of Florida, bylaws certified by
the corporate secretary of Lennar and certificates of
good standing dated within 30 days of the date of
this Agreement.
(25) A resolution of the board of directors of Lennar,
certified as of the date of the Agreement by its
corporate secretary, authorizing the execution,
delivery and performance of Lennar Undertaking, and
all other agreements, instruments or documents to be
delivered by Lennar under this Agreement.
(26) A certificate as to the incumbency and authenticity
of the signatures of the officers of Lennar executing
Lennar Undertaking and all other agreements,
instruments or documents to be delivered under this
Agreement (Lender being entitled to rely on that
certificate until a new incumbency certificate has
been furnished to Lender).
(27) Financial statements of Lennar containing a balance
sheet as of November 30, 2000, and related statements
of income, changes in stockholders' equity and cash
flows for the period ended on the that date, all
prepared in accordance with GAAP applied on a basis
consistent with prior periods and audited by
independent certified public accountants of
recognized standing acceptable to Lender.
(28) A favorable written opinion of counsel to each
Borrower and Lennar, addressed to Lenders and dated
as of the date of this Agreement, covering such
matters as Credit Agent may reasonably request.
(29) Uniform Commercial Code, tax lien and judgment
searches of the appropriate public records for each
Borrower that do not disclose the existence of any
prior Lien on the Collateral other than in favor of
Credit Agent or as permitted under this Agreement.
(30) Copies of the certificates, documents or other
written instruments that evidence each Borrower's
eligibility described in Section 2.3, all in form and
substance satisfactory to Credit Agent.
(31) Copies of each Borrower's errors and omissions
insurance policy or mortgage impairment insurance
policy, and blanket bond coverage policy, or
certificates in lieu of policies, showing compliance
by each Borrower as of the date of this Agreement
with the related provisions of Section 8.9.
Page 23
(32) Executed financing statements in recordable form
covering the Collateral and ready for filing in all
jurisdictions required by Credit Agent.
(33) Receipt by Credit Agent and Lenders of any fees due
on the date of this Agreement.
(34) An agreement among each Borrower that is selling
Loans to Fannie Mae, Lender and Fannie Mae, pursuant
to which Fannie Mae agrees to send all cash proceeds
of Mortgage Loans sold by such Borrower to Fannie Mae
to the Cash Collateral Account.
(35) An executed Funding Bank Agreement.
(36) An executed Electronic Tracking Agreement among
Borrowers, Credit Agent and Mortgage Electronic
Registration Systems, Inc. ("MERS"), and MERCORP,
Inc., pursuant to which Credit Agent will have the
authority to, among other things, withdraw Mortgages
from the MERS system, if either the Mortgage Loan has
been registered on the MERS system naming Borrower as
servicer or subservicer, or the Mortgage Loan has not
yet been registered on the MERS system.
6.1(b) If any Borrower is indebted to any of its directors, officers,
shareholders or Affiliates, as of the date of this Agreement,
which indebtedness is in excess of $35,000,000, the Person to
whom that Borrower is indebted must have executed a
Subordination of Debt Agreement, on the form prescribed by
Credit Agent; and Credit Agent must have received an executed
copy of that Subordination of Debt Agreement, certified by the
corporate secretary of the respective Borrower to be true and
complete and in full force and effect as of the date of the
Advance.
6.1(c) The Credit Agent should have received satisfactory evidence
that (i) upon disbursement of the Advances to be made on the
Closing Date to repay loans outstanding under the Existing US
Home Agreement, such loans shall be repaid in full, the
commitments thereunder shall be terminated and the security
interests granted in connection therewith shall be released,
and (ii) as of the Closing Date, the commitments under the
Existing Universal Agreement shall be terminated and, upon
repayment of the remaining loans outstanding thereunder, the
security interests granted in connection therewith shall be
released.
6.1(d) U.S. Home shall have merged with and into UAMC, with UAMC
being the surviving corporation.
6.2. Each Advance
The obligation of Lenders to make the initial and each subsequent
Advance, is subject to the satisfaction, in the sole discretion of
Lenders, as of the date of each Advance, of the following additional
conditions precedent:
6.2(a) Borrower must have delivered to Credit Agent the Advance
Request and Collateral Documents called for under, and must
have satisfied the procedures set forth in, Article 3. All
items delivered to Credit Agent must be satisfactory to Credit
Agent in form and content, and Credit Agent may reject any
item that does not satisfy the requirements of this Agreement
or the related Purchase Commitment.
Page 24
6.2(b) Credit Agent must have received evidence satisfactory to them
as to the making and/or continuation of any book entry or the
due filing and recording in all appropriate offices of all
financing statements and other instruments as may be necessary
to perfect the security interest of Credit Agent in the
Collateral under the Uniform Commercial Code or other
applicable law.
6.2(c) The representations and warranties of Borrower contained in
Section 2.3, Article 7, Article 10 and Exhibit H must be
accurate and complete in all material respects as if made on
and as of the date of each Advance.
6.2(d) Borrower must have performed all agreements to be performed by
it under this Agreement, and after giving effect to the
requested Advance, there will exist no Default or Event of
Default under this Agreement.
6.2(e) Lennar must have performed all agreements to be performed by
Lennar under the Lennar Undertaking.
Delivery of an Advance Request by Borrower will be deemed a
representation by Borrower that all conditions set forth in this
Section have been satisfied as of the date of the Advance.
End of Article 6
Page 25
7. GENERAL REPRESENTATIONS AND WARRANTIES
Each Borrower represents and warrants to Credit Agent, as of the date
of this Agreement and as of the date of each Advance Request and the
making of each Advance, that:
7.1. Place of Business
As of the Closing Date, and thereafter until Borrower provides Lenders
with Notice of any change:
7.1(a) UAMC's chief executive office and principal place of business
is 311 Park Place Boulevard, Suite 500, Clearwater, Florida
33759.
7.1(b) EHMI's chief executive office and principal place of business
is 11000 NE 33rd Place, Suite 300, Bellevue, Washington 98004.
7.1(c) AFSI's chief executive office and principal place of business
is 24896 Chrisanta Drive, Mission Viejo, CA 92691.
7.1(d) UAMCC's chief executive office and principal place of business
is 24896 Chrisanta Drive, Mission Viejo, CA 92691.
7.1(e) UAMC Asset's chief executive office and principal place of
business is 730 NW 107th Avenue, 4th Floor, Miami, Florida
33173.
From and after the time Borrower provides Lenders with Notice of any
change of address, the new address shall remain the chief executive
office and principal place of business of the applicable Borrower(s)
until Notice of a subsequent change of address is given.
7.2. Organization; Good Standing; Subsidiaries
UAMC is a corporation duly organized, validly existing and in good
standing under the laws of the State of Florida, and has the full legal
power and authority to own its property and to carry on its business as
currently conducted. EHMI is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Washington, and has the full legal power and authority to own its
property and to carry on its business as currently conducted. AFSI is a
corporation duly organized, validly existing and in good standing under
the laws of the State of California, and has the full legal power and
authority to own its property and to carry on its business as currently
conducted. UAMCC is a corporation duly organized, validly existing and
in good standing under the laws of the State of California, and has the
full legal power and authority to own its property and to carry on its
business as currently conducted. UAMC Asset is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Nevada, and has the full legal power and authority to own its
property and to carry on its business as currently conducted. Each
Subsidiary of each Borrower is duly organized, validly existing and in
good standing under the laws of its jurisdiction of formation, and has
the full legal power and authority to own its property and conduct its
business as currently conducted. Each Borrower and each Subsidiary of
each Borrower is duly qualified as a foreign corporation to do business
and is in good standing in each jurisdiction in which the transaction
of its business makes qualification necessary, except in jurisdictions,
if any, where a failure to be in good standing has no material adverse
effect on Borrowers' or the Subsidiaries' business, operations, assets
or financial condition as a whole. For the purposes of this Agreement,
good standing includes qualification for any and all licenses and
payment of any and all taxes required in the jurisdiction
Page 26
of its incorporation and in each jurisdiction in which Borrower
transacts business. As of the date of this Agreement, no Borrower has
any Subsidiaries except as set forth on Exhibit D, which sets forth
with respect to each Subsidiary, its name, address, place of
incorporation, each state in which it is qualified as a foreign
corporation, and the percentage ownership of its capital stock by the
respective Borrower.
7.3. Authorization and Enforceability
Each Borrower has the power and authority to execute, deliver and
perform this Agreement, the Notes and other Loan Documents to which
Borrower is party and to make the borrowings under this Agreement. The
execution, delivery and performance by Borrower of this Agreement, the
Notes and the other Loan Documents to which Borrower is party and the
making of the borrowings under this Agreement and the Notes, have been
duly and validly authorized by all necessary corporate action on the
part of Borrower (none of which actions has been modified or rescinded,
and all of which actions are in full force and effect) and do not and
will not conflict with or violate any provision of law, of any
judgments binding upon Borrower, or of the articles of incorporation or
by-laws of Borrower, conflict with or result in a breach of or
constitute a default or require any consent under, or result in the
creation of any Lien upon any property or assets of Borrower other than
the Lien on the Collateral granted under this Agreement, or result in
or require the acceleration of any indebtedness of Borrower under any
agreement, instrument or indenture to which Borrower is a party or by
which Borrower or its property may be bound or affected. This
Agreement, the Notes and the other Loan Documents constitute the legal,
valid, and binding obligations of each Borrower, enforceable in
accordance with their respective terms, except as limited by
bankruptcy, insolvency or other such laws affecting the enforcement of
creditors' rights.
7.4. Authorization and Enforceability of Lennar Undertaking
Lennar has the power and authority to execute, deliver and perform the
Lennar Undertaking. The Lennar Undertaking constitutes the legal,
valid, and binding obligation of Lennar, enforceable in accordance with
its terms, except as limited by bankruptcy, insolvency or other such
laws affecting the enforcement of creditors' rights.
7.5. Approvals
The execution and delivery of this Agreement, the Notes and the other
Loan Documents, the performance of each Borrower's obligations under
this Agreement, the Notes and the other Loan Documents and the validity
and enforceability of this Agreement, the Notes and the other Loan
Documents do not require any license, consent, approval or other action
of any state or federal agency or governmental or regulatory authority
other than those which have been obtained and remain in full force and
effect.
7.6. Financial Condition
The balance sheet of each Borrower (and, if applicable, Borrower's
Subsidiaries, on a consolidated basis) as of each Statement Date, and
the related statements of income, cash flows and changes in
stockholders' equity for the fiscal period ended on each Statement
Date, previously furnished to Credit Agent, fairly present the
financial condition of Borrower (and, if applicable, Borrower's
Subsidiaries) as at that Statement Date and the results of its
operations for the fiscal period ended on that Statement Date. Borrower
had, on each Statement Date, no known material liabilities, direct or
indirect, fixed or contingent, matured or unmatured, or liabilities for
taxes, long-term leases or unusual forward or long-term commitments not
disclosed by, or reserved against in, said balance sheet and related
statements, and at the present time there are
Page 27
no material unrealized or anticipated losses from any loans, advances
or other commitments of any Borrower except as previously disclosed to
Credit Agent in writing. Those financial statements were prepared in
accordance with GAAP applied on a consistent basis throughout the
periods involved. Since the Audited Statement Date, there has been no
material adverse change in the business, operations, assets or
financial condition of any Borrower (and, if applicable, Borrower's
Subsidiaries), nor is any Borrower aware of any state of facts that
(with or without notice or lapse of time or both) would or could result
in any such material adverse change.
7.7. Litigation
There are no actions, claims, suits or proceedings pending or, to any
Borrower's knowledge, threatened or reasonably anticipated against or
affecting Borrower or any Subsidiary of Borrower in any court or before
any arbitrator or before any government commission, board, bureau or
other administrative agency that, if adversely determined, may
reasonably be expected to result in a material adverse change in
Borrower's business, operations, assets or financial condition as a
whole, or that would affect the validity or enforceability of this
Agreement, the Notes or any other Loan Document.
7.8. Compliance with Laws
No Borrower nor any Subsidiary of any Borrower is in violation of any
provision of any law, or of any judgment, award, rule, regulation,
order, decree, writ or injunction of any court or public regulatory
body or authority that could result in a material adverse change in any
Borrower's business, operations, assets or financial condition as a
whole or that would affect the validity or enforceability of this
Agreement, the Notes or any other Loan Document.
7.9. Regulation U
No Borrower is engaged principally, or as one of its important
activities, in the business of extending credit for the purpose of
purchasing or carrying Margin Stock, and no part of the proceeds of any
Warehousing Advances made under this Agreement will be used to purchase
or carry any Margin Stock or to extend credit to others for the purpose
of purchasing or carrying any Margin Stock.
7.10. Investment Company Act
No Borrower is an "investment company" or controlled by an "investment
company" within the meaning of the Investment Company Act of 1940, as
amended.
7.11. Payment of Taxes
Each Borrower and each of their respective Subsidiaries has filed or
caused to be filed all federal, state and local income, excise,
property and other tax returns or extensions thereto that are required
to be filed with respect to the operations of Borrower and their
Subsidiaries, all such returns are true and correct and Borrower and
each of their Subsidiaries has paid or caused to be paid all taxes
shown on those returns or on any assessment, to the extent that those
taxes have become due, including all FICA payments and withholding
taxes, if appropriate. The amounts reserved as a liability for income
and other taxes payable in the financial statements described in
Section 7.6 are sufficient for payment of all unpaid federal, state and
local income, excise, property and other taxes, whether or not
disputed, of Borrower and their Subsidiaries accrued for or applicable
to the period and on the dates of such financial statements and all
years and periods prior to those financial statements and for which
Borrower and their Subsidiaries may be
Page 28
liable in its own right or as transferee of the assets of, or as
successor to, any other Person. No tax Liens have been filed and no
material claims are being asserted against Borrower, any Subsidiary of
Borrower or any property of Borrower or any Subsidiary of Borrower with
respect to any taxes, fees or charges.
7.12. Agreements
No Borrower nor any Subsidiary of any Borrower is a party to any
agreement, instrument or indenture or subject to any restriction
materially and adversely affecting its business, operations, assets or
financial condition, except as disclosed in the financial statements
described in Section 7.6. No Borrower nor any Subsidiary of any
Borrower is in default in the performance, observance or fulfillment of
any of the obligations, covenants or conditions contained in any
agreement, instrument, or indenture which default could result in a
material adverse change in Borrower's business, operations, properties
or financial condition as a whole. No holder of any indebtedness of any
Borrower or of any of their respective Subsidiaries has given notice of
any asserted default under that indebtedness, and no liquidation or
dissolution of any Borrower or of any of their Subsidiaries and no
receivership, insolvency, bankruptcy, reorganization or other similar
proceedings relative to Borrower or of any of their Subsidiaries or any
of their properties is pending, or to the knowledge of Borrower,
threatened.
7.13. Title to Properties
Each Borrower and each Subsidiary of each Borrower has good, valid,
insurable and (in the case of real property) marketable title to all of
its properties and assets (whether real or personal, tangible or
intangible) reflected on the financial statements described in Section
7.6, except for those properties and assets that Borrower has disposed
of since the date of those financial statements either in the ordinary
course of business or because they were no longer used or useful in the
conduct of Borrower's or the Subsidiary's business. All of Borrower's
properties and assets are free and clear of all Liens except as
disclosed in each Borrower's respective financial statements.
7.14. ERISA
Each Plan is in compliance with all applicable requirements of ERISA
and the Internal Revenue Code and with all material applicable rulings
and regulations issued under the provisions of ERISA and the Internal
Revenue Code setting forth those requirements, except where any failure
to comply would not result in a material loss to any Borrower or any
ERISA Affiliate. All of the minimum funding standards or other
contribution obligations applicable to each Plan have been satisfied.
No Plan is a defined-benefit pension plan subject to Title IV of ERISA,
and there is no Multiemployer Plan.
7.15. No Retiree Benefits
Except as required under Section 4980B of the Internal Revenue Code,
Section 601 of ERISA or applicable state law, no Borrower nor, if
applicable, any of its respective Subsidiary is obligated to provide
post-retirement medical or insurance benefits with respect to employees
or former employees.
