EXHIBIT 10.2
AMENDED AND RESTATED CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT AGREEMENT (this "Agreement") is made
and entered into as of April 9, 2004, between DHI Mortgage Company, Ltd., a
Texas limited partnership (formerly known as CH Mortgage Company I, Ltd) (the
"Company"), U.S. Bank National Association, as agent ("Agent") and Lenders
referred to below ("Lenders").
RECITALS
WHEREAS, the Company and the Agent and the Lenders party thereto
previously entered into that certain Credit Agreement dated as of August 13,
1999, as amended by a First Amendment to Credit Agreement dated as of August 14,
2000, a Second Amendment to Credit Agreement dated as of August 10, 2001, a
Third Amendment to Credit Agreement dated as of February 22, 2002, a Fourth
Amendment to Credit Agreement dated as of August 12, 2002, a Fifth Amendment to
Credit Agreement dated as of September 25, 2002, a Sixth Amendment to Credit
Agreement dated as of October 18, 2002, a Seventh Amendment to Credit Agreement
dated as of February 28, 2003, an Eighth Amendment to Credit Agreement dated as
of August 12, 2003 and a Ninth Amendment to Credit Agreement dated as of
February 12, 2004 (as amended, the "Prior Credit Agreement") pursuant to which
the Lenders party thereto provided to the Company a secured mortgage warehousing
line of credit upon the terms and subject to the conditions and limitations set
forth therein; and
WHEREAS, the Company and the Agent and the Lenders referred to below
have reached agreement on the terms, conditions and limitations of this Amended
and Restated Credit Agreement to be entered into in amendment, restatement and
replacement of the Prior Credit Agreement;
NOW, THEREFORE, the parties hereto hereby agree as follows:
ARTICLE I
GENERAL TERMS
Section 1.01 Certain Definitions. As used in this Agreement, the
following terms have the following meanings.
"Advance" means (a) a Prime Rate Advance, (b) a Balance Funded Rate
Advance or (c) a LIBOR Rate Advance.
"Affiliate" means, as to any Person, each other Person that directly or
indirectly (through one or more intermediaries or otherwise) controls, is
controlled by, or is under common control with, such Person.
"Agent" has the meaning assigned to such term in the preamble hereof.
-1-
"Aggregate Commitment Amounts" means the total of the Commitment
Amounts of the Lenders, which is $250,000,000 initially, subject to increase in
accordance with Section 10.11(d), but not to exceed $350,000,000.
"Agreement" means this Credit Agreement, as the same may from time to
time be amended, modified or supplemented.
"Applicable Margin" means, with respect to:
(a) Prime Rate Advances, 0%, and
(b) LIBOR Rate Advance, 0.825%.
"Approval Amount" means, with respect to U.S. Bank, $125,000,000.
"Balance Calculation Period" means each calendar month.
"Balance Funded Amount" means with respect to any Lender for any
Balance Calculation Period, the average of the Qualifying Balances of such
Lender for such Balance Calculation Period. As used in this paragraph,
"Qualifying Balances" shall mean, with respect to any Lender, for any day the
lesser of (a) the amount of such Lender's Loans on such day, and (b) the sum of
the collected balances in all identified non-interest bearing accounts of the
Borrowers maintained with such Lender less (i) amounts necessary to satisfy
reserve and deposit insurance requirements and (ii) amounts required to
compensate such Lender for services rendered in accordance with such Lender's
system of charges for services to similar accounts.
"Balance Funded Rate" means a rate of 0.825% per annum.
"Balance Funded Rate Advance" means an outstanding Loan that bears
interest as provided in Section 2.04(a)(i).
"Balances Deficiency" as defined in Section 2.04(a)(i).
"Balances Deficiency Fee" as defined in Section 2.04(a)(i).
"Balances Surplus" as defined in Section 2.04(a)(i).
"Borrowers" means the Company and the Co-Borrowers.
"Borrowing Base" means at any date the Collateral Value of all Eligible
Mortgage Loans which have been delivered to and held by Agent or otherwise
identified as Mortgage Collateral.
"Borrowing Base Certificate" means a certificate in the form attached
hereto as Exhibit C.
"Borrowing Date" means the Business Day specified by the Company in a
borrowing request as the date on which it requests the Lender to make Loans.
-2-
"Business Day" means a day, other than a Saturday or Sunday, on which
commercial banks are open for business with the public in Minneapolis, Minnesota
and on which the federal wire system is open.
"Capitalized Servicing Rights" means as of any Person, all rights to
service Mortgage Loans which would be capitalized under GAAP (regardless of
whether such rights result from asset securitizations, whole loan sales or
originations of Mortgage Loans).
"Cash Equivalents" means (a) securities issued or directly and fully
guaranteed or Insured by the United States Government or any agency or
instrumentality thereof which mature within 90 days from the date of
acquisition, (b) time deposits, which mature within 90 days from date of
acquisition, with, and certificates of deposit, which mature within 90 days from
the date of acquisition, of, Agent or any Lender or any other domestic
commercial bank having capital and surplus in excess of $200,000,000, which has,
or the holding company of which has, a commercial paper rating of at least A-1
or the equivalent thereof by Standard & Poor's Ratings Group (a division of
McGraw Hill, Inc.) or P-1 or the equivalent thereof by Moody's Investors
Service, Inc., or (c) overnight investments in money market mutual funds
registered under the 1940 Act.
"Change of Control" means the occurrence of Parent not owning, directly
or indirectly, (1) all of the issued and outstanding ownership interests of the
Company or (2) a controlling interest in any other Borrower.
"Closing Date": The later of the date of this Agreement and the date on
which all conditions of Section 3.1 are fulfilled or waived by the Majority
Lenders in writing.
"Co-Borrowers" means each Person who becomes a party to this Agreement
as a Co-Borrower pursuant to a Joinder Agreement and Section 3.03.
"Co-Borrower Sublimit" means $10,000,000.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, together with the regulations from time to time promulgated with respect
thereto.
"Collateral" has the meaning given to it in the Security Agreement.
"Collateral Value" means:
(a) with respect to each Eligible Mortgage Loan that is a Conforming
Mortgage Loan and included in the Borrowing Base, ninety-eight percent (98%) of
the least of: (i) the outstanding principal balance of the Mortgage Note
constituting such Conforming Mortgage Loan; (ii) the amount at which an Investor
has committed to purchase the Conforming Mortgage Loan pursuant to a Take-out
Commitment or the weighted average commitment price under the applicable
Take-Out Commitment (excluding from the commitment price any stated servicing
release premium); or (iii) at the election of the Agent, the Market Value of the
Mortgage Note constituting such Mortgage Loan; and
-3-
(b) with respect to each Eligible Mortgage Loan that is a Jumbo
Mortgage Loan and included in the Borrowing Base, ninety-eight percent (98%) of
the least of: (i) the outstanding principal balance of the Mortgage Note
constituting such Jumbo Mortgage Loan; (ii) the amount at which an Investor has
committed to purchase the Jumbo Mortgage Loan pursuant to a Take-Out Commitment
or the weighted average commitment price under the applicable Take-Out
Commitment (excluding from the commitment price any stated servicing release
premium); or (iii) at the election of the Agent, the Market Value of the
Mortgage Note constituting such Jumbo Mortgage Loan.
(c) with respect to each Eligible Mortgage Loan that is a Nonconforming
Mortgage Loan and included in the Borrowing Base, ninety-eight percent (98%) of
the least of: (i) the outstanding principal balance of the Mortgage Note
constituting such Nonconforming Mortgage Loan; (ii) the amount at which an
Investor has committed to purchase the Nonconforming Mortgage Loan pursuant to a
Take-Out Commitment or the weighted average commitment price under the
applicable Take-Out Commitment (excluding from the commitment price any stated
servicing release premium); and (iii) at the election of the Agent, the Market
Value of the Mortgage Note constituting such Nonconforming Mortgage Loan.
"Commitment" means, as to any Lender, the obligation of such Lender to
make Loans to the Borrowers pursuant to Section 2.01 hereof in an aggregate
amount not to exceed such Lender's Commitment Amount.
"Commitment Amount" means, as to any Lender, the amount set opposite
such Lender's name as its Commitment Amount on Schedule 5.
"Company" means DHI Mortgage Company, Ltd., a Texas limited
partnership, formerly known as CH Mortgage Company I, Ltd.
"Company's Consolidated Tangible Net Worth" means, as of any date, the
remainder of (a) all assets of the Company and the Restricted Subsidiaries on a
Consolidated basis minus (b) the sum of (i) all GAAP Indebtedness and all
Contingent Indebtedness of the Company and the Restricted Subsidiaries, (ii) all
assets of the Company and the Restricted Subsidiaries which would be classified
as intangible assets under GAAP, including Capitalized Servicing Rights,
goodwill (whether representing the excess cost over book value of assets
acquired or otherwise), patents, trademarks, trade names, copyrights,
franchises, deferred charges and intercompany receivables, (iii) investments in
and advances to Unrestricted Subsidiaries, and (iv) investments in and advances
(other than loans permitted pursuant to Section 6.05(f)) to JV's.
"Confirmation" means a Confirmation of Borrowing/Paydown/ Conversion in
the form of Exhibit B.
"Conforming Mortgage Loan" means a first priority Mortgage Loan that
has been FHA-insured or VA-guaranteed or that has been underwritten in
accordance with Fannie Mae guidelines and/or meets all applicable requirements
for sale to Fannie Mae or Freddie Mac or for guaranty by Ginnie Mae.
-4-
"Consolidated" refers to the consolidation of any Person, in accordance
with GAAP, with its properly consolidated subsidiaries excluding all
Unrestricted Subsidiaries. References herein to a Person's Consolidated
financial statements refer to the consolidated financial statements of such
Person and its properly consolidated subsidiaries excluding all Unrestricted
Subsidiaries.
"Contingent Indebtedness" of any Person at a particular date means the
sum (without duplication) at such date of (a) all obligations of such Person in
respect of letters of credit, acceptances, or similar obligations issued or
created for the account of such Person, (b) all obligations of such Person under
any contract, agreement or understanding of such Person pursuant to which such
Person guarantees, or in effect guarantees, any indebtedness or other
obligations of any other Person in any matter, whether directly or indirectly,
contingently or absolutely, in whole or in part, (c) all liabilities secured by
any Lien on any property owned by such Person, whether or not such Person has
assumed or otherwise become liable for the payment thereof and (d) any liability
of such Person or any Affiliate thereof in respect of unfunded vested benefits
under in ERISA Plan, excluding any GAAP Indebtedness.
"CP Facility Documents" means (a) Amended and Restated Loan Agreement
dated as of July 25, 2003 among CH Funding LLC, Atlantic Assets Securitization
Corp., Falcon Asset Securitization Corporation, Bank One, NA (Main Office
Chicago), Lloyds TSB Bank PLC, Credit Lyonnais New York Branch and Company (b)
Master Repurchase Agreement dated as of July 9, 2002 between the Company and CH
Funding, LLC, (c) Addendum to Master Purchase Agreement dated as of July 9, 2002
between the Company and CH Funding, LLC, (d) Collateral Agency Agreement dated
as of July 9, 2002 between CH Funding, LLC, Credit Lyonnais New York Branch, as
Administrative Agent and U.S. Bank National Association as Collateral Agent (e)
all amendments to date and still in effect including the Omnibus Amendment dated
as of August 26, 2002 ("First Omnibus Amendment"), the Second Omnibus Amendment
dated as of November 25, 2002, Fourth Omnibus Amendment dated July 25, 2003 and
Fifth Omnibus Amendment dated as of December 19, 2003, and (f) any documents or
instruments amending or restating any of the foregoing documents in a manner
approved in advance in writing by the Agent.
"Debtor Laws" means all applicable liquidation, conservatorship,
bankruptcy, moratorium, arrangement, receivership, insolvency, reorganization or
similar laws from time to time in effect affecting the rights of creditors
generally and general principles of equity.
"Default" means any of the events specified in Section 7.01 hereof,
whether or not any requirement for notice or lapse or time or any other
condition has been satisfied.
"Distribution" means (a) any cash dividend or any other cash
distribution made by a Person on, or in respect of, any stock, partnership
interest, or other equity interest in such Person and (b) any and all funds,
cash or other payments made in respect of the purchase, redemption, acquisition
or retirement of any beneficial interest, stock, partnership interest, or other
equity interest in such Person.
-5-
"Drawdown Termination Date:" means the earlier of April 8, 2005, or the
day on which the Notes first become due and payable in full.
"Eligible Mortgage Loan" means a Mortgage Loan as described in Schedule
1 attached hereto.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, together with the regulations from time to time
promulgated with respect thereto.
"ERISA Affiliation" means all members of the group of corporations and
trades or businesses (whether or not incorporated) which, together with the
Company, are treated as a single employer under Section 414 of the Code.
"ERISA Plan" means any pension benefit plan subject to Title IV of
ERISA or Section 412 of the Code maintained or contributed to by the Company or
any ERISA Affiliate with respect to which the Company has a fixed or contingent
liability.
"Event of Default" means any of the events specified in Section 7.01
hereof, provided that any requirement in connection with such event for the
giving of notice or the lapse of time, or the happening of any further
condition, event or act has been satisfied.
"Exit Date": the Closing Date or any date thereafter on which a Lender
terminates its status as a Lender hereunder.
"Exiting Lenders": A Lender that is terminating its status as a Lender
hereunder.
"Fannie Mae" means Fannie Mae, a corporation created under the laws of
the United States, and any successor thereto.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100th of one percent) equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of Minneapolis on the Business Day
next succeeding such day, provided that (i) if the day for which such rate is to
be determined is not a Business Day, the Federal Funds Rate for such day shall
be such rate on such transactions on the next preceding Business Day as so
published on the next succeeding Business Day, and (ii) if such rate is not so
published for any day, the Federal Funds Rate for such day shall be the average
rate quoted to Agent on such day on such transactions as determined by Agent.
"FHA" means the Federal Housing Administration and any successor
thereto.
"Fiscal Quarter" means each period of three calendar months ending
December 31, March 31, June 30 and September 30 of each year.
-6-
"Fiscal Year" means each period of twelve calendar months ending
September 30 of each year.
"Four Quarter Period" means as of the end of any Fiscal Quarter, the
period of four consecutive Fiscal Quarters then ended.
"Freddie Mac" means Freddie Mac, a corporation created under the laws
of the United States, and any successor thereto.
"Funding and Settlement Account" means account number 104756234365 of
the Borrowers with Agent.
"GAAP" means those generally accepted accounting principles and
practices which are recognized as such by the Financial Accounting Standards
Board (or any generally recognized successor) and which, in the case of the
Borrowers, are applied for all periods after the date hereof in a manner
consistent with the manner in which such principles and practices were applied
to the financing statements described in Section 4.06. If any change in any
accounting principle or practice is required by the Financial Accounting
Standards Board (or any such successor) in order for such principle or practice
to continue as a generally accepted accounting principle or practice, all
reports and financial statements required hereunder with respect to the
Borrowers or with respect to the Borrowers and their Consolidated subsidiaries
may be prepared in accordance with such change, but all calculations and
determinations to be made hereunder may be made in accordance with such change
only after notice of such change is given to each Lender and Majority Lenders
agree to such change insofar as it affects the accounting of the Borrowers.
"GAAP Indebtedness" of any Person at a particular date mean the sum
(without duplication) at such date of (a) all indebtedness of such Person for
borrowed money or for the deferred purchase price of property or services or
which is evidenced by a note, bond, debenture, or similar instrument, and (b)
all obligations of such Person under any lease required by GAAP to be
capitalized on the balance sheet of such Person.
"General Partner" means the general partner of the Company which on the
date hereof is DHI Mortgage Company GP, Inc., a Delaware corporation, formerly
known as CH Mortgage Company GP, Inc.
"Ginnie Mae" means the Government National Mortgage Association, or any
successor thereto.
"Good Funds Wire Clearing Account" means account number 104756234340 of
the Company with Agent.
"Governmental Authority" means any nation or government, any agency,
department, state or other political subdivision thereof and any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
-7-
"Government Requirement" means any law, statute, code, ordinance,
order, rule, regulation, judgment, decree, injunction, franchise, permit,
certificate, license, authorization or other direction or requirement
(including, without limitation, any of the foregoing which relate to
environmental standards or controls, energy regulations and occupational, safety
and health standards or controls) of any arbitrator, court or other Governmental
Authority, which exercises jurisdiction over the Company and its Restricted
Subsidiaries or any of its Property.
"HELOC Mortgage Loan" means a Nonconforming Mortgage Loan that is a
home equity line of credit that provides for no more than two advances.
"HELOC Mortgage Loan Sublimit" means five percent (5%) of the Aggregate
Commitment Amounts.
"Immediately Available Funds" means funds with good value on the day
and in the city in which payment is received.
