Exhibit 4(n)
$12,000,000
TERM LOAN AGREEMENT
between
MARKET STREET MORTGAGE CORPORATION, as Borrower,
and
GE CAPITAL MORTGAGE SERVICES, INC., as Lender
____________________________________
Dated as of April 29, 1994
____________________________________
TABLE OF CONTENTS
Page
Section 1. Definitions and Principles of Construction 1
1.01 Defined Terms 1
1.02 Principles of Construction 12
Section 2. Amount and Terms of Credit 13
2.01 Commitment 13
2.02 Minimum Borrowing Amount 13
2.03 Reserved 13
2.04 Request for Advance 13
2.05 Disbursement of Funds 13
2.06 Note 13
2.07 Interest and Principal Payments 14
2.08 Increased Costs 15
2.09 Increased Capital 15
Section 3. Fees and Charges 16
3.01 Fees and Charges 16
Section 4. Prepayments 17
4.01 Reserved 17
4.02 Mandatory Prepayments 17
4.03 Release of Collateral; Substitution 18
4.04 Sale of Collateral 18
4.05 Method and Place of Payment 19
4.06 Net Payments 19
4.07 Breakage Costs 20
Section 5. Conditions Precedent 20
5.01 Execution of Agreement; Note 20
5.02 No Default: Representations and Warranties 21
5.03 Request for Advance 21
5.04 Opinions of Counsel 21
5.05 Diligence 21
5.06 Corporate Documents; Proceedings 21
5.07 Financial Statements 22
5.08 Mandatory Prepayment 22
5.09 Term Loan Security Agreement; UCC's 22
5.10 No Adverse Change 23
5.11 Insurance 23
5.12 Fees 23
5.13 No Litigation 23
5.14 Legal or Regulatory Proceedings 24
5.15 Eligible Portfolio 24
5.16 Servicing Documents 25
5.17 Sale and Transfer Dates 25
5.18 No Repurchase; No Material Change 25
5.19 Initial Appraisal 26
5.20 Assignment of Purchase Contract, etc. 26
5.21 Other Conditions Satisfied 26
Section 6. Representations, Warranties and Agreements 26
6.01 Corporate Power and Authority 26
6.02 No Violation 27
6.03 Governmental Approvals 27
6.04 Financial Condition; Undisclosed Liabilities; etc. 27
6.05 Litigation 27
6.06 True and Complete Disclosure 27
6.07 Use of Proceeds; Margin Regulations 28
6.08 Compliance with Statutes, etc 28
6.09 No Burdensome Agreement 28
6.10 Security Interests 28
6.11 Representations in Warehouse Agreement 28
6.12 Representations in Purchase Contracts 29
6.13 Representations Relating to Servicing 29
Section 7. Affirmative Covenants 30
7.01 Information Covenants 31
(a) Financial Statements 31
(b) Notice of Default 31
(c) Agency Related Defaults 31
(d) Change in Servicing Procedures 31
(e) Sale of Servicing Rights 31
(f) Portfolio Appraisal 31
(g) Monthly Portfolio Analysis 32
7.02 Collateral 32
ii
7.03 Covenants in Warehouse Agreement 32
7.04 Transfer of Servicing Rights 32
Section 8. Negative Covenants 33
8.01 Liens 33
8.02 Indebtedness 33
8.03 Modifications of Certain Agreements and Collateral 33
8.04 Negative Covenants in Warehouse Agreement 34
Section 9 Events of Default 34
9.01 Payments 34
9.02 Representations, etc. 34
9.03 Covenants 35
9.04 Term Loan Security Agreement 35
9.05 Defaults Under Warehouse Agreements 35
Section 10. Miscellaneous 36
10.01 Payment of Expenses; Indemnity 36
10.02 Notices 38
10.03 Benefit of Agreement 38
10.04 No Waiver; Remedies Cumulative 38
10.05 Calculations; Computations 38
10.06 Governing Law; Submission to Jurisdiction; Venue 39
10.07 Participation and Syndication 39
10.08 Obligation to Make Payments in Dollars 39
10.09 Counterparts 40
10.10 Effectiveness 40
10.11 Headings Descriptive 40
10.12 Amendment or Waiver 40
10.13 Survival 40
10.14 Waiver of Jury Trial 40
iii
EXHIBITS
EXHIBIT A - Form of Request for Advance
EXHIBIT B - Form of Note
EXHIBIT C - Form of Opinion of Special Counsel for
the Borrower
EXHIBIT D-1 - Form of Officers' Certificate for
Borrower
EXHIBIT D-2 - Forms of Owners' and Officers
Certification
EXHIBIT E - Form of Term Loan Security Agreement
EXHIBIT F - Form of Servicing Release Commitment
SCHEDULES
SCHEDULE I - Liabilities and Obligations
SCHEDULE II - Exceptions to Representations in
GE Warehouse Credit Agreement
SCHEDULE III - Existing Indebtedness
iv
TERM LOAN AGREEMENT, dated as of April 29, 1994, between MARKET STREET
MORTGAGE CORPORATION, a Michigan corporation (the "Borrower"), and GE
CAPITAL MORTGAGE SERVICES, INC., a New Jersey corporation (the "Lender")
W I T N E S S E T H:
WHEREAS, the Borrower has requested the Lender to make a secured term
loan to the Borrower, in an aggregate principal amount not to exceed
$12,000,000, to finance the Borrower's purchase from time to time of
mortgage loan servicing rights; and
WHEREAS, the Lender is willing to make such secured term loan to the
Borrower, but only subject to and upon the terms and conditions herein set
forth;
NOW, THEREFORE, in consideration of the premises, and the mutual
covenants hereinafter contained, the parties hereto agree as follows:
Section 1. Definitions and Principles of Construction.
1.01 Defined Terms. As used in this Agreement, the following
terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"Acknowledgment Agreement" shall mean, with respect to any
Serviced Loan, the agreement or agreements (including all exhibits and
schedules attached thereto or delivered pursuant thereto and all amendments
and supplements thereof), if any, by and among the Borrower, the Lender and
an Agency, pursuant to which the Agency has consented to the Borrower's
grant to the Lender of a security interest in the Servicing Rights
associated with such Serviced Loan to secure Advances made hereunder.
"Adjustable Rate Loan" shall mean a Mortgage Loan where the
initial interest rate is subject to adjustment after closing under the
circumstances described in the Mortgage Note.
"Administrative Costs" shall have the meaning provided in Section
3.01(b).
"Advance" shall have the meaning provided in Section 2.01.
"Affiliate" shall mean, as to any Person, any other Person (other
than an individual) directly or indirectly controlling, controlled by, or
under direct or indirect common control with, such Person. A Person shall
be deemed to control another Person if such Person possesses, directly or
indirectly, the power to direct or cause the direction of
1
the management and policies of such other Person, whether through the
ownership of voting securities, by contract or otherwise.
"Agency" shall mean, as the context requires, FHLMC, FNMA or
GNMA.
"Agency Agreement" shall mean the agreement or agreements
(including all exhibits and schedules attached thereto or delivered
pursuant thereto and all amendments and supplements thereof) between a
Seller and an Agency relating to Serviced Loans owned by such Agency and
the servicing thereof by the Seller or otherwise affecting the Servicing
Rights associated with such Serviced Loans, which Agency Agreement shall be
transferred to the Borrower pursuant to the Purchase Contract for such
Servicing Rights.
"Agency Consent" shall mean the written consent or approval of an
Agency to the transfer of Servicing Rights from a Seller to the Borrower as
contemplated by the related Purchase Contract.
"Agency Requirements" shall mean the applicable rules,
regulations, directives and instructions of an Agency, including, without
limitation, the applicable requirements of the Guides, the Agency
Agreements, the Agency Consents and the Acknowledgment Agreements.
"Agency Rights" shall mean all rights, powers and prerogatives of
an Agency under or pursuant to any Servicing Documents or the Guides, and
all claims of an Agency arising out of any and all defaults and outstanding
obligations of the Borrower to such Agency.
"Agreement" shall mean this Term Loan Agreement (including all
exhibits and schedules attached hereto or delivered pursuant hereto), as
modified, supplemented or amended from time to time.
"Amortizing Installment" shall have the meaning provided in
Section 2.07(b).
"Appraisal" shall mean any appraisal of a Servicing Portfolio or
of Comparable Servicing Rights made by the Lender or by an Appraiser and
delivered to Lender pursuant to Section 4.03(b), Section 5.19 or Section
7.01(f); provided that (i) no Appraisal shall attribute any value to
Servicing Rights, or the Comparable Servicing Rights described in Section
4.03(b), for Delinquent Loans, Foreclosure Loans, or Mortgage Loans with
respect to which litigation (except any class action suit where the
mortgagor is not the class representative) or bankruptcy proceedings have
been commenced, and (ii) the methodology and assumptions used by any
Appraiser shall have been approved by the Lender in its reasonable
discretion.
2
"Appraised Value" shall mean, with respect to any Servicing
Portfolio or Comparable Servicing Rights, the value set forth in the most
recent Appraisal thereof which has been delivered to the Lender pursuant to
Section 5.19 or Section 7.01(f).
"Appraiser" shall mean a Person (who shall not be an Affiliate of
the Lender or the Borrower) experienced in the valuation of mortgage
servicing rights, selected by the Borrower and acceptable to the Lender.
"Assignment of Mortgage" shall mean, with respect to any Serviced
Loan, an assignment of the related Mortgage, notice of transfer or
equivalent instrument in recordable form, sufficient under the laws of the
jurisdiction where the related Mortgaged Property is located, to reflect
the sale of the Mortgage to the Agency who has purchased the same, which
assignment, notice of transfer or equivalent instrument may be in the form
of one or more blanket assignments covering Mortgage Loans secured by
Mortgaged Properties located in the same jurisdiction.
"Balloon Loan" shall mean a Mortgage Loan where the scheduled
monthly payments of principal and interest are based on an amortization
schedule longer than the actual loan term and a larger final payment is
required at the end of the loan term to pay the remaining principal
balance.
"Borrower" shall mean Market Street Mortgage Corporation, a
Michigan corporation, and its successors in interest and permitted assigns.
"Borrowing Base" shall mean, with respect to any Servicing
Portfolio, an amount equal to 70% of the lesser of (x) the Purchase Price
of such Servicing Portfolio (excluding, however, any amount allocated under
the Purchase Contract to Servicing Rights for Delinquent Loans, Foreclosure
Loans and Mortgage Loans with respect to which litigation or bankruptcy
proceedings have been commenced) or (y) the Appraised Value of such
Servicing Portfolio (as reflected in an Appraisal delivered pursuant to
Section 5.19); provided that, in any event, (i) the Borrowing Base for any
Servicing Portfolio where the Serviced Loans are owned by FHLMC or FNMA
shall not exceed 1.0% of the aggregate unpaid principal balance of such
Serviced Loans, and (ii) the Borrowing Base for any Servicing Portfolio
where the Serviced Loans are owned by GNMA shall not exceed 1.2% of the
aggregate unpaid principal balance of such Serviced Loans.
"Business Day" shall mean any day except Saturday, Sunday and any
day which shall be in New York, New York, a legal holiday or a day on which
banking institutions are authorized or required by law or other government
action to close.
"Buy-Down Loan" shall mean a Mortgage Loan which is subject to an
interest rate buy-down arrangement whereby the borrower, the seller of the
Mortgaged Property, or another party pays an amount to the lender or its
agent to reduce or subsidize the loan payments, or to obtain a lower
interest rate for all or a portion of the loan term.
3
"Cash-Out Refinance Loan" shall mean either (i) a Mortgage Loan
obtained to repay an existing debt secured by the Mortgaged Property, where
the loan amount includes additional cash paid to the borrower, in an amount
which would qualify it as a cash-out refinance loan under applicable Agency
Requirements, or (ii) a Mortgage Loan where the borrower is the present
owner of the Mortgaged Property and the Mortgaged Property does not already
have a mortgage lien against it.
"Collateral" shall mean all "Collateral" as defined in the Term
Loan Security Agreement.
"Commercial Paper" shall mean the short-term promissory notes of
GE Capital Corporation.
"Commercial Paper Rate" shall mean, with respect to any calendar
month, a rate per annum determined by annualizing the aggregate interest
expense of GE Capital Corporation (determined on an accrual basis) for such
calendar month in respect of Commercial Paper outstanding during such
calendar month.
"Commitment" shall mean the obligation of the Lender to make
Advances in an aggregate principal amount outstanding at any time not to
exceed $12,000,000.