7.16. Assumed Names
No Borrower originates Mortgage Loans or otherwise conduct business
under any names other than its legal name and the assumed names set
forth on Exhibit G. Each Borrower has made all
Page 29
filings and taken all other action as may be required under the laws of
any jurisdiction in which it originates Mortgage Loans or otherwise
conducts business under any assumed name. To the best of Borrowers'
knowledge, each Borrower's use of the assumed names set forth on
Exhibit G does not conflict with any other Person's legal rights to any
such name, nor otherwise give rise to any liability by that Borrower to
any other Person.
End of Article 7
Page 30
8. AFFIRMATIVE COVENANTS
As long as the Commitments are outstanding or there remain any
Obligations to be paid or performed under this Agreement or under any
other Loan Document, Borrower must:
8.1. Payment of Obligations
Punctually pay or cause to be paid all Obligations, including the
Obligations payable under this Agreement and under the Notes, in
accordance with their terms.
8.2. Financial Statements
Deliver to Credit Agent:
8.2 (a) As soon as available and in any event within 30 days after the
end of each month, interim statements of income of UAMC (and
its Subsidiaries, on a consolidated basis) for the immediately
preceding month and for the period from the beginning of the
fiscal year to the end of that month, and the related balance
sheet as at the end of the immediately preceding month, all in
reasonable detail, subject, however, to year-end audit
adjustments.
8.2 (b) As soon as available and in any event within 90 days after the
end of each fiscal year of UAMC, fiscal year-end statements of
income, cash flows and changes in stockholders' equity of UAMC
(and its Subsidiaries, on a consolidated basis) for that year,
and the related balance sheet as of the end of that year
(setting forth in comparative form the corresponding figures
for the preceding fiscal year), all in reasonable detail and
accompanied by (1) an opinion as to those financial statements
in form and substance satisfactory to Credit Agent and
prepared by independent certified public accountants of
recognized standing acceptable to Credit Agent, and (2) any
management letters, management reports or other supplementary
comments or reports delivered by those accountants to each
Borrower or its respective board of directors.
8.2 (c) Together with each delivery of financial statements required
by this Section, a Compliance Certificate for each Borrower
substantially in the form of Exhibit E.
8.2 (d) Copies of all regular or periodic financial and other reports
that each Borrower files with the Securities and Exchange
Commission or any successor governmental agency or other
entity.
8.3. Other Borrower Reports
Deliver to Credit Agent:
8.3 (a) If at any time Borrowers' consolidated Servicing Portfolio
exceeds $500,000,000, as soon as available and in any event
within 45 days after the end of each Calendar Quarter, a
consolidated report ("Servicing Portfolio Report") as of the
end of the month, as to all Mortgage Loans the servicing
rights to which are owned by Borrower (specified by investor
type, recourse and non-recourse) regardless of whether the
Mortgage Loans are Pledged Loans. The Servicing Portfolio
Report must indicate which Mortgage Loans (1) are current and
in good standing, (2) are more than 30, 60 or 90 days past
due, (3) are the subject of pending bankruptcy or foreclosure
proceedings, or (4) have been
Page 31
converted (through foreclosure or other proceedings in lieu of
foreclosure) into real estate owned by Borrower.
8.3 (b) With each Officer's Certificate, a monthly status report on
each Construction/Perm Mortgage Loan, including, without
limitation, the loan number, mortgagor name(s), property
address, general contractor name, completion status (percent
completed or staged draw no. and brief description), estimated
completion date (if completion date is behind schedule, then
an explanation of delay), date of last on-site inspection, and
Pledged Mortgage payment status.
8.3 (c) Weekly or more frequently as Lender may from time to time
request, a commitment summary and pipeline report
substantially in the form of Exhibit I ("Commitment Summary
Report") dated as of the close of business on the first
Business Day of each week and provided to Lender by facsimile
by the close of business on the next succeeding Business Day.
8.3 (d) As soon as available and in any event within 30 days after the
end of each month, a consolidated loan production report as of
the end of that month, presenting the total dollar volume and
the number of Mortgage Loans originated and closed or
purchased during that month and for the fiscal year-to-date,
specified by property type and loan type.
8.3 (e) As soon as available and in any event within 30 days after
filing with the Securities and Exchange Commission, a copy of
the 10-Q and 10-K of Lennar.
8.3 (f) Other reports in respect of Pledged Loans and Pledged
Securities, in such detail and at such times as Credit Agent
in its discretion may reasonably request.
8.3 (g) With reasonable promptness, such further information regarding
the business, operations, properties or financial condition of
each Borrower as Credit Agent, or any Lender, through Credit
Agent, may reasonably request, including copies of any audits
completed by HUD, Ginnie Mae, Fannie Mae or Freddie Mac.
8.4. Maintenance of Existence; Conduct of Business
Preserve and maintain each Borrower's corporate existence in good
standing and all of its rights, privileges, licenses and franchises
necessary or desirable in the normal conduct of its business, including
its eligibility as lender, seller/servicer and issuer described under
Section 2.3; conduct its business in an orderly and efficient manner;
maintain a net worth of acceptable assets as required for maintaining
Borrower's eligibility as lender, seller/servicer and issuer described
under Section 2.3; and make no material change in the nature or
character of its business.
8.5. Compliance with Applicable Laws
Comply with the requirements of all applicable laws, rules, regulations
and orders of any governmental authority, a breach of which could
result in a material adverse change in any Borrower's business,
operations, assets, or financial condition as a whole or on the
enforceability of this Agreement, any other Loan Document or any
Collateral, except where contested in good faith and by appropriate
proceedings.
8.6. Inspection of Properties and Books; Operational Reviews
8.6 (a) Permit Credit Agent, any Lender or any Participant (and their
authorized representatives) to discuss the business,
operations, assets and financial condition of each Borrower
and their respective Subsidiaries with each Borrower's
officers, agents and employees, and to
Page 32
examine and make copies or extracts of each Borrower's and
their Subsidiaries' books of account, all at such reasonable
times as Credit Agent, any Lender or any Participant may
request.
8.6 (b) Provide its accountants with a copy of this Agreement promptly
after the execution of this Agreement and authorize and
instruct them to answer candidly all questions that the
officers of Credit Agent, any Lender or any Participant or any
authorized representatives of Credit Agent, any Lender or any
Participant may address to them in reference to the financial
condition or affairs of each Borrower and their Subsidiaries.
Each Borrower may have a representative in attendance at any
meetings held between the officers or other representatives of
Credit Agent, any Lender or any Participant and any Borrower's
accountants under this authorization.
8.6 (c) Permit Credit Agent, any Lender or any Participant (and their
authorized representatives) access to each Borrower's premises
and records for the purpose of conducting a review of each
Borrower's general mortgage business methods, policies and
procedures, auditing its loan files, and reviewing the
financial and operational aspects of each Borrower's business.
8.7. Notice
Give prompt Notice to Credit Agent of (a) any action, suit or
proceeding instituted by or against any Borrower or any of its
Subsidiaries in any federal or state court or before any commission or
other regulatory body (federal, state or local, domestic or foreign),
which action, suit or proceeding has at issue in excess of $1,000,000,
or any such proceedings threatened against any Borrower or any of its
Subsidiaries in a writing containing the details of that action, suit
or proceeding; (b) the filing, recording or assessment of any federal,
state or local tax Lien against any Borrower, any of its Subsidiaries
or any of their respective assets; (c) an Event of Default; (d) a
Default that continues for more than 4 Business Days; (e) the
suspension, revocation or termination of any Borrower's eligibility, in
any respect, as approved lender, seller/servicer or issuer as described
under Section 2.3; (f) the transfer, loss, nonrenewal or termination of
any material Servicing Contracts to which any Borrower is a party, or
which is held for the benefit of any Borrower, and the reason for that
transfer, loss, nonrenewal or termination; (g) any Prohibited
Transaction with respect to any Plan, specifying the nature of the
Prohibited Transaction and what action Borrower proposes to take with
respect to it; (h) any significant change in Borrowers' accounting
treatment or reporting practices, or any change in Borrowers' fiscal
year, or (i) any other action, event or condition of any nature that
could lead to or result in a material adverse change in the business,
operations, assets or financial condition of any Borrower or any of its
Subsidiaries.
8.8. Payment of Debt, Taxes and Other Obligations
Pay, perform and discharge, or cause to be paid, performed and
discharged, all of the obligations and indebtedness of each Borrower
and its Subsidiaries, all taxes, assessments and governmental charges
or levies imposed upon Borrower or its Subsidiaries or upon their
respective income, receipts or properties before those taxes,
assessments and governmental charges or levies become past due, and all
lawful claims for labor, materials and supplies or otherwise that, if
unpaid, could become a Lien or charge upon any of their respective
properties or assets. Each Borrower and its Subsidiaries are not
required, however, to pay any taxes, assessments and governmental
charges or levies or claims for labor, materials or supplies for which
each Borrower or its Subsidiaries have obtained an adequate bond or
insurance or that are being contested in good faith and by proper
proceedings that are being reasonably and diligently pursued and for
which proper reserves have been created.
Page 33
8.9. Insurance
Maintain errors and omissions insurance or mortgage impairment
insurance, and blanket bond coverage, with such companies and in such
amounts as satisfy prevailing requirements applicable to a lender,
seller/servicer and issuer described under Section 2.3, and liability
insurance and fire and other hazard insurance on its properties, in
each case with responsible insurance companies acceptable to Credit
Agent, in such amounts and against such risks as is customarily carried
by similar businesses operating in the same location.
8.10. Closing Instructions
Indemnify and hold Credit Agent and Lenders harmless from and against
any loss, including reasonable attorneys' fees and costs, attributable
to the failure of any title insurance company, agent or approved
attorney to comply with any Borrower's disbursement or instruction
letter relating to any Mortgage Loan.
8.11. Subordination of Certain Indebtedness
Cause any indebtedness of any Borrower to any shareholder, director,
officer or Affiliate of Borrower, which indebtedness is in excess of
$35,000,000, to be subordinated to the Obligations by the execution and
delivery to Credit Agent of a Subordination of Debt Agreement, on the
form prescribed by Credit Agent, certified by the corporate secretary
of that Borrower to be true and complete and in full force and effect.
8.12. Other Loan Obligations
Perform all material obligations under the terms of each loan
agreement, note, mortgage, security agreement or debt instrument by
which any Borrower is bound or to which any of its property is subject,
and promptly notify Credit Agent in writing of a declared default under
or the termination, cancellation, reduction or nonrenewal of any of its
other lines of credit or agreements with any other lender. Exhibit F is
a true and complete list of all such lines of credit or agreements as
of the date of this Agreement. Borrower must give Credit Agent at least
30 days Notice before entering into any additional lines of credit or
agreements.
8.13. ERISA
Maintain (and, if applicable, will cause each ERISA Affiliate to
maintain) each Plan in compliance with all material applicable
requirements of ERISA and of the Internal Revenue Code and with all
applicable rulings and regulations issued under the provisions of ERISA
and of the Internal Revenue Code, and not permit any ERISA Affiliate
to, (a) engage in any transaction in connection with which Borrower or
any ERISA Affiliate would be subject to either a civil penalty assessed
pursuant to Section 502(i) of ERISA or a tax imposed by Section 4975 of
the Internal Revenue Code, in either case in an amount exceeding
$25,000 or (b) fail to make full payment when due of all amounts that,
under the provisions of any Plan, Borrower or any ERISA Affiliate is
required to pay as contributions to that Plan, or permit to exist any
accumulated funding deficiency (as such term is defined in Section 302
of ERISA and Section 412 of the Internal Revenue Code), whether or not
waived, with respect to any Plan in an aggregate amount exceeding
$25,000.
Page 34
8.14. Use of Proceeds of Advances
Use the proceeds of each Advance solely for the purpose of funding
Eligible Assets and against the pledge of those Eligible Assets as
Collateral or, in the case of Advances against Foreclosure Mortgage
Loans and Foreclosure Claim Receivables, repaying Advances outstanding
against or repurchase obligations with respect to the related Mortgage
Loans.
End of Article 8
Page 35
9. NEGATIVE COVENANTS
As long as the Commitment is outstanding or there remain any
Obligations to be paid or performed, no Borrower must, either directly
or indirectly, without the prior written consent of Credit Agent:
9.1. Contingent Liabilities
Assume, guarantee, endorse or otherwise become contingently liable for
the obligation of any Person (including any Subsidiary that is not a
Borrower), except by endorsement of negotiable instruments for deposit
or collection in the ordinary course of business, and except for
obligations arising in connection with the sale of Mortgage Loans
without credit recourse (but subject to recourse for breaches of normal
representations, warranties and other provisions) in the ordinary
course of Borrower's business, and except for other contingent
liabilities in an aggregate amount not greater than $10,000,000.
9.2. Restrictions on Fundamental Changes
9.2 (a) Consolidate, merge or enter into any analogous reorganization
or transaction with any Person, except that any Borrower may
merge with another Borrower and any Borrower other than UAMC
may enter into a merger if the surviving corporation will be a
wholly-owned Subsidiary of UAMC.
9.2 (b) Liquidate, wind up or dissolve (or suffer any liquidation or
dissolution).
9.2 (c) Cease actively to engage in the business of originating
Mortgage Loans or make any other material change in the nature
or scope of the business in which Borrower engages as of the
date of this Agreement.
9.2 (d) Sell, assign, lease, convey, transfer or otherwise dispose of
(whether in one transaction or a series of transactions) all
or substantially all of Borrower's business or assets, whether
now owned or acquired after the Closing Date.
9.2 (e) Change its name or jurisdiction of incorporation or formation
without providing 30 days prior written notice to Credit
Agent.
9.3. Loss of Eligibility
Take any action that would cause any Borrower to lose all or any part
of its status as an eligible lender, seller/servicer or issuer as
described under Section 2.3.
9.4. Tangible Leverage Ratio
Permit UAMC'S Tangible Leverage Ratio at any time to exceed 10 to 1.
9.5. Minimum Tangible Net Worth
Permit UAMC's Tangible Net Worth at any time to be less than
$40,000,000.
Page 36
9.6. Distributions to Shareholders
Declare or pay any dividends or otherwise declare or make any
distribution to Borrower's shareholders (including any purchase or
redemption of stock) unless, both before and after giving effect
thereto, no Default or Event of Default will exist.
9.7. Transactions with Affiliates
Directly or indirectly (a) make any loan, advance, extension of credit
or capital contribution to any of Borrower's Affiliates, except (i) any
Borrower may make loans, advances, extensions of credit or capital
contributions to another Borrower, (ii) UAMC may make loans to Lennar,
and (iii) Borrowers may make additional loans, advances, extensions of
credit and capital contributions to Affiliates in an aggregate amount
at any time outstanding not in excess of $15,000,000, in each case as
long as, both before and after giving effect thereto, no Default or
Event of Default will exist, (b) sell, transfer, pledge or assign any
of its assets to or on behalf of those Affiliates, or (c) pay
management fees to or on behalf of those Affiliates.
9.8. Recourse Servicing Contracts
Acquire or enter into, or permit any Subsidiary to acquire or enter
into, Servicing Contracts under which Borrower must repurchase or
indemnify the holder of the Mortgage Loans as a result of defaults on
the Mortgage Loans at any time during the term of those Mortgage Loans
(but subject to recourse for breaches of normal representations,
warranties and other provisions), if the aggregate principal amount of
Mortgage Loans serviced pursuant to such Servicing Contracts would
exceed $250,000,000.
9.9. Deferral of Subordinated Debt
Pay any Subordinated Debt of Borrower in advance of its stated maturity
or, after a Default or Event of Default under this Agreement has
occurred, make any payment of any kind on any Subordinated Debt of
Borrower until all of the Obligations have been paid and performed in
full and any applicable preference period has expired.
9.10. Limitation on Liens.
Create, incur, assume or permit to exist any Lien with respect to any
property now owned or hereafter acquired by Borrower or any Subsidiary,
or any income or profits therefrom, except (a) the security interests
granted to Credit Agent, for the benefit of Lenders, under the Loan
Documents; (b) Liens described on Exhibit L; (c) Liens in connection
with deposits or pledges to secure payment of workers' compensation,
unemployment insurance, old age pensions or other social security
obligations, in the ordinary course of business of Borrower or any
Subsidiary; (d) Liens for taxes, fees, assessments and governmental
charges not delinquent or which are being contested in good faith by
appropriate proceedings and for which appropriate reserves have been
established in accordance with GAAP; (e) encumbrances consisting of
zoning regulations, easements, rights of way, survey exceptions and
other similar restrictions on the use of real property and minor
irregularities in title thereto which do not materially impair their
use in operation of its business; (f) contingent Liens on office
equipment arising under leases of office space; (g) Liens on equipment
to secure Debt incurred to finance the acquisition of such Equipment,
including, without limitations, capitalized leases, (h) Liens incurred
in connection with Gestation Agreements with respect to the property
described in the definition of such term, and (i) other Liens, provided
the Debt secured by such Liens is permitted pursuant to Section
9.11(i).