"Investor" means any Person listed on Schedule 2 and any other Person
approved in writing by Agent who agrees to purchase Mortgage Collateral pursuant
to a Take-Out Commitment.
"Joinder Agreement" means an agreement in the form attached hereto as
Exhibit E.
"Jumbo Mortgage Loan" means a Mortgage Loan which would in all respects
be a Conforming Loan but for the fact that the original unpaid principal amount
of the underlying Mortgage Note is more than the maximum principal amount
allowable for purchase by Fannie Mae or Freddie Mac (but does not exceed
$1,000,000).
"Jumbo Sublimit" means twenty-five percent (25%) of the Aggregate
Commitment Amounts.
"JV" means a joint venture (whether structured as a corporation,
partnership, limited liability company, or other entity or arrangement) between
the Company and one or more builders, developers, title companies, or other
service providers in the residential real estate industry for the purpose of
making Mortgage Loans.
"Lenders" means each signatory hereto (other than the Company and any
other Borrowers) including U.S. Bank in its capacity as a Lender hereunder
rather than as Agent, and the successors of each as holder of a Note (or a
portion thereof) that has been transferred in accordance with Section 10.11.
"LIBOR Business Day": a Business Day which is also a day for trading by
and between banks in United States dollar deposits in the interbank LIBOR market
and a day on which banks are open for business in New York City.
"LIBOR Rate:" on any date of determination, the average offered rate
for deposits in United States dollars having a maturity of one month (rounded
upward, if necessary, to the
-8-
nearest 1/16 of 1%) for delivery of such deposits on such date of determination
which appears on the Telerate Page 3750 or any successor thereto as of 11:00
a.m., London time (or such other time as of which such rate appears) on such
date of determination, adjusted for any reserve requirement and any subsequent
costs arising from a change in government regulation, or the rate for such
deposits determined by the Agent at such time based on such other published
service of general application as shall be selected by the Agent for such
purpose; provided, that in lieu of determining the rate in the foregoing manner,
the Agent may determine the rate based on rates at which United States dollar
deposits having a maturity of one month are offered to the Agent in the
interbank LIBOR market at such time for delivery in Immediately Available Funds
on such date of determination in an amount equal to $1,000,000 (round upward, if
necessary, to the nearest 1/16 of 1%).
"LIBOR Rate Advance": an outstanding Loan that bears interest as
provided in Section 2.04(a)(iii).
"Lien" means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (whether statutory or otherwise), or preference,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever (including, without limitation, any conditional sale or other
title retention agreement, any financing lease having substantially the same
economic effect as any of the foregoing, and the filing of any financing
statement under the Uniform Commercial Code or comparable law of any
jurisdiction in respect of any of the foregoing).
"Loan" has the meaning given it in Section 2.01.
"Loan Document" means any, and "Loan Documents" shall mean all, of this
Agreement, the Notes, the Security Instruments and any and all other agreements
or instruments now or hereafter executed and delivered by the Company, the
Borrowers or any other Person in connection with, or as security for the payment
or performance of any or all of the Obligations, as any of such may be renewed,
amended or supplemented from time to time.
"Majority Lenders" means (i) if there are less than three Lenders,
Lenders collectively having Percentage Shares totaling in the aggregate one
hundred percent (100%); and (ii) if there are three or more Lenders, Lenders
collectively having Percentage Shares totaling in the aggregate at least
sixty-six and two-thirds percent (66 2/3%).
"Market Value" means at any date with respect to any Mortgage Loan, the
bid price quoted in writing to the Agent as of the computation date by two
nationally recognized dealers selected by the Agent who at the time are making a
market in similar Mortgage Loans (excluding from such bid price any stated
servicing release premium included therein), multiplied, in any case, by the
outstanding principal amount thereof.
"Material Adverse Effect" means any material adverse effect on (a) the
validity or enforceability of this Agreement, the Notes or any other Loan
Document, (b) the business, operations, total Property or financial condition of
the Company and its Restricted Subsidiaries
-9-
on a Consolidated basis, (c) the collateral under the Security Agreement, or (d)
the ability of any Borrower to fulfill its obligations under this Agreement, the
Notes, or any other Loan Document to which it is a party.
"Maximum Rate" means, with respect to each Lender, the maximum
nonusurious rate of interest that such Lender is permitted under applicable law
to contract for, take, charge, or receive with respect to its Loans. All
determinations herein of the Maximum Rate, or of any interest rate determined by
reference to the Maximum Rate, shall be made separately for each Lender as
appropriate to assure that the Loan Documents are not construed to obligate any
Person to pay interest to any Lender at a rate in excess of the Maximum Rate
applicable to such Lender.
"Mortgage" means a mortgage or deed of trust, on standard forms in form
and substance satisfactory to Agent, securing a Mortgage Note and granting a
perfected first or second priority lien on residential real property consisting
of land and a single-family dwelling thereon which is completed and ready for
occupancy.
"Mortgage Assignment" means an instrument duly executed and in
recordable form assigning a Mortgage, in blank and all like intervening
instruments that have been executed with respect to such Mortgage and which is
in form acceptable to Agent and satisfies all Requirements of Law.
"Mortgage Collateral" means all Mortgage Notes (a) which are made
payable to the order of any of the Borrowers or have been endorsed (without
restriction or limitation) payable to the order of any of the Borrowers, (b) in
which Agent has been granted and continues to hold a perfected first priority
security interest, (c) which are in form and substance acceptable to Agent in
its reasonable discretion, (d) which are secured by Mortgages, and (e) with
respect to Eligible Mortgage Loans, conform in all respects with all the
requirements for purchase of such Mortgage Notes under the Take-Out Commitments
and are valid and enforceable in accordance with their respective terms.
"Mortgage Loan" means a one-to-four-family mortgage loan which is
evidenced by a Mortgage Note and secured by a Mortgage, together with the rights
and obligations of a holder thereof and payments thereon and proceeds therefrom.
"Mortgage Note" means the Note or other evidence of indebtedness
evidencing the indebtedness of an Obligor under a Mortgage Loan.
"Mortgage-Backed Security" means (a) any security (including, without
limitation, a participation certificate) guaranteed by Ginnie Mae that
represents an interest in a pool of mortgages, deeds of trust or other
instruments creating a Lien on Property which is improved by a completed single
family residence, including but not limited to a condominium, planned unit
development or townhouse, (b) a security (including a participation certificate)
issued by Fannie Mae or Freddie Mac that represent interests in such a pool, and
(c) a privately-placed security representing undivided interests in or otherwise
supported by such a pool.
-10-
"Nonconforming Mortgage Loan" means a Mortgage Loan that (a) is neither
a Conforming Mortgage Loan nor a Jumbo Mortgage Loan, (b) generally meets
Standard & Poor's Ratings Group (a division of McGraw Hill, Inc.) underwriting
guidelines for Subprime Mortgage Loans, (c) has a FICO score equal to or in
excess of the requirements of the Investor under the applicable Take-Out
Commitment for such Mortgage Loan, (d) has a combined loan-to-value ratio of not
more than 100%, and (e) has a face amount of no more than $100,000, in the case
of a Mortgage Loan made pursuant to a home equity line of credit (except for a
Mortgage Loan made pursuant to a home equity line of credit in California, in
which case the face amount shall be no more than $500,000), and no more than
$400,000, in the case of any other Mortgage Loan.
"Nonconforming Sublimit" means fifteen percent (15%) of the Aggregate
Commitment Amounts.
"Note" means any promissory note delivered by the Company to a Lender
pursuant to Section 2.02 in the form attached hereto as Exhibit A, and all
renewals, modifications and extensions thereof. "Notes" means collectively each
Lender's Note.
"Obligations" means all present and future GAAP Indebtedness and
Contingent Indebtedness, obligations, and Liabilities of the Borrowers, or any
of them, to Agent or any Lender, and all renewals and extensions thereof, or any
part thereof, arising pursuant to this Agreement or any other Loan Document, and
all interest accrued thereon, and reasonable attorneys' fees and other costs
incurred in the drafting, negotiation, enforcement or collection thereof,
regardless of whether such indebtedness, obligations, and liabilities are
direct, indirect, fixed, contingent, joint, several or joint and several.
"Obligor" means the Person or Persons obligated to pay the indebtedness
which is the subject of a Mortgage Loan.
"Operating Account" means the non-interest bearing demand checking
account established by the Company with Agent to be used for the Company's
operations.
"Parent" means D.R. Horton, Inc., a Delaware Corporation, which owns
indirectly through one or more of its wholly-owned Subsidiaries, one hundred
percent (100%) of the general and limited partnership interests in the Company.
"PBGC" means the Pension Benefit Guaranty Corporation or any
Governmental Authority succeeding to any of its functions.
"Percentage Share" means, with respect to any Lender (a) when used in
Section 2.01, in any borrowing request or when no Loans are outstanding
hereunder, the percentage set forth opposite such Lender's name on Schedule 5,
and (b) when used otherwise, the percentage obtained by dividing (i) the sum of
the unpaid principal balance of such Lender's Loans at the time in question by
(ii) the sum of the aggregate unpaid principal balance of all Loans at such
time.
-11-
"Person" means any individual, corporation, partnership, joint venture,
association, joint stock company, limited liability company, trust,
unincorporated organization, Governmental Authority, or any other form of
entity.
"Prime Rate" means at the time of any determinations thereof, the rate
per annum which is most recently publicly announced by U.S. Bank as its "Prime
Rate", which may be a rate at, above or below the rate at which U.S. Bank lends
to other Persons.
"Prime Rate Advance" means an outstanding Loan that bears interest as
provided in Section 2.04(a)(ii).
"Property" means any interest in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible.
"Regulation D" means Regulation D issued by the Board of Governors of
the Federal Reserve system as in effect from time to time.
"Regulation T" means Regulation T issued by the Board of Governors of
the Federal Reserve System as in effect from time to time.
"Regulation U" means Regulation U issued by the Board of Governors of
the Federal Reserve System as in effect from time to time.
"Regulation X" means Regulation X issued by the Board of Governors of
the Federal Reserve System as in effect from time to time.
"Regulatory Change" means any change after the date hereof in United
States federal, state or foreign laws or regulations or the adoption or making
after such date of any interpretations, directives or requests applying to a
class of banks including any Lender under any United States federal, state or
foreign laws or regulations (whether or not having the force of law) by any
court or governmental or monetary authority charged with the interpretation or
administration thereof.
"Reportable Event" means (a) a reportable event described in Sections
4043(b)(5) or (6) of ERISA or the regulations promulgated thereunder, or (b) any
other reportable event described in Section 4043(b) of ERISA or the regulations
promulgated thereunder other than a reportable event not subject to the
provision for 30-day notice to the PBGC pursuant to a waiver by the PBGC under
Section 4043(a) of ERISA.
"Required Mortgage Documents" means as to any Mortgage Loan, the items
described in Section 4.02 of the Security Agreement.
"Requirement of Law" as to any Person means the charter and by-laws or
other organizational or governing documents of such Person, and any law,
statute, code, ordinance, order, rule, regulation judgment, decree, injunction,
franchise, permit, certificate, license, authorization or other determination,
direction or requirement (including, without limitation, any
-12-
of the foregoing which relate to environmental standards or controls, energy
regulations and occupational, safety and health standards or controls) of any
arbitrator, court or other Governmental Authority, in each case applicable to or
binding upon such Person or any of its Property or to which such Person or any
of its Property is subject.
"Restricted Subsidiary" means any subsidiary of the Company in
existence on the date hereof and any Subsidiary hereafter acquired or formed by
the Company which the Company does not designate as an Unrestricted Subsidiary.
"Risk Rating" means the risk rating of a Mortgage Loan determined by
the underwriting guidelines of the Company or other applicable standards of an
Investor to which such Mortgage Loan is to be sold by a Borrower under a
Take-Out Commitment, provided that such underwriting guidelines or other
applicable standards comply with industry standards (as defined by Standard &
Poor's Rating Group).
"Security Agreement" means the Amended and Restated Pledge and Security
Agreement of even date herewith between the Borrowers and Agent, substantially
in the form attached hereto as Exhibit F, as the same may from time to time be
further supplemented, amended or restated.
"Security Instrument" means (a) the Security Agreement and (b) such
other executed documents as are or may be necessary to grant to Agent a
perfected first prior and continuing security interest in and to all Mortgage
collateral, and any and all other agreements or instruments now or hereafter
executed and delivered by the Borrowers in connection with, or as security for
the payment or performance of, all or any of the Obligations, including the
Borrowers' obligations under the Notes and this Agreement, as such agreements
may be amended, modified or supplemented from time to time.
"Subprime Mortgage Loans" means any loans with credit characteristics
which do not fit the traditional requirements for a Risk Rating of "A" (as
defined by Standard & Poor's Rating Group), generally due to the overall
underlying credit quality, credit bureau score, loan-to-value ratio, lack of
credit history, etc. but which do fit the traditional requirements for a Risk
Rating of "B" or "C" (as defined by Standard & Poor's Rating Group).
"Subsidiary" means, with respect to any Person, any corporation,
association, partnership, joint venture, or other business or corporate entity,
enterprise or organization which is directly or indirectly (through out or more
intermediaries) controlled by or owned fifty percent (50%) or more by such
Person.
"Swingline Commitment" means the discretionary revolving credit
facility provided by U.S. Bank to the Borrowers described in Section 2.01.
"Swingline Loan" means a loan made by U.S. Bank to the Borrowers
pursuant to Section 2.01.
-13-
"Take-Out Commitment" means with respect to any Mortgage Loan shall
mean a bona fide current, unused and unexpired whole loan commitment or forward
sale Mortgage-Backed Security commitment issued in favor of and held by the
Company made by an Approved Investor, under which such Approved Investor agrees
prior to the expiration thereof, upon the satisfaction of certain terms and
conditions therein, to purchase such Mortgage Loan or related Mortgage-Backed
Security at a specified price, which commitment is not subject to any term or
condition which is not customary in commitments of like nature or which, in the
reasonably anticipated course of events, cannot be fully complied with prior to
the expiration thereof.
"Termination Event" means (a) the occurrence with respect to any ERISA
Plan of a Reportable Event, (b) the withdrawal of the Company or any ERISA
Affiliate from a plan during a plan year in which it was a "substantial
employer", as defined in Section 4001(a)(2) of ERISA, (c) the distribution to
affected parties of a notice of intent to terminate any ERISA Plan or the
treatment of any ERISA plan amendment as a termination under Section 4041 of
ERISA, (d) the institution of proceedings to terminate any ERISA Plan by the
PBGC under Section 4042 of ERISA, or (e) any other event or condition which
might constitute grounds under Section 4042 of ERISA for the termination of, or
the appointment of a trustee to administer, any ERISA Plan.
"UCC" means the Texas Uniform Commercial Code, as the same may
hereafter be amended.
"Unrestricted Subsidiary" means (i) any Subsidiary of the Company that
at the time of acquisition or formation of such Subsidiary by the Company shall
be designated as an Unrestricted Subsidiary by the Board of Directors of the
Company in the manner provided below and (ii) any Subsidiary of an Unrestricted
Subsidiary. The Board of Directors of the General Partner may designate any
newly acquired or formed Subsidiary to be an Unrestricted Subsidiary, provided
that no Default or Event of Default shall have occurred and be continuing at the
time of or, after giving effect to such designation. The Board of Directors may
designate any Unrestricted Subsidiary to be a Restricted Subsidiary by
delivering written notice of such designation to Agent together with a
compliance certificate signed by the President, Accounting Director or Chief
Financial Officer of General Partner which shall certify to Agent and Lenders
that at the date of and, after giving effect to such designation, the Company
shall be in compliance with all covenants set forth in the Loan Documents and no
Default or Event of Default shall have Occurred and be continuing.
"VA" means the U.S. Department of Veterans Affairs and any successor
thereto.
"Wet Warehousing Loans" means Eligible Mortgage Loans which are
included in the Borrowing Base, but for which the Required Mortgage Documents
have not been delivered to Agent.
"Wet Warehousing Sublimit" means fifty-five percent (55%) of the
Aggregate Commitment Amounts during the last four (4) Business Days in any
calendar month and the first four (4) Business Days in the next succeeding
calendar month or thirty percent (30%) of the Aggregate Commitment Amounts at
any other time.
-14-
Section 1.02 Other Definitional Provisions.
(a) Unless otherwise specified therein, all terms defined in this
Agreement shall have the above-defined meanings when used in the Notes or any
other Loan Document, certificate, report or other document made or delivered
pursuant hereto.
(b) Each term defined in the singular form in Section 1.01 means the
plural thereof when the plural form of such term is used in this Agreement, the
Notes or any other Loan Document, certificate, report or other document made or
delivered pursuant hereto, and each term defined in the plural form in Section
1.01 shall mean the singular thereof when the singular form of such term is used
herein or therein.