"Commitment Fee" shall have the meaning provided in Section
3.01(a).
"Comparable Servicing Rights" shall have the meaning provided in
Section 4.03(b).
"Contingent Obligation" shall mean, as to any Person, any
obligation of such Person guaranteeing or intended to guarantee any
Indebtedness, leases, dividends or other obligations ("primary
obligations") of any other Person (the "primary obligor") in any manner,
whether directly or indirectly, including, without limitation, any
obligation of such Person, whether or not contingent, (i) to purchase or
repurchase any such primary obligation or any property constituting direct
or indirect security therefor, (ii) to advance or supply funds (x) for the
purchase or payment of any such primary obligation or (y) to maintain
working capital or equity capital of the primary obligor or otherwise to
maintain the net worth or solvency of the primary obligor, (iii) to
purchase property, securities or services primarily for the purpose of
assuring the owner of any such primary obligation of the ability of the
primary obligor to make payment of such primary obligation or (iv)
otherwise to assure or hold harmless the holder of such primary obligation
against loss in respect thereof; provided, however, that the term
Contingent Obligation shall not include endorsements of instruments for
deposit or collection in the ordinary course of business. The amount of
any Contingent Obligation shall be deemed to be an amount equal to the
stated or determinable amount of the primary obligation in respect of which
such Contingent Obligation is made or, if not stated or determinable, the
maximum reasonably anticipated liability in respect thereof (assuming such
Person is required to perform thereunder); provided, that with
4
respect to Contingent Obligations that consist of an obligation to
repurchase Mortgage Loans, or fund any losses related thereto, sold by the
Borrower with recourse the amount of such Contingent Obligations at any
time shall in no event be less than an amount equal to the sum of (i) 40%
of the outstanding principal balance of all such Mortgage Loans as to which
foreclosure proceedings have been commenced with respect to the underlying
property or bankruptcy or insolvency proceedings have been commenced with
respect to the obligor thereon, (ii) 30% of the outstanding principal
balance of all such Mortgage Loans with respect to which any payment due
thereunder is more than 89 days delinquent, (iii) 15% of the outstanding
principal balance of all such Mortgage Loans with respect to which any
payment due thereunder is more than 59, but less than 90 days, delinquent,
(iv) 4% of all such Mortgage Loans with respect to which any payment due
thereunder is more than 29 days, but less then 60 days, delinquent and (v)
0.50% of the aggregate outstanding principal balance of all such Mortgage
Loans as to which no payment due thereunder is more than 29 days past due.
"Cooper River Warehouse Credit Agreement" shall mean the
Warehouse Credit Agreement dated as of July 30, 1993 among the Borrower,
Cooper River Funding Inc., as lender, and GE Capital Mortgage Services,
Inc., as agent, as modified, supplemented or amended from time to time.
"Credit Documents" shall mean this Agreement, the Note and the
Term Loan Security Agreement.
"Custodial Agreement" shall mean, with respect to any Serviced
Loan, the agreement or agreements governing the retention of the originals
of the Mortgage Note, Mortgage, Assignment of Mortgage and other Mortgage
Loan Documents as referred to and in accordance with the related Agency
Agreement, which agreements are to be assigned by the Seller to the
Borrower pursuant to the related Purchase Contract.
"Custodian" shall mean an entity acting as a Mortgage Loan
Document custodian under any Custodial Agreement or pursuant to any Agency
Requirements, and any successor in interest to such entity.
"Default" shall mean any event, act or condition which with
notice or lapse of time, or both, would constitute an Event of Default.
"Delinquent Loan" shall mean a Mortgage Loan in respect of which
any Monthly Payment due thereon is more than thirty (30) days overdue.
"Dollars" and the sign "$" shall each mean freely transferable
lawful money of the United States.
"Downpayment Amount" shall have the meaning provided in Section
4.04(c).
5
"Effective Date" shall have the meaning provided in Section
10.10.
"Escrow Account" shall mean an account or accounts maintained for
the deposit of Escrow Payments received in respect of one or more Serviced
Loans.
"Escrow Payments" shall mean, with respect to any Serviced Loan,
the amounts constituting ground rents, taxes, assessments, water rates,
sewer rents, municipal charges, mortgage insurance premiums, fire and
hazard insurance premiums, condominium charges, buy-down funds, optional
insurance funds and any other payments required to be escrowed by the
Mortgagor with the mortgagee pursuant to the requirements of the related
Mortgage, the related Agency Agreement, or any other documents.
"Event of Default" shall have the meaning provided in Section 9.
"Expiry Date" shall mean the earlier of (i) December 31, 1994, as
such date may be extended upon mutual agreement between the Borrower and
the Lender from time to time and (ii) the date on which the commitment to
advance funds to the Borrower pursuant to either the GE Warehouse Credit
Agreement or the Cooper River Warehouse Credit Agreement, or both, shall
terminate.
"Extended Advance" shall have the meaning provided in Section
2.01.
"Extension Period" shall have the meaning provided in Section
3.01(a).
"Fees" shall mean the Commitment Fee and the Administrative
Costs.
"FHA" shall mean the Federal Housing Administration or any
successor thereto.
"FHLMC" shall mean the Federal Home Loan Mortgage Corporation or
any successor thereto.
"FHLMC Guide" shall mean the FHLMC Sellers' & Servicers' Guide,
any amendments or additions thereto, and any successor publication
respecting the subject matter thereof.
"FNMA" shall mean the Federal National Mortgage Association, a
corporation in conformance with Title III of the National Housing Act, as
amended, or any successor thereto.
"FNMA Guides" shall mean the FNMA Selling Guide and the FNMA
Servicing Guide, any amendments and additions thereto, and any successor
publication respecting the subject matter thereof.
6
"Foreclosure Loan" shall mean a Mortgage Loan with respect to
which foreclosure proceedings have been referred to an attorney or have
been instituted and are pending or have been completed, or a deed in lieu
of foreclosure has been accepted or delivery thereof is pending.
"GE Warehouse Credit Agreement" shall mean the Warehouse Credit
Agreement, dated as of July 30, 1993, between the Borrower and the Lender,
as modified, supplemented or amended from time to time.
"GE Warehouse Security Agreement" shall mean the Warehouse
Security Agreement, dated as of July 30, 1993, between the Borrower and the
Lender, as modified, supplemented or amended from time to time.
"GNMA" shall mean the Governmental National Mortgage Association,
a corporation in conformance with Title VIII of the Housing and Urban
Development Act of 1968, as amended, or any successor thereto.
"GNMA Guide" shall mean the GNMA Mortgage-Backed Securities
Guide, and any amendments and additions thereto, and any successor
publication respecting the subject matter thereof.
"Guides" shall mean the FHLMC Guide, the FNMA Guides and/or the
GNMA Guide, as applicable.
"HUD" shall mean the Department of Housing and Urban Development
or any successor thereto.
"Indebtedness" shall mean, as to any Person, without duplication,
(i) all indebtedness (including principal, interest, fees and charges) of
such Person for borrowed money or for the deferred purchase price of
property or services, (ii) the face amount of all letters of credit issued
for the account of such Person and all drafts drawn thereunder, (iii) all
liabilities secured by any Lien on any property owned by such Person,
whether or not such liabilities have been assumed by such Person, (iv) the
aggregate amount required in accordance with generally accepted accounting
principles to be capitalized under leases under which such Person is the
lessee and (v) all Contingent Obligations of such Person.
"Initial Borrowing Date" shall mean the date on which the initial
incurrence of Advances occurs.
"Lender" shall mean GE Capital Mortgage Services, Inc., a New
Jersey corporation, and its successors in interest and assigns.
"Lien" shall mean any mortgage, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or other),
preference, priority or security
7
agreement of any kind or nature whatsoever (including, without limitation,
any conditional sale or other title retention agreement, any financing or
similar statement or notice filed under the UCC or any other similar
recording or notice statute, and any lease having substantially the same
effect as any of the foregoing), and any Agency Rights.
"Margin Stock" shall have the meaning provided in Regulation U of
the Board of Governors of the Federal Reserve System.
"Maturity Date" shall have the meaning provided in Section 2.06.
"Monthly Payment" shall mean the scheduled monthly payment of
principal and interest and taxes and insurance on a Mortgage Loan.
"Mortgage" shall mean the mortgage, deed of trust, deed to secure
debt, or other instrument securing a Mortgage Note, which creates a first
lien on an unsubordinated estate in fee simple or a leasehold estate (as
permitted by the relevant Agency) in real property.
"Mortgage File" shall mean the file containing the Mortgage Loan
Documents pertaining to a particular Mortgage Loan.
"Mortgage Bankers' Reporting Forms" shall mean all Mortgage
Bankers' Financial Reporting Form Statement of Condition (designated as
FHLMC Form 1055 and FNMA Form 1002, respectively, and any successor thereto
or replacement thereof) filed by the Borrower with FHLMC or FNMA.
"Mortgage Loan" shall mean a loan evidenced by a Mortgage Note
and secured by a Mortgage encumbering a completed one to four family
residential property (including, without limitation, condominium units and
excluding cooperative ownership interests).
"Mortgage Loan Documents" shall mean the loan documents
pertaining to any Mortgage Loan, including, without limitation, the
Mortgage Note, the Mortgage, any Assignment of the Mortgage and all other
assignments, the title insurance policy and, if applicable, the policy of
primary mortgage guaranty insurance.
"Mortgage Loan Schedule" shall mean, with respect to any
Servicing Portfolio, the mortgage loan schedule setting forth the
information with respect to each Mortgage Loan in the Servicing Portfolio
as required by Agency Requirements.
"Mortgage Note" shall mean the promissory note or other evidence
of the indebtedness of a Mortgagor which is secured by a Mortgage.
8
"Mortgaged Property" shall mean the real property securing
repayment of the debt evidenced by a Mortgage Note.
"Mortgagor" shall mean the obligor on a Mortgage Note.
"New Servicer" shall have the meaning provided in Section 4.04.
"Note" shall have the meaning provided in Section 2.06.
"Obligations" shall mean all "Obligations" as defined in the Term
Loan Security Agreement.
"Office" shall mean the office of the Lender located at Three
Executive Campus, Cherry Hill, New Jersey 08002 or such other address as
the Lender may specify from time to time in a written notice to the
Borrower.
"Operating Account" shall mean the operating account number
890-0026723 maintained by the Lender at Bank of New York or such other
account as the Lender may specify from time to time in a written notice to
the Borrower.
"Parent" shall mean Republic Bancorp Inc., a Michigan
corporation.
"Person" shall mean any individual, partnership, joint venture,
firm, corporation, association, trust or other enterprise or any government
or political subdivision or any agency, department or instrumentality
thereof.
"Pool" shall mean a group of Mortgage Loans which is segregated
on the basis of applicable Agency Requirements and which is considered to
be aggregated for the purposes of servicing.
"Purchase Contract" shall mean the agreement or agreements
(including all exhibits and schedules attached thereto or delivered
pursuant thereto and all amendments and supplements thereof) pursuant to
which a Seller has agreed to sell and transfer to the Borrower certain
Servicing Rights.
"Purchase Price" shall mean the aggregate amount to be paid by
the Borrower to a Seller pursuant to a Purchase Contract as the full
purchase price for the Servicing Portfolio being purchased thereunder.
"Request for Advance" shall have the meaning provided in Section
2.04.
"Sale Date" shall mean, with respect to any Purchase Contract,
the date on or as of which ownership of all Servicing Rights being
purchased thereunder shall have been sold and transferred to the Borrower
by the Seller in accordance with the terms thereof and
9
the Borrower has remitted to the Seller the portion of the Purchase Price
then required to be paid for such Servicing Rights.
"Seller" shall mean a Person who owns certain Servicing Rights
which it has agreed to sell and transfer to the Borrower pursuant to a
Purchase Contract.
"Serviced Loan" shall mean a Mortgage Loan which is subject to an
Agency Agreement and whose Servicing Rights are the subject of a Purchase
Contract.
"Servicing Documents" shall mean, with respect to any Servicing
Portfolio, the following documents and instruments related thereto:
(i) the Purchase Contract;
(ii) the Servicing Manual, if any;
(iii) all Agency Agreements (containing both the original
Mortgage Loan Schedule and an updated Mortgage Loan
Schedule as of the relevant Sale Date);
(iv) all Agency Consents, consents from any other
applicable parties, and tri-party agreements with an
Agency required in order to effect the valid transfer
of the related Servicing Rights pursuant to Agency
Requirements;
(v) all Acknowledgment Agreements;
(vi) all Custodial Agreements; and
(vii) any assignment, conveyance agreement or other
document or instrument (not otherwise described in
clauses (ii) through (vi) above) required under the
terms of the Purchase Contract to be executed and
delivered by the Seller, the Borrower or any other
party to effect the purchase and sale of the
Servicing Rights thereunder.