Page 37
9.11. Limitation on Debt.
Incur or permit to remain outstanding any Debt other than (a) Debt
incurred under this Agreement, (b) Debt described on Exhibit M hereto,
(c) Debt incurred to finance the acquisition by Borrower or a
Subsidiary of equipment used in the ordinary course of its business,
(d) Debt incurred under Gestation Agreements, (e) current liabilities,
not overdue unless contested in good faith, incurred by Borrower or any
Subsidiary otherwise than for borrowed money, (f) deferred taxes
arising from capitalized excess servicing fees and capitalized
servicing rights, (g) Subordinated Debt, (h) Debt arising under Hedging
Arrangements, and (i) other Debt in an aggregate amount at any time
outstanding of not more than $50,000,000.
End of Article 9
Page 38
10. SPECIAL REPRESENTATIONS, WARRANTIES AND COVENANTS
CONCERNING COLLATERAL
10.1. Special Representations and Warranties Concerning Collateral
Each Borrower represents and warrants to Lenders, as of the date of
this Agreement and as of the date of each Advance Request and the
making of each Warehousing Advance, that:
10.1 (a) No Borrower has selected the Collateral in a manner so as to
affect adversely Lenders' interests.
10.1 (b) A Borrower is the legal and equitable owner and holder, free
and clear of all Liens (other than Liens granted under this
Agreement), of the Pledged Loans, Pledged Agreements for Deed
and the Pledged Securities. All Pledged Loans, Pledged
Agreements for Deed, Pledged Securities and related Purchase
Commitments have been duly authorized and validly issued to
Borrower, and all of the foregoing items of Collateral comply
with all of the requirements of this Agreement, and have been
and will continue to be validly pledged or assigned to Credit
Agent, subject to no other Liens.
10.1 (c) Each Borrower has, and will continue to have, the full right,
power and authority to pledge the Collateral pledged and to be
pledged by it under this Agreement.
10.1 (d) Each Mortgage Loan and each related document included in the
Pledged Loans (1) has been duly executed and delivered by the
parties to that Mortgage Loan and that related document, (2)
has been made in compliance with all applicable laws, rules
and regulations (including all laws, rules and regulations
relating to usury), (3) is and will continue to be a legal,
valid and binding obligation, enforceable in accordance with
its terms, without setoff, counterclaim or defense in favor of
the mortgagor under the Mortgage Loan or any other obligor on
the Mortgage Note and (4) has not been modified, amended or
any requirements of which waived, except in a writing that is
part of the Collateral Documents. No party to any Mortgage
Loan or related document is in violation of any applicable
law, rule or regulation if the violation would impair the
collectibility of the Mortgage Loan or the performance by the
mortgagor or any other obligor of its obligations under the
Mortgage Note or any related document.
10.1 (e) Each Pledged Loan is secured by a Mortgage on, and each
Pledged Agreement for Deed constitutes a Lien on, real
property located in one of the states of the United States or
the District of Columbia.
10.1 (f) Except for open-ended Second Mortgage Loans, Construction/Perm
Mortgage Loans and Third Party Builder Construction Mortgage
Loans, each Mortgage Loan has been fully advanced in the face
amount of its Mortgage Note.
10.1 (g) Each First Mortgage is a first Lien on the premises described
in that Mortgage, each Second Mortgage Loan is secured by a
second Lien on the premises described in that Mortgage, and
each Pledged Agreement for Deed is either a first or second
Lien on the related Single Family Property. Each Pledged Loan
has or will have a title insurance policy, in ALTA form or
equivalent, from a recognized title insurance company,
insuring the priority of the Lien of the Mortgage and meeting
the usual requirements of Investors purchasing those Mortgage
Loans.
Page 39
10.1 (h) Each Mortgage Loan has been evaluated or appraised in
accordance with Title XI of FIRREA.
10.1 (i) The Mortgage Note for each Pledged Loan is (1) payable or
endorsed to the order of the respective Borrower, (2) an
"instrument" within the meaning of Section 9-105 of the
Uniform Commercial Code of all applicable jurisdictions and
(3) is denominated and payable in United States dollars.
10.1 (j) No default has existed for 60 days or more under any Pledged
Loan, except for a Foreclosure Mortgage Loan, or under any
Pledged Agreement for Deed.
10.1 (k) No party to an Eligible Asset or any related document is in
violation of any applicable law, rule or regulation that would
impair the collectibility of the Eligible Asset or the
performance by the mortgagor or any other obligor of its
obligations under the Eligible Asset or any related document.
10.1 (l) All fire and casualty policies covering the premises
encumbered by each Mortgage included in the Pledged Loans and
each Pledged Agreement for Deed (1) name and will continue to
name a Borrower and their successors and assigns as the
insured under a standard mortgagee clause, (2) are and will
continue to be in full force and effect and (3) afford and
will continue to afford insurance against fire and such other
risks as are usually insured against in the broadest form of
extended coverage insurance available.
10.1 (m) Pledged Loans and Pledged Agreements for Deed secured by
premises located in a special flood hazard area designated as
such by the Director of the Federal Emergency Management
Agency are and will continue to be covered by special flood
insurance under the National Flood Insurance Program.
10.1 (n) Each Pledged Loan against which a Warehousing Advance is made
on the basis of a Purchase Commitment meets all of the
requirements of that Purchase Commitment, and each Pledged
Security against which a Warehousing Advance is outstanding
meets all of the requirements of the related Purchase
Commitment.
10.1 (o) Pledged Loans that are intended to be exchanged for Agency
Securities comply or, prior to the issuance of the Agency
Securities will comply, with the requirements of any
governmental instrumentality, department or agency issuing or
guaranteeing the Agency Securities.
10.1 (p) Pledged Loans that are intended to be used in the formation of
Mortgage-backed Securities (other than Agency Securities)
comply with the requirements of the issuer of the
Mortgage-backed Securities (or its sponsor) and of the Rating
Agencies.
10.1 (q) The original assignments of Mortgage and UCC financing
statements delivered to Credit Agent for each Pledged Loan and
Pledged Agreement for Deed are in recordable form and comply
with all applicable laws and regulations governing the filing
and recording of such documents.
10.1 (r) Each Pledged Loan secured by real property to which a
Manufactured Home is affixed will create a valid Lien on that
Manufactured Home that will have priority over any other Lien
on the Manufactured Home, whether or not arising under
applicable real property law.
Page 40
10.2. Special Affirmative Covenants Concerning Warehousing Collateral
As long as the Warehousing Commitment is outstanding or there remain
any Obligations to be paid or performed under this Agreement or under
any other Loan Document, each Borrower must:
10.2 (a) Warrant and defend the right, title and interest of Lenders in
and to the Collateral against the claims and demands of all
Persons.
10.2 (b) Service or cause to be serviced all Pledged Loans in
accordance with the standard requirements of the issuers of
Purchase Commitments covering them and all applicable HUD,
Fannie Mae and Freddie Mac requirements, including taking all
actions necessary to enforce the obligations of the obligors
under such Mortgage Loans. Service or cause to be serviced all
Mortgage Loans backing Pledged Securities in accordance with
applicable governmental requirements and requirements of
issuers of Purchase Commitments covering them. Hold all escrow
funds collected in respect of Pledged Loans and Mortgage Loans
backing Pledged Securities in trust, without commingling the
same with non-custodial funds, and apply them for the purposes
for which those funds were collected.
10.2 (c) Execute and deliver to Credit Agent such Uniform Commercial
Code financing statements with respect to the Collateral as
Credit Agent may request, and those further instruments of
sale, pledge, assignment or transfer, and those powers of
attorney, as required by Credit Agent, and do and perform all
matters and things necessary or desirable to be done or
observed, for the purpose of effectively creating, maintaining
and preserving the security and benefits intended to be
afforded Credit Agent under this Agreement.
10.2 (d) Notify Credit Agent within 2 Business Days of any default
under, or of the termination of, any Purchase Commitment
relating to any Pledged Loan, Eligible Mortgage Pool or
Pledged Security.
10.2 (e) Promptly comply in all respects with the terms and conditions
of all Purchase Commitments, and all extensions, renewals and
modifications or substitutions of or to all Purchase
Commitments. Deliver or cause to be delivered to the Investor
the Pledged Loans and Pledged Securities to be sold under each
Purchase Commitment not later than the mandatory delivery date
of the Pledged Loans or Pledged Securities under the Purchase
Commitment.
10.2 (f) Maintain, at an office of Borrower approved by Credit Agent,
or in the office of a computer service bureau engaged by
Borrower and approved by Credit Agent and, upon request, make
available to Credit Agent the originals, or copies in any case
where the originals have been delivered to Credit Agent or to
an Investor, of the Mortgage Notes and Mortgages included in
Pledged Loans, Mortgage-backed Securities included in Pledged
Securities, Purchase Commitments, and all related Mortgage
Loan documents and instruments, and all files, surveys,
certificates, correspondence, appraisals, computer programs,
tapes, discs, cards, accounting records and other information
and data relating to the Collateral.
10.2 (g) On or before originating any Mortgage Loan for sale to Fannie
Mae, enter into an agreement among such Borrower, Credit Agent
and Fannie Mae, pursuant to which Fannie Mae agrees to send
all cash proceeds of Mortgage Loans sold by Borrower to Fannie
Mae to the Settlement Account.
Page 41
10.3. Special Negative Covenants Concerning Warehousing Collateral
As long as the Warehousing Commitment is outstanding or there remain
any Obligations to be paid or performed, no Borrower must, either
directly or indirectly, without the prior written consent of Credit
Agent:
10.3 (a) Amend, modify or waive any of the terms and conditions of, or
settle or compromise any claim in respect of, any Pledged
Loans or Pledged Securities, except in a manner consistent
with the terms of the related Purchase Commitment and any FHA
insurance policy or VA guaranty.
10.3 (b) Sell, transfer or assign, or grant any option with respect to,
or pledge (except under a Purchase Commitment or this
Agreement) any of the Collateral or any interest in any of the
Collateral.
10.3 (c) Make any compromise, adjustment or settlement in respect of
any of the Collateral or accept other than cash in payment or
liquidation of the Collateral.
10.3 (d) Cause UAMC Asset not to issue any stock or other securities in
addition to or in substitution for the Pledged Shares, except
to UAMC, and pledge hereunder, immediately upon its
acquisition (directly or indirectly) thereof, any and all
additional shares of stock or other securities of UAMC Asset.
10.4. Special Affirmative Covenants Concerning Builder Construction Mortgage
Loans
As long as the Warehousing Commitment is outstanding or there remain
any Obligations to be paid or performed under this Agreement or under
any other Loan Document, each Borrower must:
10.4 (a) Prior to the submission of a request for an initial Advance
against a Third Party Builder Construction Mortgage Loan,
Borrower shall have reviewed the financial and business
ability of the builder to complete the improvements to the
premises encumbered by a Pledged Mortgage in a timely and cost
efficient manner.
10.4 (b) Notify Credit Agent within 2 Business Days of the following
events: (1) a lien filed against premises encumbered by a
Pledged Mortgage and not removed within 15 days of the filing,
(2) a Pledged Mortgage being out of balance with the Cost
Breakdown and not brought back in balance by the mortgagor
within 15 days after such determination by Borrower, and (3)
any damage or destruction of the premises encumbered by a
Pledged Mortgage.
10.5. Special Representations Concerning Construction/Perm Mortgage Loans and
Third Party Builder Construction Mortgage Loans
Borrower hereby represents and warrants to Credit Agent, as of the date
of this Agreement and as of the date of each Advance Request, that:
10.5 (a) Each Construction/Perm Mortgage Loan and Third Party Builder
Construction Loan included in the Pledged Loans (1) has an
American Land Title Association Lender's construction loan
policy or commitment, (2) has "all risk" builder's insurance
and workers' compensation insurance, (3) has a survey prepared
and certified by a duly registered surveyor or title company
showing no encroachments of the improvements or the proposed
improvements to be constructed on the premises encumbered by
the Pledged
Page 42
Loan on to other lands or easements or restrictions, unless
such encroachments have been insured over or are acceptable to
the Investor, (5) has building permits and all necessary
licenses and approvals for the construction of the
improvements on the premises encumbered by the Pledged Loan,
(6) has a "as completed" appraisal giving an As Completed
Appraised Value, (7) has a fixed price general contract issued
by a licensed contractor, and (8) has all necessary utilities
available to the premises encumbered by the Pledged Loan.
10.5 (b) Prior to the initial Advance against a Construction/Perm
Mortgage Loan or a Third Party Builder Construction Mortgage
Loan included in the Pledged Loans, Borrower shall have
received (1) a Cost Breakdown, (2) a draw schedule, and (3) an
inspection report.
10.5 (c) Prior to each Advance against a Construction/Perm Mortgage
Loan or a Third Party Builder Construction Mortgage Loan
included in the Pledged Loans, Borrower (i) shall have
received (A) an inspection report confirming completion of the
work for which such Advance is being requested and the Total
Hard Costs are adequate to complete the improvements and (B)
invoices for each soft cost reimbursement for which such
Advance is being requested, and (ii) shall not have received a
notice of intent to assert a Lien from any contract,
subcontractor, material supplier or other Person.
10.5 (d) Prior to the final Advance against a Construction/Perm
Mortgage Loan or a Third Party Builder Construction Mortgage
Loan included in the Pledged Loans, Borrower shall have
received, (1) a final inspection report or certificate of
occupancy confirming completion of all work in accordance with
the plans and specifications, (2) final lien waivers, (3)
final certificate of appraiser that the premises encumbered by
the Pledged Loan equals the As Completed Appraised Value, and
(4) a datedown endorsement from the title insurance company
showing clear title as of the date of disbursement of such
Advance.
10.5 (e) Within 15 days after the final Advance against a
Construction/Perm Mortgage Loan or a Third Party Builder
Construction Mortgage Loan included in the Pledged Loan,
Borrower shall receive any Mortgage Note modification or
modified Mortgage Note delivered in connection with a
Construction/Perm Mortgage Loan and a Mortgage Note or Wet
Settlement package evidencing a Mortgage Loan which refinances
a related Mortgage Loan.
10.6. Special Representations and Warranties Concerning Receivables
Borrower hereby represents and warrants to the Lender, as of the date
of this Agreement and as of the date of each Advance Request and the
making of each Advance that:
10.6 (a) Borrower is the legal and equitable owner and holder, free and
clear of all Liens (other than Liens granted hereunder) of the
Receivables, and the Receivables have been and will continue
to be subject to a security interest in favor of the Credit
Agent, subject to no other Liens.
10.6 (b) Borrower has, and will continue to have, the full right, power
and authority to grant a security interest in the Receivables
to the Credit Agent.
10.6 (c) Each Receivable is a valid, enforceable right to retain
amounts received from obligors under Mortgage Loans serviced
by Borrower, or a valid, enforceable right to payment from
Fannie Mae, Freddie Mac, Ginnie Mae, VA, FHA or a private
mortgage insurer, is currently due, and as to which no
condition exists that will impair or materially delay payment
thereof.
Page 43
10.6 (d) To the best of Borrower's knowledge, with respect to any
Receivables, the mortgagor who is liable for payments that
will be applicable to such Receivables, or Fannie Mae, Freddie
Mac, Ginnie Mae, FHA, VA or the private mortgage insurer,
obligated thereon, has no defense, setoff, claim or
counterclaim against Borrower which can be asserted against
the Credit Agent, whether in any proceeding to enforce the
Credit Agent's security interest in such Receivable or
otherwise.
10.6 (e) Except for the Acknowledgment Agreements, to the extent
required, no consent of any Person is required for the grant
of a security interest in the Receivables to the Credit Agent,
and no consent will need to be obtained upon the occurrence of
an Event of Default for the Credit Agent to exercise its
rights with respect to any of the Receivables.