(c) The words "hereof," "herein," "hereunder" and similar terms when
used in this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement, and section, subsection, schedule and
exhibit references herein are references to sections, subsections, schedules and
exhibits to this Agreement unless otherwise specified. The word "or" is not
exclusive, and the word "including" (in its various forms) means "including
without limitation."
(d) Unless the context otherwise requires or unless otherwise provided
herein the terms defined in this Agreement which refer to a particular
agreement, instrument or document also refer to and include all renewals,
extensions, modifications, amendments and restatements of such agreement,
instrument or document, provided that nothing contained in this section shall be
construed to authorize any such renewal, extension, modification, amendment or
restatement.
(e) As used herein, in the Notes or in any other Loan Document,
certificate or report or other document made or delivered pursuant hereto,
accounting terms relating to any Person and not specifically defined in this
Agreement or therein shall have the respective meanings given to them under
GAAP.
Section 1.03 Exhibits and Schedules. All Exhibits and Schedules
attached to this Agreement are a part hereof for all purposes.
Section 1.04 Calculations and Determinations. All calculations under
the Loan Documents of interest and of fees shall be made on the basis of actual
days elapsed and a year of 360 days. Each determination by Agent or a Lender of
amounts to be paid under Sections 2.07 and 2.08 or any other matters which are
to be determined hereunder by Agent or a Lender (such as any LIBOR Rate or
Business Day) shall, in the absence of manifest error, be conclusive and
binding. Unless otherwise expressly provided herein or unless Agent otherwise
consents all financial statements and reports furnished to Agent or any Lender
hereunder shall be prepared and all financial computations and determinations
pursuant hereto shall be made in accordance with GAAP.
ARTICLE II
TERMS OF CREDITS
-15-
Section 2.01 Commitments and Discretionary Swingline Commitment.
(a) Commitments. Subject to the terms and conditions contained in this
Agreement, each Lender agrees to make loans ("Loans") to the Borrowers on a
revolving credit basis from time to time on any Business Day from the date of
this Agreement through the Drawdown Termination Date. The aggregate principal
amount of any Lender's Loans at any time outstanding (after giving effect to the
other transactions contemplated by the borrowing request pursuant to which a
Loan is requested) shall not exceed the lesser of: (i) such Lender's Percentage
Share of the Borrowing Base or (ii) such Lender's Commitment Amount. At no time
shall the aggregate amount of all Loans outstanding at any time exceed the
lesser of (A) the Borrowing Base, and (B) the Aggregate Commitment Amounts at
such time. Loans may be requested as Prime Rate Advances, LIBOR Rate Advances,
Balance Funded Rate Advances or any combination of the foregoing.
(b) Discretionary Swingline Commitment. Upon the terms and subject to
the conditions of this Agreement, until the Drawdown Termination Date, U.S.
Bank, in its sole discretion, may lend to the Borrowers loans (each such loan, a
"Swingline Loan") at such times and in such amounts as the Company shall
request, up to an aggregate principal amount at any time outstanding equal to
the amount by which U.S. Bank's Approval Amount exceeds the principal amount
outstanding under U.S. Bank's Note; provided, that U.S. Bank will not make a
Swingline Loan if (i) after giving effect thereto, the total principal amount of
outstanding Loans and Swingline Loans would exceed the lesser of the Aggregate
Commitment Amounts at such time or the Borrowing Base, or (ii) U.S. Bank has
received written notice from the Company or any Lender that one or more of the
conditions precedent set forth in Article III for the making of a Loan have not
been satisfied.
Section 2.02 Promissory Notes. The Loans (including the Swingline Loans
in the case of U.S. Bank) made by each Lender pursuant to this Article II shall
be evidenced by a Note payable to the order of such Lender.
Section 2.03 Obtaining Loans; Refinancing of Swingline Loans.
(a) Notice and Manner of Obtaining Loans. The Company shall give Agent
telephonic notice of each request for Loans not later than 1:00 p.m.
(Minneapolis, Minnesota time) on the requested Borrowing Date and of each
request for Swingline Loans not later than 3:00 p.m. (Minneapolis, Minnesota
time) on the requested Borrowing Date. Each request for Loans or Swingline Loans
shall specify the aggregate amount of Loans or Swingline Loans requested,
whether each such Loan or Swingline Loan is being made to permit a Co-Borrower
to originate or acquire one or more Mortgage Loans (and, if so, specifying the
Co-Borrower), and whether such Loans to be made by each Lender are to be funded
as Prime Rate Advances, LIBOR Rate Advances or Balance Funded Rate Advances;
provided, that any portion of a Loan not so designated shall be funded as a
LIBOR Rate Advance. On the first Business Day after the Closing Date, the
Company shall be deemed to have requested Loans in an amount equal to the
outstanding principal balance of all Loans under the Prior Credit Agreement, and
such Loans shall be used to refinance such Loans under the Prior Credit
Agreement. Agent shall notify each
-16-
Lender via facsimile and telephone by not later than 2:00 P.M. (Minneapolis,
Minnesota time) on the date it receives such request of each request for Loans
received from the Company, of such Lenders's Percentage Share of the Loans
requested and whether such Lender's Loans are to funded as Prime Rate Advances,
LIBOR Rate Advances or Balance Funded Rate Advances. The Company shall, not
later than the following Business Day, confirm any such request by delivering to
Agent a Confirmation. Each request for Loans shall be irrevocable and binding on
the Company and any applicable Co-Borrower. If all conditions precedent to such
Loan have been met, each Lender shall deposit into the Funding and Settlement
Account in immediately available dollars by not later than 4:00 P.M.
(Minneapolis, Minnesota time) on the Borrowing Date the amount of such Lender's
Loan and upon receipt of such funds, Agent shall promptly make such funds
available to the Company and any applicable Co-Borrower by depositing such funds
in the Good Funds Wire Clearing Account or the Operating Account, as requested
by the Company. On the Borrowing Date of requested Swingline Loans, U.S. Bank
may deposit into the Funding and Settlement Account in Immediately Available
Funds by not later than 4:00 p.m. (Minneapolis, Minnesota time) on the requested
Borrowing Date the amount of the requested Swingline Loans. Unless Agent shall
have received notice from a Lender prior to 3:00 P.M. (Minneapolis, Minnesota
time) on any Borrowing Date that such Lender will not make available to Agent
such Lender's Loan, Agent may in its discretion assume that such Lender has made
such Loan available to Agent in accordance with this section and Agent may if it
chooses, in reliance upon such assumption make such Loan available to the
Company and any applicable Co-Borrower. If and to the extent such Lender shall
not so make its Loan available to Agent, such Lender shall, on demand, pay to
Agent the amount of such Loan together with interest thereon, for each day from
the date such amount is made available to the Company and any applicable
Co-Borrower until the date such amount is paid or repaid to Agent at the Federal
Funds Rate. If such Lender does not pay such amount promptly upon Agent's demand
therefor, Agent shall notify the Company and the Company and each applicable
Co-Borrower shall immediately repay such amount to Agent together with accrued
interest thereon at the applicable rate or rates provided in Section 2.04. Agent
shall use its best efforts to demand any such amount from both such Lender and
the Company, provided, that any failure by Agent to make any such demand on both
such Lender and the Company shall not in any manner affect such Lender's, the
Company's or any applicable Co-Borrower's obligation to pay or repay such
amount, with interest, as set forth herein. The failure of any Lender to make
any Loan to be made by it hereunder shall not relieve any other Lender of its
obligation hereunder, if any, to make its Loan, but no Lender shall be
responsible for the failure of any other Lender to make any Loan to be made by
such other Lender. Each request for Loans or Swingline Loans shall be deemed to
be a representation by the Company that (i) no Event of Default or Default has
occurred or will exist upon the making of the requested Loans or Swingline Loans
and (ii) the representations and warranties contained in Section 4 hereof and in
Section 5 of the Security Agreement are true and correct with the same force and
effect as if made on and as of the date of such request.
(b) Refinancing of Swingline Loans.
(i) Permitted Refinancings of Swingline Loans. U.S. Bank, at
any time in its sole and absolute discretion, may, upon notice given to
each other Lender by not later than
-17-
2:00 P.M. (Minneapolis, Minnesota time) on any Business Day, request
that each Lender (including U.S. Bank) make a Loan in an amount equal
to its Percentage Share of a portion of the aggregate unpaid principal
amount of any outstanding Swingline Loans for the purpose of
refinancing such Swingline Loans. Such Loans shall be made as LIBOR
Advances, unless the Company specifies otherwise.
(ii) Mandatory Refinancings of Swingline Loans. Not later than
2:00 P.M. (Minneapolis time) at least on a weekly basis, U.S. Bank will
notify each other Lender of the aggregate amount of Swingline Loans
which are then outstanding and the amount of Loans required to be made
by each Lender (including U.S. Bank) to refinance such outstanding
Swingline Loans (which shall be in the amount of each Lender's
Percentage Share of such outstanding Swingline Loans). Such Loans shall
be made as LIBOR Advances, unless the Company specifies otherwise.
(iii) Lenders' Obligation to Fund Refinancings of Swingline
Loans. Upon the giving of notice by U.S. Bank under Section 2.03(b)(i)
or 2.03(b)(ii), each Lender (including U.S. Bank) shall make a Loan in
an amount equal to its Percentage Share of the aggregate principal
amount of Swingline Loans to be refinanced, and provide proceeds of
such Loans, in Immediately Available Funds, by not later than 3:00 P.M.
(Minneapolis time) on the date such notice was received; provided,
however, that a Lender shall not be obligated to make any such Loan
unless (A) U.S. Bank believed in good faith that all conditions to
making the subject Swingline Loan were satisfied at the time such
Swingline Loan was made, or (B) if the conditions to such Swingline
Loan were not satisfied, such Lender had actual knowledge, by receipt
of the statements furnished to it pursuant to Section 4.01 or
otherwise, that any such condition had not been satisfied and failed to
notify U.S. Bank in a writing received by U.S. Bank prior to the time
it made such Swingline Loan that U.S. Bank was not authorized to make a
Swingline Loan until such condition had been satisfied, or U.S. Bank
was obligated to give notice of the occurrence of an Event of Default
or a Default to Lenders pursuant to Section 8.08 and failed to do so,
or (C) any conditions to the making of such Swingline Loan that were
not satisfied had been waived in writing by Majority Lenders prior to
or at the time such Swingline Loan was made. The proceeds of Loans made
pursuant to the preceding sentence shall be paid to U.S. Bank (and not
to any Borrower) and applied to the payment of principal of the
outstanding Swingline Loans, and the Company authorizes Agent to charge
the Funding and Settlement Account or any other account (other than
escrow or custodial accounts) maintained by the Company with Agent (up
to the amount available therein) in order to immediately pay U.S. Bank
the principal amount of such Swingline Loans to the extent Loans made
by the Lenders are not sufficient to repay in full the principal of the
outstanding Swingline Loans requested or required to be refinanced.
Upon the making of a Loan by a Lender pursuant to this Section
2.03(b)(iii), the amount so funded shall become due under such Lender's
Note and the outstanding principal amount of the Swingline Loans shall
be correspondingly reduced. If any portion of any Loan made by Lenders
pursuant to this Section 2.03(b)(iii) should be recovered by or on
behalf of any Borrower from U.S. Bank in bankruptcy or otherwise, the
loss of the amount so recovered shall be ratably shared among all
Lenders in the
-18-
manner contemplated by Section 9.11. Each Lender's obligation to make
Loans referred to in this Section 2.03(b) shall, subject to the proviso
to the first sentence of this Section 2.03(b)(iii), be absolute and
unconditional and shall not be affected by any circumstance, including,
without limitation, (1) any setoff, counterclaim, recoupment, defense
or other right which such Lender may have against U.S. Bank, any
Borrower or anyone else for any reason whatsoever; (2) the occurrence
or continuance of a Default or an Event of Default; (3) any adverse
change in the condition (financial or otherwise) of the Company or any
Co-Borrower; (4) any breach of this Agreement by any Borrower, the
Agent or any Lender; or (5) any other circumstance, happening or event
whatsoever, whether or not similar to any of the foregoing; provided,
that in no event shall a Lender be obligated to make a Loan if, after
giving effect thereto, the outstanding principal balance of such
Lender's Note would exceed its Commitment Amount.
Section 2.04 Interest; Balances Deficiency Fees; Continuations and
Conversions.
(a) Interest Rates; Balances Deficiency Fees. The Borrowers will pay
the Agent monthly in arrears, within two Business Days after the Company's
receipt of Agent's statement therefor, interest on the unpaid principal balance
of each Advance of each Lender from time to time outstanding as follows:
(i) with respect to Balance Funded Rate Advances, at the
Balance Funded Rate; provided, that if for any Balance Calculation
Period the Balance Funded Amount maintained by the Company with any
Lender is less than an amount equal to the average daily aggregate
unpaid principal balance of the Balance Funded Rate Advances owed to
such Lender during such Balance Calculation Period (such deficiency
being herein referred to as the "Balances Deficiency"), the Borrowers
will pay such Lender a fee (the "Balances Deficiency Fee") for said
Balance Calculation Period on the Balances Deficiency at a per annum
rate equal to the average daily LIBOR Rate plus Applicable Margin in
effect during said Balance Calculation Period; and provided further,
that if the Balance Funded Amount maintained by the Company with any
Lender for any Balance Calculation Period exceeds the weighted average
daily aggregate unpaid principal balance of the Balance Funded Rate
Advances owed to such Lender during such Balance Calculation Period
(such excess being defined herein as the "Balances Surplus"), then such
Balances Surplus, or, if the Company and such Lender shall so agree,
the charges reduction benefit for such Balances Surplus (as determined
by such Lender), may be carried forward and applied to succeeding
Balance Calculation Periods (but not to any Balance Calculation Period
occurring in any subsequent calendar year);
(ii) with respect to Prime Rate Advances, the Prime Rate plus
the Applicable Margin, as adjusted automatically on and as of the
effective date of any change in the Prime Rate;
(iii) with respect to LIBOR Rate Advance the LIBOR Rate plus
the Applicable Margin, as adjusted automatically on and as of the
effective date of any change in the LIBOR Rate; and
-19-
(iv) with respect to any Obligations not paid when due (A)
consisting of Balance Funded Rate Advances, a rate per annum equal to
the Balance Funded Rate plus 4.0% per annum,(B) consisting of LIBOR
Rate Advances, a rate per annum equal to the LIBOR Rate plus 4.0% per
annum, (C) consisting of Prime Rate Advances, a rate per annum equal to
the Prime Rate plus 4.0% per annum, and (D) consisting of other
Obligations, a rate per annum equal to the Prime Rate plus the
Applicable Margin plus 4.0% for the period from the date such
Obligations were due until the same are paid.
(b) Payment of Interest and Fees. Agent shall use its best efforts to
provide the Company with a statement for interest on the Notes, the facility
fees with respect to the Commitments and the collateral handling fees with
respect to Mortgage Loans pledged under the Pledge and Security Agreement, in
each case accrued through the last day of each calendar month, on or before the
third Business Day (and in any case, no later than the tenth Business Day), of
the next succeeding calendar month, but shall have no liability to any Borrower
for its failure to do so. Interest on the Notes, facility fees and collateral
handling fees accrued through the last day of each calendar month shall be due
and payable on the second Business Day after the date the Company receives such
statement from Agent; provided, that interest payable at the rates provided for
in Section 2.04 (a)(iv) shall be payable on demand. Any Balances Deficiency Fee
payable hereunder shall be due and payable quarterly after each Balance
Calculation Period within two Business Days after receipt by the Company from
any Lender of a statement therefor (a copy of which shall be provided to Agent)
containing the calculations made to determine such Balances Deficiency Fee,
which statement shall be conclusive absent manifest error unless approved by
such Lender.
(c) Designation and Conversions of Outstanding Advances. Subject to the
terms and conditions of this Agreement, the Company shall designate, on any
Borrowing Date, all or portions of the Loans to be made on such Borrowing Date
as one or more LIBOR Rate Advances, Balance Funded Rate Advances or Prime Rate
Advances. Any portion of an outstanding Loan not designated as a Prime Rate
Advance or a Balance Funded Rate Advance shall be funded as a LIBOR Rate
Advance. Thereafter, subject to the terms and conditions of this Agreement, the
Company shall have the option to convert all or any portion of any outstanding
Advance consisting of Loans into Advances of another type (i.e., LIBOR Rate
Advances, Balance Funded Rate Advances or Prime Rate Advances); provided,
however, that (i) no Advance may be requested as or converted into a Balance
Funded Rate or, [without the written consent of the Lenders to which it is owed
(a copy of which shall be provided to Agent) a Balance Funded Rate Advance if an
Event of Default or Default has occurred and is continuing on the proposed date
of conversion, and (ii) no Advance owed to any Lender may be requested as or
converted into a Balance Funded Rate Advance without the prior consent of such
Lender, which shall be confirmed to Agent in writing by such Lender, if the
Balance Funded Amount maintained by the Company at such Lender is less than the
aggregate amount of Balance Funded Rate Advances owed to such Lender, after
giving effect to such conversion. The Company shall provide Agent with
telephonic notice of each proposed conversion not later than 1:00 P.M.