"Servicing File" shall mean, collectively, the documents, files
and other items pertaining to a particular Serviced Loan including, but not
limited to, the computer files, data disks, books, records, data tapes,
notes, and all additional documents generated as result of or utilized in
originating and/or servicing such Serviced Loan.
"Servicing Manual" shall mean any manual or similar collection of
directories or instructions detailing the procedures pursuant to which the
Seller is to effect the transfer
10
of the Servicing Rights, the Servicing Files, the Agency Agreements and all
other applicable Servicing Documents to the Borrower pursuant to the
related Purchase Contract.
"Servicing Portfolio" shall mean all Servicing Rights which are
the subject of a particular Purchase Contract.
"Servicing Rights" shall mean, with respect to a Serviced Loan,
any and all of the following as defined and permitted in the related
Servicing Documents and the Guides: (a) all rights to service the Serviced
Loan; (b) any payments or monies payable or received for servicing the
Serviced Loan; (c) any late fees, assumption fees, penalties or similar
payments payable or received with respect to the Serviced Loan; (d) all
rights to receive (from the Mortgagor, insurance proceeds, claims
settlements, or any other source) funds advanced (i) to cover delinquent
Monthly Payments or (ii) in the performance of other servicing obligations
(including, without limitation, the preservation, protection, management
and disposition of Mortgaged Properties and the enforcement of judicial or
other remedial proceedings with respect thereto); (e) escrow payments or
other similar payments payable or received with respect to the Serviced
Loan; (f) all accounts and other rights to payments related to any of the
property described in this paragraph; (g) possession and use of any and all
Servicing Files pertaining to the Serviced Loan or pertaining to the past,
present or prospective servicing of the Serviced Loan; (h) all rights under
all agreements or documents creating, defining or evidencing any such
servicing rights; and (i) all rights, powers and privileges incident to any
of the foregoing. For purposes of Section 4 and Sections 7.01(f) and (g),
the term "Servicing Rights" shall also include all Comparable Servicing
Rights which have been substituted for Servicing Rights previously pledged
to the Lender pursuant to Section 4.03(b).
"Servicing Sale Agreement" shall mean a written agreement between
the Borrower and a New Servicer which provides for the purchase by the New
Servicer of Servicing Rights which are then pledged as Collateral under the
Term Loan Security Agreement.
"Standard Fee Period" shall mean the period beginning on the
first day immediately succeeding the Expiry Date and ending on the next
succeeding December 31, and each one-year period thereafter (beginning on
each January 1) until the Term Loan shall have been paid in full.
"Subsidiary" shall mean, as to any Person, (i) any corporation
more than 50% of whose stock of any class or classes having by the terms
thereof ordinary voting power to elect a majority of the directors of such
corporation (irrespective of whether or not at the time stock of any class
or classes of such corporation shall have or might have voting power by
reason of the happening of any contingency) is at the time owned by such
Person and/or one or more Subsidiaries of such Person and (ii) any
partnership, association, joint venture or other entity in which such
Person and/or one or more Subsidiaries of such Person has
11
(A) more than a 50% equity interest at the time or (B) an interest
satisfying the provisions of clause (i) above in any general partner of any
limited partnership or joint venture.
"Taxes" shall have the meaning provided in Section 4.06.
"Term Loan" shall have the meaning provided in Section 2.07(b).
"Term Loan Security Agreement" shall have the meaning provided in
Section 5.09.
"Transfer Date" shall mean, in connection with any Purchase
Contract, the date on or as of which (i) the Seller shall have transferred
to the Borrower the Servicing Files, the Agency Agreement, the Mortgage
Files and any other documents relating to the Serviced Loans whose
Servicing Rights were transferred to the Borrower as of the relevant Sale
Date, and (ii) the Borrower shall have assumed the actual servicing of the
Serviced Loans in accordance with the terms of such Purchase Contract and
any relevant Agency Requirements. The Transfer Date may be on or
subsequent to the Sale Date, but in any event shall be no later than three
months after the Sale Date.
"UCC" shall mean the Uniform Commercial Code as from time to time
in effect in New Jersey or Florida or any other relevant jurisdiction, as
applicable.
"United States" and "U.S." shall each mean the United States of
America.
"VA" shall mean the Veterans Administration or any successor
thereto.
"VA Loan" shall mean a Mortgage Loan which is eligible for
guarantee by VA and is either so guaranteed or is subject to a current
binding and enforceable commitment for such guarantee pursuant to the
provisions of the Servicemen's Readjustment Act, as now in effect and as
may be hereafter amended from time to time, and is otherwise eligible for
inclusion in a GNMA mortgage-backed security pool.
1.02 Principles of Construction. (a) All references to
sections, schedules and exhibits are to sections, schedules and exhibits in
or to this Agreement unless otherwise specified. The words "hereof,"
"herein," "hereto" and "hereunder" and words of similar import when used in
this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement.
(b) All accounting terms not specifically defined herein shall
be construed in accordance with generally accepted accounting principles in
conformity with those used in the preparation of the financial statements
referred to in Section 5.07.
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Section 2. Amount and Terms of Credit.
2.01 Commitment. Subject to and upon the terms and conditions
set forth herein, the Lender agrees to make an advance or advances (each an
"Advance" and, collectively, the "Advances") to the Borrower, each of which
Advances: (i) shall be made at any time and from time to time in accordance
with the terms hereof on and after the Effective Date and prior to the
Expiry Date (or such earlier date as the Commitment shall have been
terminated pursuant to the terms hereof); provided, that certain Advances
(herein called "Extended Advances") may be made after the Expiry Date to
fund a purchase of Servicing Rights which was approved for funding by the
Lender prior to the Expiry Date; (ii) shall bear interest and shall be
repaid as provided in Section 2.07; (iii) shall be prepaid in accordance
with the provisions hereof; and (iv) shall be made against the pledge by
the Borrower of Servicing Rights as Collateral for such Advance as provided
herein and in the Term Loan Security Agreement; provided, however, that (1)
the aggregate principal amount of Advances outstanding at any time shall
not exceed the lesser of (x) the Commitment and (y) 70% of the Appraised
Value of all Servicing Portfolios then pledged as Collateral under the Term
Loan Security Agreement (as set forth in the most recent Appraisal
delivered to the Lender hereunder), (2) the aggregate principal amount of
Advances incurred and outstanding as of the Expiry Date shall equal at
least $1.5 million, and (3) the aggregate principal amount of Advances
outstanding at any time secured by a particular Servicing Portfolio shall
not exceed the Borrowing Base for such Servicing Portfolio.
2.02 Minimum Borrowing Amount. The principal amount of each
Advance shall not be less than $500,000 and, if greater, shall be in an
integral multiple of $100,000.
2.03 Reserved.
2.04 Request for Advance. Whenever the Borrower desires to
incur an Advance hereunder, it shall deliver to the Lender at its Office a
request for Advance substantially in the form of Exhibit A (the "Request
for Advance") not later than 12:30 p.m. (New York City time) on the
Business Day prior to the proposed date of such Advance. Each Request for
Advance (i) shall be appropriately completed to specify the aggregate
principal amount of the Advance to be made and the proposed date of such
Advance (which shall be a Business Day), and (ii) shall have attached
thereto each of the exhibits or other attachments specified herein,
including, without limitation, a Borrowing Base certificate substantially
in the form of Schedule I to Exhibit A.
2.05 Disbursement of Funds. No later than 3:00 P.M. (New York
City time) on the date specified in the Request for Advance, the Lender
shall make available to the Borrower the amount of such Advance requested
to be made on such date in Dollars by wire transfer to an account of the
Seller, in accordance with the instructions set forth in the Request for
Advance.
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2.06 Note. The Borrower's obligation to pay the principal of,
and interest on, all Advances made to it by the Lender shall be evidenced
by a promissory note substantially in the form of Exhibit B (the "Note").
The Note shall (i) be executed by the Borrower, (ii) be payable to the
order of the Lender and be dated the Initial Borrowing Date, (iii) be in a
stated principal amount equal to the Commitment, (iv) be payable in the
aggregate principal amount of the Advances evidenced thereby in Amortizing
Installments as provided in Section 2.07, (v) mature (with respect to each
Advance evidenced thereby not previously repaid) on the earlier to occur of
the fifth anniversary of the Effective Date or the maturity of the
promissory note delivered by the Borrower pursuant to the GE Warehouse
Credit Agreement (the "Maturity Date"), (vi) bear interest as provided in
Section 2.07, (vii) be subject to mandatory prepayment as provided in
Section 4.02 and (viii) be entitled to the benefits of this Agreement and
the other Credit Documents. The Lender will note on its internal records
the amount of each Advance made by it and each payment in respect thereof
and, prior to any transfer of the Note, will endorse on the reverse side
thereof the outstanding principal amount of Advances evidenced thereby;
provided, however, that failure to make any such notation shall not affect
the Borrower's obligations in respect of such Advances.
2.07 Interest and Principal Payments. (a) The Borrower agrees
to pay interest in respect of the outstanding principal amount of each
Advance from the date the proceeds thereof are made available to the
Borrower until such principal amount shall be paid in full (whether through
payment of Amortizing Installments, at maturity, by acceleration or
otherwise) at a rate per annum equal to 3.75% in excess of the Commercial
Paper Rate in effect from time to time.
(b) The aggregate principal amount of all Advances which shall
have been incurred and are outstanding as of the Expiry Date, together
with any Extended Advances, is herein referred to as the "Term Loan." The
Borrower shall repay the Term Loan (including any Extended Advances) in
forty-eight (48) consecutive monthly installments (each, an "Amortizing
Installment"), beginning on the first Business Day of the calendar month
immediately succeeding the month in which the Expiry Date occurs and on the
first Business Day of each calendar month thereafter; provided, that, the
repayment of any Extended Advance shall begin on the first Business Day of
the calendar month immediately succeeding the month in which such Extended
Advance was made, and provided, further, that the incurrence of any
Extended Advances will not extend the period for repayment of the Term Loan
beyond the 48-month repayment period described above. Each of the first
forty-seven (47) Amortizing Installments shall be in an amount which would
be sufficient to repay the principal of the Term Loan (including any
Extended Advances) in sixty (60) equal, consecutive monthly installments,
and the forty-eighth (48th) Amortizing Installment shall be in an amount
sufficient to pay the remaining balance of the Term Loan. The amount of
all Amortizing Installments due after the incurrence of any Extended
Advance shall be increased to provide for the repayment of such Extended
Advance in equal installments over the remainder of the original 48-month
repayment period.
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(c) Overdue principal and, to the extent permitted by law,
overdue interest, and any other overdue amount payable by the Borrower
hereunder, shall bear interest at a rate per annum equal to 4% per annum in
excess of the rate specified in clause (a) above in effect from time to
time; provided, however, that no Advance shall bear interest at a rate in
excess of the maximum rate permitted by applicable law.
(d) Accrued (and theretofore unpaid) interest shall be payable
in respect of the Advances (i) monthly in arrears on the fifth Business Day
of each calendar month with respect to interest accrued during the
preceding calendar month, (ii) on any prepayment of Advances permitted
under this Agreement, (iii) on the Maturity Date and (iv) after the
Maturity Date, on demand. The Lender shall provide the Borrower with a
notice setting forth the interest accrued with respect to each calendar
month not later than the third Business Day following the end of such
calendar month.
2.08 Increased Costs. If, due to either (a) the effectiveness
or introduction of, or any change in, or any change in the interpretation
of, any law or regulation by any court or administrative or governmental
authority charged with the administration thereof or (b) compliance after
the date hereof with any guideline or request from any central bank or
other governmental authority or official (whether or not having the force
of law), there shall be an increase in the cost to the Lender of making,
funding or maintaining any Advance or the Commitment hereunder or the
Lender shall be required to make a payment calculated by reference to the
principal of, or interest on, any Advance made by it or the Commitment
(other than any such increased cost, reduction in the amount receivable, or
payment required to be made resulting from the imposition or an increase in
the rate of any Taxes unless such Taxes are payable by the Borrower under
Section 4.06), then the Borrower shall, from time to time, upon demand by
the Lender, pay additional amounts sufficient to compensate the Lender for
any such increased cost (subject, however, to the limitation contained in
the last sentence of this Section). A certificate of an officer of the
Lender as to the amount of any such increased cost actually incurred by the
Lender (and the calculation thereof) submitted to the Borrower shall be
conclusive and binding for all purposes, absent manifest error.