10.7. Special Representations Concerning Pledged Shares.
The Borrowers hereby represent and warrant to the Lenders, as of the
date of this Agreement and as of the date of each Advance Request for
an Advance and the making of each such Advance, that:
10.7 (a) UAMC has title to the Pledged Shares and will have title to
all further Pledged Shares hereafter issued, free of all Liens
except the security interest in favor of the Credit Agent.
10.7 (b) UAMC has full power and authority to subject the Pledged
Shares to the security interest created hereby.
10.7 (c) No financing statement covering all or part of the Pledged
Shares is on file in any public office (except for any
financing statements filed by the Credit Agent).
10.7 (d) The Pledged Shares have been duly authorized and validly
issued by UAMC Asset and are fully paid and non-assessable.
The certificates representing the Pledged Shares are genuine.
The Pledged Shares are not subject to any offset or similar
right or claim of the issuers thereof.
10.7 (e) The Pledged Shares constitute 100% of the issued and
outstanding shares of capital stock of UAMC Asset.
10.8. Voting Rights; Dividends; Etc.
10.8 (a) Subject to paragraph (d) of this Section 10.8, UAMC shall be
entitled to exercise or refrain form exercising any and all
voting and other consensual rights pertaining to the Pledged
Shares for any purpose not inconsistent with the terms of this
Agreement; provided, however, that UAMC shall not exercise or
refrain from exercising any such right if such action could
reasonably be expected to have a material adverse effect on
the value of the Collateral or any material part thereof.
10.8 (b) Any and all dividends paid in respect of the Pledged Shares
after the occurrence and during the continuance of any Default
or Event of Default shall be forthwith delivered to the Credit
Agent to hold as Collateral and shall, if received by any
Borrower, be received in trust for the benefit of the Lenders,
be segregated from the other property or funds of Borrowers,
and be forthwith delivered to the Credit Agent as Collateral
in the same form as so received (with any necessary
endorsement or assignment). Each Borrower shall, upon request
by the Lender, promptly execute all such documents and do all
such acts as may be necessary or desirable to give effect to
the provisions of this Section 10.8(b).
10.8 (c) The Credit Agent shall execute and deliver (or cause to be
executed and delivered) to
Page 44
UAMC all such proxies and other instruments as UAMC may
reasonable request for the purpose of enabling UAMC to
exercise the voting and other rights that it is entitled to
exercise pursuant to Section 10.8(a) hereof and to receive the
dividends that it is authorized to receive and retain pursuant
to Section 10.8(b) hereof.
10.8 (d) Upon the occurrence and during the continuance of any Event of
Default, the Credit Agent shall have the right in its sole
discretion, and Borrowers shall execute and deliver all such
proxies and other instruments as may be necessary or
appropriate to give effect to such right, to terminate all
rights of Borrowers to exercise or refrain from exercising the
voting and other consensual rights that it would otherwise be
entitled to exercise pursuant to Section 10.8(a) hereof, and
all such rights shall thereupon become vested in the Credit
Agent who shall thereupon have the sole right to exercise or
refrain from exercising such voting and other consensual
rights; provided, however, that the Credit Agent and the
Lenders shall not be deemed to possess or have control over
any voting rights with respect to any Collateral unless and
until the Credit Agent has given written notice to Borrowers
that any further exercise of such voting rights by Borrowers
is prohibited and that the Credit Agent and/or its assigns
will henceforth exercise such voting rights; and provided
further, that neither the registration of any item of
Collateral in the Credit Agent's name nor the exercise of any
voting rights with respect thereto shall be deemed to
constitute a retention by the Credit Agent or the Lenders of
any such Collateral in satisfaction of the Obligations or any
part thereof.
End of Article 10
Page 45
11. DEFAULTS; REMEDIES
11.1. Events of Default
The occurrence of any of the following is an event of default ("Event
of Default"):
11.1 (a) Any Borrower fails to pay the principal of any Advance when
due, whether at stated maturity, by acceleration, or
otherwise; or fails to pay any installment of interest on any
Advance within 12 days after the date of Credit Agent's
invoice or account analysis statement; or fails to pay, within
any applicable grace period, any other amount due under this
Agreement or any other Obligation of Borrower to Credit
Agents; or
11.1 (b) Any Borrower or any of their Subsidiaries, other than USH
Funding Inc. or Edgewater Reinsurance Ltd., fails to pay, or
defaults in the payment of any principal or interest on, any
other indebtedness or any contingent obligation within any
applicable grace period; breaches or defaults with respect to
any other material term of any other indebtedness or of any
loan agreement, mortgage, indenture or other agreement
relating to that indebtedness, if the effect of that breach or
default is to cause, or to permit the holder or holders of
that indebtedness (or a trustee on behalf of such holder or
holders) to cause, indebtedness of Borrower or their
Subsidiaries, other than USH Funding Inc. or Edgewater
Reinsurance Ltd., in the aggregate amount of $2,000,000 or
more to become or be declared due before its stated maturity
(upon the giving or receiving of notice, lapse of time, both,
or otherwise); or
11.1 (c) Any Borrower fails to perform or comply with any term or
condition applicable to it contained in Sections 8.4 (as to
corporate existence) and 8.14 or in any Section of Article 9;
or
11.1 (d) Any representation or warranty made or deemed made by each
Borrower under this Agreement, other than in Section 10.1, in
any other Loan Document or in any written statement or
certificate at any time given by Borrower is inaccurate or
incomplete in any material respect on the date as of which it
is made or deemed made; or
11.1 (e) Any Borrower defaults in the performance of or compliance with
any term contained in this Agreement or any other Loan
Document other than those referred to in Sections 11.1 (a),
11.1 (c) or 11.1 (d) and such default has not been remedied or
waived within 30 days after the earliest of (1) receipt by
Borrower of Notice from Credit Agent of that default, (2)
receipt by Credit Agent of Notice from Borrower of that
default or (3) the date Borrower should have notified Credit
Agent of that default under Section 8.7(c) or 8.7(d); or
11.1 (f) A case (whether voluntary or involuntary) is filed by or
against any Borrower under any applicable bankruptcy,
insolvency or other similar federal or state law and, in the
event of an involuntary case, the same is not dismissed within
60 days; or a court of competent jurisdiction appoints a
receiver (interim or permanent), liquidator, sequestrator,
trustee, custodian or other officer having similar powers over
any Borrower, or over all or a substantial part of their
respective properties or assets; or any Borrower, (1) consents
to the appointment of or possession by a receiver (interim or
permanent), liquidator, sequestrator, trustee, custodian or
other officer having similar powers over any Borrower, or over
all or a substantial part of their respective properties or
assets, (2) makes an assignment for the benefit of creditors,
or (3) fails, or admits in writing its inability, to pay its
debts as those debts become due; or
Page 46
11.1 (g) Any Borrower fails to perform any contractual obligation to
repurchase Mortgage Loans, if such obligations in the
aggregate exceed $2,000,000; or
11.1 (h) Any money judgment, writ or warrant of attachment or similar
process involving in an amount in excess of $2,000,000 is
entered or filed against any Borrower or any of its
Subsidiaries or any of their respective assets and remains
undischarged, unvacated, unbonded or unstayed for a period of
30 days or 5 days before the date of any proposed sale under
that money judgment, writ or warrant of attachment or similar
process; or
11.1 (i) Any order, judgment or decree decreeing the dissolution of any
Borrower is entered and remains undischarged or unstayed for a
period of 20 days; or
11.1 (j) Any Borrower purports to disavow the Obligations or contests
the validity or enforceability of any Loan Document; or
11.1 (k) Lennar purports to disavow its obligations under its Lennar
Undertaking or contests the validity or enforceability of
Lennar Undertaking; or
11.1 (l) Credit Agent's security interest on any portion of the
Collateral becomes unenforceable or otherwise impaired and all
Advances made against any of that Collateral are not paid in
full, or the impairment is not cured, within 10 days after
earliest of (i) receipt by Borrower of Notice from Credit
Agent of the impairment, (ii) receipt by Credit Agent of
Notice from Borrower of the impairment, or (iii) the date
Borrower should have notified Credit Agent of the impairment
under Section 8.7(c) or 8.7(d); or
11.1 (m) A material adverse change occurs in any Borrower's financial
condition, business, properties, operations or prospects, or
in any Borrower's ability to repay the Obligations; or
11.1 (n) Any Lien for any taxes, assessments or other governmental
charges (1) is filed against any Borrower or any of its
property, or is otherwise enforced against Borrower or any of
its property, or (2) obtains priority that is equal or greater
than the priority of Credit Agent's security interest in any
of the Collateral; or
11.1 (o) UAMC ceases to own, directly, all of the capital stock of each
other Borrower, or Lennar ceases to own, directly or
indirectly, a majority of each class of the capital stock of
UAMC; or
11.1 (p) UAMC Asset shall incur any Debt, other than Debt owed to the
Lenders, or any Pledged Asset owned by UAMC Asset shall become
subject to any Lien, other than Liens in favor of the Credit
Agent.
11.2. Remedies
11.2 (a) If a Lender shall have knowledge of a Default or an Event of
Default, it shall forthwith give Notice thereof to Credit
Agent. Credit Agent shall not be deemed to have knowledge or
Notice of the occurrence of a Default or an Event of Default
unless Credit Agent has received Notice from a Lender or a
Borrower.
11.2 (b) If an Event of Default described in Section 11.1 (f) occurs
with respect to any Borrower, the Commitments will
automatically terminate and the unpaid principal amount of and
accrued interest on the Notes and all other Obligations will
automatically become due and payable, without presentment,
demand or other requirements of any kind, all of which
Borrower expressly waives.
Page 47
11.2 (c) If any other Event of Default occurs, Majority Lenders may, by
Notice to each Borrower, terminate the Commitments and declare
the Obligations to be immediately due and payable.
11.2 (d) If any Event of Default occurs, Credit Agent, on behalf of
Lenders, may, and at the direction of the Majority Lenders
shall (subject to Section 12.3(c)), also take any of the
following actions:
(1) Foreclose upon or otherwise enforce its security
interest in and Lien on the Collateral to secure all
payments and performance of the Obligations in any
manner permitted by law or provided for in the Loan
Documents.
(2) Notify all obligors under any of the Collateral that
the Collateral has been assigned to Credit Agent , on
behalf of Lenders (or to another Person designated by
Credit Agent) and that all payments on that
Collateral are to be made directly to Credit Agent
(or such other Person); settle, compromise or
release, in whole or in part, any amounts any obligor
or Investor owes on any of the Collateral on terms
acceptable to Credit Agent; enforce payment and
prosecute any action or proceeding involving any of
the Collateral; and where any Collateral is in
default, foreclose on and enforce any Liens securing
that Collateral in any manner permitted by law and
sell any property acquired as a result of those
enforcement actions.
(3) Act, or contract with a third party to act at
Borrower's expense, as servicer or subservicer of
Collateral requiring servicing and perform all
obligations required under any Servicing Contracts
and Purchase Commitments.
(4) Require each Borrower to assemble and make available
to Credit Agent the Collateral and all related books
and records at a place designated by Credit Agent.
(5) Enter onto property where any Collateral or related
books and records are located and take possession of
those items with or without judicial process as
permitted by applicable law; and obtain access to
each Borrower's data processing equipment, computer
hardware and software relating to the Collateral and
use all of the foregoing and the information
contained in the foregoing in any manner Credit Agent
deems necessary for the purpose of effectuating its
rights under this Agreement and any other Loan
Document.
(6) Before the disposition of the Collateral, prepare it
for disposition in any manner and to the extent
Credit Agent deems appropriate.
(7) Exercise all rights and remedies of a secured
creditor under the Uniform Commercial Code of
Minnesota or other applicable law, including selling
or otherwise disposing of all or any portion of the
Collateral at one or more public or private sales,
whether or not the Collateral is present at the place
of sale, for cash or credit or future delivery, on
the terms and in the manner as Credit Agent may
determine, including sale under any applicable
Purchase Commitment. If notice is required under
applicable law, Credit Agent will give Borrower not
less than 10 days' notice of any public sale or of
the date after which any private sale may be held.
Each Borrower agrees that 10 days' notice is
reasonable notice. Credit Agent may, without notice
or publication, adjourn any public or private sale
one or more times by announcement at the time and
place fixed for the sale, and the sale may be held at
any time or place announced at the adjournment. In
the case of a sale of all or any portion of the
Collateral on credit or for future delivery, the
Collateral sold on those terms may be may be retained
by Credit Agent until
Page 48
the purchaser pays the selling price or takes
possession of the Collateral. Credit Agent has no
liability to Borrower if a purchaser fails to pay for
or take possession of the Collateral sold on those
terms, and in the case of any such failure, Credit
Agent may sell the Collateral again upon notice
complying with this Section.
(8) Instead of or in conjunction with exercising the
power of sale authorized by Section 11.2 (d)(7),
Credit Agent may proceed by suit at law or in equity
to collect all amounts due upon the Collateral, or to
foreclose Credit Agent's Lien on and sell all or any
portion of the Collateral pursuant to a judgment or
decree of a court of competent jurisdiction.
(9) Proceed against any Borrower on the Notes or against
Lennar under the Lennar Undertaking.
(10) Retain all excess proceeds from the sale or other
disposition of the Collateral, and apply them to the
payment of the Obligations under Section 11.3.
11.2 (e) Credit Agent shall follow the instructions of the Majority
Lenders in exercising or not exercising its rights under this
Section 11.2, but (i) Credit Agent shall have no obligation to
take or not to take any action which it believes may expose it
to any liability, and (ii) Credit Agent may, but shall be
under no obligation to, await instructions from the Majority
Lenders before exercising or not exercising its rights under
this Section 11.2.
11.2 (f) Credit Agent or any Lender will incur no liability as a result
of the commercially reasonable sale or other disposition of
all or any portion of the Collateral at any public or private
sale or other disposition. Each Borrower waives (to the extent
permitted by law) any claims it may have against Credit Agent
and each other Lender arising by reason of the fact that the
price at which the Collateral may have been sold at a private
sale was less than the price that Credit Agent might have
obtained at a public sale, or was less than the aggregate
amount of the outstanding Advances, plus accrued and unpaid
interest on the Advances, and unpaid fees, even if Credit
Agent accepts the first offer received and does not offer the
Collateral to more than one offeree. Nothing set forth above
in this Section 11.2(f) shall be construed as purporting to
waive Credit Agent's obligation to dispose of Collateral in a
commercially reasonable manner as required under the Uniform
Commercial Code. Each Borrower agrees that any sale of
Collateral under the terms of a Purchase Commitment or under
the terms of the Lennar Undertaking, or any other disposition
of Collateral arranged by Borrower, whether before or after
the occurrence of an Event of Default, will be deemed to have
been made in a commercially reasonable manner.
11.2 (g) Each Borrower acknowledges that Mortgage Loans are collateral
of a type that is the subject of widely distributed standard
price quotations and that Mortgage-backed Securities are
collateral of a type that is customarily sold on a recognized
market. Each Borrower waives any right it may have to prior
notice of the sale of Pledged Securities, and agrees that
Credit Agent may purchase Pledged Loans and Pledged Securities
at a private sale of such Collateral. Nothing set forth above
in this Section 11.2(g) shall be construed as purporting to
waive Credit Agent's obligation to dispose of Collateral in a
commercially reasonable manner as required under the Uniform
Commercial Code.
11.2 (h) Each Borrower specifically waives and releases (to the extent
permitted by law) any equity or right of redemption, stay or
appraisal that Borrower has or may have under any rule of law
or statute now existing or adopted after the date of this
Agreement, and any right to require Credit Agent to (1)
proceed against any Person, (2) proceed against or exhaust any
of the Collateral or pursue its rights and remedies against
the Collateral in any particular order, or (3) pursue any
other remedy within its power. Credit Agent is not
Page 49
required to take any action to preserve any rights of any
Borrower against holders of mortgages having priority to the
Lien of any Mortgage included in the Collateral or to preserve
Borrower's rights against other prior parties.