(Minneapolis, Minnesota time) on the date of any conversion, which notice shall
set forth the proposed date therefor. Each such notice shall specify (A) the
amount to be converted, and (B) the date for the conversion. Any notice given by
the Company under this Section 2.04(c)
-20-
shall be irrevocable. The Company shall promptly confirm any such proposed
conversion by delivering to Agent a duly completed and executed Confirmation.
Agent shall notify each Lender affected by such proposed conversion by not later
than 2:00 P.M. (Minneapolis, Minnesota time) on the date it receives such notice
of the Advances of such Lender being converted and the types of Advances into
which such Advances are being converted.
Section 2.05 Fees.
(a) The Company shall pay to the Agent, on behalf of each Lender, a
facility fee ("Facility Fee") in the amount of 0.100% per annum of each Lender's
Commitment Amount. The Facility Fee shall be payable monthly in arrears on the
first Business Day of each month commencing May 1, 2004 and shall be computed on
the basis of a 360-day year and applied to the actual number of days elapsed in
such month; provided, that on May 1, 2004, the Company shall pay the prorated
portion of the Facility Fee due from the date the Credit Agreement is executed
by all parties thereto (the "Closing Date") to April 30, 2004. If the Credit
Agreement terminates on any date other than the last of the then current month,
the Company shall pay the prorated portion of the Facility Fee due from the
beginning of the then current month to and including the date on which the
Credit Agreement terminates.
(b) The Company shall pay to the Agent for its own account, an Agent
fee and collateral handling fees agreed to in that certain letter agreement
dated of even date herewith between the Company and Agent.
Section 2.06 Mandatory Repayments. The unpaid principal amount of each
Note, together with all interest accrued thereon, shall be due and payable on
the Drawdown Termination Date. In addition, if at any time the aggregate
outstanding principal amount of all Loans exceeds the Borrowing Base, the
Company and the applicable Co-Borrowers shall repay the amount of such excess
within twenty-four hours after having knowledge thereof or receiving notice
thereof from Agent.
Section 2.07 Payments to Lenders. All payments of Interest on the
Notes, all payments of principal, including any principal payment made with
proceeds of Mortgage Collateral, and fees hereunder shall be made directly to
Agent for prompt distribution to the applicable Lenders to whom such payment is
owed in federal or other Immediately Available Funds before 1:00 p.m.
(Minneapolis, Minnesota time) on the respective dates when due via wire transfer
to the Funding and Settlement Account. Any payment received by Agent after such
time will be deemed to have been made on the next following Business Day. Should
any such payment become due and payable on a day other than a Business Day, the
maturity of such payment shall be extended to the next succeeding Business Day,
and, in the case of a payment of principal or past due interest, interest shall
accrue and be payable thereon for the period of such extension as provided in
the Loan Document under which such payment is due. Each payment under a Loan
Document shall be payable at the place provided therein and, if no specific
place of payment is provided, shall be payable at the place of payment of the
Notes. When Agent collects or receives money on account of the Obligations,
Agent shall distribute the money so collected or received, and Agent and Lenders
shall apply all such money so distributed, as follows:
-21-
(a) first, for the payment of all Obligations which are then due, and
if such money is insufficient to pay all such Obligations, (i) first to any
reimbursements due Agent under Section 5.05, (ii) second to the payment of any
Swingline Loans then outstanding, (iii) third to the payment of the Loans then
due, and (iv) then to the partial payment of all other Obligations then due in
proportion to the amounts thereof, or as Lenders shall otherwise agree;
(b) then for the prepayment of amounts owing under the Loan Documents
if so specified by the Company;
(c) then for the prepayment of principal on the Notes, together with
accrued and unpaid interest on the principal so prepaid; and
(d) last, for the payment or prepayment of any other Obligations.
All payments applied to principal or interest on any Note shall be
applied first to any Interest then due and payable, then to principal then due
and payable, and last to any prepayment of principal and interest. All
distributions of amounts described in any of subsections (b), (c) or (d) above
shall be made by Agent pro rata to Agent and each Lender then owed Obligations
described in such subsection in proportion to all amounts owed all Lenders which
are described in such subsection.
Section 2.08 Increased Capital Requirements. In the event that, as a
result of any Regulatory Change, compliance by any Lender with any applicable
law or governmental rule, requirement, regulation, guideline or order (whether
or not having the force of law) regarding capital adequacy has the effect of
reducing the rate of return on such Lender's capital as a consequence of such
Lender's Commitment or amounts outstanding under such Lender's Note to a level
below that which such Lender would have achieved but for such compliance (taking
into consideration such Lender's policies with respect to capital adequacy),
then from time to time the Borrowers shall pay to such Lender, within thirty
days after written demand by such Lender, such additional amount or amounts as
will compensate such Lender for such reduction; provided, that the Borrowers
shall not be obligated to pay any such additional amount (i) unless such Lender
shall first have notified the Borrowers in writing that it intends to seek such
compensation pursuant to this Section, or (ii) to the extent such additional
amount is attributable to the period ending 91 days prior to the date of the
first such notice with respect to such Regulatory Change (the "Excluded
Period"), except to the extent any amount is attributable to the Excluded Period
as a result of the retroactive application of the applicable Regulatory Change.
A certificate, which shall be conclusive except for manifest error, as to the
amount of any such reduction (including calculations in reasonable detail
showing how such Lender computed such reduction and a statement that such Lender
has not allocated to its Commitment or amounts outstanding under its Note a
proportionately greater amount of such reduction than is attributable to each of
its other commitments to lend or to each of its other outstanding credit
extensions that are affected similarly by such compliance by such Lender,
whether or not such Lender allocates any portion of such reduction to such other
commitments or credit extensions) shall be furnished promptly by such Lender to
the Borrowers.
-22-
Section 2.09 Provisions Relating to LIBOR Rate Advances and Balance
Funded Rate Advances.
(a) Interest Rate Not Ascertainable, Etc. If, on the date for
determining the LIBOR Rate in respect of any LIBOR Rate Advance, any Lender
determines (which determination shall be conclusive and binding, absent error)
that the LIBOR Rate will not adequately and fairly reflect the cost to such
Lender of funding such LIBOR Rate Advance, then such Lender shall notify Agent,
and Agent shall notify the Company, of such determination, whereupon the
obligation of such Lender to make, or to convert any Advances to, LIBOR Rate
Advances shall be suspended until such Lender notifies Agent, and Agent notifies
the Company, that the circumstances giving rise to such suspension no longer
exist. Outstanding LIBOR Rate Advances owed to such Lender shall thereupon
automatically be converted to bear interest at a rate equal to the Federal Funds
Rate plus 0.50%, and in such event, the Company will thereafter be entitled to
designate subsequent Advances to bear interest at the Federal Funds Rate plus
0.50%.
(b) Increased Cost. If, after the date hereof, any Regulatory Change or
compliance with any request or directive (whether or not having the force of
law) of any governmental authority, central bank or comparable agency:
(i) shall subject any Lender to any tax, duty or other charge
with respect to LIBOR Rate Advances or Balance Funded Rate Advances,
its Note, or its obligation to make LIBOR Rate Advances or Balance
Funded Rate Advances, or shall change the basis of taxation of payment
to such Lender of the principal of or interest on LIBOR Rate Advances
or Balance Funded Rate Advances or any other amounts due under this
Agreement in respect of LIBOR Rate Advances or Balance Funded Rate
Advances or its obligation to make LIBOR Rate Advances or Balance
Funded Rate Advances (except for changes in the rate of tax on the
overall net income of such Lender imposed by the laws of the United
States or any jurisdiction in which such Lender's principal office is
located); or
(ii) shall impose, modify or deem applicable any reserve,
special deposit, capital requirement or similar requirement (including,
without limitation, any such requirement imposed by the Board of
Governors of the Federal Reserve System, but excluding any such
requirement to the extent included in calculating the LIBOR Rate)
against assets of, deposits with or for the account of, or credit
extended by, any Lender or shall impose on any Lender or on the
interbank LIBOR market any other condition affecting LIBOR Rate
Advances or Balance Funded Rate Advances, such Lender's Note, or its
obligation to make LIBOR Rate Advances or Balance Funded Rate Advances;
and the result of any of the foregoing is to increase the cost to such Lender of
making or maintaining any LIBOR Rate Advance or Balance Funded Rate Advance, or
to reduce the amount of any sum received or receivable by such Lender under this
Agreement or under its Note, then, within 30 days after written demand by such
Lender, the Borrowers shall pay to such Lender such additional amount or amounts
as will compensate such Lender for such increased
-23-
cost or reduction; provided, that the Borrowers shall not be obligated to pay
any such additional amount (i) unless such Lender shall first have notified the
Company in writing that it intends to seek such compensation pursuant to this
Section, or (ii) to the extent such additional amount is attributable to the
period ending 91 days prior to the date of the first such notice with respect to
such Regulatory Change (the "Excluded Period"), except to the extent any amount
is attributable to the Excluded Period as a result of the retroactive
application of the applicable Regulatory Change. A certificate of any Lender
claiming compensation under this Section 2.09(b), setting forth the additional
amount or amounts to be paid to it hereunder and stating in reasonable detail
the basis for the charge and the method of computation (including a statement
that such Lender has not allocated to its Commitment or amounts outstanding
under its Note a proportionately greater amount of such compensation than is
attributable to each of its other commitments to lend or to each of its other
outstanding credit extensions that are affected by such compliance by such
Lender, whether or not such Lender allocates any portion or such compensation to
such other commitments or credit extensions), shall be conclusive in the absence
of manifest error. In determining such amount, such Lender may use any
reasonable averaging and attribution methods. Failure on the part of any Lender
to demand compensation for any increased costs or reduction in amounts received
or receivable with respect to any period shall not constitute a waiver of such
Lender's rights to demand compensation for any increased costs or reduction in
amounts received or receivable in any subsequent period.
(c) Illegality. If, after the date of this Agreement, the adoption of,
or any change in, any applicable law, rule or regulation, or any change in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by any Lender with any request or directive (whether or
not having the force of law) of any such authority, central bank or comparable
agency shall make it unlawful or impossible for such Lender to make, maintain or
fund LIBOR Rate Advances or Balance Funded Rate Advances, such Lender shall
notify the Company and Agent, whereupon the obligation of such Lender to make or
convert Advances into LIBOR Rate Advances or Balance Funded Rate Advances, shall
be suspended until such Lender notifies the Company and Agent that the
circumstances giving rise to such suspension no longer exist. If any Lender
determines that it may not lawfully continue to maintain any LIBOR Rate Advances
or Balance Funded Rate Advances, all of the affected Advances shall be
automatically converted as of the date of such Lender's notice to bear interest
at a rate equal to the Federal Funds Rate plus 0.50% and, in such event, the
Company will thereafter be entitled to designate subsequent Advances to bear
interest at the Federal Funds Rate plus 0.50%.
ARTICLE III
CONDITIONS PRECEDENT
The obligation of each Lender to make Loans hereunder is subject to
fulfillment of the conditions precedent stated in this Article III.
Section 3.01 Initial Borrowing. The obligation of each Lender to fund
any Loan hereunder shall be subject to, in addition to the conditions precedent
specified in Section 3.02,
-24-
delivery to Agent of the following (each of the following documents being duly
executed and delivered and in form and substance satisfactory to Agent, and,
with the exception of the Notes, each in a sufficient number of originals that
Agent, its counsel and each Lender may have an executed original of each
document);
(a) an executed counterpart of this Agreement and of all instruments,
certificates and opinions referred to in this Article III not theretofore
delivered (except the borrowing request which is to be delivered at the time
provided in Subsection 3.02(a) hereof);
(b) the Notes;
(c) the Security Agreement dated of even date herewith,
(d) a certificate of the Secretary or Assistant Secretary of General
Partner setting forth (i) resolutions of its board of directors authorizing the
execution, delivery, and performance of the Loan Documents to which it is a
party and identifying the officers authorized to sign such instruments, (ii)
specimen signatures of the officers so authorized, (iii) articles of
incorporation of General Partner certified by the appropriate Secretary of State
as of a recent date acceptable to the Agent in its sole discretion, (iv) bylaws
of General Partner, certified as being accurate and complete and (v) limited
partnership agreement of the Company, certified as being accurate and complete;
(e) a certificate of the existence and good standing for each of the
Company and General Partner in their respective states of incorporation or
organization dated as of a recent date acceptable to the Agent in its sole
discretion;
(f) an opinion of counsel for the Borrowers in form and substance
acceptable to Agent;
(g) a Borrowing Base Certificate dated as of the date of the first
Borrowing, certified by the President, Accounting Director or Chief Financial
Officer of General Partner; and
(h) such other documents as Agent may reasonably request at any time at
or prior to the date of the initial Borrowing hereunder.
Section 3.02 All Borrowings. The obligation of each Lender to fund any
Loan pursuant to this Agreement is subject to the following further conditions
precedent:
(a) the Company shall make a request for such Loan in accordance with
Section 2.03 (and thereafter deliver to Agent a Confirmation with respect
thereto, as required by Section 2.03) accompanied by the Required Mortgage
Documents, if applicable;
(b) all Property in which the Borrowers have granted a Lien to Agent
shall have been physically delivered to the possession of Agent or a bailee
acceptable to Agent to the extent that such possession is required under this
Agreement or appropriate for the purpose of perfecting the Lien of Agent in such
Collateral;
-25-
(c) the representations and warranties of the Company and each
Restricted Subsidiary contained in this Agreement or any Security Instrument
(other than those representations and warranties which are by their terms
limited to the date of the agreement in which they are initially made) shall be
true and correct in all material respects on and as of the date of such Loan;
(d) no Default or Event of Default shall have occurred and be
continuing and no change or event which constitutes a Material Adverse Effect
shall have occurred as of the date of such Loan;
(e) the Funding and Settlement Account and the Operating Account shall
be established and in existence;
(f) the making of such Loan shall not be prohibited by any Governmental
Requirement;
(g) the delivery to Agent of such other documents and opinions of
counsel, including such documents as may be necessary or desirable to perfect or
maintain the priority of any Lien granted or intended to be granted hereunder or
otherwise and including favorable written opinions of counsel with respect
thereto, as Agent may reasonably request; and
(h) the aggregate amount of all Loans and Swingline Loans outstanding,
after giving effect to such Loan, does not exceed the lesser of (i) the
Borrowing Base and (ii) the Aggregate Commitment Amount.
The making of any request for any Loan or Swingline Loan by the Company
shall be deemed to constitute a representation and warranty by the Company on
the date thereof and on the date on which such Loan or Swingline Loan is made as
to the facts specified in Subsections (c) and (d) of this Section 3.02.
Section 3.03 New Co-Borrowers. The Company may, at any time, add (i)
any Person from which the Company regularly purchases Mortgage Loans in the
ordinary course of its business, or (ii) any Affiliate that will warehouse
Mortgage Loans hereunder, as a Co-Borrower hereunder with the prior written
consent of the Majority Lenders by entering into a Joinder Agreement with the
Agent and such Person; provided, that, without limiting the Majority Lender's
right to consent to such matters, the effectiveness of any such Joinder
Agreement, and of the addition of any such Person as a Co-Borrower hereunder,
shall be subject to the following conditions precedent:
(a) The Agent shall have received the following, all of which must be
in form and content satisfactory to the Agent, in its sole discretion:
(1) The Joinder Agreement.
-26-
(2) Certified copies of the new Co-Borrower's articles
of incorporation and bylaws or other organizational documents,
and certificates of good standing dated no less recently than
thirty (30) days prior to the date of the Joinder Agreement.
(3) A copy of resolutions of the board of directors or
other governing authority of the new Co-Borrower, certified as
of the date of the Joinder Agreement by its corporate
secretary (or the equivalent), authorizing the execution,
delivery and performance of the Joinder Agreement (and thereby
the assumption of the Obligations under the Loan Documents)
and all other instruments or documents to be delivered by the
new Co-Borrower pursuant to this Agreement and the Joinder
Agreement.
(4) A certificate of the corporate secretary (or the
equivalent) of the new Co-Borrower, as to the incumbency and
authenticity of the signatures of the officers of the new
Co-Borrower executing the Joinder Agreement, and all other
instruments or documents to be delivered by such new
Co-Borrower pursuant to the Joinder Agreement and this
Agreement (the Agent being entitled to rely thereon until a
new such certificate has been furnished to the Agent).
(5) A tax, lien and judgment search of the appropriate
public records for the new Co-Borrower in the States where its
chief executive office is located, including a search of
Uniform Commercial Code financing statements, which search
shall not have disclosed the existence of any prior Lien on
the Collateral other than in favor of the Agent, for the
benefit of the Secured Parties, or as permitted hereunder.