Notwithstanding the foregoing, the Borrower shall not be obligated to pay
any increased cost otherwise payable under this Section 2.08 to the extent
that such payment, when added to the aggregate amount previously paid by
the Borrower under this Section 2.08 and Section 2.09, would exceed 1% of
the aggregate principal amount of Advances then outstanding.
2.09 Increased Capital. If after the date hereof either (a) the
introduction or effectiveness of, or any change in, or in the
interpretation of, any law or regulation or (b) compliance with any
guideline or request from any central bank or other governmental authority
or official (whether or not having the force of law and including, in any
event, any law, regulation or interpretation with respect to capital
adequacy or request in connection with any of the foregoing) affects or
would affect the amount of capital required or expected to be maintained by
the Lender or any corporation controlling the Lender and the Lender
reasonably determines that the amount of such capital is increased by or
based upon the
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existence of the Lender's agreement, in its discretion, to make or maintain
Advances hereunder and other similar agreements or facilities, then, upon
demand by the Lender, the Borrower shall immediately pay to the Lender for
the account of the Lender from time to time, as specified by the Lender,
additional amounts sufficient to compensate the Lender in light of such
circumstances, to the extent that the Lender reasonably determines such
increase in capital to be allocable to the existence of the Lender's
agreements hereunder (subject, however, to the limitation contained in the
last sentence of this Section). A certificate as to such amounts (and the
calculation thereof) submitted to the Borrower by the Lender shall be
conclusive and binding for all purposes, absent manifest error.
Notwithstanding the foregoing, the Borrower shall not be obligated to pay
any amount otherwise payable under this Section 2.09 to the extent that
such payment, when added to the aggregate amount previously paid by the
Borrower under this Section 2.09 and Section 2.08, would exceed 1% of the
aggregate principal amount of Advances then outstanding.
Section 3. Fees and Charges.
3.01 Fees and Charges. (a) The Borrower shall pay the Lender a
commitment fee (the "Commitment Fee") with respect to each Advance made
hereunder, which shall be calculated and paid as follows: (i) on the date
the Advance is made, an amount equal to 0.25% per annum of the principal
amount of such Advance, prorated for the period beginning on such payment
date and ending on the Expiry Date; provided, however, that if the Expiry
Date is subsequently extended pursuant to the terms hereof (the time period
beginning on the first day after the previously stated Expiry Date and
ending on the new Expiry Date being herein referred to as an "Extension
Period") the Borrower shall pay, on the first day of the Extension Period,
an additional Commitment Fee in an amount equal to 0.25% per annum of the
principal amount of all Advances then outstanding, prorated for the
Extension Period, and (ii) beginning on the first Business Day immediately
succeeding the Expiry Date, and on each January 1 thereafter, until the
Term Loan shall have been paid in full, an amount equal to 0.25% per annum
of the principal amount of the Term Loan outstanding on the particular
payment date (which amount shall be prorated for any Standard Fee Period
which is less than a full calendar year, and shall be subject to partial
rebate under the circumstances described in the next sentence of this
Section). If at any time during any Standard Fee Period the Borrower sells
all or any portion of a Servicing Portfolio then pledged as Collateral
under the Term Loan Security Agreement and the Lender shall have received
any required prepayment of Advances with respect thereto and shall have
released its Lien on such Collateral pursuant to Section 4.04, the Lender
shall rebate to the Borrower that portion of the Commitment Fee for such
Standard Fee Period attributable to the Advances being prepaid, pro-rated
for the period beginning on the first day of such Standard Fee Period and
ending on the date of such prepayment; provided, however, that the rebated
amount shall in no event exceed 50% of the total Commitment Fee for such
Standard Fee Period attributable to the prepaid Advances.
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(b) The Borrower shall pay to the Lender, promptly following
the Lender's request therefor, all reasonable costs and expenses (the
"Administrative Costs") incurred by the Lender in connection with (i) the
making of an Advance (including, without limitation, all costs associated
with the review and processing of the applicable Servicing Documents and
any other documents, and the costs of overnight and express delivery, wire
transfers, notary, recording and filing fees and any similar fees and
charges), and (ii) the Lender's review (and, if applicable, preparation) of
Appraisals, and the Lender's review and assessment of the qualifications,
methodology and assumptions of any Appraiser other than the Lender.
(c) The Lender shall provide the Borrower with a notice setting
forth the Commitment Fee accrued with respect to each one-year period
referred to in clause (a) above not later than the third Business Day
following the end of such one-year period and shall provide the Borrower
with a notice setting forth the Administrative Costs incurred with respect
to each calendar month not later than the third Business Day following the
end of such calendar month.
Section 4. Prepayments.
4.01 Reserved.
4.02 Mandatory Prepayments. Except as set forth in Section
4.03(b) and Section 4.04, a prepayment of Advances shall be required,
without notice or demand of any kind to the Borrower, as follows (any such
prepayment occurring after the Expiry Date shall be deemed to refer to
prepayment of the Term Loan or the applicable portion thereof):
(a) if any Servicing Rights in respect of which an Advance has
been made hereunder are sold or otherwise transferred (including, without
limitation, in connection with any repurchase of such Servicing Rights by a
Seller pursuant to the related Purchase Contract), the Borrower shall
immediately prepay outstanding Advances in an aggregate principal amount
equal to the then outstanding principal amount of the Advances which were
incurred to purchase such Servicing Rights;
(b) if on any date the aggregate principal amount of Advances
then outstanding (after giving effect to all other repayments thereof on
such date, including, without limitation, any Amortizing Installment),
exceeds 70% of the Appraised Value of all Servicing Rights then pledged as
Collateral (as set forth in the most recent Appraisal which has been
delivered to the Lender pursuant to Section 7.01(f)), the Borrower shall
immediately prepay outstanding Advances in an aggregate principal amount
equal to such excess amount; and
(c) if the Borrower becomes aware that the Borrower's rights to
service all or any portion of the Serviced Loans whose Servicing Rights
have been pledged as Collateral may be terminated, the Borrower shall
immediately prepay an amount equal to the
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outstanding principal amount of all Advances which were incurred to fund
the purchase of such Servicing Rights.
4.03 Release of Collateral; Substitution. (a) So long as no
Default or Event of Default has occurred and is continuing or would result
therefrom, upon the Borrower's request for the release of the Lender's Lien
with respect to any specified Servicing Rights then pledged as Collateral,
accompanied by a prepayment by the Borrower of Advances in an aggregate
principal amount equal to the then outstanding principal amount of the
Advances which were incurred to purchase such Servicing Rights, and a
deposit by the Borrower of such amount as the Lender shall designate as a
reserve for application to any fees, accrued interest or breakage costs
payable as of or with respect to the calendar month in which such
prepayment occurs, the Lender shall, within one Business Day after the
later of the receipt of such request or such prepayment and deposit,
release from the Lien granted pursuant to the Term Loan Security Agreement
and deliver to the Borrower in accordance with the terms of the Term Loan
Security Agreement the Collateral corresponding to or related to such
Servicing Rights.
(b) So long as no Default or Event of Default has occurred and is
continuing, in lieu of any required prepayment of Advances pursuant to
Section 4.02(a) or Section 4.03(a) or Section 4.04, the Borrower may,
subject to the terms and conditions hereof and the prior consent of the
Lender, substitute and pledge either (i) additional Servicing Rights
comparable to those being released from the Lender's Lien, or (ii) other
comparable servicing rights, reasonably acceptable to the Lender, for
Mortgage Loans originated by the Borrower and not purchased from a Seller
("Comparable Servicing Rights"), whose Appraised Value (based on a new
Appraisal), in either case, is such that immediately after giving effect to
such substitution or addition, such prepayment is no longer required.
4.04 Sale of Collateral. (a) In the event that the Borrower
determines to sell all or any portion of a Servicing Portfolio, the
Borrower shall be required to prepay Advances in an aggregate principal
amount equal to the then outstanding principal amount of the Advances which
were incurred to purchase the Servicing Portfolio (or portion thereof)
being sold.
(b) The Lender shall take such action as the Borrower shall
reasonably request pursuant to this Section 4.04 to effect the sale and
transfer of a Servicing Portfolio, and any related Collateral, to the
purchaser thereof (the "New Servicer"), including, without limitation,
executing and delivering any appropriate amendments to, or assignments of
the Lender's rights under, any pertinent Servicing Documents; provided,
however, that:
(i) prior to taking any action pursuant to this Section
4.04, the Lender shall have received any indemnity or other assurances
requested by the Lender from the Borrower with respect to any actions to be
performed by the Lender pursuant to this Section 4.04;
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(ii) the Borrower shall reimburse the Lender, immediately
upon request, for all costs and expenses (including, without limitation,
attorneys' fees) incurred by the Lender in connection with any such sale of
Collateral and release of Lien and any other actions to be taken by the
Lender pursuant to this Section 4.04; and
(iii) the Lender shall not be required to release its Lien
on any Collateral until it shall have received the full amount of the
prepayment required pursuant to Section 4.04(a).
(c) Upon the execution and delivery by the Borrower and a New
Servicer of a Servicing Sale Agreement, the Lender, at the Borrower's
request and upon receipt of a copy of the executed Servicing Sale
Agreement, shall issue and deliver to the New Servicer a written commitment
(a "Servicing Release Commitment"), substantially in the form set forth in
Exhibit F hereto, whereby the Lender will agree to release the Servicing
Portfolio (or portion thereof) being sold to the New Servicer from the Lien
granted pursuant to the Term Loan Security Agreement, upon the Lender's
receipt from the New Servicer, in immediately available funds, of the full
amount of the prepayment required under Section 4.04(a) on account of the
sale of such Servicing Portfolio (less any applicable Downpayment Amount
previously received by the Lender pursuant to the next sentence of this
subsection (c)). The Borrower shall pay to the Lender immediately upon
receipt (or cause the New Servicer to pay directly to the Lender) the full
amount of any down payment, installment payment, "earnest money" or similar
amount (collectively, the "Downpayment Amount") which the Borrower shall
have received (or be entitled to receive) from the New Servicer pursuant to
the Servicing Sale Agreement prior to the date of the New Servicer's
payment to the Lender pursuant to the immediately preceding sentence of
this subsection (c).
4.05 Method and Place of Payment. Except as otherwise
specifically provided herein, all payments under this Agreement and the
Note shall be made to the Lender not later than 2:00 p.m. (New York City
time) on the date when due and shall be made in Dollars in immediately
available funds for deposit to the Operating Account as directed by the
Lender. Any payment received after 2:00 p.m. (New York City time) on any
Business Day shall be treated as being received on the next succeeding
Business Day. Whenever any payment to be made hereunder or under the Note
shall be stated to be due on a day which is not a Business Day, the due
date thereof shall be extended to the next succeeding Business Day and,
with respect to payments of principal, interest, fees and penalties, shall
be payable at the rate otherwise applicable on the scheduled payment date.
The Borrower hereby authorizes the Lender to deduct from each Advance to be
made hereunder all amounts due and owing to the Lender including interest,
penalties, fees or mandatory prepayments.
4.06 Net Payments. All payments made by the Borrower hereunder
will be made without setoff, counterclaim or other defense. Promptly upon
(and in no event later than 10 days following) notice from the Lender to
the Borrower, the Borrower agrees to pay, prior to the date on which
penalties attach thereto, all present and future income,
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stamp and other taxes, levies, or costs and charges whatsoever imposed,
assessed, levied or collected on or in respect of an Advance and/or the
recording, registration, notarization or other formalization of an Advance
or the execution and delivery or otherwise with respect to this Agreement
or the other Credit Documents or any Servicing Documents and/or any
payments of principal, interest or other amounts made on or in respect of
an Advance (all such taxes, levies, costs and charges being herein
collectively called "Taxes"); provided that Taxes shall not include taxes
imposed on or measured by the overall net income or receipts of the Lender
by the United States of America or any political subdivision or taxing
authority thereof or therein. The Borrower agrees to also pay such
additional amounts equal to increases in taxes payable by the Lender
described in the foregoing proviso, which increases arise solely from the
receipt by the Lender of payments made by the Borrower described in the
immediately preceding sentence of this Section 4.06. Promptly (and in no
event later than 10 days) after the date on which payment of any such Tax
is due pursuant to applicable law, the Borrower will, at the request of the
Lender, furnish to the Lender evidence, in form and substance satisfactory
to the Lender, that the Borrower has met its obligation under this Section
4.06. The Borrower agrees to indemnify the Lender against, and reimburse
the Lender on demand for, any Taxes, as reasonably determined by the Lender
in good faith. The Lender shall provide the Borrower with appropriate
receipts for any payments or reimbursements made by the Borrower pursuant
to this Section 4.06.