11.2 (i) Credit Agent may, but is not obligated to, advance any sums or
do any act or thing necessary to uphold or enforce the Lien
and priority of, or the security intended to be afforded by,
any Mortgage included in the Collateral, including payment of
delinquent taxes or assessments and insurance premiums. All
advances, charges, costs and expenses, including reasonable
attorneys' fees and disbursements, incurred or paid by Credit
Agent or any Lender in exercising any right, power or remedy
conferred by this Agreement, or in the enforcement of this
Agreement, together with interest on those amounts at the
Default Rate, from the time paid by Credit Agent until repaid
by Borrower, are deemed to be principal outstanding under this
Agreement and the Notes.
11.2 (j) No failure or delay on the part of Credit Agent to exercise
any right, power or remedy provided in this Agreement or under
any other Loan Document, at law or in equity, will operate as
a waiver of that right, power or remedy. No single or partial
exercise by Credit Agent or any Lender of any right, power or
remedy provided under this Agreement or any other Loan
Document, at law or in equity, precludes any other or further
exercise of that right, power, or remedy by Credit Agent or
any Lender, or Credit Agent's exercise of any other right,
power or remedy. Without limiting the foregoing, each Borrower
waives all defenses based on the statute of limitations to the
extent permitted by law. The remedies provided in this
Agreement and the other Loan Documents are cumulative and are
not exclusive of any remedies provided at law or in equity.
11.2 (k) Credit Agent is hereby granted a license or other right to
use, upon the occurrence of an Event of Default ,without
charge, each Borrower's computer programs, other programs,
labels, patents, copyrights, rights of use of any name,
Investor lists, trade names, trademarks, service marks and
advertising matter, or any property of a similar nature, as it
pertains to the Collateral, in advertising for sale and
selling any Collateral, and each Borrower's rights under all
licenses and all other agreements related to the foregoing
inure to Lenders' benefit until the Obligations are paid in
full.
11.3. Application of Proceeds
The proceeds of any sale, disposition or other enforcement of Credit
Agent's security interest in all or any part of the Collateral shall be
applied by Credit Agent as follows:
11.3 (a) In the case of the proceeds of Other Eligible Assets
(excluding Servicing Contracts) and related collateral:
First, to the payment of the costs and expenses of such sale
or enforcement, including reasonable compensation to Credit
Agent's agents and counsel, and all expenses, liabilities and
advances made or incurred by or on behalf of Credit Agent in
connection therewith;
Second, to the payment of the costs and expenses of such sale
or enforcement, including reasonable compensation to Lenders'
agents and counsel, and all expenses, liabilities and advances
made or incurred by or on behalf of any Lender in connection
therewith;
Third, to Lenders, for application to the Obligations owed to
each of them in respect of Swingline Advances, Warehousing
Advances and RFC Direct Advances, as set forth in clauses
Third, Fourth, Fifth, Sixth and Seventh of Section 11.3(b) and
clauses Third and Fourth of Section 11.3(c); and
Page 50
Fourth, to the remaining Obligations; and
Finally, to the payment to Borrower, or to their successors or
assigns, or as a court of competent jurisdiction may direct,
of any surplus then remaining from such proceeds.
11.3 (b) In the case of the proceeds of Eligible Assets and related
Collateral:
First, to the payment of the costs and expenses of such sale
or enforcement, including reasonable compensation to Credit
Agent's agents and counsel, and all expenses, liabilities and
advances made or incurred by or on behalf of Credit Agent in
connection therewith;
Second, to the payment of the costs and expenses of such sale
or enforcement, including reasonable compensation to Lenders'
agents and counsel, and all expenses, liabilities and advances
made or incurred by or on behalf of any Lender in connection
therewith;
Third, to RFC, in an amount equal to the amount of accrued
interest or Balance Deficiency Fees owed to RFC in respect of
Swingline Advances, until paid in full;
Fourth, to RFC until the principal amount of all Swingline
Advances outstanding are paid in full;
Fifth, to Lenders holding Warehousing Advances, pro rata in
accordance with the amount of accrued interest, or accrued
Balance Deficiency Fees, owed to each of them in respect of
Warehousing Advances, until such interest and fees are paid in
full;
Sixth, to Lenders holding Warehousing Advances, pro rata in
accordance with their respective Percentage Shares, until the
principal amounts of all Warehousing Advances outstanding are
paid in full;
Seventh, to Lenders holding Warehousing Advances, pro rata in
accordance with their respective Percentage Shares, until all
fees and other Obligations accrued by or due each Lender and
Credit Agent are paid in full;
Eighth, to RFC for RFC Direct Advances, until the principal
amount of all RFC Direct Advances outstanding are paid in
full; and
Ninth, to RFC for RFC Direct Advances, until all fees and
other Obligations accrued by or due RFC are paid in full; and
Tenth, to the remaining Obligations; and
Finally, to the payment to Borrower, or to their successors or
assigns, or as a court of competent jurisdiction may direct,
of any surplus then remaining from such proceeds.
11.4. Credit Agent Appointed Attorney-in-Fact
Each Borrower appoints Credit Agent its attorney-in-fact, with full
power of substitution, for the purpose of carrying out the provisions
of this Agreement, the Notes and the other Loan Documents and taking
any action and executing any instruments that Credit Agent deems
necessary or advisable to accomplish that purpose. Each Borrower's
appointment of Credit Agent as attorney-in-fact is irrevocable and
coupled with an interest. Without limiting the generality of the
foregoing, Credit Agent may give notice of Credit Agent's Lien on the
Collateral to any Person, either in the name of Borrower or in its own
name, endorse all Pledged Loans or
Page 51
Pledged Securities payable to the order of Borrower, change or cause to
be changed the book-entry registration or name of subscriber or
Investor on any Pledged Security, or receive, endorse and collect all
checks made payable to the order of Borrower representing payment on
account of the principal of or interest on, or the proceeds of sale of,
any of the Pledged Loans or Pledged Securities and give full discharge
for those transactions.
11.5. Right of Set-Off
Without limiting any other right that Credit Agent or any Lender may
have under applicable law or otherwise, if any Borrower defaults in the
payment of any Obligation or in the performance of any of its duties
under the Loan Documents, each Lender may, without Notice to or demand
on Borrower (which Notice or demand each Borrower expressly waives),
set-off, appropriate or apply any and all property of Borrower held at
any time by such Lender, or any indebtedness at any time owed by such
Lender to or for the account of Borrower, against the Obligations,
whether or not those Obligations have matured.
11.6. Sharing of Payments
If upon the occurrence of an Event of Default and acceleration of the
Obligations, if any Lender shall hold or receive and retain any
payment, whether by setoff, application of deposit balance or security,
or otherwise, in respect of the Obligations, then such Lender shall
purchase from the other Lenders for cash and at face value and without
recourse, such participation in the Obligations held by them as shall
be necessary to cause such payment to be shared ratably with each of
them; provided, that if such payment or part thereof is thereafter
recovered from such purchasing Lender, the related purchases from the
other Lenders shall be rescinded ratably and the purchase price
restored as to the portion of such excess payment so recovered, but
without interest thereon unless the purchasing Lender is required to
pay interest on such amounts to the Person recovering such payment, in
which case with interest thereon, computed at the same rate, and on the
same basis, as the interest that the purchasing Lender is required to
pay. If any Lender receives a payment from any Borrower not in respect
of the Obligations, but relating to another relationship of such Lender
and Borrower, such Lender may apply the payment first to the
indebtedness arising out of the other relationship and then against the
Obligations as provided for above.
End of Article 11
Page 52
12. AGENT
12.1. Appointment
Each Lender hereby irrevocably designates and appoints Credit Agent as
the agent of such Lender under the Loan Documents and each such Lender
hereby irrevocably authorizes Credit Agent to take such action on its
behalf under the provisions of the Loan Documents and to exercise such
powers and perform such duties as are expressly delegated to Credit
Agent by the terms of the Loan Documents, together with such other
powers as are reasonably incidental thereto. Credit Agent hereby
accepts such appointment and agrees to act in accordance with this
Agreement.
12.2. Duties of Agent
12.2 (a) The provisions of the Loan Documents set forth the exclusive
duties of Credit Agent and no implied duties or obligations
shall be read into the Loan Documents against Credit Agent.
Credit Agent shall not be bound in any way by any agreement or
contract other than the Loan Documents and any other agreement
to which it is a party. Credit Agent shall act as an
independent contractor in performing its obligations as Credit
Agent under the Loan Documents and nothing herein contained
shall be deemed to create any fiduciary relationship among or
between Credit Agent, Borrower or Lenders.
12.2 (b) Credit Agent shall examine the Pledged Loans delivered by or
on behalf of Borrower hereunder to determine whether the
Pledged Loans: (i) include the documents and instruments to be
delivered for each Pledged Loan required pursuant to Section
3.1, (ii) conforms with the requirements of this Agreement,
and (iii) is otherwise in conformity with any customary
collateral review criteria which Credit Agent may communicate
to Borrower from time to time. If Credit Agent shall have
determined that any Mortgage Loan delivered to Credit Agent
does not meet the requirements of this Agreement or the Credit
Agreement, Credit Agent may return to Borrower all Collateral
Documents relating thereto.
12.2 (c) As to any Pledged Loan against which Advances may be made
pursuant to this Agreement, if Credit Agent shall note any
minor discrepancies or deficiencies in any Collateral
Documents pertaining thereto, Credit Agent shall: (a)
immediately notify Borrower thereof, (b) if such discrepancies
or deficiencies can be cured without returning any Collateral
Documents to Borrower, request that Borrower cure such
discrepancies or deficiencies immediately, and (c) if such
discrepancies or deficiencies can only be cured by returning
Collateral Documents to Borrower, return any Collateral
Documents containing any discrepancy or deficiency to Borrower
for correction against a Trust Receipt pursuant to Section
5.5(a) hereof.
12.3. Standard of Care
Credit Agent shall act in accordance with customary standards for those
engaged as credit agents or collateral agents of commercial
transactions in similar capacities.
12.3 (a) Credit Agent shall not be required to ascertain or inquire as
to the performance or observance of any of the conditions or
agreements to be performed or observed by any other party,
except as specifically provided in the Loan Documents. Credit
Agent disclaims any responsibility for the validity or
accuracy of the recitals to the Loan
Page 53
Documents and any representations and warranties contained
herein, unless specifically identified as recitals,
representations or warranties of Credit Agent.
12.3 (b) The Credit shall not have any responsibility for ascertaining
the value, collectibility, insurability, enforceability,
effectiveness or suitability of any Collateral, the title of
any party therein, the validity or adequacy of the security
afforded thereby, or the validity of the Loan Documents
(except as to its authority to enter into the Loan Documents
and to perform its obligations hereunder and thereunder).
12.3 (c) No provision of this Agreement shall require Credit Agent to
expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder or
in the exercise of any of its rights or powers, if, in its
sole judgment, it shall believe that repayment of such funds
or adequate indemnity against such risk or liability is not
assured to it.
12.3 (d) Credit Agent is not responsible for preparing or filing any
reports or returns relating to federal, state or local income
taxes with respect to this Agreement, other than for its
compensation or for reimbursement of expenses.
12.4. Delegation of Duties
Credit Agent may execute any of its duties under the Loan Documents by
or through agents or attorneys-in-fact and shall be entitled to advice
of counsel concerning all matters pertaining to such duties. Credit
Agent shall not be responsible for the negligence or misconduct of any
agents or attorneys-in-fact selected by it with reasonable care.
12.5. Exculpatory Provisions
Credit Agent or any of its respective officers, directors, employees,
agents, attorneys-in-fact or Affiliates shall not be (a) liable for any
action lawfully taken or omitted to be taken by it or such Person under
or in connection with the Loan Documents (except for its or such
Person's own gross negligence or willful misconduct), or (b)
responsible in any manner to any of Lenders for any recitals,
statements, representations or warranties made by each Borrower or any
officer thereof contained in the Loan Documents or in any certificate,
report, statement or other document referred to or provided for in, or
received by Credit Agent under or in connection with, the Loan
Documents or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of the Loan Documents or for any failure
of any Borrower to perform its obligations under any Loan Document.
Credit Agent shall not be under any obligation to any Lender to
ascertain or to inquire as to the observance or performance of any of
the agreements contained in, or conditions of, the Loan Documents or to
inspect the properties, books or records of each Borrower or any of its
Subsidiaries.
12.6. Reliance by Agent
Credit Agent shall be entitled to rely, and shall be fully protected in
relying, upon any note, writing, resolution, notice, consent,
certification, affidavit, letter, cablegram, telegram, telecopy, telex
or teletype message, statement, order or other document or conversation
reasonably believed by it to be correct and to have been signed, sent
or made by the proper Person or Persons and upon advice and statements
of legal counsel (including, without limitation, counsel to Borrower),
independent accountants (including, without limitation, accountants to
Borrower) and other experts selected by Credit Agent. Credit Agent may
deem and treat the payee of any Note as the owner thereof for all
purposes. As to Lenders (a) Credit Agent shall be fully justified in
failing or refusing to take any action under the Loan Documents unless
it shall first receive such advice or concurrence of the Majority
Lenders or all of Lenders, as appropriate, or it shall first be
Page 54
indemnified to its satisfaction by Lenders ratably in accordance with
their respective Percentage Shares against any and all liability and
expense which may be incurred by it by reason of taking or continuing
to take any action (except for liabilities and expenses resulting from
Credit Agent's gross negligence or willful misconduct), (b) Credit
Agent shall in all cases be fully protected in acting, or in refraining
from acting, under the Loan Documents in accordance with a request of
the Majority Lenders or all of Lenders, as appropriate, and such
request and any action taken or failure to act pursuant thereto shall
be binding upon all Lenders, (c) Credit Agent shall be fully justified
in failing or refusing to take any action under the Loan Documents
unless it shall first receive such advice or concurrence of Credit
Agent, and (d) Credit Agent shall in all cases be fully protected in
acting, or in refraining from acting, under the Loan Documents in
accordance with a request of or instructions from Credit Agent, and
such request and any action taken or failure to act pursuant thereto
shall be binding upon all Lenders.
12.7. Non-Reliance on Agent or Other Lenders
Each Lender expressly acknowledges that Credit Agent, nor any of their
respective officers, directors, employees, agents, attorneys-in-fact or
Affiliates has made any representations or warranties to such Lender
and that no act by Credit Agent hereafter taken, including any review
of the affairs of each Borrower, shall be deemed to constitute any
representation or warranty by Credit Agent to any Lender. Each Lender
represents to Credit Agent that it has, independently and without
reliance upon Credit Agent or any other Lender, and based on such
documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, operations, property,
financial and other condition and creditworthiness of each Borrower and
made its own decision to enter into and make Advances under the Credit
Agreement. Each Lender also represents that it will, independently and
without reliance upon Credit Agent or any other Lender, and based on
such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and
decisions in taking or not taking action under the Credit Agreement,
and to make such investigation as it deems necessary to inform itself
as to the business, operations, property, financial and other condition
and creditworthiness of each Borrower. Except for notices, reports and
other documents expressly required to be furnished to Lenders by Credit
Agent hereunder, Credit Agent shall have no duty or responsibility to
provide any Lender with any credit or other information concerning the
business, operations, property, financial or other condition or
creditworthiness of each Borrower or any Subsidiary which may come into
the possession of Credit Agent or any of their respective officers,
directors, employees, agents, attorneys-in-fact or Affiliates.
12.8. Agent in Individual Capacity
Credit Agent may make loans to, accept deposits from and generally
engage in any kind of business with any Borrower as though it were not
an agent hereunder. With respect to the Advances made or renewed by
them and any Note issued to them, Credit Agent shall have the same
rights and powers under the Loan Documents as any Lender and may
exercise the same as though it were not Credit Agent, and the terms
"Lender" and "Lenders" shall include Credit Agent in its individual
capacity.