(6) Executed financing statements in recordable form
naming the new Co-Borrower as debtor, covering the Collateral
and ready for filing in all jurisdictions required by the
Agent.
(7) Copies of the new Co-Borrower's errors and
omissions insurance policy or mortgage impairment insurance
policy and blanket bond coverage policy, all in form and
content satisfactory to the Agent, showing compliance of the
new Co-Borrower as of the date of the Joinder Agreement with
the related provisions of Section 5.06.
(8) An opinion of counsel for each Co-Borrower in form
and substance reasonably satisfactory to the Agent.
(b) The representations and warranties contained in Article 4 hereof
applicable to the Co-Borrower shall be accurate and complete in all material
respects as if made on and as of the date of, and after giving effect to, the
Joinder Agreement.
(c) The Borrowers shall have performed all agreements to be performed
by them hereunder, and after giving effect to the addition of the new
Co-Borrower hereunder, there shall exist no Default or Event of Default
hereunder.
-27-
Each of the Co-Borrowers (including, without limitation, any Co-Borrower that
becomes a party hereto pursuant to a Joinder Agreement) hereby authorizes the
Company, on behalf of the Borrowers, to execute and deliver Joinder Agreements
and Notes on behalf of all of the Borrowers.
3.04 Forece Majeure. Notwithstanding Borrowers' satisfaction of the
conditions set forth in this Agreement, the Agent and the Lenders have no
obligations to fund a Loan if the Lenders or the Agent are unable to deliver
such funds as a result of any fire or other casualty, failure of power, strike,
lockout or other labor trouble, banking moratorium, embargo, sabotage,
confiscation, condemnation, riot, civil disturbance, insurrection, act of
terrorism, war or other activity of armed forces, act of God or other similar
reason beyond the control of the Lenders and the Agent. The Lenders and the
Agent will fund the requested Loan as soon as reasonably possible following the
occurrence of such an event.
ARTICLE IV
BORROWER REPRESENTATIONS AND WARRANTIES
Each Borrower represents and warrants as follows:
Section 4.01 Organization and Good Standing. Each Borrower (a) is duly
formed and existing in good standing under the laws of the jurisdiction of its
formation, (b) is duly qualified as a foreign organization and in good standing
in all jurisdictions in which its failure to be so qualified could have a
Material Adverse Effect, (c) has the organizational power and authority to own
its properties and assets and to transact the business in which it is engaged
and is or will be qualified in the jurisdictions wherein it proposes to transact
business in the future and (d) is in compliance with all Requirements of Law
except to the extent that the failure to comply therewith could not, in the
aggregate, have a Material Adverse Effect.
Section 4.02 Authorization and Power. Each Borrower has the requisite
organizational power and authority to execute, deliver and perform the Loan
Documents to which it is a party; each Borrower is duly authorized to and has
taken all action necessary to authorize it to, execute, deliver and perform the
Loan Documents to which it is a party and is and will continue to be duly
authorized to perform such Loan Documents.
Section 4.03 No Conflicts or Consents. Neither the execution and
delivery by any Borrower of the Loan Documents to which it is a party, nor the
consummation of any of the transactions herein or therein contemplated, nor
compliance with the terms and provisions hereof or with the terms and provisions
thereof, will (a) materially contravene or conflict with any Requirement of Law
to which any Borrower is subject, or any indenture, mortgage, deed of trust, or
other agreement or instrument to which any Borrower is a party or by which any
Borrower may be bound, or to which the Property of any Borrower may be subject,
or (b) result in the creation or imposition of any Lien, other than the Lien of
the Security Agreement, on the Property of any Borrower. All actions, approvals,
consents, waivers, exemptions, variances,
-28-
franchises, orders, permits, authorizations, rights and licenses required to be
taken, given or obtained, as the case may be, from any Governmental Authority
that are necessary in connection with the transactions contemplated by the Loan
Documents have been obtained.
Section 4.04 Enforceable Obligations. This Agreement, the Notes and the
other Loan Documents are the legal, valid and binding obligations of the
Borrowers, enforceable in accordance with their respective terms, except as
limited by Debtor Laws.
Section 4.05 No Liens. The applicable Borrowers have good and
indefeasible title to the Mortgage Collateral free and clear of all Liens and
other adverse claims of any nature, other than Liens in the Mortgage Collateral
in favor of Agent.
Section 4.06 Financial Condition of the Company. The Company has
delivered to Agent and each Lender copies of its unaudited Consolidated balance
sheet as of January 31, 2004; such financial statements fairly present the
financial condition of the Company as of such date and have been prepared in
accordance with GAAP; as of the date thereof, there were no material
obligations, liabilities or GAAP Indebtedness or Contingent Indebtedness
(including material contingent and indirect liabilities and obligations or
unusual forward or long-term commitments) of the Company which are not reflected
in such financial statements and no change which constitutes a Material Adverse
Effect has occurred in the financial condition or business of the Company since
January 31, 2004. The Company has also delivered to Agent and each Lender
management reports for the month ended February 29, 2004; such reports fairly
and accurately present the Company's commitment position, pipeline position,
servicing and production as of the end of such months and for the fiscal year to
date for the periods ending on such dates.
Section 4.07 Full Disclosure. Each material fact or condition relating
to the Loan Documents or the financial condition, business, or property of any
Borrower that is a Material Adverse Effect has been disclosed in writing to
Agent. All information previously furnished by the Company and its Restricted
Subsidiaries or any Borrower to Agent in connection with the Loan Documents was
and all information furnished in the future by the Company and its Restricted
Subsidiaries or any Borrower to Agent or Lenders will be true and accurate in
all material respects or based on reasonable estimates on the date the
information is stated or certified. To the best knowledge of the Company,
neither the financial statements referred to in Section 4.07 hereof, nor any
borrowing request, officer's certificate or statement delivered by the Company
and its Restricted Subsidiaries or any Borrower to Agent and each Lender in
connection with this Agreement, contains any untrue statement of material fact.
Section 4.08 No Default. Neither the Company nor any Restricted
Subsidiary is in default under any loan agreement, mortgage, security agreement
or other material agreement or obligation to which it is a party or by which any
of its Property is bound the consequence of which could result in a Material
Adverse Effect.
Section 4.09 No Litigation. There are no material actions, suits or
legal, equitable, arbitration or administrative proceedings pending, or to the
knowledge of the Company,
-29-
threatened, against the Company or any Restricted Subsidiary the adverse
determination of which could constitute a Material Adverse Effect.
Section 4.10 Taxes. All tax returns required to be filed by the Company
and each Restricted Subsidiary in any jurisdiction have been filed or extended
and all taxes, assessments, fees and other governmental charges upon the Company
and each Restricted Subsidiary or upon any of its properties, income or
franchises have been paid prior to the time that such taxes could give rise to a
Lien thereon, unless protested in good faith by appropriate proceedings and with
respect to which reserves in conformity with GAAP have been established on the
books of the Company or such Restricted Subsidiary. Neither the Company nor any
Restricted Subsidiary has any knowledge of any proposed tax assessment against
the Company or any Restricted Subsidiary.
Section 4.11 Principal Office, etc. The principal office, chief
executive office and principal place of business of the Company and each
Restricted Subsidiary is at the address set forth in Section 10.01. The
principal office, chief executive office and principal place of business of each
Co-Borrower is at the address set forth in the applicable Joinder Agreement.
Section 4.12 Compliance with ERISA. None of the Company, any Restricted
Subsidiary or any ERISA Affiliate of the Company or any Restricted Subsidiary
currently maintains, contributes to, is required to contribute to or has any
liability, whether absolute or contingent, with respect to an ERISA Plan. With
respect to all other employee benefit plans maintained or contributed to by the
Company and each Restricted Subsidiary, the Company and each Restricted
Subsidiary is in material compliance with ERISA.
Section 4.13 Subsidiaries. Neither the Company nor any Restricted
Subsidiary presently has any Subsidiary or owns any stock in any other
corporation or association except those listed in Schedule 3. As of the date
hereof, the Company and each Restricted Subsidiary owns, directly or indirectly,
the equity interest in each of its Subsidiaries which is indicated in Schedule
3.
Section 4.14 Indebtedness. The Company has no indebtedness outstanding
other than the GAAP Indebtedness and Contingent Indebtedness permitted by
Section 6.02.
Section 4.15 Permits. The Company and each Restricted Subsidiary has
all permits and licenses necessary for the operation of its business.
Section 4.16 Status Under Certain Federal Statutes. Neither the Company
nor any Restricted Subsidiary is (a) a "holding company" or a "subsidiary
company" of a "holding company" or an "affiliate" of a "holding company" or of a
"subsidiary company" of a "holding company", as such terms are defined in the
Public Utility Holding Company Act of 1935, as amended, (b) a "public utility",
as such term is defined in the Federal Power Act, as amended, (c) an "investment
company", or a company "controlled" by an "investment company" within the
meaning of the Investment Company Act of 1949, as amended or (d) a "rail
carrier", or a "person controlled by or affiliated with a rail carrier", within
the meaning of Title 49, U.S.C., and neither
-30-
the Company nor any Restricted Subsidiary is a "carrier" to which 49 U.S.C.
Section 11301(b)(1) is applicable.
Section 4.17 No Approvals Required. Other than consents and approvals
previously obtained and actions previously taken, neither the execution and
delivery of the Loan Documents, nor the consummation of any of the transactions
contemplated hereby or thereby requires the consent or approval of, the giving
of notice to, or the registration, recording or filing by any the Borrowers or
any Restricted Subsidiary of any document with, or the taking of any other
action in respect of, any Governmental Authority which has jurisdiction over any
the Borrowers or any Restricted Subsidiary or any of its Property, except for
(a) the filing of the Mortgages, Uniform Commercial Code financing statements
and other similar filings to perfect the interest of Agent in the Collateral,
and (b) such other consents, approvals, notices, registrations, filings or
action as may be required in the ordinary course of business of any the
Borrowers and Restricted Subsidiaries in connection with the performance of the
obligations of the Borrowers hereunder.
Section 4.18 Individual Mortgage Loans. The Company and the applicable
Co-Borrowers hereby represent with respect to each Mortgage Note and Mortgage
Loan that is part of the Collateral:
(a) The Company and the applicable Co-Borrowers have good and
marketable title to each Mortgage Note and Mortgage, was the sole owner thereof
and had full right to pledge the Mortgage Loan to Agent free and clear of any
other Lien except any such Lien which has been disclosed to Agent in writing and
which is permitted hereunder;
(b) To the best knowledge of the Company and the applicable
Co-Borrowers, other than the permitted thirty (30) day delinquency period for
payments permitted by the definition of Eligible Mortgage Loan, there is no
default, breach, violation or event of acceleration existing under any Mortgage
or the related Mortgage Note and there is no event which, with the passage of
time or with notice and/or the expiration of any grace or cure period, would
constitute a default, breach, violation or event of acceleration and no such
default, breach, violation or event of acceleration has been waived;
(c) To the best of the knowledge of the Company and the applicable
Co-Borrowers, the physical condition of the Property subject to the Mortgage has
not deteriorated since the date of origination of the related secured Mortgage
Loan (normal wear and tear excepted) and there is no proceeding pending for the
total or partial condemnation of any Mortgaged Property;
(d) Each Mortgage contains customary and enforceable provisions such as
to render the rights and remedies of the holder thereof adequate for the
realization against the related Property subject to the Mortgage of the benefits
of the security provided thereby, including, (i) in the case of a Mortgage
designated as a deed of trust, by trustee's sale, and (ii) otherwise, by
judicial foreclosure;
(e) Each Mortgage Loan is a first or second lien one-to-four-family
loan which is not a construction loan, has been underwritten by the originator,
investor or mortgage insurer thereof
-31-
in accordance with such originator's, investor's or mortgage insurer's then
current underwriting guidelines, and is a Conforming Loan, a Nonconforming Loan,
an FHA loan, a VA loan or Jumbo Mortgage Loan;
(f) Each Mortgage Note is payable in monthly installments of principal
and interest, or interest only, as applicable, with interest payable in arrears,
and no Mortgage Note provides for any extension of the original term;
(g) No Mortgage Loan is a loan in respect of the purchase of a
manufactured home or mobile home or the land on which a manufactured home or
mobile home will be placed; no Mortgage securing a Mortgage Loan secures
commercial property;
(h) The origination practices used by the originator of the Mortgage
Loans and the collection practices used by the Company and the applicable
Co-Borrowers with respect to each Mortgage Loan have been in all material
respects legal, proper, prudent and customary in the loan origination and
servicing business;
(i) To the best knowledge of the Company and the applicable Co
Borrowers, each Mortgage Loan was originated in compliance with all applicable
laws and no fraud or misrepresentation was committed by any Person in connection
therewith; and
(j) Each Mortgage Loan matures within thirty (30) years after the date
of origination thereof.
Section 4.19 Ginnie Mae, FHA, VA, Fannie Mae and Freddie Mac
Eligibility of the Borrowers. Each of the Borrowers is (a) an FHA-approved,
non-supervised mortgagee in good standing and an eligible lender under the VA
loan guaranty program, meeting all requirements of law and governmental
regulation so as to be eligible to originate, purchase, hold and service
FHA-insured Mortgage Loans, VA-guaranteed Mortgage Loans and conventional
Mortgage Loans and to issue Mortgage-Backed Securities guaranteed by Ginnie Mae;
(b) an approved seller/servicer of Mortgage Loans to Fannie Mae and to Freddie
Mac in the Freddie Mac regions in which it operates, meeting all applicable
Fannie Mae and Freddie Mac regulations so as to be able to service Mortgage
Loans for Fannie Mae and Freddie Mac; and (c) a Fannie Mae, Freddie Mac and
Ginnie Mae-approved servicer of Mortgage-Backed Securities, meeting all
applicable regulations of Fannie Mae, Freddie Mac and Ginnie Mae so as to be
able to service the Mortgage Loans that secure Mortgage-Backed Securities.
Section 4.20 Co-Borrowers. Each Co-Borrower originates and sells to the
Company Mortgage Loans. The Company will receive benefit from each Loan or
Swingline Loan made hereunder to enable a Co-Borrower to originate a Mortgage
Loan, whether or not such Mortgage Loan is thereafter sold to the Company,
because of the continuing business relationship between the Company and such
Co-Borrower.
ARTICLE V
AFFIRMATIVE COVENANTS
-32-
The Company and each Restricted Subsidiary shall at all times comply
with the covenants contained in this Article V, from the date hereof and for so
long as any part of the Obligations or any Commitment is outstanding unless
Majority Lenders have agreed otherwise.
Section 5.01 Financial Statement and Reports. The Company shall furnish
to Agent and each Lender the following, all in form and detail reasonably
satisfactory to Agent:
(a) Promptly after becoming available, and in any event within ninety
(90) days after the close of each Fiscal Year of the Company, the audited
balance sheet of the Company as of the end of such year, and the audited related
statements of income, partners' equity and cash flows of Company for such year,
setting forth in each case in comparative form the corresponding figures for the
preceding Fiscal Year, accompanied by the related report of independent
certified public accountant of national standing prepared on a GAAP basis;
(b) Promptly after becoming available, and in any event within thirty
(30) days after the end of each month, including the twelfth month in the Fiscal
Year of the Company, a balance sheet of the Company as of the end of such month
and the related statements of income, partners' equity and cash flows of the
Company for such month and the period from the first day of the then current
fiscal year of the Company through the end of such month, certified by the Chief
Financial Officer, Accounting Director or President of General Partner to have
been calculated on a GAAP basis;
(c) Promptly upon receipt thereof, a copy of each other report
submitted to the Company by independent accountants in connection with any
annual, interim or special audit of the books of the Company;
(d) Promptly and in any event within thirty (30) days after the end of
each calendar month in each Fiscal Year of the Company, and within fifteen (15)
days after the completion of each year-end audit by the Company's independent
public accountants, a completed Officer's Certificate in the form of Exhibit D
hereto, executed by the President, Chief Financial Officer or Accounting
Director of General Partner;
(e) Promptly and in any event within thirty (30) days after the end of
each month, a Borrowing Base Certificate substantially in the form of Exhibit C
hereto;
(f) Promptly and in any event within thirty (30) days after the end of
each month, a management report regarding (i) the Company's pipeline and
commitment position, including investor type, amount and rate of committed
Mortgage Loans and expiration date and (ii) the Company's production statistics,
including type of product and/or origination source (retail or correspondent)
and geographic concentration in each case in form and detail as reasonably
required by Agent, prepared as of the end of such month and for the Fiscal Year
to date; and
(g) Such other information concerning the business, properties or
financial condition of the Company and its Restricted Subsidiaries as Agent or
any Lender may reasonably request.