4.07 Breakage Costs. If the Borrower shall prepay any principal
of Advances, whether pursuant to a voluntary or mandatory prepayment,
Borrower shall pay to the Lender (in addition to principal and interest)
such additional amounts as may be necessary to compensate the Lender for
any loss and any direct or indirect costs, including the cost of
reemployment of funds so prepaid at rates lower than the cost to the Lender
of such funds, except that no such additional amount will be required in
any case where the Borrower has given the Lender at least 45 days' prior
written notice of a particular prepayment of Advances. Such losses and
costs, which the Lender shall exercise reasonable efforts to minimize,
shall be specified in writing to the Borrower by the Lender and, absent
manifest error in computation, shall be binding on the Borrower. The
Borrower shall make any required payment of such costs and losses on the
date on which interest in respect of the Advances prepaid is otherwise due
and payable.
Section 5. Conditions Precedent.
The obligation of the Lender to make each Advance to the Borrower
hereunder is subject, at the time of the making of each such Advance
(except as hereinafter indicated), to the satisfaction of the following
conditions:
5.01 Execution of Agreement; Note. On or prior to the Initial
Borrowing Date, (i) the Effective Date shall have occurred and (ii) there
shall have been delivered to the Lender the Note executed by the Borrower
in the amount, maturity and as otherwise provided herein.
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5.02 No Default Representations and Warranties. At the time of
the making of each Advance and also after giving effect thereto (i) there
shall exist no Default or Event of Default, and (ii) all representations
and warranties contained herein and in the other Credit Documents shall be
true and correct in all material respects with the same effect as though
such representations and warranties had been made on and as of the date of
such Advance.
5.03 Request for Advance. Prior to the making of each Advance,
the Lender shall have received a Request for Advance with respect thereto
meeting the requirements of Section 2.04.
5.04 Opinions of Counsel. On the Initial Borrowing Date, the
Lender shall have received from outside counsel for the Borrower (who shall
be reasonably satisfactory to the Lender) an opinion addressed to the
Lender and dated the Initial Borrowing Date covering the matters set forth
in Exhibit C and such other matters incident to the transactions
contemplated herein as the Lender may reasonably request. If, at the time
of the making of any Advance subsequent to the Initial Borrowing Date, the
Lender shall have requested same, the Lender shall have received from
counsel for the Borrower (who shall be reasonably satisfactory to the
Lender) an opinion in form and substance reasonably satisfactory to the
Lender, addressed to the Lender and dated the date of such Advance,
covering such matters as the Lender shall specify or such other matters
incident to the transactions contemplated herein as the Lender may
reasonably request.
5.05 Diligence. (a) On or prior to the Initial Borrowing Date,
the Lender shall have satisfactorily completed its due diligence review of
the Borrower's operations, business and financial condition and its
mortgage servicing practices and procedures, including, without limitation,
the due diligence practices and procedures employed by the Borrower in
assessing any proposed purchase of Servicing Rights.
(b) Prior to the making of any Advance, the Lender shall have
satisfactorily completed its due diligence review with respect to (i) the
Servicing Rights which are the subject of the particular Advance, the
Seller's servicing practices and procedures with respect thereto, and the
related Servicing Documents and Servicing Files, and/or (ii) the results of
the Borrower's due diligence review with respect to the matters described
in clause (i).
(c) The completion of any due diligence review pursuant to
paragraph (a) or (b) above shall in no manner limit or compromise the
Lender's rights and remedies in the event of any breach by the Borrower of
its obligations, representations or warranties hereunder.
5.06 Corporate Documents; Proceedings. (a) On the Initial
Borrowing Date, the Lender shall have received a certificate, dated the
Initial Borrowing Date, signed by the President or any Vice President of
the Borrower, and attested to by the Secretary or any
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Assistant Secretary of the Borrower, substantially in the form of Exhibit
D-1 and with appropriate insertions, together with copies of the
resolutions of the Borrower referred to in such certificate, a
good-standing certificate from the Secretary of State of the jurisdiction
of incorporation of the Borrower dated not later than 20 days prior to the
Initial Borrowing Date, and any amendments to the Borrower's Certificate of
Incorporation and By-Laws adopted by the Borrower after July 30, 1993.
(b) At the time of making each Advance, all corporate and legal
proceedings and all instruments and agreements in connection with the
transactions contemplated in this Agreement and the other Credit Documents
shall be reasonably satisfactory in form and substance to the Lender, and
the Lender shall have received all information and copies of all documents
and papers, including records of corporate proceedings and governmental
approvals, if any, which the Lender reasonably may have requested in
connection therewith, such documents and papers where appropriate to be
certified by proper corporate or governmental authorities.
5.07 Financial Statements. On or prior to the Initial Borrowing
Date, the Lender shall have received to the extent not already delivered
pursuant to the GE Warehouse Credit Agreement (i) the consolidated and
consolidating balance sheets of the Borrower and its Parent for the fiscal
year most recently ended and the related statements of income and retained
earnings and statements of cash flows of the Borrower and its Parent for
such fiscal year, certified by an independent certified public accountant
of recognized national standing reasonably acceptable to the Lender and
prepared in accordance with generally accepted accounting principles in the
United States consistently applied, together with "management letters"
detailing any "material weaknesses in internal controls" (as defined by the
Financial Accounting Standards Board) noted by such accountants for such
period and (ii) copies of any uniform single audit reports in respect of
the Borrower, any audits or financial reports in respect of the Borrower
completed or requested by HUD, GNMA, FNMA, FHLMC or any other governmental
agency or institutional investor, and any Mortgage Bankers' Reporting Forms
prepared by the Borrower, in each case during the year preceding the date
hereof.
5.08 Mandatory Prepayment. After giving effect to the proposed
Advance, no prepayment would be required pursuant to Section 4.02.
5.09 Term Loan Security Agreement; UCC's. (a) On or prior to
the Initial Borrowing Date, the Borrower shall have duly authorized,
executed and delivered a Term Loan Security Agreement substantially in the
form of Exhibit E (as modified, supplemented or amended from time to time,
the "Term Loan Security Agreement") covering all of the Borrower's present
and future Collateral, together with:
(i) acknowledgment copies of proper financing statements
(Form UCC-1) (in form satisfactory to the Lender) duly filed
under the UCC of each jurisdiction as may be necessary or, in the
opinion of the Lender, desirable to
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perfect the security interests purported to be created by the
Term Loan Security Agreement;
(ii) certified copies of "Requests for Information or Copies"
(Form UCC-11), or equivalent reports, listing the financing
statements referred to in clause (a) above and all other
effective financing statements that name the Borrower as debtor
and that are filed in the jurisdictions referred to in said
clause (a), together with copies of such other financing
statements (none of which shall cover the Collateral, except to
the extent evidencing Liens permitted pursuant to Section 8.01);
(iii) evidence of the completion of all other recordings and
filings of, or with respect to, the Term Loan Security Agreement
as may be necessary or, in the opinion of the Lender, desirable
to perfect the security interests purported to be created by the
Term Loan Security Agreement; and
(iv) evidence that all other actions necessary or, in the
opinion of the Lender, desirable to perfect and protect the
security interests created by the Term Loan Security Agreement
have been taken.
(b) On or prior to the date of the first Advance in respect of
any Servicing Rights, the Borrower shall have executed and delivered to the
Lender (and any Agency requiring the same) (i) acknowledgement copies of
proper financing statements (Form UCC-1) (in form satisfactory to the
Lender and any such Agency) covering such Servicing Rights and any related
Collateral, which shall have been duly filed under the UCC of each
jurisdiction as may be necessary or, in the opinion of the Lender,
desirable to perfect the Lender's security interest therein, and (ii)
copies of such other documents or reports, or evidence of completion of
such other recordings and filings, described in paragraph (a)(ii)(iii) and
(iv) above but with specific reference to such Servicing Rights and related
Collateral, as the Lender may request.
5.10 No Adverse Change. Since July 30, 1993 there shall have
been no material adverse change in the operations, business, property,
assets or financial condition or prospects of the Borrower or the Parent.
5.11 Insurance. The insurance required pursuant to Section 5.11
of the GE Warehouse Credit Agreement shall be in full force and effect.
5.12 Fees. Prior to the making of any Advance, the Borrower
shall have paid all Fees then due and payable to the Lender.
5.13 No Litigation. There shall be no judgment, order,
injunction or other restraint which shall prohibit or impose, and no
litigation pending or threatened against or affecting the Borrower or any
of its Subsidiaries which, in the opinion of the Lender, would
23
prohibit or result in the imposition of materially adverse conditions upon,
the financing contemplated hereby, or otherwise have a material adverse
effect on the business, operations, properties or assets, or on the
condition, financial or otherwise, of the Borrower or any of its
Subsidiaries.
5.14 Legal or Regulatory Proceedings. On or prior to the
Initial Borrowing Date, the Borrower shall have delivered to the Lender
certificates of the principal shareholders and senior officers of the
Borrower, in substantially the form of Exhibit D-2, with respect to certain
legal and regulatory proceedings relating to such persons.
5.15 Eligible Portfolio. The Serviced Loans in a Servicing
Portfolio which is the subject of an Advance shall meet all of the
following criteria as of the applicable Sale Date for such Servicing
Portfolio (except if and to the extent waived in writing by the Lender):
(a) the weighted average age of the Serviced Loans in such
Servicing Portfolio does not exceed nine months;
(b) Serviced Loans totalling at least 95% of the aggregate
principal amount of all Mortgage Loans in the Servicing Portfolio shall
have interest rates not greater than 0.5% above the FHLMC 60-day commitment
rate for Mortgage Loans with like maturities;
(c) no more than 35% of the Serviced Loans shall be VA Loans;
(d) no more than 10% of the Serviced Loans shall be Balloon
Loans;
(e) no more than 10% of the Serviced Loans shall be Buy-Down
Loans;
(f) no more than 10% of the Serviced Loans shall be secured by
Mortgages on condominium units;
(g) no more than 30% of the Serviced Loans shall be Adjustable
Rate Loans;
(h) no more than 5% of the Serviced Loans shall be Cash-Out
Refinance Loans;
(i) no more than 2% of the Serviced Loans shall be secured by
Mortgaged Property which is not owner-occupied;
(j) the delinquency rate of the Serviced Loans shall not exceed
the average delinquency rates applicable to Mortgage Loans of the same type
and location as the Serviced Loans as shown on the most recent National
Delinquency Survey of the Mortgage Bankers Association;
24
(k) the geographic dispersion of the Mortgaged Properties which
secure the Serviced Loans has been approved by the Lender in its reasonable
discretion; and
(l) none of the Serviced Loans shall contain graduated payment,
shared appreciation or contingent interest provisions, or be subject to
special escrow arrangements, unless approved by the Lender.
5.16 Servicing Documents. Prior to the making of the first
Advance in respect of any Servicing Rights:
(a) the Lender shall have received executed counterparts (or
certified copies of executed counterparts acceptable to the Lender) of all
related Servicing Documents requested by the Lender;
(b) all such Servicing Documents (i) shall be in form and
substance satisfactory to the Lender, (ii) shall be in full force and
effect, and shall not have been amended, modified or altered except as
previously disclosed to and approved by the Lender, and (iii) shall comply
with all Agency Requirements; and
(c) no default, or event which, with the passage of time or the
giving of notice, or both, would constitute a default under, any such
Servicing Documents shall have occurred and be continuing.
5.17 Sale and Transfer Dates. Prior to or on the date of making
the first Advance in respect of any Servicing Rights:
(a) the related Sale Date shall have occurred;
(b) either the related Transfer Date shall have occurred, or
the Borrower shall have submitted to the Lender certifications or other
assurances satisfactory to Lender in its sole discretion that the Transfer
Date will occur simultaneously with the incurrence of such Advance; and
(c) the Borrower shall have paid to the Seller any portion of
the Purchase Price not being financed through Advances.