12.9. Successor Agent
Credit Agent may resign as such at any time upon giving 30 days Notice
to Borrower and Lenders. Credit Agent may be removed immediately with
cause or at any time upon 30 days Notice from the Majority Lenders to
Credit Agent and Borrower. Upon Notice of such resignation or removal,
the Majority Lenders may appoint a successor Credit Agent (which
successor Credit Agent, assuming that no Default or Event of Default
exists, shall be reasonably acceptable to
Page 55
Borrower). The date on which Borrower, Credit Agent and Lenders have
received Notice from such successor of its acceptance of appointment as
Credit Agent shall constitute the effective date of resignation or
removal of the resigning or removed Credit Agent. If no successor
Credit Agent shall have been so appointed by the Majority Lenders, and
shall have accepted such appointment within the allotted time period,
then, upon 5 days Notice to Borrower, the resigned or removed Credit
Agent may, on behalf of Lenders, appoint a successor. Upon the
effective date of resignation or removal of the resigning or removed
Credit Agent, such successor will thereupon succeed to and become
vested with all the rights, powers, privileges, and duties of the
resigning or removed Credit Agent, but the resigning or removed Credit
Agent shall not be discharged from any liability as a result of its or
its directors', officers', agents', or employees' gross negligence or
willful misconduct in the performance of its duties and obligations
under this Agreement prior to the effective date of its resignation or
removal. Upon the effective date of its resignation or removal, Credit
Agent shall assign all of its right, title and security interest in and
to all Collateral to its successor, without recourse, warranty or
representation, express or implied.
End of Article 12
Page 56
13. MISCELLANEOUS
13.1. Notices
Except where telephonic or facsimile notice is expressly authorized by
this Agreement, all communications required or permitted to be given or
made under this Agreement ("Notices") must be in writing and must be
sent by manual delivery, overnight courier or United States mail
(postage prepaid), addressed as follows (or at such other address as
may be designated by it in a Notice to the other):
If to Borrower: Universal American Mortgage Company
730 NW 107th Avenue, 4th Floor
Miami, FL 33172
Attention: Janice Munoz, Treasurer
and Vice President
If to Credit Agent: Residential Funding Corporation
4800 Montgomery Lane, #300
Bethesda, MD 20814
Attention: Jim Clapp, Director
If to any Lender: As set forth on the signature pages hereof or of
any amendment hereto.
In addition, Credit Agent shall use its best efforts to provide a copy
of any Notice of an Event of Default, or regarding the exercise of any
of its remedies to Lennar Corporation, 700 N.W. 107th Avenue, 4th
Floor, Miami, Florida 33172, Attention: David B. McCain, Vice President
and General Counsel, or such other counsel as Borrower may designate,
but failure to provide such copy shall not render any such Notice
ineffective. All periods of Notice will be measured from the date of
delivery if manually delivered, from the first Business Day after the
date of sending if sent by overnight courier or from 4 days after the
date of mailing if sent by United States mail, except that Notices to
Credit Agent under Article 2 and Section 11.2 shall be deemed to have
been given only when actually received. Each Borrower authorizes Credit
Agent to accept Borrower's bailee pledge agreements, Advance Requests,
shipping requests, wire transfer instructions and security delivery
instructions transmitted to Credit Agent by facsimile or electronic
transmission, and those documents, when transmitted to Credit Agent by
facsimile or electronic transmission, have the same force and effect as
the originals.
13.2. Reimbursement Of Expenses; Indemnity
Borrower must: (a) pay such documentation production fees as Credit
Agent may require and all out-of-pocket costs and expenses of Credit
Agent, including reasonable fees, service charges and disbursements of
counsel (including allocated costs of internal counsel), in connection
with the amendment, enforcement and administration of this Agreement,
the Notes, and other Loan Documents and the making and repayment of the
Advances, and the payment of interest thereon; (b) indemnify, pay, and
hold harmless Credit Agent, and any other holder of the Notes from and
against, all present and future stamp, documentary and other similar
taxes with respect to the foregoing matters and save Credit Agent, and
any other holder of the Notes harmless from and against any and all
liabilities with respect to or resulting from any delay or omission to
pay such taxes; and (c) indemnify, pay and hold harmless Credit Agent,
each Lender, any of their officers, directors, employees or agents and
any subsequent holder of the Notes (collectively called the
"Indemnitees") from and against all liabilities, obligations, actual
losses, damages, penalties, judgments, direct suits, costs, expenses
and disbursements of any kind or nature whatsoever (including the
reasonable fees and disbursements of counsel of the Indemnitees
(including
Page 57
allocated costs of internal counsel), exclusive of indirect,
consequential and other similar losses, in connection with any
investigative, administrative or judicial proceeding, whether or not
the Indemnitees have been designated as parties to such proceeding)
that may be imposed upon, incurred by or asserted against such
Indemnitees in any manner relating to or arising out of this Agreement,
the Notes, or any other Loan Document or any of the transactions
contemplated hereby or thereby ("Indemnified Liabilities"), except that
Borrower has no obligation under this Agreement to any Indemnity with
respect to Indemnified Liabilities arising from the gross negligence or
willful misconduct of such Indemnitee. To the extent that the
undertaking to indemnify, pay and hold harmless as set forth in the
preceding sentence may be unenforceable because it is violative of any
law or public policy, Borrower must contribute the maximum portion that
it is permitted to pay and satisfy under applicable law to the payment
and satisfaction of all Indemnified Liabilities incurred by the
Indemnitees or any of them. The agreement of Borrower contained in this
Article survives the expiration or termination of this Agreement and
the payment in full of the Notes. Attorneys' fees and disbursements
incurred in enforcing, or on appeal from, a judgment under this
Agreement are recoverable separately from and in addition to any other
amount included in such judgment, and this clause is intended to be
severable from the other provisions of this Agreement and to survive
and not be merged into such judgment.
13.3. Indemnification by Lenders
Lenders agree to indemnify Credit Agent in its respective capacity as
such (to the extent not reimbursed by Borrower and without limiting the
obligation of Borrower to do so), ratably according to the respective
amounts of their Percentage Shares, from and against any and all
liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind
whatsoever which may at any time (including without limitation at any
time following the payment of the Obligations) be imposed on, incurred
by or asserted against Credit Agent in any way relating to or arising
out of the Loan Documents or any documents contemplated by or referred
to herein or therein or the transactions contemplated hereby or thereby
or any action taken or omitted by Credit Agent under or in connection
with any of the foregoing; provided that no Lender shall be liable for
the payment of any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from Credit Agent's gross negligence or willful
misconduct. The agreements in this Section shall survive the payment of
the Obligations and the termination of this Agreement. Attorneys' fees
and disbursements incurred in enforcing, or on appeal from, a judgment
pursuant hereto shall be recoverable separately from and in addition to
any other amount included in such judgment, and this clause is intended
to be severable from the other provisions of this Agreement and to
survive and not be merged into such judgment.
13.4. Financial Information
All financial statements and reports furnished to Credit Agent under
this Agreement must be prepared in accordance with GAAP, applied on a
basis consistent with that applied in preparing the financial
statements as at the end of and for each Borrower's most recent fiscal
year (except to the extent otherwise required to conform to good
accounting practice).
13.5. Terms Binding Upon Successors; Survival of Representations
The terms and provisions of this Agreement are binding upon and inure
to the benefit of each Borrower, Credit Agent, and their respective
successors and assigns. All of Borrower's representations, warranties,
covenants and agreements survive the making of any Advance, and remain
effective for as long as the Commitments are outstanding or there
remain any Obligations to be paid or performed.
Page 58
13.6. Lenders in Individual Capacity
Lenders and their Affiliates may make loans to, accept deposits from
and generally engage in any kind of business with Borrowers and/or any
Subsidiary regardless of the capacity of Lenders hereunder. Lenders may
disclose to the other Lenders information regarding other relationships
which they may have with Borrower and Borrower hereby consents to these
disclosures.
13.7. Assignment and Participations
This Agreement and the Obligations of each Borrower may not be assigned
by any Borrower. Any Lender may, subject to the limitations set forth
below, assign or transfer, in whole or in part, this Agreement and the
other Loan Documents and further may sell participations in all or any
part of its Advances or Maximum Commitment or any other interest in the
Obligations or any of its obligations hereunder to another Person. In
the case of an assignment, upon notice thereof by such Lender to
Borrower and consent of Credit Agent, the assignee shall have, to the
extent of such assignment (unless otherwise provided thereby), the same
rights and benefits as it would have if it were a "Lender" hereunder,
and, if the assignee has expressly assumed, for the benefit of
Borrower, such Lender's obligations hereunder, such Lender shall be
relieved of its obligations hereunder to the extent of such assignment
and assumption, provided that Credit Agent shall have no obligation to
consent to there being more than a total of 10 Lenders (a Participant
is not a Lender). In the case of a participation, the participating
Person's (a "Participant") rights against Lender from whom it has
purchased such participation in respect of such participation are those
set forth in the agreement executed by such Lender in favor of the
Participant relating thereto. Such Lender shall remain solely
responsible to the other parties hereto for the performance of such
Lender's obligations under the Loan Documents, whether or not such
Lender shall remain the holder of any Note. Such Lender shall retain
all voting rights with respect to such Note, the Advances hereunder and
Lender's Maximum Commitment. Borrower, Credit Agent and the other
Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under the Loan
Documents. Without limiting any Lender's exclusive right to collect and
enforce the Obligations owed to it, Borrower agrees that each
participation will give rise to a debtor-creditor relationship between
Borrower and the Participant, and Borrower authorizes each Participant,
upon the occurrence of an Event of Default, to proceed directly by
right of setoff, banker's lien, or otherwise, against any assets of
Borrower that may be held by that Participant. Nothing contained herein
shall in any manner or to any extent affect the right of any Lender to
pledge or assign its Notes and interests in this Agreement to any
Federal Reserve Bank pursuant to applicable laws or regulations, or to
assign its Notes and its right to receive and retain payments on its
Notes provided such Lender remains primarily and directly liable
pursuant to the terms and conditions of this Agreement to keep, observe
and perform all of its obligations under this Agreement. Any Lender may
furnish any information concerning Borrower in the possession of such
Lender from time to time to Affiliates of such Lender and to assignees
and Participants (including prospective assignees and Participants) and
Borrower hereby consents to the provision of such information.
13.8. Commitment Increases
13.8 (a) At any time and from time to time after the Closing Date, the
Warehousing Credit Limit may be increased either by an
Additional Lender establishing a Warehousing Commitment or by
one or more then existing Lender ("Increase Lender")
increasing its Warehousing Commitment Amount (each such
increase by either means, a "Commitment Increase"), provided
that no Commitment Increase shall become effective unless and
until (i) Borrower, Credit Agent and the Additional Lender or
the Increase Lender shall have executed and delivered an
amendment or other modification with respect to such
Commitment Increase, and (ii) if, after giving effect thereto,
the Credit Limit would exceed $500,000,000, such Commitment
Increase shall have been consented to by each of the
Page 59
other Lenders. Any such increase may be temporary or
permanent; provided, that the permanent Warehousing Commitment
amount of each Lender shall at no time be less than
$15,000,000. Prior to the effective date ("Effective Date") of
any Commitment Increase involving an Additional Lender,
Borrowers shall issue a promissory note to the Additional
Lender. Such new promissory note or notes shall constitute a
"Warehousing Note" for the purposes of the Loan Documents.
13.8 (b) On the Effective Date of any Commitment Increase, Credit Agent
shall recompute the Percentage Share for each Lender based on
the new Warehousing Credit Limit which results from the
Commitment Increase, and within 2 Business Days, Credit Agent
shall request Advances from or shall direct prepayments to
each Lender so that the total amount of all then outstanding
Warehousing Advances are shared pro rata by each Lender.
13.8 (c) On the effective date of any reduction of the Warehousing
Credit Limit resulting from the expiration of a temporary
increase in any Lender's Warehousing Commitment Amount, the
Credit Agent shall recompute the Percentage Share for each
Lender and request Warehousing Advances from and direct
prepayments to each Lender so that the total amount of all the
outstanding Advances are shared pro-rata by each Lender.
13.9. Amendments
This Agreement may not be amended or terms or provisions hereof waived
unless such amendment or waiver is in writing and signed by the
Majority Lenders, Credit Agent and each Borrower; provided, however,
that without the prior written consent of 100% of Lenders, no amendment
or waiver shall: (1) waive or amend any term or provision of Sections
8.4 or the definition of any type of Collateral or the provisions of
Section 5.2 hereof, (2) reduce the principal of, or rate of interest or
fees on, the Advances or any Lender's Commitments, (3) except as
provided in Section 13.8, modify the Warehousing Credit Limit, (4)
except as provided in Section 13.8, modify any Lender's Percentage
Share of the Warehousing Credit Limit, (5) modify the definition of
"Majority Lenders," or of the number or percentage of Lenders that are
required to take action under the Loan Documents, (6) extend the
Warehousing Maturity Date, (7) release any material portion of the
Collateral, except as expressly contemplated by the Loan Documents or
in connection with a sale of such Collateral permitted hereunder, (8)
amend Exhibit H, or (9) amend this Section. It is expressly agreed and
understood that the failure by the Majority Lenders to elect to
accelerate amounts outstanding hereunder or to terminate the obligation
of Lenders to make Advances hereunder shall not constitute an amendment
or waiver of any term or provision of this Agreement.
13.10. Governing Law
This Agreement and the other Loan Documents are governed by the laws of
the State of Minnesota, without reference to its principles of
conflicts of laws.
13.11. Relationship of the Parties
This Agreement provides for the making and repayment of Advances by
Lenders (in their capacity as lenders) and each Borrower (in its
capacity as a borrower), for the payment of interest on those Advances
and for the payment of certain fees by Borrower to Lenders and Credit
Agent. The relationship between Lenders and Borrower is limited to that
of creditor and secured party on the part of Lenders, Credit Agent and
of borrower and debtor on the part of Borrower. The provisions of this
Agreement and the other Loan Documents for compliance with financial
covenants and the delivery of financial statements and other operating
reports are intended solely
Page 60
for the benefit of Lenders to protect its interest as a creditor and
lender. Nothing in this Agreement creates or may be construed as
permitting or obligating any Lender to act as a financial or business
advisor or consultant to Borrower, as permitting or obligating any
Lender to control Borrower or to conduct Borrower's operations, as
creating any fiduciary obligation on the part of Lenders to Borrower,
or as creating any joint venture, agency, or other relationship between
Lenders and Borrower other than as explicitly and specifically stated
in the Loan Documents. Each Borrower acknowledges that it has had the
opportunity to obtain the advice of experienced counsel of its own
choosing in connection with the negotiation and execution of the Loan
Documents and to obtain the advice of that counsel with respect to all
matters contained in the Loan Documents, including the waiver of jury
trial contained in Section 13.16. Each Borrower further acknowledges
that it is experienced with respect to financial and credit matters and
has made its own independent decisions to apply to Lenders for credit
and to execute and deliver this Agreement.
13.12. Severability
If any provision of this Agreement is declared to be illegal or
unenforceable in any respect, that provision is null and void and of no
force and effect to the extent of the illegality or unenforceability,
and does not affect the validity or enforceability of any other
provision of the Agreement.
13.13. Consent to Credit References
Each Borrower consents to the disclosure of information regarding
Borrower and its Subsidiaries and their relationships with Lenders to
Persons making credit inquiries to Credit Agent. This consent is
revocable by Borrower at any time upon Notice to Lenders as provided in
Section 13.1.
13.14. Counterparts
This Agreement may be executed in any number of counterparts, each of
which will be deemed an original, but all of which together constitute
but one and the same instrument.
13.15. Entire Agreement
This Agreement, the Notes and the other Loan Documents represent the
final agreement among the parties with respect to their subject matter,
and may not be contradicted by evidence of prior or contemporaneous
oral agreements among the parties. There are no oral agreements among
the parties with respect to the subject matter of this Agreement, the
Notes and the other Loan Documents.
13.16. Consent to Jurisdiction
AT THE OPTION OF CREDIT AGENT, THIS AGREEMENT, THE NOTES AND THE OTHER
LOAN DOCUMENTS MAY BE ENFORCED IN ANY STATE OR FEDERAL COURT WITHIN THE
STATE OF MINNESOTA. EACH BORROWER CONSENTS TO THE JURISDICTION AND
VENUE OF THOSE COURTS, AND WAIVES ANY OBJECTION TO THE JURISDICTION OR
VENUE OF ANY OF THOSE COURTS, INCLUDING THE OBJECTION THAT VENUE IN
THOSE COURTS IS NOT CONVENIENT. ANY SUCH SUIT, ACTION OR PROCEEDING MAY
BE COMMENCED AND INSTITUTED BY SERVICE OF PROCESS UPON EACH BORROWER BY
FIRST CLASS REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED,
ADDRESSED TO BORROWER AT ITS ADDRESS LAST KNOWN TO CREDIT AGENT. EACH
BORROWER'S CONSENT AND AGREEMENT UNDER THIS SECTION DOES NOT AFFECT
Page 61
CREDIT AGENT'S RIGHT TO ACCOMPLISH SERVICE OF PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE
PROCEED AGAINST ANY BORROWER IN ANY OTHER JURISDICTION OR COURT. IN THE
EVENT ANY BORROWER COMMENCES ANY ACTION IN ANOTHER JURISDICTION OR
VENUE UNDER ANY TORT OR CONTRACT THEORY ARISING DIRECTLY OR INDIRECTLY
FROM THE RELATIONSHIP CREATED BY THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS, CREDIT AGENT AT ITS OPTION MAY HAVE THE CASE TRANSFERRED TO
A STATE OR FEDERAL COURT WITHIN THE STATE OF MINNESOTA OR, IF A
TRANSFER CANNOT BE ACCOMPLISHED UNDER APPLICABLE LAW, MAY HAVE
BORROWER'S ACTION DISMISSED WITHOUT PREJUDICE.