-33-
Section 5.02 Taxes and Other Liens. Each Borrower and each Restricted
Subsidiary shall pay and discharge promptly all taxes, assessments and
governmental charges or levies imposed upon it or upon its income or upon any of
its Property as all claims of any kind (including claims for labor, materials,
supplies and rent) which, if unpaid, might become a Lien upon any or all of its
Property; provided, however, each Borrower and each Restricted Subsidiary shall
not be required to pay any such tax, assessment, charge, levy or claim if the
amount, applicability or validity thereof shall currently be contested in good
faith by appropriate proceedings diligently conducted by or on behalf of the
Company, applicable Borrower or such Restricted Subsidiary and if the Company,
applicable Borrower or such Restricted Subsidiary shall have set up reserves
therefor adequate under GAAP.
Section 5.03 Maintenance. Each of the Borrowers and Restricted
Subsidiaries shall (a) maintain its corporate or partnership existence, rights
and franchises; (b) observe and comply in all material respects with all
Governmental Requirements, and (c) maintain its Properties (and any Properties
leased by or consigned to it or held under title retention or conditional sales
contracts) in good and workable condition at all times and make all repairs,
replacements, additions, betterments and improvements to its Properties as are
needful and proper so that the business carried on in connection therewith may
be conducted properly and efficiently at all times.
Section 5.04 Further Assurances. The Borrowers shall, within three (3)
Business Days after the request of Agent, cure any defects in the execution and
delivery of the Notes, this Agreement or any other Loan Document and the
Borrowers shall, at its expense, promptly execute and deliver to Agent upon
request all such other and further documents, agreements and instruments in
compliance with or accomplishment of the covenants and agreements of the
Borrowers and each Restricted Subsidiary in this Agreement and in the other Loan
Documents or to further evidence and more fully describe the collateral intended
as security for the Notes, or to correct any omissions in this Agreement or the
other Loan Documents, or more fully to state the security for the obligations
set out herein or in any of the other Loan Documents, or to make any recordings,
to file any notices, or obtain any consents.
Section 5.05 Reimbursement of Expenses. The Borrowers shall pay,
subject to the limitation in Section 10.19 hereof (in the case of each
Co-Borrower) (a) all reasonable legal fees (including, without limitation,
allocated costs for in-house legal service) incurred by Agent in connection with
the preparation, negotiation or execution of this Agreement, the Notes and the
other Loan Documents and any amendments, consents or waivers executed in
connection therewith, (b) all fees, charges or taxes for the recording or filing
of the Security Instruments, (c) all out-of-pocket expenses of Agent in
connection with the legal administration of this Agreement, the Notes and the
other Loan Documents, including courier expenses incurred in connection with the
Mortgage Collateral, and (d) all amounts expended, advanced or incurred by Agent
to satisfy any obligation of any Borrower under this Agreement or any of the
other Loan Documents or to collect the Notes, or to enforce the rights of Agent
or any Lender under this Agreement or any of the other Loan Documents or to
collect the Note, or to enforce the rights of Agent or any Lender under this
Agreement or any of the other Loan Documents, which amounts shall include all
underwriting expenses, collateral liquidation costs, court costs, attorneys'
fees
-34-
(including, without limitation, for trial, appeal or other proceedings), fees of
auditors and accountants, and investigation expenses reasonably incurred by
Agent or any Lender in connection with any such matters, together with interest
at the post-maturity rate specified in the Note on each item specified in clause
(a) through (d) from thirty (30) days after the date of written demand or
request for reimbursement until the date of reimbursement.
Section 5.06 Insurance. Each Borrower shall maintain with financially
sound and reputable insurers, insurance with respect to its properties and
business against such liabilities, casualties, risks and contingencies and in
such types and amounts as is customary in the case of Persons engaged in the
same or similar businesses and similarly situated, including, without
limitation, a fidelity bond or bonds with financially sound and reputable
insurers with such coverage and in such amounts as is customary in the case of
Persons engaged in the same or similar business and similarly situated. The
improvements on the land covered by each Mortgage shall be kept continuously
insured at all times by responsible insurance companies against fire and
extended coverage hazard under policies, binders, letters, or certificates of
insurance, with a standard mortgagee clause in favor of the applicable Borrower
and its assigns. Each such policy must be in an amount equal to the lesser of
the maximum insurable value of the improvements or the original principal amount
of the Mortgage Note, without reduction by reason of any co-insurance, reduced
rate contribution, or similar clause of the policies or binders. Upon request of
Agent, each Borrower shall furnish or cause to be furnished to Agent from time
to time a summary of the insurance coverage of such Borrower in form and
satisfactory to Agent and if requested shall furnish Agent copies of the
applicable policies.
Section 5.07 Accounts and Records. The Company and each Restricted
Subsidiary shall keep true and accurate books of record and shall account for
all dealings or transactions in relation to its business and activities, in
accordance with GAAP. The Company and each Restricted Subsidiary shall maintain
and implement administrative and operating procedures (including, without
limitation, an ability to recreate all records pertaining to the performance of
the Company's or such Restricted Subsidiary's obligations under any servicing
agreements in the event of the destruction of the originals of such records) and
keep and maintain all documents, books, records, computer tapes and other
information reasonably necessary or advisable for the performance by the Company
and each Restricted Subsidiary of its obligations under any servicing
agreements.
Section 5.08 Right of Inspection. The Borrowers shall permit authorized
representatives of Agent or any Lender to examine their servicing records and
books of records and account and make copies or extracts thereof and to visit
and inspect any of the Properties of the Borrowers, all upon reasonable notice
during normal business hours, provided that if no Event of Default has occurred
and is continuing, such visits and inspections at the Borrowers' premises shall
be limited to periods of no more than two (2) consecutive days on two occasions
(total of four days) during each twelve-month period. Such visits and
inspections shall be at Agent's or such Lender's expense unless an Event of
Default has occurred and is continuing, in which case it shall be at the
Borrowers' expense. The Borrowers shall permit authorized representatives of
Agent or any Lender to discuss the business, operations, assets and financial
condition of the Borrowers and the Restricted Subsidiaries with its officers at
any time.
-35-
Section 5.09 Notice of Certain Events. The Company shall promptly
notify Agent and each Lender upon (a) the receipt of any notice from, or the
taking of any other action by, the holder of any promissory note, debenture or
other evidence of GAAP Indebtedness and Contingent Indebtedness of the Company
or any Restricted Subsidiary with respect to a claimed default, together with a
detailed statement by a responsible officer of the Company specifying the notice
given or other action taken by such holder and the nature of the claimed default
and what action the Company is taking or proposes to take with respect thereto;
(b) the commencement of, or any determination in, any legal, judicial or
regulatory proceedings between the Company or any Restricted Subsidiary and any
Governmental Authority or any other Person which, if adversely determined, could
have a Material Adverse Effect; (c) any material adverse change in the business,
operations, prospects or financial condition of the Company or any Restricted
Subsidiary, including, without limitation, the insolvency of the Company or any
Restricted Subsidiary, (d) any event or condition which could have a Material
Adverse Effect or (e) the occurrence of any Termination Event.
Section 5.10 Performance of Certain Obligations and Information
Regarding Investors. The Company and the applicable Co-Borrowers shall perform
and observe in all material respects each of the provisions of each Take-Out
Commitment and any servicing agreement on its part to be performed or observed
and will cause all things to be done which are necessary to have each item of
Mortgage Collateral covered by a Take-Out Commitment comply with the
requirements of such Take-Out Commitment. The Company and the applicable
Co-Borrowers will deliver to Agent financial information concerning any Person
Lenders are reviewing to determine whether to approve such Person as an
Investor.
Section 5.11 Use of Proceeds; Margin Stock. The proceeds of all
Borrowings shall be used by the Borrowers solely for the origination or
acquisition of Mortgage Loans in the ordinary course of the Borrowers' business.
None of such proceeds shall be used for the purpose of purchasing or carrying
any "margin stock" as defined in Regulation U, or for the purpose of reducing or
retiring any GAAP Indebtedness and Contingent Indebtedness which was originally
incurred to purchase or carry margin stock or for any other purpose which might
constitute this transaction a "purpose credit" within the meaning of such
Regulation U.
Section 5.12 Notice of Default. The Company shall furnish to Agent and
each Lender immediately upon becoming aware of the existence of any Default or
Event of Default, a written notice specifying the nature and period of existence
thereof and the action which the Company is taking or proposes to take with
respect thereto.
Section 5.13 Compliance with Loan Documents. The Company shall cause
each Restricted Subsidiary to promptly comply with any and all covenants and
provisions of the Loan Documents to be complied with by such Person.
Section 5.14 Operations and Properties. The Company and each Restricted
Subsidiary shall comply with all rules, regulations and guidelines applicable to
it. The Borrowers shall act prudently and in accordance with customary industry
standards in managing and operating their Property.
-36-
Section 5.15 Maintenance of Qualifications. Each the Borrowers will
maintain its status as an FHA-approved mortgagee, as an approved lender under
the VA guarantee program, as an approved seller/servicer of Mortgage Loans to
Fannie Mae and to Freddie Mac in the Freddie Mac regions in which it operates
and as an FHA-approved direct endorsement mortgagee, and its eligibility to
issue Mortgage-Backed Securities or to service the Mortgage Loan pools formed
with respect to Mortgage-Backed Securities.
ARTICLE VI
NEGATIVE COVENANTS
The Company and each Restricted Subsidiary shall at all times comply
with the covenants contained in this Article VI, from the date hereof and for so
long as any part of the Obligations or any Commitment is outstanding unless
Majority Lenders have agreed otherwise:
Section 6.01 No Merger. Each of the Borrowers shall not merge or
consolidate with or into any Person, if immediately prior to any such merger or
consolidation a Default or Event of Default exists or would occur as a result
thereof, or if as a result of any such merger or consolidation a Change of
Control would occur.
Section 6.02 Limitation on GAAP Indebtedness and Contingent
Indebtedness. At no time shall the Company or any Restricted Subsidiary incur,
create, contract, assume, have outstanding, guarantee or otherwise be or become,
directly or indirectly, liable in respect of any GAAP Indebtedness or Contingent
Indebtedness except:
(a) the Obligations;
(b) trade debt (including, without limitation, trade debt for services
provided by an Affiliate), equipment leases, loans for the purchase of equipment
used in the ordinary course of the Borrower's business and indebtedness for
taxes and assessments not yet due and payable owed in the ordinary course of
business;
(c) unsecured GAAP Indebtedness or unsecured Contingent Indebtedness
owing to Parent or any Affiliate of Parent, including unsecured Contingent
Indebtedness of the Company to CH Funding , LLC under the CP Facility Documents;
and
(d) Contingent Indebtedness to Persons other than Parent or Affiliate
of Parent (including GAAP Indebtedness and Contingent Obligations of CH Funding,
LLC under the CP Facility Documents).
Section 6.03 Business. The Company shall not, directly or indirectly,
other than through an Unrestricted Subsidiary, engage in any business which
differs materially from that currently engaged in by the Company or any other
business customarily engaged in by other Persons in the mortgage banking
business.
-37-
Section 6.04 Liquidations, Dispositions of Substantial Assets. Except
as expressly provided below in this section, neither the Company nor any
Restricted Subsidiary shall dissolve or liquidate or sell, transfer, lease or
otherwise dispose of any material portion of its property or assets or business.
The Company and the Restricted Subsidiaries may sell Mortgage Loans and the
right to service Mortgage Loans in the ordinary course of their business
(including sales or transfers of Mortgage Loans by the Company to CH Funding
under the CP Facility Documents), any Restricted Subsidiary may sell its
property, assets or business to the Company or another Restricted Subsidiary,
and any Restricted Subsidiary may liquidate or dissolve if at the time thereof
and immediately thereafter, the Company and the Restricted Subsidiaries are in
compliance with all covenants set forth in the Loan Documents and no Default or
Event of Default shall have occurred and be continuing.
Section 6.05 Loans, Advances, and Investments. Neither the Company nor
any Restricted Subsidiary shall make any loan (other than Mortgage Loans),
advance, or capital contribution to, or investment in (including any investment
in any Restricted Subsidiary, joint venture or partnership), or purchase or
otherwise acquire any of the capital stock, securities, ownership interests, or
evidences of indebtedness of, any Person (collectively, "Investment"), or
otherwise acquire any interest in, or control of, another Person, except for the
following:
(a) Cash Equivalents;
(b) Any acquisition of securities or evidences of indebtedness of
others when acquired by the Borrowers in settlement of accounts receivable or
other debts arising in the ordinary course of its business, so long as the
aggregate amount of any such securities or evidences of indebtedness is not
material to the business or condition (financial or otherwise) of a the
Borrowers;
(c) Mortgage Notes acquired in the ordinary course of the Borrowers'
business;
(d) Investment in any existing Affiliate or any Subsidiary (including
Investments by the Company in CH Funding, LLC, a Delaware limited liability
company) or JV; provided that at the time any such investment is made and
immediately thereafter, the Company and the Restricted Subsidiaries are in
compliance with all covenants set forth in the Loan Documents and no Default or
Event of Default shall have occurred and be continuing;
(e) Loans to officers or employees in an aggregate amount not to exceed
$300,000; and
(f) Loans made to JV's in an amount not to exceed $10,000,000 at any
one time outstanding, secured by Mortgage Loans originated with the proceeds of
such loans and covered by a bona fide current, unused and unexpired whole loan
commitment issued in favor of and held by such JV made by an Approved Investor
or the Company.
Section 6.06 Use of Proceeds. The Borrowers shall not permit the
proceeds of the Loans to be used for any purpose other than those permitted by
Section 5.11 hereof. The
-38-
Borrowers shall not, directly or indirectly, use any of the proceeds of the
Loans for the purpose, whether immediate, incidental or ultimate, of buying any
"margin stock" or of maintaining, reducing or retiring any GAAP Indebtedness and
Contingent Indebtedness originally incurred to purchase a stock that is
currently any "margin stock", or for any other purpose which might constitute
this transaction a "purpose credit", in each case within the meaning of
Regulation U or otherwise take or permit to be taken any action which would
involve a violation of Regulation U, Regulation T or Regulation X or any other
regulation of the Board of Governors of the Federal Reserve System.
Section 6.07 Actions with Respect to Mortgage Collateral. The Borrowers
shall not:
(a) Compromise, extend, release, or adjust payments on any Mortgage
Collateral, accept a conveyance of mortgaged property in full or partial
satisfaction of any Mortgage Collateral, or release any Mortgage securing or
underlying any Mortgage Collateral;
(b) Agree to the amendment or termination of any Take-Out Commitment in
which Agent has a security interest or to substitution of a Take-out Commitment
for a Take-Out Commitment in which Agent has a security interest hereunder, if
such amendment, termination or substitution may reasonably be expected (as
determined by Majority Lenders in their sole discretion) to have a Material
Adverse Effect; or
(c) Transfer, sell, assign, or deliver any Mortgage Collateral pledged
to Agent to any Person other than Agent, except pursuant to a Take-Out
Commitment and except by the Company to CH Funding, LLC under the CP Facility
Documents.
Section 6.08 Transactions with Affiliates. The Company shall not enter
into any transactions including, without limitation, any purchase, sale, lease
or exchange of property or the rendering of any service, with any Affiliate
other than a Restricted Subsidiary unless such transactions are otherwise
permitted under this Agreement (including, without limitation, the transactions
permitted under Section 6.02) and are in the ordinary course of the Company's
business.
Section 6.09 Liens. The Company shall not grant, create, incur, assume,
permit or suffer to exist any Lien, upon any of its Mortgage Notes or servicing
rights or any property related thereto, including but not limited to the
mortgages securing such Mortgage Notes and the proceeds of the Mortgage Notes
and Servicing Rights (whether or not part of the Mortgage Collateral), other
than (a) Liens in an aggregate amount not to exceed $2,000,000, (b) Liens which
secure payment of the Obligations, (c) such non-consensual Liens as may be
deemed to arise as a matter of law pursuant to any Take-Out Commitment and (d)
Liens described on Schedule 4.
Section 6.10 ERISA Plans. Neither the Company nor any Restricted
Subsidiary shall adopt or agree to maintain or contribute to ERISA Plan. The
Company shall promptly notify Agent and each Lender in writing in the event an
ERISA Affiliate adopts an ERISA Plan.
Section 6.11 Change of Principal Office; Fiscal Year. The Company shall
not move its principal office, executive office or principal place of business
from the address set forth in Section 10.01 or change its Fiscal Year, without
prior written notice to Agent and each Lender.
39
Section 6.12 Limitation on Distributions and Redemptions. The Company
will not make any Distribution, except as expressly provided in this section.