5.18 No Repurchase; No Material Change. On the date of making
any Advance, no event shall have occurred and be continuing that would (i)
obligate the Seller to repurchase any of the Servicing Rights which are the
subject of such Advance, (ii) entitle an Agency to terminate the Borrower's
right to service the Serviced Loans, or (iii) cause any material change in
the Borrower's servicing practices and procedures with respect to the
Serviced Loans which in the Lender's reasonable judgment would materially
prejudice the Lender's interest in any of the Collateral or its rights
under this Agreement.
25
5.19 Initial Appraisal. Prior to the making of the first
Advance in respect of any Servicing Rights, the Lender shall have received
an Appraisal of such Servicing Rights acceptable to the Lender.
5.20 Assignment of Purchase Contract, etc. Prior to the making
of the first Advance in respect of any Servicing Rights, the Borrower, if
so requested by Lender, shall have executed and delivered to the Lender (a)
an assignment of the Borrower's rights (but not its obligations) under the
related Purchase Contract (together with the Seller's written consent to
such assignment if required under the Purchase Contract), and (b) an
assignment or assignments of the Borrower's rights under any related
Custodial Agreements, Escrow Accounts, tax service contracts or other
agreements related to the Serviced Loans or Servicing Rights.
5.21 Other Conditions Satisfied. Prior to the making of any
Advance, any conditions precedent contained in any Servicing Documents and
any Agency Requirements which relate to or would otherwise affect the sale
of any Servicing Rights to the Borrower or the financing thereof under this
Agreement, and which are required under the terms of such Servicing
Documents or Agency Requirements to have been satisfied as of the date of
such Advance, shall have been satisfied.
The acceptance of the benefits of each Advance shall constitute a
representation and warranty by the Borrower to the Lender that all
conditions required under this Section 5 to have been satisfied as of the
date of such Advance have been satisfied. All of the Note, certificates,
legal opinions, Appraisals and other documents and papers referred to in
this Section 5, unless otherwise specified, shall be delivered to the
Lender at the Office and shall be satisfactory in form and substance to the
Lender.
Section 6. Representations, Warranties and Agreements.
In order to induce the Lender to enter into this Agreement and to
make the Advances, the Borrower makes the following representations,
warranties and agreements as of the Effective Date, all of which shall
survive the execution and delivery of this Agreement and the Note and the
making of the Advances (with the execution and delivery of this Agreement
and the making of each Advance thereafter being deemed to constitute a
representation and warranty that the matters as specified in this Section 6
are true and correct in all respects on and as of the date hereof and as of
the date of such Advance, unless stated to relate to a specific earlier
date):
6.01 Corporate Power and Authority. The Borrower has the
corporate power to execute, deliver and perform the terms and provisions of
each of the Credit Documents and has taken all necessary corporate action
to authorize the execution, delivery and performance by it of each of such
Credit Documents. The Borrower has duly executed and delivered each of the
Credit Documents, and each of such Credit Documents constitutes its legal,
valid and binding obligation enforceable in accordance with its terms.
26
6.02 No Violation. Neither the execution, delivery or
performance by the Borrower of the Credit Documents, nor compliance by it
with the terms and provisions thereof, (i) will contravene any provision of
any law, statute, rule or regulation or any order, writ, injunction or
decree of any court or governmental instrumentality, (ii) will conflict or
be inconsistent with or result in any breach of any of the material terms,
covenants, conditions or provisions of, or constitute a default under, or
result in the creation or imposition of (or the obligation to create or
impose) any Lien other than a Lien permitted pursuant to Section 8.01 upon
any of the property or assets of the Borrower pursuant to the terms of any
indenture, mortgage, deed of trust, credit agreement, loan agreement or any
other agreement, contract or instrument to which the Borrower is a party or
by which it or any of its property or assets is bound or to which it may be
subject or (iii) will violate any provision of the certificate of
incorporation or by-laws of the Borrower.
6.03 Governmental Approvals. No order, consent, approval,
license, authorization or validation of, or filing, recording or
registration with (except as have been obtained or made prior to the
Effective Date), or exemption by, any governmental or public body or
authority, or any subdivision thereof, is required to authorize, or is
required in connection with, (i) the execution, delivery and performance of
any Credit Document or (ii) the legality, validity, binding effect or
enforceability of any such Credit Document.
6.04 Financial Condition; Undisclosed Liabilities; etc. (a)
Since July 30, 1993, there has not been any material adverse change in the
business, operations, property, assets, condition (financial or otherwise)
or prospects of the Borrower.
(b) Except as fully reflected on the financial statements
referred to in Section 5.07, there will be as of the Effective Date no
liabilities or obligations with respect to the Borrower or any of its
Subsidiaries of any nature whatsoever (whether absolute, accrued,
contingent or otherwise and whether or not due) which, either individually
or in the aggregate, would be material to the Borrower or to the Borrower
and its Subsidiaries taken as a whole. Except as set forth in Schedule I
to this Agreement, as of the Effective Date the Borrower does not know of
any basis for the assertion against the Borrower or any of its Subsidiaries
of any liability or obligation of any nature whatsoever that is not fully
reflected in the financial statements referred to in Section 5.07 which,
either individually or in the aggregate, could be material to the Borrower.
6.05 Litigation. There are no actions, suits or proceedings
pending or threatened with respect to any Credit Document or any Servicing
Documents to which the Borrower is a party.
6.06 True and Complete Disclosure. All factual information
(taken as a whole) heretofore or contemporaneously furnished by or on
behalf of the Borrower in writing to the Lender (including, without
limitation, all information contained in the Credit Documents or any
Servicing Documents to which the Borrower is a party) for purposes of or in
connection with this Agreement, the Term Loan Security Agreement or any
transaction
27
contemplated herein or therein is, and all other such factual information
(taken as a whole) hereafter furnished by or on behalf of the Borrower in
writing to the Lender will be, true and accurate in all material respects
on the date as of which such information is dated or certified and not
incomplete by omitting to state any fact necessary to make such information
(taken as a whole) not misleading in any material respect at such time in
light of the circumstances under which such information was provided.
6.07 Use of Proceeds; Margin Regulations. All proceeds of each
Advance will be used by the Borrower to finance the Borrower's acquisition
of Servicing Rights. No part of the proceeds of any Advance will be used
by the Borrower to purchase or carry any Margin Stock or to extend credit
to others for the purpose of purchasing or carrying any Margin Stock.
Neither the making of any Advance nor the use of the proceeds thereof will
violate or be inconsistent with the provisions of Regulation G, T, U or X
of the Board of Governors of the Federal Reserve System.
6.08 Compliance with Statutes, etc. The Borrower and each of
its Subsidiaries is in compliance with all applicable statutes, regulations
and orders of, and all applicable restrictions imposed by, all governmental
bodies, domestic or foreign, in respect of the conduct of its business and
the ownership of its property, except such noncompliances as would not (i)
in the aggregate, have a material adverse effect on the business,
operations, property, assets, condition (financial or otherwise) or
prospects of the Borrower and (ii) affect in any respect the validity or
enforceability of any Credit Document, any Servicing Document or the
Lender's rights in the Collateral.
6.09 No Burdensome Agreement. Neither the Borrower nor any
Subsidiary is a party to any indenture, loan or credit agreement or any
lease or other agreement or instrument or subject to any charter or
corporate restriction which by its terms would have a material adverse
effect on the business, condition (financial or otherwise), operations or
properties of the Borrower or such Subsidiary or on the ability of the
Borrower to carry out its obligations under the Note, the other Credit
Documents to which it is a party or any Servicing Documents to which it is
or shall become a party.
6.10 Security Interests. The Term Loan Security Agreement
creates, as security for the Obligations, valid and enforceable security
interests in and Liens on all of the Collateral in favor of the Lender
which are perfected and superior and prior to the rights of all third
Persons (except Agency Rights) and are subject to no other Liens (other
than Liens permitted pursuant to Section 8.01). The Borrower has, or will
have at the time of pledge thereof, good and marketable title to all of the
Collateral, free and clear of all Liens except those described in the
preceding sentence.
6.11 Representations in Warehouse Agreement. Except as set
forth in Schedule II, each of the representations, warranties and
agreements made by the Borrower pursuant to Sections 6.01, 6.05(a), 6.06,
6.09, 6.10, 6.11, 6.12, 6.14, 6.16, 6.18, 6.21, 6.22 and 6.23 of the GE
Warehouse Credit Agreement (collectively, the "GE Representations") is
28
incorporated herein by reference as if set forth herein in full. As of the
date hereof and as of the date of each Advance the Borrower makes each of
the GE Representations for the benefit of the Lender under this Agreement.
The Borrower's obligation under this Section 6.11 to make the GE
Representations shall continue regardless of, and shall be unaffected by,
the expiration or termination of the GE Warehouse Credit Agreement.
6.12 Representations in Purchase Contracts. The representations
and warranties made by the Seller and the Borrower in the related Purchase
Contract with respect to all matters affecting the related Servicing
Rights, Servicing Documents and Serviced Loans (collectively the "Purchase
Contract Representations") (a) were true and correct in all material
respects on the dates so made, and are deemed to be incorporated herein by
reference as if set forth herein in full. As of the date of each Advance,
the Borrower makes to the Lender, for its benefit under this Agreement,
each of the related Purchase Contract Representations.
6.13 Representations Relating to Servicing. As of the date of
each Advance:
(a) The Borrower, the Seller, and any other parties thereto,
have duly executed and delivered each of the related Servicing Documents
which is required to have been executed and delivered as of such date, and
each of such Servicing Documents constitutes the legal, valid and binding
obligation of all parties thereto, enforceable against such parties in
accordance with their respective terms;
(b) (i) Each Serviced Loan, whose Servicing Rights are the
subject of such Advance, was underwritten in accordance with the
underwriting standards of the related Agency in effect at the time the
Serviced Loan was originated; (ii) each such Serviced Loan is in conformity
with such underwriting standards on the date of such Advance; and (iii) the
related Mortgage Note and Mortgage are on forms acceptable to such Agency;
(c) The Seller has serviced the Serviced Loans and has kept and
maintained complete and accurate books and records in connection therewith,
in accordance with all Agency Requirements and all applicable laws and
regulations, including, without limitation, all FHA and VA regulations, and
the Seller has remitted to each Agency all distributions to which such
Agency is entitled under the relevant Agency Requirements;
(d) The Seller and the Borrower have performed all obligations
to be performed under Agency Requirements in respect of the transfer and
sale of the Servicing Rights and the other transactions contemplated by the
Purchase Contract, and no event has occurred and is continuing which, but
for the passage of time or the giving of notice, or both, would constitute
a default under or breach of such Agency Requirements;
(e) Except as to recourse for breaches of representations and
warranties given by the Seller in Agency Agreements, none of the Servicing
Rights are subject to recourse against the servicer for losses in
connection with the liquidation of a Serviced Loan,
29
borrower defaults or repurchase obligations upon the occurrence of
non-payment or any other event;
(f) No Agency Agreement or other Servicing Document contains
any uncustomary, unusual or burdensome servicing obligations with respect
to the Servicing Rights or contains provisions which vary from published
Agency standards; no waivers with respect to any Agency Requirements have
been obtained which adversely affect the quality of any Serviced Loans; and
no Agency Consent reduces or limits the rights or compensation of the
servicer under the applicable Agency Agreement.
(g) (i) Each Serviced Loan included in a Pool of Serviced Loans
meets all eligibility requirements for inclusion in such Pool, in
accordance with all applicable Agency Requirements for loan pooling; (ii)
all such Pools have been finally and properly certified or recertified in
accordance with applicable laws, regulations and Agency Requirements; (iii)
the Servicing Rights in respect of each Pool are eligible under all
applicable laws, regulations and Agency Requirements to be transferred to
the Borrower; (iv) no Serviced Loan has been bought out of a Pool without
all required prior written approvals of the applicable Agency; and (v) the
Servicing Files to be delivered to the Borrower pursuant to the related
Purchase Contract for any Pool of Serviced Loans will include all documents
necessary in order for the appropriate Custodian to recertify such Pool in
accordance with Agency Requirements;
(h) (i) Immediately prior to the transfer and sale of the
Servicing Rights pursuant to the related Purchase Contract, the Seller was
the sole owner and holder of such Servicing Rights; (ii) such Servicing
Rights had not been assigned or pledged to any other party; and (iii) the
Seller had good and marketable right, title and interest therein, and had
the full right and authority, subject to no interest or agreement with any
other party, to sell, transfer and assign the Servicing Rights pursuant to
the Purchase Contract to the Borrower, free and clear of any Lien (except
Agency Rights); and
(i) The security interest in the Servicing Rights granted
pursuant to the Term Loan Security Agreement is the only outstanding and
existing interest that the Borrower has granted to the Lender or any other
party in the Servicing Rights; and
(j) The Borrower has complied in all material respects with and
is not in material violation of, and will comply in all material respects
with and will not be in material violation of, any law, regulation,
Servicing Document or Agency Requirement relating to any Servicing Rights.