13.17. Waiver of Jury Trial
EACH BORROWER, EACH OF LENDERS AND CREDIT AGENT EACH COVENANTS AND
AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY A
JURY, AND FULLY WAIVES ANY RIGHT TO TRIAL BY JURY TO THE EXTENT THAT
ANY SUCH RIGHT NOW EXISTS OR HEREAFTER ARISES. THIS WAIVER OF RIGHT TO
TRIAL BY JURY IS SEPARATELY GIVEN, KNOWINGLY AND VOLUNTARILY, BY
BORROWER AND CREDIT AGENT, AND IS INTENDED TO ENCOMPASS EACH INSTANCE
AND EACH ISSUE FOR WHICH THE RIGHT TO TRIAL BY JURY WOULD OTHERWISE
APPLY. CREDIT AGENT, EACH OF LENDERS AND BORROWER ARE EACH AUTHORIZED
AND DIRECTED TO SUBMIT THIS AGREEMENT TO ANY COURT HAVING JURISDICTION
OVER THE SUBJECT MATTER AND THE PARTIES TO THIS AGREEMENT AS CONCLUSIVE
EVIDENCE OF THIS WAIVER OF THE RIGHT TO JURY TRIAL. FURTHER, EACH
BORROWER, EACH OF LENDERS AND CREDIT AGENT EACH CERTIFIES THAT NO
REPRESENTATIVE OR AGENT OF THE OTHER PARTY, INCLUDING THE OTHER PARTY'S
COUNSEL, HAS REPRESENTED, EXPRESSLY OR OTHERWISE, TO ANY OF ITS
REPRESENTATIVES OR AGENTS THAT THE OTHER PARTY WILL NOT SEEK TO ENFORCE
THIS WAIVER OF RIGHT TO TRIAL BY JURY.
13.18. Confidentiality
The Credit Agent and each Lender shall use reasonable efforts to assure
that information about the Borrower and its operations, affairs and
financial condition, not generally disclosed to the public or to trade
and other creditors, which is furnished to the Credit Agent or such
Lender pursuant to the provisions hereof is used only for the purposes
of this Agreement and any other relationship between the Credit Agent
or such Lender and the Borrower and not divulged to any Person other
than the Credit Agent, such Lender, its Affiliates and their respective
officers, directors, employees and agents, except: (a) to their
attorneys and accountants, (b) in connection with the enforcement of
the rights of the Credit Agent or such Lender hereunder and under the
other Loan Documents or otherwise in connection with applicable
litigation, (c) in connection with assignments and participations and
the solicitation of prospective assignees and participants referred to
in Section 13.7 (provided such assignees, participants and prospecting
assignees and participants agree to be bound by this Section 13.18) and
(d) as may otherwise be required or requested by any regulatory
authority having jurisdiction over the Credit Agent or by any
applicable law, rule, regulation or judicial process, the opinion of
the Credit Agent's counsel concerning the making of such disclosure to
be binding on the parties hereto.
End of Article 13
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14. DEFINITIONS
14.1. Defined Terms
Capitalized terms defined below or elsewhere in this Agreement have the
following meanings or, as applicable, the meanings given to those terms
in Exhibits to this Agreement:
"Additional Lender" means a Person admitted as a Lender under the
Agreement by the terms of an amendment hereto.
"Advance" means a Warehousing Advance or an RFC Direct Advance.
"Advance Rate" means, with respect to any Eligible Asset, the Advance
Rate set forth in Exhibit H for that type of Eligible Asset.
"Advance Request" has the meaning set forth in Section 3.1(a).
"Affiliate" has the meaning set forth in the United States Bankruptcy
Code, 11 U.S. C.ss.ss.101 et seq.
"Agency Security" means a Mortgage-backed Security issued or guaranteed
by Fannie Mae, Freddie Mac or Ginnie Mae.
"Agreement" means this Warehousing Credit and Security Agreement,
either as originally executed or as it may be amended, restated,
renewed or replaced.
"Appraised Property Value" means with respect to an interest in real
property, the then current fair market value of the real property and
any improvements on it as of recent date determined in accordance with
Title XI of FIRREA by a qualified appraiser who is a member of the
American Institute of Real Estate Appraisers or other group of
professional appraisers.
"Approved Custodian" means a pool custodian or other Person that Credit
Agent deems acceptable, in its sole discretion, to hold Mortgage Loans
for inclusion in a Mortgage Pool or to hold Mortgage Loans as agent for
an Investor that has issued a Purchase Commitment for those Mortgage
Loans. Credit Agent may at any time, on 3 Business Days' Notice to
Borrower, add or remove any Person as an Approved Custodian.
"Audited Statement Date" means the date of Borrower's most recent
audited financial statements (and, if applicable, Borrower's
Subsidiaries, on a consolidated basis) delivered to Credit Agent under
this Agreement.
"Balance Deficiency Fee" has the meaning set forth in Section 4.1(b).
"Balance Funded Agreement" has the meaning set forth in Section 4.1(b).
"Balance Funded Portion" has the meaning set forth in Section 4.1(b).
"Balance Funded Rate" means, for any Advance, the Balance Funded Rate
specified for that Advance in Exhibit H.
"Bank One" means BANK ONE, NATIONAL ASSOCIATION, Chicago, Illinois, or
any successor bank.
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"Borrower" has the meaning set forth in the first paragraph of this
Agreement.
"Business Day" means any day other than Saturday, Sunday or any other
day on which national banking associations are closed for business.
"Buydown" has the meaning set forth in Section 4.3(k).
"Calendar Quarter" means the 3 month period beginning on each January
1, April 1, July 1 or October 1.
"Cash Collateral Account" means a demand deposit account maintained at
the Funding Bank in Credit Agent's name and designated for receipt of
the proceeds of the sale or other disposition of Collateral.
"Check Disbursement Account" means a demand deposit account maintained
at the Funding Bank in the name of Borrower and under the control of
Credit Agent for the clearing of checks written by Borrower to fund
Warehousing Advances.
"Closing Date" has the meaning set forth in the Recitals to this
Agreement.
"Collateral" has the meaning set forth in Section 5.1.
"Collateral Documents" means, with respect to each Mortgage Loan, (a)
the Required Documents, (b) as applicable, the original lender's ALTA
Policy of Title Insurance or its equivalent, documents evidencing the
FHA Commitment to Insure, the VA Guaranty or private mortgage
insurance, the appraisal, the Regulation Z statement, an environmental
assessment, if applicable, an engineering report, if applicable,
certificates of casualty or hazard insurance, credit information on the
maker of the Mortgage Note, the HUD-1 or corresponding purchase advice,
(c) any other document required to be delivered to Credit Agent, and
(d) any other document that is customarily desired for inspection or
transfer incidental to the purchase of any Mortgage Note by an Investor
or that is customarily executed by the seller of a Mortgage Note to an
Investor.
"Committed Purchase Price" means for an Eligible Asset (a) the dollar
price as set forth in the Purchase Commitment or, if the price is not
expressed in dollars, the product of the Mortgage Note Amount
multiplied by the price (expressed as a percentage) as set forth in a
Purchase Commitment for the Eligible Asset, or (b) if the Eligible
Asset is to be used to back an Agency Security, the price (expressed as
a percentage) as set forth in a Purchase Commitment for the Agency
Security.
"Commitment" means the Warehousing Commitment.
"Compliance Certificate" means a certificate executed on behalf of
Borrower by its chief financial officer or its treasurer or by another
officer approved by Credit Agent, substantially in the form of Exhibit
E.
"Cost Breakdown" means a list of the costs and expenses to be financed
by Advances against a Building Construction Mortgage Loan or a
Construction/Perm Mortgage Loan, including, without limitation, real
property acquisition costs, hard and soft construction costs,
architectural fees, the Rehab Escrow and any other costs and expenses
budgeted to construct and complete the improvements.
"Credit Agent" means RFC, in its capacity as credit agent for Lenders
hereunder, and any successor pursuant to Section 12.9 hereof.
"Credit Limit" means the Warehousing Credit Limit.
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"Debt" means (a) all indebtedness or other obligations of a Person
that, in accordance with GAAP, would be included in determining total
liabilities as shown on the liabilities side of a balance sheet of the
Person on the date of determination, plus (b) all indebtedness or other
obligations of the Person for borrowed money or for the deferred
purchase price of property or services. For purposes of calculating a
Person's Debt, Subordinated Debt not due within 1 year of that date and
deferred taxes arising from capitalized excess servicing fees and
capitalized servicing rights may be excluded from a Person's
indebtedness. For purposes of calculating Borrowers' Debt, letters of
credit outstanding on the date hereof naming Lennar and its
Subsidiaries as beneficiary shall, to the extent otherwise included, be
excluded.
"Default" means the occurrence of any event or existence of any
condition that, but for the giving of Notice or the lapse of time,
would constitute an Event of Default.
"Default Rate" means, for any Advance, the Interest Rate applicable to
that Advance plus 2% per annum. If no Interest Rate is applicable to an
Advance, "Default Rate" means, for that Advance, the highest Interest
Rate then applicable to any outstanding Advance plus 2% per annum.
"Deposit Balances" means funds of or maintained by Borrower and its
Subsidiaries in accounts at a Lender or a Designated Bank.
"Depository Benefit" means the compensation received by Credit Agent,
directly or indirectly, as a result of Borrower's maintenance of
Deposit Balances with a Designated Bank.
"Designated Bank" means any bank designated by Credit Agent as a
Designated Bank, but only for as long as Credit Agent has an agreement
under which Credit Agent receives Depository Benefits from that bank.
"Designated Bank Charges" means any fees, interest or other charges
that would otherwise be payable to a Designated Bank in connection with
Deposit Balances maintained at the Designated Bank, including deposit
insurance premiums, service charges and any other charges that may be
imposed by governmental authorities from time to time.
"Eligible Asset" means a Mortgage Loan, Agreement for Deed or
Foreclosure Claim Receivable that satisfies the conditions and
requirements set forth in Exhibit H.
"Eligible Mortgage Pool" means a Mortgage Pool for which (a) an
Approved Custodian has issued its initial certification, (b) there
exists a Purchase Commitment covering the Agency Security to be issued
on the basis of that certification and (c) the Agency Security will be
delivered to Credit Agent.
"ERISA" means the Employee Retirement Income Security Act of 1974 and
all rules and regulations promulgated under that statute, as amended,
and any successor statute, rules, and regulations.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) that is a member of a group of which Borrower is a member
and that is treated as a single employer under Section 414 of the
Internal Revenue Code.
"Event of Default" means any of the conditions or events set forth in
Section 11.1.
"Exchange Act" means the Securities Exchange Act of 1934 and all rules
and regulations promulgated under that statute, as amended, and any
successor statute, rules, and regulations.
"Exhibit A" means Exhibit A-SF, Exhibit A-Construction, Exhibit A-Other
Investments and Exhibit A-SF/UNI, as applicable to the type of Eligible
Asset being financed.
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"Exhibit B" means Exhibit B-SF, Exhibit B-Construction and Exhibit
A-Other Investments, as applicable to the type of Eligible Asset being
financed.
"Existing Agreements" means the Existing Universal Agreement and the
Existing U.S. Home Agreement.
"Existing Universal Agreement" means the Fourth Restated Revolving
Credit Agreement dated as of May 28, 1999, among Lennar Corporation,
Universal American Mortgage Company, UAMC Asset Corp. and Eagle Home
Mortgage, Inc., as Borrowers, the lenders named therein and The First
National Bank of Chicago, acting in its capacity as administrative
agent for the lenders, as the same may have been amended, supplemented
or otherwise modified.
"Existing U.S. Home Agreement" means the Second Amended and Restated
Warehousing Credit and Security Agreement dated as of October 1, 1999,
U.S. Home Mortgage Corporation, as borrower, and Residential Funding
Corporation, as lender, as the same may have been amended, supplemented
or otherwise modified.
"Fair Market Value" means, at any time for an Eligible Asset or a
related Agency Security (if the Eligible Asset is to be used to back an
Agency Security) as of any date of determination, (a) the Committed
Purchase Price if the Eligible Asset is covered by a Purchase
Commitment from Fannie Mae or Freddie Mac or the Eligible Asset is to
be exchanged for an Agency Security and that Agency Security is covered
by a Purchase Commitment from an Investor, or (b) otherwise, the market
price for such Eligible Asset or Agency Security, determined by Credit
Agent based on market data for similar Mortgage Loans, Agency
Securities or other assets and such other criteria as Credit Agent
deems appropriate in its sole discretion.
"Fannie Mae" means Fannie Mae, a corporation created under the laws of
the United States, and any successor corporation or other entity.
"Federal Funds Rate" means, for each week, the effective Federal Funds
Rate (per annum) of interest in effect on the first Business Day of
that week, as published by Bloomberg L.P. If the Federal Funds Rate is
not published by Bloomberg L.P. on the first Business Day of any week,
then the term "Federal Funds Rate" means the highest Federal Funds Rate
published in The Wall Street Journal in its regular column entitled
"Money Rates" on the first Business Day of that week.
"FHA" means the Federal Housing Administration and any successor agency
or other entity.
"FICA" means the Federal Insurance Contributions Act, as amended, and
any successor statute.
"FIRREA" means the Financial Institutions Reform, Recovery and
Enforcement Act of 1989 and all rules and regulations promulgated under
that statute, as amended, and any successor statute, rules, and
regulations.
"First Mortgage" means a Mortgage that constitutes a first Lien on the
real property covered by the Mortgage.
"First Mortgage Loan" means a Mortgage Loan secured by a First
Mortgage.
"Freddie Mac" means Freddie Mac, a corporation created under the laws
of the United States, and any successor corporation or other entity.
"Funding Bank" means Bank One or any other bank designated by Credit
Agent as a Funding Bank.
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"Funding Bank Agreement" means a letter agreement on the form
prescribed by Credit Agent between the Funding Bank and Borrower
authorizing Credit Agent's access to the Operating Account.
"GAAP" means generally accepted accounting principles set forth in
opinions and pronouncements of the Accounting Principles Board and the
American Institute of Certified Public Accountants and in statements
and pronouncements of the Financial Accounting Standards Board, or in
opinions, statements or pronouncements of any other entity approved by
a significant segment of the accounting profession, which are
applicable to the circumstances as of the date of determination.
"Gestation Agreement" means an agreement under which Borrower agrees to
sell or finance (a) a Mortgage Loan prior to the date of purchase by an
Investor or (b) a Mortgage Pool prior to the date a Mortgage-backed
Security backed by the Mortgage Pool is issued.
"Ginnie Mae" means the Government National Mortgage Association, an
agency of the United States government, and any successor agency or
other entity.
"GMAC-RFC Client Guide" means the applicable loan purchase guide issued
by Credit Agent, as the same may be amended or replaced.
"Hedging Arrangements" means, with respect to any Person, any
agreements or other arrangements (including interest rate swap
agreements, interest rate cap agreements and forward sale agreements)
entered into to protect that Person against changes in interest rates
or the market value of assets.
"HUD" means the Department of Housing and Urban Development, and any
successor agency or other entity.
"Indemnified Liabilities" has the meaning set forth in Section 13.2.
"Indemnitees" has the meaning set forth in Section 13.2.
"Interest Rate" means, for any Advance, the floating rate of interest
specified for that Advance in Exhibit H.