Distributions may be made by the Company (i) at any time with respect to a
Distribution to pay or reimburse taxes (whether gross receipts, income or
franchise taxes and whether state or federal) actually incurred by the General
Partner or any limited partner in the Company due to its status as General
Partner or limited partner in the Company or actually incurred by any Affiliate
due to its status as an Affiliate of the Company and whose income or gross
receipts are required to be, or are, reported with the Company's on a
consolidated basis, or (ii) within sixty (60) days after the end of each Fiscal
Quarter with respect to any other Distribution, and with respect to all
Distributions described in clauses (i) and (ii) of this sentence, to the extent
that the aggregate value of all Distributions made by the Company in the Four
Quarter Period ending on the last day of the most recently ended Fiscal Quarter
does not exceed Company's profit for such Four Quarter Period, so long as no
Default or Event of Default exists at the time such Distribution is made, or
will occur as a result of the making thereof.
Section 6.13 Tangible Net Worth. As of the end of each calendar month,
Company's Consolidated Tangible Net Worth shall not be less than $45,000,000.
Section 6.14 Tangible Net Worth Ratio. The ratio of (i) the sum of GAAP
Indebtedness and Contingent Indebtedness to (ii) the Company's Consolidated
Tangible Net Worth shall not be more than 12.0 to 1.0 as of the end of each
calendar month.
Section 6.15 Net Income. As of the end of each Fiscal Quarter, the
Company's Consolidated income, calculated in accordance with GAAP, for the two
consecutive Fiscal Quarters then ended shall not be less than $1.00.
Section 6.16 Custodian. The Company will not appoint any collateral
agent or custodian for its Mortgage Loans other than U.S. Bank.
Section 6.17 Payments to Parent. Upon the occurrence and continuation
of an Event of Default, the Company shall not make any payment on any
indebtedness owed by it to Parent or any Affiliate of Parent.
ARTICLE VII
EVENTS OF DEFAULT
Section 7.01 Nature of Event. An Event of Default shall exist if any
one or more of the following occurs:
(a) The Company and the applicable Co-Borrowers fail to make any
payment of principal of or interest on any Note or any fee or other amount
required to be paid to Agent or any Lender pursuant to this Agreement or any
other Loan Document within two (2) calendar days after notice of such failure is
given by Agent to the Company and the applicable Co-Borrowers;
(b) Default is made in the due observance or performance by the Company
and the applicable Co-Borrowers or any Restricted Subsidiaries of any covenant
or agreement set forth
40
in Article VI or Section 5.01 and such default continues unremedied for thirty
(30) calendar days;
(c) Default is made in the due observance or performance by the Company
and the applicable Co-Borrowers or any Restricted Subsidiaries of any covenant
or agreement set forth in any Loan Document (other than as referred to in
subsections (a) or (b) above) and such default continues unremedied for thirty
(30) calendar days after notice of such default is given by Agent to the Company
and the applicable Co-Borrowers;
(d) Any material statement, warranty or representation by or on behalf
of the Company and the applicable Co-Borrowers contained in any Loan Document or
in any borrowing request, proves to have been incorrect or misleading in any
material respect as of the date made or deemed made;
(e) Any Borrower or any Restricted Subsidiary:
(i) suffers the entry against it of a judgment, decree or
order for relief by a court of competent jurisdiction in an involuntary
proceeding commenced under any applicable bankruptcy, insolvency or
other similar law of any jurisdiction now or hereafter in effect,
including the federal Bankruptcy Code, as from time to time amended, or
has any such proceeding commenced against it which remains undismissed
for a period of sixty (60) days; or
(ii) commences a voluntary case under any applicable
bankruptcy, insolvency or similar law now or hereafter in effect,
including the federal Bankruptcy Code, as from time to time amended; or
applies for or consents to the entry of any order for relief in an
involuntary case under any such law; or makes a general assignment for
the benefit of creditors; or fails generally to pay (or admits in
writing its inability to pay) its debts as such debts become due; or
takes partnership action, corporate action or other action to authorize
any of the foregoing; or
(iii) suffers the appointment of or taking possession by a
receiver, liquidator, assignee, custodian, trustee, sequestrator, or
similar official of all or a substantial part of its assets or of any
part of the Mortgage Collateral in a proceeding brought against or
initiated by it, and such appointment or taking possession is neither
made ineffective nor discharged within sixty (60) days after the making
thereof, or such appointment or taking possession is it any time
consented to, requested by, or acquiesced to by it; or
(iv) suffers the entry against it of a final judgment for the
payment of money in excess of $500,000 (not covered by insurance
satisfactory to Agent in its discretion), unless the same is discharged
within thirty (30) days after the date of carry thereof or an appeal or
appropriate proceeding for review thereof is taken within such period
and a stay of execution pending such appeal is obtained; or
(v) suffers a writ or warrant of attachment or any similar
process to be issued by any court against all or any substantial part
of its assets or any part of the Mortgage Collateral;
41
provided, however, if any event set forth in this Section 7.01(e) occurs with
respect to any Restricted Subsidiary, the occurrence of such event shall not
constitute an Event of Default unless it could have a Materially Adverse Effect.
(f) The Company or any Restricted Subsidiary fails to make when due or
within any applicable grace period (after giving effect to any applicable notice
requirement), any payment on any GAAP Indebtedness and Contingent Indebtedness
(other than the Obligations); or any event or condition occurs under any
provision contained in any agreement under which such obligation is governed,
evidenced or secured (or any other material breach or default under such
obligation or agreement occurs) if a Material Adverse Effect is caused thereby;
(g) Any Loan Document shall for any reason cease to be in full force
and effect, or be declared null and void or unenforceable in whole or in part as
the result of any action initiated by any Person other than Agent or any Lender;
or the validity or enforceability of any such document shall be challenged or
denied by any Person other than Agent or any Lender;
(h) Either (i) any "accumulated funding deficiency" (as defined in
Section 412(a) of the Code in excess of $25,000 exists with respect to any ERISA
Plan, whether or not waived by the Secretary of the Treasury or his delegate, or
(ii) any Termination Event occurs with respect to any ERISA Plan and the then
current value of such ERISA Plan's benefits guaranteed under Title IV of ERISA
exceeds the then current value of such ERISA Plan's assets available for the
payment of such benefits by more than $10,000 (or in the case of a Termination
Event involving the withdrawal of a substantial employer, the withdrawing
employer's proportionate share of such excess exceeds such amount) or (iii) the
Company or any of its Restricted Subsidiaries or any ERISA Affiliate withdraws
from a multiemployer plan resulting in liability under Title IV of ERISA of an
amount in excess of $10,000; or
(i) A Change of Control occurs.
Section 7.02 Default Remedies. Except as provided in the following
sentence, upon the occurrence of an Event of Default, Agent may (and upon
written instructions from Majority Lenders, Agent shall) declare the Commitments
to be terminated and/or declare the entire principal and all interest accrued on
the Notes to be, and the Notes, together with all Obligations, shall thereupon
become, forthwith due and payable, without any presentment, demand, protest,
notice of protest and nonpayment, notice of acceleration or of intent to
accelerate or other notice of any kind, all of which hereby are expressly
waived. Notwithstanding the foregoing, (a) if an Event of Default specified in
Subsections 7.01(e)(i), (ii) or (iii) above occurs with respect to the Company,
the Commitments shall automatically and immediately terminate and the Notes and
all other Obligations shall become automatically and immediately due and
payable, both as to principal and interest, without any action by Agent or any
Lender and without presentment, demand, protest, notice of protest and
nonpayment, notice of acceleration or of intent to accelerate, or any other
notice of any kind, all of which are hereby expressly waived, anything contained
herein or in any Notes to the contrary notwithstanding, and (b) if an Event of
Default specified in Sections 7.01(b), (c), (d), (e), (f) or (g) occurs with
respect to a Co-Borrower, the Agent and the Lenders shall not have the right to
declare the Commitments to be terminated, declare the entire principal and all
interest accrued on the Notes to be forthwith due and payable, or exercise any
of their other rights hereunder or under the Loan Documents (except that the
42
Lenders shall have no further obligation to make Loans to enable such
Co-Borrower to originate Mortgage Loans, and the Agent and the Lenders may
exercise their remedies with respect to the Mortgage Loans pledged by such
Co-Borrower to the Agent pursuant to the Pledge and Security Agreement) for 10
Business Days after the occurrence of such Event of Default, or thereafter if
all Loans made to enable such Co-Borrower to originate or acquire Mortgage Loans
hereunder have been repaid in full.
ARTICLE VIII
INDEMNIFICATION
Section 8.01 Indemnification. Each the Borrowers agrees to indemnify
Agent and each Lender and each director, officer, agent, attorney, employee,
representative and Affiliate of Agent and each Lender (each an "Indemnified
Party"), upon demand, from and against any and all liabilities, obligations,
claims, losses, damages, penalties, actions, judgments, suits, costs, expenses
or disbursements (including reasonable fees of attorneys, accountants, experts
and advisors) of any kind or nature whatsoever (in this Section 8.01
collectively called "liabilities and costs") which to any extent (in whole or in
part) may be imposed on, incurred by, or asserted against any Indemnified Party
growing out of, resulting from or in any other way associated with any of the
Mortgage Collateral, the Loan Documents and the transactions and events
(including the enforcement or defense thereof) at any time associated therewith
or contemplated therein.
THE FOREGOING INDEMNIFICATION SHALL APPLY WHETHER OR NOT SUCH
LIABILITIES AND COSTS ARE IN ANY WAY OR TO ANY EXTENT OWED, IN WHOLE OR
IN PART, UNDER ANY CLAIM OR THEORY OF STRICT LIABILITY, OR ARE CAUSED
IN WHOLE OR PART, BY ANY NEGLIGENT ACT OR OMISSION OF ANY KIND BY SUCH
INDEMNIFIED PARTY,
provided only that such Indemnified Party shall be not entitled under this
section to receive Indemnification for that portion, if any, of any liabilities
and costs which is proximately caused by its own individual gross negligence or
willful misconduct. The foregoing provisions of this Section 8.01 shall not
apply to liabilities and costs incurred by any Lender (unless such Lender is
Agent) which may be imposed on or asserted against such Lender by any other
Lender.
Section 8.02 Limitation of Liability. None of Agent, Lenders, their
directors, officers, agents or employees shall be liable for any action taken or
omitted to be taken by it or them under or in connection with this Agreement.
THE FOREGOING EXCULPATION SHALL APPLY TO ANY NEGLIGENT ACT OR OMISSION OF ANY
KIND BY ANY SUCH PERSON, PROVIDED THAT SUCH PERSON SHALL BE LIABLE FOR ITS OWN
INDIVIDUAL GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.
ARTICLE IX
AGENT
Section 9.01 Appointment and Authorization. Each Lender appoints and
authorizes Agent to take such actions as agent on its behalf and to exercise
such powers under this Agreement and the other Loan Documents as are delegated
to Agent by the terms hereof and
43
thereof, together with such powers as are reasonably incidental thereto. Neither
Agent nor any of its directors, officers or employees shall be liable for any
action taken or omitted to be taken by it or them under or in connection with
this Agreement or the other Loan Documents, WHETHER OR NOT AMOUNTING TO SIMPLE
NEGLIGENCE, except for its or their own gross negligence or willful misconduct;
provided, however, that Agent shall be protected in acting or refraining from
acting upon the instruction of the requisite Lenders under Section 9.06; and
provided, further, that Agent shall not be required to take any action that
exposes it to personal liability or is contrary to any Loan Document, other
agreement or applicable law. Agent shall act as an independent contractor in
performing its obligations as Agent hereunder and under the other Loan Documents
and nothing herein contained shall be deemed to create a fiduciary relationship
among or between Agent, the Borrowers or Lenders.
Section 9.02 Note Holders. Agent may treat the payee of any Note as the
holder thereof until written notice of transfer shall have been filed with it
signed by such payee.
Section 9.03 Consultation With Counsel. Agent may consult with legal
counsel selected by it and shall not be liable for any action taken or suffered
in good faith by it in accordance with the advice of such counsel.
Section 9.04 Documents. Agent shall not be under a duty to examine into
or pass upon the validity, effectiveness, genuineness or value of the Notes, the
other Loan Documents or any other instrument or document furnished pursuant
thereto or thereunder. Agent makes no representation or warranty to any Lender,
nor shall Agent be responsible for any representations, warranties or statements
made in connection with this Agreement or any other Loan Document. Agent shall
be entitled to assume that this Agreement and the other Loan Documents are
valid, effective and genuine and what they purport to be. Agent (i) shall
execute and deliver the Security Agreement, whereupon each provision thereof
which is contemplated to be binding upon Lenders shall be binding upon Lenders
and each of them; and (ii) shall not waive, amend or otherwise modify any
provision of the Pledge and Security Agreement without the written consent of
Lenders required pursuant to Section 10.02.
Section 9.05 Agent and Affiliates. With respect to its Commitments and
the Loans made by it in its capacity as a Lender, the entity that is Agent shall
have the same rights and powers under this Agreement and the other Loan
Documents as any other Lender and may exercise the same as though it were not
Agent, and the entity that is Agent and its Affiliates may accept deposits from,
lend money to and generally engage in any kind of business with the Borrowers or
any Subsidiary as if it were not Agent.
Section 9.06 Action by Agent. Agent shall be entitled to use its
discretion with respect to exercising or refraining from exercising any rights
which may be vested in it by, or with respect to taking or refraining from
taking any action or actions which it may be able to take under or in respect
of, this Agreement and the other Loan Documents. Agent shall incur no liability
under or in respect of this Agreement or any of the other Loan Documents by
acting upon any notice, consent, certificate, warranty or other paper or
instrument believed by it to be genuine or authentic or to be signed by the
proper party or parties, or with respect to anything which it may do or refrain
from doing in the reasonable exercise of its judgment, or which may seem to it
to be necessary or desirable in the premises. Agent may employ agents and
attorneys-
44
in-fact in carrying out its responsibilities under the Loan Documents, and shall
not be responsible for the negligence or misconduct of any such agents or
attorneys-in-fact as long as Agent was not grossly negligent in selecting or
directing such agents or attorneys-in-fact, EVEN IF SUCH SELECTION AMOUNTED TO
SIMPLE NEGLIGENCE. Agent shall not be responsible for delays in performance
resulting from acts beyond its control. Such acts shall include, without
limitation, acts of God, strikes, lockouts, riots, acts of war or terrorism,
epidemics, nationalization, expropriation, currency restrictions, governmental
regulations superimposed after the fact, fire, communication line failures,
computer viruses, power failures, earthquakes or other disasters.
Section 9.07 Credit Analysis. Each Lender has made, and shall continue
to make, its own independent investigation or evaluation of the operations,
business, property and condition, financial and otherwise, of the Borrowers in
connection with its Commitments and Loans and has made its own appraisal of the
creditworthiness of the Borrowers. Except as explicitly provided herein, Agent
has no duty or responsibility, either initially or on a continuing basis, to
provide any Lender with any credit or other information with respect to such
operations, business, property, condition or creditworthiness, whether such
information comes into its possession on or before the first Event of Default or
at any time thereafter.
Section 9.08 Notices of Event of Default, etc. In the event that any
Lender shall have acquired actual knowledge of any Event of Default or Default,
other than as a result of its receipt of financial statements delivered to it
pursuant to Section 5.01, such Lender shall promptly give notice thereof to
Agent. Agent shall, promptly upon receipt of any such notice provide a copy
thereof to the other Lenders. Upon receipt from any Lender of a request that
Agent give notice to the Borrowers of the occurrence of an Event of Default or
Default under Article 7, Agent shall promptly forward such request to the other
Lenders and will take such action and assert such rights under this Agreement
and the other Loan Documents as Majority Lenders shall direct in writing.
Section 9.09 Indemnification. Each Lender agrees to indemnify Agent (to
the extent not reimbursed by the Borrowers), ratably according to its Percentage
Share, from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever which may be imposed on, incurred by or asserted
against Agent in any way relating to or arising out of this Agreement or the
other Loan Documents or any action taken or omitted by Agent under this
Agreement or the other Loan Documents, WHETHER OR NOT AGENT'S SIMPLE NEGLIGENCE
CAUSES THE SAME IN WHOLE OR IN PART; provided that no Lender shall be liable for
any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting from
Agent's gross negligence or willful misconduct. Without limitation of the
foregoing, each Lender agrees to reimburse Agent promptly upon demand for its
Percentage Share (determined under clause (l) of the definition thereof) of any
out-of-pocket expenses (including counsel fees) incurred by Agent in connection
with the preparation, execution, delivery, administration, modification,
amendment or enforcement (whether through negotiations, legal proceedings or
otherwise) of, or legal advice in respect of rights or responsibilities under,
this Agreement and the other Loan Documents, to the extent that Agent is not
reimbursed for such expenses by the Borrowers, WHETHER OR NOT SUCH OUT-OF-POCKET
EXPENSES RESULTED, IN WHOLE OR IN PART, FROM AGENT'S SIMPLE
45
NEGLIGENCE; provided, that no Lender shall be liable for any portion of any such
expenses resulting from Agent's gross negligence or willful misconduct.