Section 7. Affirmative Covenants.
The Borrower covenants and agrees that as of the Effective Date,
and thereafter for so long as this Agreement is in effect and until the
Note is no longer
30
outstanding and the Advances, together with interest, Fees and all other
Obligations, are paid in full:
7.01 Information Covenants. The Borrower will furnish to the
Lender (unless otherwise indicated):
(a) Financial Statements. At the times specified in the GE
Warehouse Credit Agreement, the quarterly and annual financial statements,
management letters, officers' certificates and other information required
pursuant to Section 7.01(a), (b), (c) and (d) of the GE Warehouse Credit
Agreement; provided, however, that any references to a "Default" or "Event
of Default" in any certification to be provided under the aforesaid
provisions of the GE Warehouse Credit Agreement shall also include and take
into account, for purposes of the information required under this Section
7.01(a), knowledge of any Default or Event of Default hereunder.
(b) Notice of Default. Promptly (and in no event later than
one Business Day following the occurrence thereof), notice of the
occurrence of any event which constitutes a Default or Event of Default,
detailing the nature of such Default or Event of Default and any actions
taken or proposed to be taken to cure such Default or Event of Default.
(c) Agency Related Defaults. Promptly, and in any event within
five Business Days after the Borrower's receipt thereof, copies of any
notices or information given to or received from any Agency relating to (A)
any actual or alleged default under or breach of any Agency Agreement,
Acknowledgment Agreement or Agency Consent, (B) any request for, or
assertion of rights to, repurchase any Serviced Loan pursuant to the terms
of any Agency Agreement or Agency Requirements, (C) the disqualification
of, or any proposal to disqualify, the Borrower as an Agency-approved
seller/servicer of Serviced Loans, the termination of any Agency Agreement,
or the termination, transfer or sale of any Servicing Rights.
(d) Change in Servicing Procedures. Any material change in the
Borrower's practices or procedures respecting the servicing of any Serviced
Loans, or the practices or procedures or identity of any subservicer
thereof.
(e) Sale of Servicing Rights. Written notice not less than 30
days prior to any sale of Servicing Rights as to which an Advance has been
made and is then outstanding (including, without limitation, any repurchase
by the Seller pursuant to the related Purchase Contract, in any one month,
of more than three of the Serviced Loans whose Servicing Rights were the
subject of such an Advance).
(f) Portfolio Appraisal. On or before (i) October 20, 1994,
and (ii) the 20th day of the calendar quarter immediately succeeding the
calendar quarter in which Expiry Date occurs and on or before the 20th day
of each calendar quarter thereafter, an
31
Appraisal of all Servicing Portfolios as to which Advances have been made
and are then outstanding, which shall be in form and substance satisfactory
to the Lender.
(g) Monthly Portfolio Analysis. Borrower shall include in the
monthly servicing report which Borrower is required to furnish to Lender
pursuant to Section 7.01(h) of the GE Warehouse Credit Agreement (in
addition to all information required under Section 7.01(h)) a separate
report containing the following information for all Serviced Loans whose
Servicing Rights are then pledged to Lender under the Term Loan Security
Agreement: (1) the number of such Serviced Loans, (2) the principal balance
of such Serviced Loans as of the end of the calendar month preceding the
month in which the report is furnished, (3) the weighted average interest
rate with respect to such Serviced Loans, (4) the weighted average net
servicing fee with respect to such Serviced Loans, and (5) which of such
Serviced Loans (A) are current and in good standing, (B) are more than 30,
60 or 90 days past due, and (C) are the subject of pending litigation,
bankruptcy or foreclosure proceedings.
7.02 Collateral. The Borrower will (a) warrant and defend the
right, title and interest of the Lender in and to the Collateral against
the claims and demands of all Persons whomsoever (except Agency Rights);
(b) service, or cause to be serviced, all Serviced Loans in accordance with
the requirements of the related Servicing Documents, all applicable Agency
Requirements, and all applicable laws and regulations, including, without
limitation, FHA and VA requirements, and will take all actions necessary to
enforce the obligations of the obligors under such Serviced Loans; (c) hold
all Escrow Payments collected in respect of Serviced Loans in trust,
without commingling the same with non-custodial funds, and apply the same
for the purposes for which such funds were collected; (d) comply in all
respects with the terms and conditions of all Servicing Documents, and all
extensions, renewals and modifications or substitutions thereof or thereto;
and (e) maintain, at its principal office or in a regional office approved
by the Lender, and, upon request, shall make available to the Lender the
originals, or copies in any case where the original has been delivered to
an Agency or subservicer, of all Servicing Files and Mortgage Files
relating to Serviced Loans whose Servicing Rights have pledged as
Collateral, and all other information and data relating to the Collateral.
7.03 Covenants in Warehouse Agreement. The Borrower, for the
benefit of the Lender pursuant to this Agreement, shall perform and observe
each of its covenants and agreements contained in Sections 7.01(e), 7.02
through 7.07, 7.09, 7.10 of the GE Warehouse Credit Agreement
(collectively, the "GE Covenants"), all of which are incorporated herein by
reference as if set forth herein in full. The Borrower's obligation under
this Section 7.03 shall continue regardless of, and shall be unaffected by,
the expiration or termination of the GE Warehouse Credit Agreement.
7.04 Transfer of Servicing Rights. In the event that an Agency
shall exercise its rights under any Agency Agreement, Acknowledgement
Agreement or otherwise to disqualify the Borrower as an Agency-approved
seller/servicer of any Serviced Loans, and
32
shall take steps to transfer and sell all or any portion of the related
Servicing Rights, the Lender may (but shall not be obligated to) seek to
arrange the sale or transfer of such Servicing Rights to the Lender or its
designee, or to arrange for an interim servicing agent approved by the
Agency, all in accordance with the related Agency Agreement, Acknowledgment
Agreement and any other Agency Requirements. The Borrower shall cooperate
with the Lender in any way that the Lender may request in order to effect
any such sale or transfer of such Servicing Rights, and shall be
responsible for, and pay promptly upon receipt, all fees and expenses
incurred by the Lender in connection with any such sale or transfer.
Section 8. Negative Covenants.
The Borrower covenants and agrees that as of the Effective Date,
and thereafter for so long as this Agreement is in effect and until the
Note is no longer outstanding and the Advances, together with interest,
Fees and all other Obligations, are paid in full, without the prior written
consent of the Lender:
8.01 Liens. The Borrower will not, and will not permit any of
its Subsidiaries to, create, incur, assume or suffer to exist any Lien upon
or with respect to any Collateral except:
(a) Liens created pursuant to the Term Loan Security Agreement
and the GE Warehouse Security Agreement; and
(b) Agency Rights.
8.02 Indebtedness. Without the prior written consent of the
Lender, which consent shall not be unreasonably withheld, the Borrower will
not, and will not permit any of its Subsidiaries to, contract, create,
incur, assume or suffer to exist any Indebtedness, except (i) Indebtedness
of the Borrower incurred under the Credit Documents, (ii) Indebtedness
incurred or permitted to be incurred or to exist under the GE Warehouse
Credit Agreement and the Cooper River Warehouse Credit Agreement, (iii)
Indebtedness to the Parent, (iv) Indebtedness listed on Schedule III hereto
("Existing Indebtedness"), and (iv) accrued expenses and current trade
accounts payable incurred in the ordinary course of business by the
Borrower, or any of its Subsidiaries, which are to be repaid in full not
more than one year after the date on which such Indebtedness is originally
incurred; provided that the Borrower and its Subsidiaries shall not be
permitted to incur any Indebtedness otherwise permitted under this Section
8.02 so long as any Default or Event of Default has occurred and is
continuing or if a Default or Event of Default would occur as a result of
the incurrence of any such Indebtedness.
8.03 Modifications of Certain Agreements and Collateral. The
Borrower will not (a) amend, modify or waive any of the terms of, or settle
or compromise any claim with respect to, any Collateral or any Servicing
Document, or (b) modify or waive any term
33
of any Serviced Loan or release any security or obligor, if as a result
thereof such Serviced Loan would become, nor cause, through any activity or
inactivity, a Serviced Loan to become, ineligible for FHA insurance or VA
guaranty, if applicable, or for repurchase by a Seller or an Agency (to the
extent such repurchase would otherwise be required under the terms of the
related Purchase Contract, Agency Agreement or other Agency Requirements).
8.04 Negative Covenants in Warehouse Agreement. The Borrower,
for the benefit of the Lender pursuant to this Agreement, shall perform and
observe each of its covenants and agreements set forth in Section 8 of the
GE Warehouse Credit Agreement (collectively, the "GE Negative Covenants"),
all of which are incorporated herein by reference as if set forth herein in
full. The Borrower's obligation under this Section 8.04 shall continue
regardless of and shall be unaffected by, the expiration or termination of
the GE Warehouse Credit Agreement. In addition to the foregoing, the
Borrower covenants and agrees that, to the extent any of the GE Negative
Covenants provides that the Borrower will not, and will not permit any of
its Subsidiaries to, engage in certain actions upon the occurrence and
during the continuance of any "Default" or "Event of Default" under the GE
Warehouse Credit Agreement, the Borrower likewise will not, and will not
permit any its Subsidiaries to, engage in any such actions upon the
occurrence and during the continuance of any Default or Event of Default
hereunder.
Section 9. Events of Default.
Upon the occurrence of any of the following specified events
(each an "Event of Default"):
9.01 Payments. The Borrower shall (i) default, and such default
shall continue unremedied for three or more days, in the payment when due
of any principal of any Advance (including, without limitation, any
Amortizing Installment) or (ii) default, and such default shall continue
unremedied for three or more days, in the payment when due of any interest
on any Advance or any Fees or any other amount owing hereunder or under any
Credit Document; or
9.02 Representations, etc.
(a) Any representation, warranty or statement made or
deemed made by the Borrower herein (except for any representations made or
deemed made pursuant to Section 6.13(b) through (h) hereof) or in any other
Credit Document or in any certificate delivered pursuant hereto or thereto
shall prove to be untrue in any material respect on the date as of which
made or deemed made; or
(b) Any representation made or deemed made by the
Borrower pursuant to Section 6.13(b) through (h) hereof shall prove to be
untrue in any material respect on the date as of which made or deemed made
and remains untrue in such material respect for 30 days after the first to
occur of (i) the date the Borrower becomes aware of
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such circumstance or (ii) the date on which the Lender gives notice of such
circumstance to the Borrower; provided, however, that in the case of any
such default that cannot be remedied by the payment of money, if such
default is of such a nature that it cannot be remedied within such 30-day
period but is capable of being remedied, and the Borrower is making
diligent efforts to remedy the same, such default shall not constitute an
Event of Default until such default shall have continued unremedied for a
period of 120 days after the first to occur of the dates specified in (i)
and (ii) above; or
9.03 Covenants. The Borrower shall (i) default in the due
performance or observance by it of any term, covenant or agreement
contained in Sections 7.01(b) or 8 or (ii) default in the due performance
or observance by it of any term, covenant or agreement contained in this
Agreement (other than those referred to in Sections 9.01 and 9.02 and
clause (i) of this Section 9.03) and such default shall continue unremedied
for a period of 30 days after the date on which the Lender gives notice of
such default to the Borrower; provided, however, that in the case of a
default that cannot be remedied by the payment of money, if such default is
of such a nature that it cannot be remedied within such 30-day period, but
is capable of being remedied, and the Borrower is making diligent efforts
to remedy the same, such default shall not constitute an Event of Default
until such default shall have continued for a period of 90 days after the
date of such notice from the Lender; or
9.04 Term Loan Security Agreement. The Term Loan Security
Agreement or any provision thereof shall cease to be in full force and
effect, or shall cease to give the Lender the Liens, rights, powers and
privileges purported to be created thereby, or the Borrower shall default
in the due performance or observance of any term, covenant or agreement on
its part to be performed or observed pursuant to the Term Loan Security
Agreement; or
9.05 Defaults Under Warehouse Agreements. There shall occur any
event which is defined and described as an "Event of Default" under either
the GE Warehouse Credit Agreement or the Cooper River Warehouse Credit
Agreement, regardless of whether either such Agreement is then in effect
and whether the Lender shall have exercised any of its enforcement rights
or remedies with respect thereto;
then, and in any such event, and at any time thereafter, if any Event of
Default shall then be continuing, the Lender may, by written notice to the
Borrower, take any or all of the following actions, without prejudice to
the rights of the Lender or the holder of the Note to enforce its claims
against the Borrower: (i) declare the Commitment terminated, whereupon the
Commitment of the Lender shall forthwith terminate immediately and any Fees
shall forthwith become due and payable without any other notice of any
kind; and (ii) declare the principal of and any accrued interest in respect
of all Advances and all Obligations to be, whereupon the same shall become,
forthwith due and payable without presentment, demand, protest or other
notice of any kind, all of which are hereby waived by the Borrower.