"Interim Statement Date" means the date of the most recent unaudited
financial statements of each Borrower (and, if applicable, each
Borrower's Subsidiaries, on a consolidated basis) delivered to Credit
Agent under this Agreement.
"Internal Revenue Code" means the Internal Revenue Code of 1986, Title
26 of the United States Code, the regulations, rulings and
interpretations issued under those statutory provisions and any
subsequent federal income tax law or laws, as amended.
"Investment" means any direct or indirect purchase or other acquisition
by any Person of, or a beneficial interest in, stock or other
securities of any other Person, or any direct or indirect loan, advance
(other than advances to employees for moving and travel expenses,
drawing accounts and similar expenditures in the ordinary course of
business) or capital contribution by that Person to any other Person,
including all Debt and accounts receivable from that Person which are
not current assets or did not arise from sales to that other Person in
the ordinary course of business.
"Investor" means Fannie Mae, Freddie Mac or a financially responsible
private institution that Credit Agent deems acceptable, in its sole
discretion, to issue Purchase Commitments with respect to a particular
category of Eligible Assets. Credit Agent may at any time, on 3
Business Days' Notice to Borrower, add or remove any Person as an
Investor.
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"Lender" has the meaning set forth in the first paragraph of this
Agreement.
"Lennar" means LENNAR CORPORATION, a Delaware corporation.
"Lennar Undertaking" means a guaranty of certain of Borrower's
Obligations by Lennar.
"LIBOR" means, for each week, the rate of interest per annum that is
equal to the arithmetic mean of the U.S. Dollar London Interbank
Offered Rates for 1 month periods of certain U.S. banks as of 11:00
a.m. (London time) on the first Business Day of each week on which the
London Interbank market is open, as published by Bloomberg L.P. If
those interest rates are not offered or published for any period, then
during that period LIBOR means the London Interbank Offered Rate for 1
month periods as published in The Wall Street Journal in its regular
column entitled "Money Rates" on the first Business Day of each week on
which the London Interbank market is open.
"Lien" means any lien, mortgage, deed of trust, pledge, security
interest, charge or encumbrance of any kind (including any conditional
sale or other title retention agreement, any lease in the nature of
such an agreement and any agreement to give any security interest).
"Loan Documents" means this Agreement, the Notes, the Lennar
Undertaking, any agreement of Borrower relating to Subordinated Debt,
and each other document, instrument or agreement executed by Borrower
in connection with any of those documents, instruments and agreements,
as originally executed or as any of the same may be amended, restated,
renewed or replaced.
"Loan-to-Value Ratio" means, for any Mortgage Loan, the ratio of (a)
the maximum amount that may be borrowed under the Mortgage Loan
(whether or not borrowed) at the time of origination, plus the Mortgage
Note Amounts of all other Mortgage Loans secured by the related
Property, to (b) the Appraised Property Value of the related Property.
"Manufactured Home" means a structure that is built on a permanent
chassis (steel frame) with the wheel assembly necessary for
transportation in one or more sections to a permanent site or
semi-permanent site.
"Majority Lenders" means at any date Lenders holding not less than 51%
of the aggregate Credit Limit. Notwithstanding the foregoing, if there
are only 2 Lenders the term "Majority Lenders" shall, except for
purposes of Section 11.2(c), include both of Lenders.
"Margin Stock" has the meaning assigned to that term in Regulation U of
the Board of Governors of the Federal Reserve System, as amended.
"Miscellaneous Charges" means actual miscellaneous charges and expenses
incurred by or on behalf of Credit Agent for the handling and
administration of Advances and Collateral, including costs for UCC, tax
lien and judgment searches conducted by Credit Agent, filing fees,
charges for wire transfers and check processing charges, charges for
security delivery fees, charges for overnight delivery of Collateral to
Investors, the Funding Bank's service fees and overdraft charges and
Designated Bank Charges.
"Mortgage" means a mortgage or deed of trust on real property that is
improved and substantially completed (including real property to which
a Manufactured Home has been affixed in a manner such that the Lien of
a mortgage or deed of trust would attach to the Manufactured Home under
applicable real property law).
"Mortgage-backed Securities" means securities that are secured or
otherwise backed by Mortgage Loans.
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"Mortgage Loan" means any loan evidenced by a Mortgage Note and secured
by a Mortgage.
"Mortgage Note" means a promissory note secured by one or more
Mortgages.
"Mortgage Note Amount" means, as of any date of determination, the then
outstanding and unpaid principal amount of a Mortgage Note (whether or
not an additional amount is available to be drawn under that Mortgage
Note).
"Mortgage Pool" means a pool of one or more Pledged Loans on the basis
of which a Mortgage-backed Security is to be issued.
"Multiemployer Plan" means a "multiemployer plan" as defined in Section
4001(a)(3) of ERISA, to which either Borrower or any ERISA Affiliate of
Borrower has any obligation with respect to its employees.
"Notes" means the Warehousing Notes and the Swingline Note.
"Notices" has the meaning set forth in Section 13.1.
"Obligations" means any and all indebtedness, obligations and
liabilities of each Borrower to Lenders, Credit Agent (whether now
existing or arising after the date of this Agreement, voluntary or
involuntary, joint or several, direct or indirect, absolute or
contingent, liquidated or unliquidated, or decreased or extinguished
and later increased and however created or incurred) under the Loan
Documents.
"Operating Account" means a demand deposit account maintained at the
Funding Bank in Borrower's name.
"Overdraft Advance" has the meaning set forth in Exhibit B-SF.
"Participant" has the meaning set forth in Section 13.7.
"Percentage Share" means, for any Lender at any date, that percentage
which such Lender's Warehousing Commitment Amount bears to the
Warehousing Credit Limit.
"Person" means and includes natural persons, corporations, limited
liability companies, limited liability partnerships, limited liability
limited partnerships, limited partnerships, general partnerships, joint
stock companies, joint ventures, associations, companies, trusts,
banks, trust companies, land trusts, business trusts or other
organizations, whether or not legal entities, and governments and
agencies and political subdivisions of those governments.
"Plan" means each employee benefit plan (whether in existence on the
Closing Date or established after that date), as that term is defined
in Section 3 of ERISA, maintained for the benefit of directors,
officers or employees of Borrower or any ERISA Affiliate.
"Pledged Assets" means, collectively, Pledged Loans, Pledged Agreements
for Deed, Pledged Securities, and Foreclosure Claim Receivables in
respect of which Advances are outstanding hereunder.
"Pledged Agreements for Deed" has the meaning set forth in Section
5.1(c).
"Pledged Hedging Accounts" has the meaning set forth in Section 5.1(i).
"Pledged Hedging Arrangements" has the meaning set forth in Section
5.1(i).
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"Pledged Loans" has the meaning set forth in Section 5.1 (b).
"Pledged Securities" has the meaning set forth in Section 5.1(d).
"Pledged Shares" has the meaning set forth in Section 5.1(j).
"Prohibited Transaction" has the meanings set forth for such term in
Section 4975 of the Internal Revenue Code and Section 406 of ERISA.
"Purchase Commitment" means a written commitment, in form and substance
satisfactory to Credit Agent, issued in favor of Borrower by an
Investor under which that Investor commits to purchase Mortgage Loans
or Mortgage-backed Securities.
"Receivables" has the meaning set forth in Section 5.1 (f).
"Rehab Escrow" means an escrow established as part of the initial
Advance against a Construction/Perm Mortgage Loan in an amount equal to
the difference between the amount funded for the financing or
refinancing of existing improvements on the real property encumbered by
the Pledged Mortgage and the amount funded for the renovation or
rehabilitation of the existing improvements.
"Release Amount" has the meaning set forth in Section 5.2 (f).
"RFC" means Residential Funding Corporation, a Delaware corporation,
and any successor thereto.
"RFC Advance" has the meaning set forth in Section 4.3(k).
"RFC Direct Advance" means a disbursement by RFC under the RFC Direct
Commitment.
"RFC Direct Commitment" means the obligation of RFC to make RFC Direct
Advances to Borrower under Section 1.1.
"RFC Direct Commitment Amount" means $55,000,000.
"RFC Direct Note" has the meaning set forth in Section 1.4.
"Second Mortgage" means a Mortgage that constitutes a second Lien on
the property covered by the Mortgage.
"Second Mortgage Loan" means a Mortgage Loan secured by a Second
Mortgage.
"Servicing Contract" means, with respect to any Person, the
arrangement, whether or not in writing, under which that Person has the
right to service Mortgage Loans.
"Servicing Portfolio" means, as to any Person, the unpaid principal
balance of Mortgage Loans serviced by that Person under Servicing
Contracts, minus the principal balance of all Mortgage Loans that are
serviced by that Person for others under subservicing arrangements.
"Single Family Mortgage Loan" means a Mortgage Loan secured by a
Mortgage covering a Single Family Property
"Single Family Property" means improved real property containing one to
four family residences.
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"Statement Date" means the Audited Statement Date or the Interim
Statement Date, as applicable.
"Sublimit" means the aggregate amount of Warehousing Advances
(expressed as a dollar amount or as a percentage of the Warehousing
Credit Limit) that is permitted to be outstanding at any one time
against a specific type of Eligible Asset.
"Sublimit Note" has the meaning set forth in Section 1.4.
"Subordinated Debt" means (a) all indebtedness of Borrower for borrowed
money that is effectively subordinated in right of payment to all other
present and future Obligations either (1) under a Subordination of Debt
Agreement on the form prescribed by Credit Agent or (2) otherwise on
terms acceptable to Credit Agent, and (b) solely for purposes of
Section 9.9, all indebtedness of Borrower that is required to be
subordinated by Sections 6.1 (b) and 8.11.
"Subsidiary" means any corporation, partnership, association or other
business entity in which more than 50% of the shares of stock or other
ownership interests having voting power for the election of directors,
managers, trustees or other Persons performing similar functions is at
the time owned or controlled by any Person either directly or
indirectly through one or more Subsidiaries of that Person.
"Swingline Advance" means an Advance made by RFC under Section 1.3.
"Swingline Facility Amount" means the maximum amount of Swingline
Advances to be made by RFC from time to time, but not to exceed
$75,000,000.
"Swingline Note" has the meaning set forth in Section 1.4.
"Tangible Leverage Ratio" means the ratio of a Person's (and, if
applicable, the Person's Subsidiaries, on a consolidated basis) Debt to
Tangible Net Worth. For purposes of calculating a Person's Leverage
Ratio, Debt arising under Hedging Arrangements, to the extent of assets
arising under those Hedging Arrangements, [Debt arising under Gestation
Agreements covering Agency Securities or Eligible Mortgage Pools and
Debt arising under Investment Line Agreements, to the extent of the
Investments securing the same], may be excluded from a Person's Debt.
"Tangible Net Worth" means the excess of a Person's (and, if
applicable, the Person's Subsidiaries, on a consolidated basis) total
assets over total liabilities as of the date of determination, each
determined in accordance with GAAP applied in a manner consistent with
UAMC's audited financial statements as of November 30, 2000, plus that
portion of Subordinated Debt not due within 1 year of that date. For
purposes of calculating a Person's Tangible Net Worth, advances or
loans to shareholders, directors, officers, employees or Affiliates,
investments in Affiliates, assets pledged to secure any liabilities not
included in the Debt of the Person, intangible assets, Servicing
Contracts of the type described in Section 9.8, those other assets that
would be deemed by HUD to be non-acceptable in calculating adjusted net
worth in accordance with its requirements in effect as of that date, as
those requirements appear "Consolidated Audit Guide for Audits of HUD
Programs," and other assets Credit Agent deems unacceptable, in its
sole discretion, must be excluded from a Person's total assets.
"Third Party Originated Loan" means a Mortgage Loan originated and
funded by a third party (other than with funds provided by Borrower at
closing to purchase the Mortgage Loan) and subsequently purchased by
Borrower.
"Total Hard Costs" means the total of the costs and expenses listed on
the Cost Breakdown.
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"Trust Receipt" means a trust receipt in a form approved by and under
which Credit Agent may deliver any document relating to the Collateral
to Borrower for correction or completion.
"U.S. Home" means U.S. HOME MORTGAGE CORPORATION, a Florida
corporation.
"Warehouse Period" means, for any Eligible Asset, the maximum number of
days a Warehousing Advance against that type of Eligible Asset may
remain outstanding as set forth in Exhibit H.
"Warehousing Advance" means a disbursement by a Lender under its
Warehousing Commitment.
"Warehousing Commitment" means the obligation of each Lender to make
Warehousing Advances to Borrower under Section 1.1.
"Warehousing Commitment Amount" means, for any Lender at any date, that
dollar amount designated as such opposite such Lender's name on Exhibit
J as its Warehousing Commitment Amount.
"Warehousing Commitment Fee" has the meaning set forth in Section 4.5.
"Warehousing Credit Limit" means the sum of the Warehousing Commitment
Amounts of all of Lenders. The initial Warehousing Credit Limit is
$335,000,000.
"Warehousing Maturity Date" has the meaning set forth in Section 1.2.
"Warehousing Note" has the meaning set forth in Section 1.4.
"Wet Settlement Advance" means any Warehousing Advance from the date
the Warehousing Advance is made until the date of Lender's receipt of
the Collateral Documents as provided in Article 3 and the Exhibit
referenced therein.
"Wire Disbursement Account" means a demand deposit account maintained
at the Funding Bank in Credit Agent's name for clearing wire transfers
requested by Borrower to fund Advances.
14.2. Other Definitional Provisions; Terms of Construction
14.2 (a) Accounting terms not otherwise defined in this Agreement have
the meanings given to those terms under GAAP. Except as may be
expressly provided to the contrary herein, all accounting
determinations hereunder shall be made in accordance with
GAAP, applied consistently with the audited financial
statements described in Section 6.1(a)(27). To the extent any
change in GAAP or Borrowers' accounting practices affects any
computation or determination required to be made pursuant to
this Agreement, such computation or determination shall be
made as if such change in GAAP or Borrowers accounting
practices had not occurred unless Borrower and Lenders agree
in writing on an adjustment to such computation or
determination to account for such change in GAAP or Borrowers'
accounting practices
14.2 (b) Defined terms may be used in the singular or the plural, as
the context requires.
14.2 (c) All references to time of day mean the then applicable time in
Chicago, Illinois, unless otherwise expressly provided.
14.2 (d) References to Sections, Exhibits, Schedules and like
references are to Sections, Exhibits, Schedules and the like
of this Agreement unless otherwise expressly provided.
Page 72
14.2 (e) The words "include," "includes" and "including" are deemed to
be followed by the phrase "without limitation."
14.2 (f) Unless the context in which it is used otherwise clearly
requires, the word "or" has the inclusive meaning represented
by the phrase "and/or."
14.2 (g) All incorporations by reference of provisions from other
agreements are incorporated as if such provisions were fully
set forth into this Agreement, and include all necessary
definitions and related provisions from those other
agreements.
14.2 (h) All references to the Uniform Commercial Code shall be deemed
to be references to the Uniform Commercial Code in effect on
the Closing Date in the applicable jurisdiction.
14.2 (i) Unless the context in which it is used otherwise clearly
requires, all references to days, weeks and months mean
calendar days, weeks and months.
End of Article 14
Page 73
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed
as of the date first above written.
BORROWER:
UNIVERSAL AMERICAN MORTGAGE COMPANY,
a Florida corporation
By: /s/ Janice Munoz
--------------------------------
Its: Vice President
EAGLE HOME MORTGAGE, INC.,
a Washington corporation
By: /s/ Janice Munoz
----------------------------------
Its: Vice President
AMERISTAR FINANCIAL SERVICES, INC.,
a California corporation
By: /s/ Janice Munoz
----------------------------------
Its: Vice President
UNIVERSAL AMERICAN MORTGAGE COMPANY OF
CALIFORNIA,
a California corporation
By: /s/ Janice Munoz
----------------------------------
Its: Vice President
UAMC ASSET CORP. II,
a Nevada corporation
By: /s/ Janice Munoz
----------------------------------
Its: Vice President
S-1
CREDIT AGENT:
RESIDENTIAL FUNDING CORPORATION,
a Delaware corporation
By: /s/ Jim Clapp
-------------------------------
Its: Director
S-2
LENDERS:
RESIDENTIAL FUNDING CORPORATION,
a Delaware corporation
By: /s/ Jim Clapp
-------------------------------
Its: Director
S-3