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Section 10. Miscellaneous.
10.01 Payment of Expenses; Indemnity. (a) Whether or not the
transactions contemplated hereby are consummated, the Borrower agrees to
pay on demand all reasonable costs and expenses in respect of the
perfection and maintenance of the security interests created by the Credit
Documents (including, without limitation, reasonable counsel fees and
expenses) and all reasonable costs and expenses in connection with the
servicing, management, handling, processing and liquidation of the
Collateral, any Serviced Loans and any Servicing Documents. The Borrower
further agrees to pay on demand all reasonable costs and expenses, if any
(including, without limitation, reasonable counsel fees and expenses), in
connection with the enforcement (whether through negotiations, workout,
legal proceedings or otherwise) of the Credit Documents and the other
documents to be delivered thereunder, including, without limitation,
reasonable counsel fees and expenses in connection with the enforcement of
rights under this Section 10.01(a).
(b) Without limiting any other rights which the Lender, or any
Affiliate thereof, as well as their respective directors, officers,
employees, agents, successors and assigns (each, an "Indemnified Party")
may have hereunder or under applicable law, the Borrower hereby agrees to
indemnify each Indemnified Party from and against any and all claims,
losses, damages, fees, expenses and liabilities (including reasonable
attorneys' fees) (all of the foregoing being collectively referred to as
"Indemnified Amounts") arising out of, relating to or resulting from (i)
this Agreement, (ii) any Servicing Rights or other Collateral, (iii) any
Serviced Loans or Servicing Documents, (iv) the mortgage servicing, escrow
and custodial practices and procedures of the Borrower, any subservicer or
other agent of the Borrower, or any Seller, and (v) the use of any proceeds
of Advances, excluding, however, Indemnified Amounts to the extent
resulting from gross negligence or willful misconduct (as determined by a
final judgment of a court of competent jurisdiction) on the part of such
Indemnified Party or any Affiliate of such Indemnified Party which directly
or indirectly controls, is controlled by or is under common control with
such Indemnified Party or is a director or officer of such Indemnified
Party or of an Affiliate of such Indemnified Party. Without limiting or
being limited by the foregoing, the Borrower shall pay on demand to each
Indemnified Party any and all amounts necessary to indemnify such
Indemnified Party from and against any and all Indemnified Amounts relating
to or resulting from:
(i) the failure of any Servicing Portfolio to meet the
eligibility requirements of Section 5.15;
(ii) reliance on any representation or warranty or
statement made or deemed made by the Borrower (or any of its
officers, employees and agents) or any Seller under or in
connection with any Credit Document or any Servicing Document
which shall have been incorrect when made;
(iii) the failure by the Borrower to comply with any
applicable law, rule, regulation or Agency Requirement with
respect to any Collateral, any
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Serviced Loan or any Servicing Document, or the nonconformity of
any Collateral, any Serviced Loan or any Servicing Document, with
any such applicable law, rule, regulation or Agency Requirement;
(iv) the failure to vest in the Lender under the Term Loan
Security Agreement a valid first priority security interest in
the Servicing Rights and the other Collateral, except as
otherwise permitted by this Agreement;
(v) the failure to have filed, or any delay in filing,
financing statements or other similar instruments or documents
under the UCC of any applicable jurisdiction or other applicable
laws with respect to any Collateral, whether at the time of any
Advance or at any subsequent time;
(vi) the breach of any of the Borrower's or any Seller's
obligations to any Agency in respect of any Servicing Document,
Serviced Loan or Servicing Rights;
(vii) the sale or transfer to the Lender of any Servicing
Rights (including, without limitation, any Agency approvals
related thereto), or the assumption by the Lender of the
servicing with respect to any Serviced Loans;
(viii)(A) the termination of, or inability of the Lender to
enforce its security interest in, the Servicing Rights or any
other Collateral or (B) the Lender's inability to collect, share
in, or receive, or any waiver of, any distribution from the sale
by an Agency of any Servicing Rights or other Collateral, in
either case as a result of the Agency's termination of any Agency
Agreement or any other agreement or arrangement between the
Agency and the Borrower, and regardless of whether the Lender
shall have consented to the occurrence of any of the
circumstances described in clauses (A) or (B) above pursuant to
any Acknowledgement Agreement or other agreement with such
Agency;
(ix) any investigation, litigation or proceeding related
to this Agreement or any other Credit Document or the use of
proceeds of Advances or in respect of any Serviced Loan, any
other Collateral or any Servicing Document; and
(x) the making of any wire transfer to an incorrect
account or in an incorrect amount in accordance with instructions
received from the Borrower or any Seller, it being understood and
agreed that, notwithstanding the indemnity under this Section
10.01(b)(x), the funds represented by any such wire shall
constitute an Advance hereunder.
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10.02 Notices. Except as otherwise expressly provided herein,
all notices and other communications provided for hereunder shall be in
writing (including telegraphic, telex, telecopier or cable communication)
and mailed, telegraphed, telexed, telecopied, cabled or delivered: if to
the Borrower or the Lender, at its address specified opposite its signature
below, or at such other address as shall be designated by such party in a
written notice to the other party hereto. All such notices and
communications shall, when mailed, telegraphed, telecopied or sent by
overnight courier, be effective when deposited in the mails, delivered to
the telegraph company or overnight courier, as the case may be, or sent by
telecopier, except that notices and communications given to the Lender
pursuant to Section 2 and Section 4 shall not be effective until received
by the Lender.
10.03 Benefit of Agreement. This Agreement shall be binding upon
and inure to the benefit of and be enforceable by the respective successors
and assigns of the parties hereto; provided, however, that the Borrower may
not assign or transfer any of its rights or obligations hereunder without
the prior written consent of the Lender. The Lender may at any time assign
any of its rights and obligations hereunder or under the Note.
10.04 No Waiver; Remedies Cumulative. No failure or delay on the
part of the Lender or the holder of the Note in exercising any right, power
or privilege hereunder or under any other Credit Document and no course of
dealing between the Borrower and the Lender or the holder of the Note shall
operate as a waiver thereof; nor shall any single or partial exercise of
any right, power or privilege hereunder or under any other Credit Document
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege hereunder or thereunder. The rights, powers and
remedies herein or in any other Credit Document expressly provided are
cumulative and not exclusive of any rights, powers or remedies which the
Lender or the holder of the Note would otherwise have. No notice to or
demand on the Borrower in any case shall entitle the Borrower to any other
or further notice or demand in similar or other circumstances or constitute
a waiver of the rights of the Lender or the holder of the Note to any other
or further action in any circumstances without notice or demand.
10.05 Calculations; Computations. (a) The financial statements
to be furnished to the Lender pursuant hereto shall be made and prepared in
accordance with generally accepted accounting principles in the United
States consistently applied throughout the periods involved (except as set
forth in the notes thereto or as otherwise disclosed in writing by the
Borrower to the Lender); provided that, except as otherwise specifically
provided herein, all computations determining compliance with Section 8
shall utilize accounting principles and policies in conformity with those
used to prepare the historical financial statements referred to in Section
5.07.
(b) All computations of interest and the Fees hereunder shall
be made on the basis of a year of 360 days for the actual number of days
occurring in the period for which such interest or fees are payable.
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10.06 Governing Law; Submission to Jurisdiction; Venue. (a) This
Agreement and the other Credit Documents and the rights and obligations of
the parties hereunder and thereunder shall be construed in accordance with
and be governed by the law of the State of New Jersey. Any legal action or
proceeding against the Borrower with respect to this Agreement or any other
Credit Document may be brought in the courts of the State of New Jersey
located in Camden County or in the United States Federal courts located in
Camden County, and, by execution and delivery of this Agreement, the
Borrower hereby irrevocably accepts for itself and in respect of its
property, generally and unconditionally, the jurisdiction of the aforesaid
courts.
(b) The Borrower hereby irrevocably waives any objection which
it may now or hereafter have to the laying of venue of any of the aforesaid
actions or proceedings arising out of or in connection with this Agreement
or any other Credit Document brought in the courts referred to in clause
(a) above and hereby further irrevocably waives and agrees not to plead or
claim in any such court that any such action or proceeding brought in any
such court has been brought in an inconvenient forum.
10.07 Participation and Syndication. Notwithstanding any other
provision of this Agreement, the Lender may at any time and from time to
time enter into participation agreements or syndication agreements with one
or more participating financial institutions whereby the Lender will
allocate to them certain percentages of the Commitment, or the Lender's
right to receive payments in respect of any Advances. The Borrower
acknowledges that, for the convenience of all parties, this Agreement is
being entered into with the Lender only and that its obligations under this
Agreement are undertaken for the benefit of, and as an inducement to, any
such financial institution as well as the Lender. The Borrower agrees to
cooperate with the Lender and any such participating financial institution
in effectuating such a participation or syndication and shall, upon the
request of the Lender, execute a replacement note or notes and such other
documents or instruments as may be reasonably necessary to evidence the
debtor-creditor relationship between Borrower and such participating
financial institution. The Borrower hereby grants to each participating
financial institution, to the extent of its participation in the
Commitment, or in the Lender's right to receive payments in respect of any
Advances, the right to set off deposit accounts maintained by the Borrower
with such financial institution. The Borrower shall pay all costs and
expenses (including, without limitation, reasonable counsel fees and
expenses incurred by the Lender and the participating financial
institutions) in connection with effectuating any participation or
syndication that is requested by the Borrower; provided, however, that
nothing herein shall obligate the Lender to enter into any participation or
syndication agreement which may be requested by the Borrower.
10.08 Obligation to Make Payments in Dollars. All payments of
the principal and interest on the Note and any other amounts due hereunder
or under any other Credit Document shall be made in Dollars.
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10.09 Counterparts. This Agreement may be executed in any number
of counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be an
original, but all of which shall together constitute one and the same
instrument. A set of counterparts executed by all the parties hereto shall
be lodged with the Borrower and the Lender.
10.10 Effectiveness. This Agreement shall become effective on
the date (the "Effective Date") on which the Borrower and the Lender shall
have signed a copy hereof (whether the same or different copies) and shall
have delivered the same to the Lender at its Office.
10.11 Headings Descriptive. The headings of the several sections
and subsections of this Agreement are inserted for convenience only and
shall not in any way affect the meaning or construction of any provision of
this Agreement.
10.12 Amendment or Waiver. Neither this Agreement nor any other
Credit Document nor any terms hereof or thereof may be changed, waived,
discharged or terminated unless such change, waiver, discharge or
termination is in writing signed by the Lender.
10.13 Survival. All indemnities set forth herein including,
without limitation, in Sections 2.08, 2.09, 4.06 and 10.01 shall survive
the execution and delivery of this Agreement and the Note and the making
and repayment of the Advances.
10.14 Waiver of Jury Trial. THE LENDER AND THE BORROWER EACH
HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES THE RIGHT EACH OF
THEM MAY HAVE TO A TRIAL BY JURY OF, UNDER OR IN CONNECTION WITH THIS
AGREEMENT, THE NOTE AND ANY AGREEMENT CONTEMPLATED TO BE EXECUTED IN
CONJUNCTION HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING,
STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY RELATING
HERETO OR THERETO. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE LENDER
TO ENTER INTO THIS AGREEMENT.
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IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized officers to execute and deliver this Agreement as of the date
first above written.
Address: MARKET STREET MORTGAGE
2650 McCormick Dr., Suite 200 CORPORATION
Clearwater, FL 34619
Attn: Tracy S. Jackson By /s/ Tracy S. Jackson
Facsimile No.: (813) 791-4136 ------------------------------
Title: Sr. V.P. & Treasurer
Three Executive Campus GE CAPITAL MORTGAGE SERVICES, INC.
Cherry Hill, New Jersey 08002
Attn: William E. Mezger By /s/ William E. Mezger Jr.
Facsimile No.: 609-486-2777 ------------------------------
Title: Sr. V.P.
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