Section 9.10 Payments. All payments of principal of the Notes and all
other funds received by Agent in respect of any payments made by the Borrowers
pursuant to this Agreement, the Notes or the other Loan Documents, other than
payments under Sections 2.08 and 2.09, and subject to the effect of Section
9.11, shall be distributed forthwith by Agent (in like currency and funds) to
Lenders on the date received or deemed received pursuant to Section 2.07, in
accordance with Section 2.04(b) in the case of payments of interest and Balances
Deficiency Fees, and ratably according to each Lender's Percentage Share in the
case of any other payment received by Agent. If Agent does not make any such
distribution (or provide Federal Reserve Bank reference numbers for the wire
transfer of the amount thereof) on the date any such payment is received or
deemed received pursuant to Section 2.07, Agent will pay interest to each Lender
entitled to receive a portion of such distribution on the amount distributable
to it at the Federal Funds Rate from such date until the date such distribution
is made, such interest to be payable with such distribution. Notwithstanding any
of the foregoing or any other provision of this Agreement, upon and after the
occurrence of an Event of Default or Default, (a) all proceeds received by Agent
from the sale or other disposition of the Collateral shall be applied in
accordance with Section 17 of the Security Agreement.
Section 9.11 Sharing of Set-Offs and Other Payments. The Agent agrees,
and each Lender agrees, that if it shall, whether through the exercise of rights
under Security Instruments or rights of banker's lien, set-off, or counterclaim
against the Borrowers or otherwise, obtain payment of a portion of the aggregate
Obligations owed to it which, taking into account all distributions made by
Agent under Section 2.07, causes Agent or such Lender to have received more than
it would have received had such payment been received by Agent and distributed
pursuant to Section 2.07, then (a) it shall be deemed to have simultaneously
purchased and shall be obligated to purchase interests in the Obligations as
necessary to cause Agent and all Lenders to share all payments as provided for
in Section 2.07, and (b) such other adjustments shall be made from time to time
as shall be equitable to ensure that Agent and all Lenders share all payments of
Obligations as provided in Section 2.07; provided, however, that nothing herein
contained shall in any way affect the right of Agent or any Lender to obtain
payment (whether by exercise of rights of banker's lien, set-off or counterclaim
or otherwise) of indebtedness other than the Obligations. The Borrowers
expressly consents to the foregoing arrangements and agrees that any holder of
any such interest or other participation in the Obligations, whether or not
acquired pursuant to the foregoing arrangements, may to the fullest extent
permitted by law exercise any and all rights of banker's lien, set-off, or
counterclaim as fully as if such holder were a holder of the Obligations in the
amount of such interest or other participation. If all or any part of any funds
transferred pursuant to this section is thereafter recovered from a Lender under
this section which received the same, the purchase provided for in this section
shall be deemed to have been rescinded to the extent of such recovery, together
with interest, if any, if interest is required pursuant to court order to be
paid on account of the possession of such funds prior to such recovery.
Section 9.12 Successor Agent. Agent may resign at any time by giving
ten days written notice thereof to Lenders and the Borrowers. The Majority
Lenders may remove Agent for acts
46
constituting gross negligence or willful misconduct by giving notice thereto to
Agent, Lenders and the Borrowers. Upon any such resignation or removal, the
Borrowers shall have the right to appoint a successor Agent, which successor
Agent shall be reasonably acceptable to Majority Lenders; provided, however if
an Event of Default has occurred and is continuing or if no successor Agent
shall have been so appointed by the Borrowers and so accepted by Majority
Lenders within 15 days after the retiring Agent's giving of notice of its
resignation of Agent or after the Majority Lenders' giving of notice of the
removal of such Agent, then the Majority Lenders shall have the right to appoint
a successor Agent, which successor Agent shall be reasonably acceptable to the
Borrowers (unless an Event of Default has occurred and is continuing). If no
successor Agent shall have be so appointed by the Majority Lenders and so
accepted by the Borrowers within 30 days after the retiring Agent's giving of
notice of its resignation of Agent or after the Majority Lenders' giving of
notice of the removal of such Agent, then the retiring Agent or the Agent being
removed, as the case may be, may, on behalf of Lenders, appoint an Agent or
custodian which shall be a Lender or a commercial bank organized under the laws
of the United States of America or of any State thereof and having a combined
capital and surplus of at least $100,000,000 and which shall be reasonably
acceptable to the Borrowers (unless an Event of Default has occurred and is
continuing). Any such resignation or removal shall be effective upon the
appointment of a successor Agent. Upon the acceptance of any appointment as
Agent hereunder by a successor Agent, such successor Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Agent, and the retiring Agent or the Agent being removed, as the
case may be, shall be discharged from its duties and obligations, under this
Agreement and the other Loan Documents. After any Agent's resignation or removal
hereunder, the provisions of this Section 9 shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was acting as Agent under
this Agreement and any other Loan Document.
Section 9.13 Notice of New Investors. Agent shall use reasonable
efforts to provide prompt notice to each Lender (which notice may be telephonic)
of its approval of any new Investor after the date hereof; provided, however,
that Agent shall have no liability to any Lender or other Person for its failure
to provide the notice described in this Section 9.13.
ARTICLE X
MISCELLANEOUS
Section 10.01 Notices. Any notice or request required or permitted to
be given under or in connection with this Agreement, the Notes or the other Loan
Documents (except as may otherwise be expressly required therein) shall be in
writing and shall be mailed by first class or express mail, postage prepaid, or
sent by telex, telegram, telecopy or other similar form of rapid transmission,
confirmed by mailing (by first class or express mail, postage prepaid) written
confirmation at substantially the same time as such rapid transmission, or
personally delivered to an officer of the receiving party. All such
communications shall be mailed, sent or delivered to the parties hereto at their
respective addresses as follows:
Any Borrower: DHI Mortgage Company, Ltd.
12357 Riata Trace Parkway, Suite C150
Austin, Texas 78727
47
Attn: Randall C. Present
FAX: (512) 345-7348
TEL: (512) 345-4663
With copies to: Samuel R. Fuller
Ted I. Harbour
Bill W. Wheat
1901 Ascension Blvd., Suite 100
Arlington, Texas 76006
FAX: (817) 856-8249
TEL: (817) 856-8200
Agent: U.S. Bank National Association
U.S. Bancorp Center
BC-MN-HO3B
800 Nicollet Mall
Minneapolis, Minnesota 55402
Attn: Kathleen M. Connor
FAX: (612) 303-2253
TEL: (612) 303-3581
or at such other addresses or to such individual's or department's attention as
the Company or the Agent may have furnished the other party in writing. Any
communication so addressed and mailed shall be deemed to be given when so
mailed, except that requests for loans, Confirmations and other communications
related thereto shall not be effective until actually received by Agent or the
Company, as the case may be; and any notice so sent by rapid transmission shall
be deemed to be given when receipt of such transmission is acknowledged, and any
communication so delivered in person shall be deemed to be given when receipted
for by, or actually received by, an authorized officer of the Company or Agent,
as the case may be. Each Co-Borrower hereby authorizes the Agent and the Lenders
to send all notices under this Agreement and the Loan Documents to the Company,
on behalf of such Co-Borrower, and the Company undertakes to provide such
notices to the applicable Co-Borrower(s).
Section 10.02 Amendments, etc. No amendment or waiver of any provision
of this Agreement, the Security Instruments, the Notes, or any other Loan
Document, nor consent to any departure by any Borrower or any Restricted
Subsidiary from the terms thereof, shall in any event be effective unless the
same shall be in writing and signed by (i) if such party is a Borrower, by the
Company, (ii) if such party is Agent, by Agent and (iii) if such party is a
Lender, by such Lender or by Agent on behalf of Lenders with the written consent
of Majority Lenders (or without further consent than that already provided
herein in the circumstances provided in Section 10.16). In the case of an
amendment other than the first and second amendment and other than annual
renewals or temporary extensions related to annual renewals, the Agent, on
behalf of each Lender executing such amendment (but excluding any Lender that
does not agree to increase its Commitment Amount under Section 10.11 (d) for any
amendment containing such an increase in Commitment Amounts), shall receive
within 5 Business Days after billing therefore, an amendment fee from the
Company in the amount of one thousand five
48
hundred dollars ($1,500) for each Lender executing such amendment.
Notwithstanding the foregoing or anything to the contrary herein, Agent shall
not, without the prior consent of each individual Lender, execute and deliver on
behalf of such Lender any waiver or amendment which would: (i) waive any of the
conditions specified in Article III (provided that Agent may in its discretion
withdraw any request it has made under Section 3.02(g)), (ii) increase the
Percentage Share of the Commitment of such Lender or subject such Lender to any
additional obligations, (iii) reduce any fees hereunder, or the principal of, or
interest on, such Lender's Note, (iv) amend the definition herein of "Majority
Lenders" or otherwise change the aggregate amount of Percentage Shares which is
required for Agent, Lenders or any of them to take any particular action under
the Loan Documents, (v) release any Borrower from its obligation to pay such
Lender's Note, (vi) amend the definitions of "Collateral Value," "Drawdown
Termination Date," and "Mortgage Collateral," (vii) release any Collateral
except in accordance with and pursuant to the Loan Documents, or (viii) change
the date on which any payments of principal, interest or fees are due hereunder.
Section 10.03 Invalidity. In the event that any one or more of the
provisions contained in the Notes, this Agreement or any other Loan Document
shall, for any reason, be held invalid, illegal or unenforceable in any respect,
such invalidity, illegality or unenforceability shall not affect any other
provision of such document.
Section 10.04 Survival of Agreements. All covenants and agreements
herein and in any other Loan Document not fully performed before the date hereof
or the date thereof, and all representations and warranties herein or therein,
shall survive until payment in full of the Obligations and termination of the
Commitments.
Section 10.05 Renewal, Extension or Rearrangement. All provisions of
this Agreement and of the other Loan Documents shall apply with equal force and
effect to each and all promissory notes hereafter executed which, in whole or in
part, represent a renewal, extension for any period, increase or rearrangement
of any part of the Obligations originally represented by the Notes or of any
part of such other Obligations.
Section 10.06. Waivers. No course of dealing on the part of Agent or
any Lender, or any of its employees, consultants or agents, nor any failure or
delay by Agent or such Lender with respect to exercising any right, power or
privilege of Agent or any Lender under the Notes, this Agreement or any other
Loan Document shall operate as a waiver thereof, except as otherwise provided in
Section 10.02 hereof.
Section 10.07 Cumulative Rights. The rights and remedies of Agent and
each Lender under the Notes, this Agreement, and any other Loan Document shall
be cumulative, and the exercise or partial exercise of any such right or remedy
shall not preclude the exercise of any other right or remedy.
Section 10.08 Construction. THE VALIDITY, CONSTRUCTION AND
ENFORCEABILITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE GOVERNED
BY THE INTERNAL LAWS OF THE STATE OF MINNESOTA, WITHOUT GIVING EFFECT TO
CONFLICT OF LAWS PRINCIPLES THEREOF, BUT
49
GIVING EFFECT TO FEDERAL LAWS OF THE UNITED STATES APPLICABLE TO NATIONAL BANKS
AND OTHER BANKS.
Section 10.09 Limitation on Interest. Agent, Lenders, the Company, each
Restricted Subsidiary and any other parties to the Loan Documents intend to
contract in strict compliance with applicable usury law from time to time in
effect. In furtherance thereof such Persons stipulate and agree that none of the
terms and provisions contained in the Loan Documents shall ever be construed to
create a contract to pay, for the use, forbearance or detention of money,
interest in excess of the maximum amount of interest permitted to be charged by
applicable law from time to time in effect. None of the Borrowers, any
Restricted Subsidiary, any present or future guarantors, endorsers, or other
Persons hereafter becoming liable for payment of any Obligation shall ever be
liable for unearned interest thereon or shall ever be required to pay interest
thereon in excess of the maximum amount that may be lawfully charged under
applicable law from time to time in effect, and the provisions of this section
shall control over all other provisions of the Loan Documents which may be in
conflict or apparent conflict herewith. Agent and Lenders expressly disavow any
intention to charge or collect excessive unearned interest or finance charges in
the event the maturity of any Obligation is accelerated, if (a) the maturity of
any Obligation is accelerated for any reason, (b) any Obligation is prepaid and
as a result any amounts held to constitute interest are determined to be in
excess of the legal maximum, or (c) Agent or any Lender or any other holder of
any or all of the Obligations shall otherwise collect moneys which are
determined to constitute interest which would otherwise increase the interest on
any or all of the Obligations to an amount in excess of that permitted to be
charged by applicable law then in effect, then all such sums determined to
constitute interest in excess of such legal limit shall, without penalty, be
promptly applied to reduce the then outstanding principal of the related
Obligations or, at Agent's or such Lender's or such holder's option, promptly
returned to the Company and each Restricted Subsidiary or the other payor
thereof upon such determination. In determining whether or not the interest paid
or payable, under any specific circumstance, exceeds the maximum amount
permitted under applicable law, Agent, Lenders and the Company and Restricted
Subsidiaries (and any other payors thereof) shall to the greatest extent
permitted under applicable law, (i) characterize any non-principal payment as an
expense, fee or premium rather than as interest, (ii) exclude voluntary
prepayments and the effects thereof, and (iii) amortize, prorate, allocate, and
spread the total amount of interest throughout the entire contemplated term of
the instruments evidencing the Obligations in accordance with the amounts
outstanding from time to time thereunder and the legal rate of interest from
time to time in effect under applicable law in order to lawfully charge the
maximum amount of interest permitted under applicable law. In the event
applicable law provides for an interest ceiling under Section 303 of the Texas
Finance Code, that ceiling shall be the weekly rate ceiling.
Section 10.10 Bank Accounts; Offset. To secure the repayment of the
Obligations each Borrower hereby grants to Agent, each Lender and to each
financial institution which hereafter acquires a participation or other interest
in the Loans or Notes (in this section called a "Participant") a security
interest, a lien, and a right of offset, each of which shall be in addition to
all other interest, liens, and rights of Agent, any Lender or Participant at
common law, under the Loan Documents, or otherwise, and each of which shall be
upon and against (a) any and all moneys, securities or other property (and the
proceeds therefrom) of the Borrower now or hereafter held or received by or in
transit to Agent, any Lender or Participant from or for the
50
account the Borrower, whether for safekeeping, custody pledge, transmission,
collection or otherwise, (b) any and all deposits (general or special, time or
demand, provisional or final) of the Borrower (other than escrow or trust funds
belonging to a third party) with Agent, any Lender or Participant, and (c) any
other credits and claims of the Borrower at any time existing against Agent, any
Lender or Participant, including claims under certificates of deposit. Upon the
occurrence of any Event of Default, each of Agent, Lenders and Participants is
hereby authorized to foreclose upon, offset, appropriate, and apply, at any time
and from time to time, without notice to the Borrowers, any and all items
hereinabove referred to against the Obligations then due and payable.
Section 10.11 Assignments, Participations, Commitment Amount Increases
and New Lenders.
(a) Assignments. Each Lender shall have the right to sell, assign or
transfer all or any part of such Lender's Note, Loans and rights and the
associated rights and obligations under all Loan Documents to one or more
financial institutions, pension plans, investment funds, or similar purchasers;
provided, that each such sale, assignment, or transfer shall be with the consent
of Agent, and the assignee, transferee or recipient shall have, to the extent of
such sale, assignment, or transfer, the same rights, benefits and obligations as
it would if it were such Lender and a holder of such Note, including, without
limitation, the right to vote on decisions requiring consent or approval of all
Lenders or Majority Lenders and the obligation to fund its Percentage Share of
any Loan directly to Agent; provided further, that (i) each Lender in making
each such sale, assignment, or transfer must dispose of a pro rata portion of
each Loan made by such Lender, (ii) each such sale, assignment, or transfer
shall be in a principal amount not less than $15,000,000, (iii) each Lender
shall at all times maintain Loans then outstanding in an aggregate amount at
least equal to $15,000,000, (iv) each Lender may not offer to sell its Note and
Loan or Interests therein in violation of any securities laws, and (v) no such
assignments shall become effective until (1) the assigning Lender delivers to
Agent copies of all written assignments and other documents evidencing any such
assignment or related thereto and (2) the assignee Lender becomes a party to
this Agreement. Notwithstanding the provisions of clauses (ii) and (iii) above,
a Lender may make a sale, assignment or transfer, or maintain Loans then
outstanding, in an amount which is less than that required above provided that
the Borrowers and such Lender have agreed to modify such requirements and have
delivered to Agent prior written evidence of their agreement to make such
modification, An assignment fee in the amount of $3,500 for each such assignment
will be payable to Agent by assignor or assignee. Within five (5) Business Days
after its receipt of notice that Agent has received copies of any assignment and
the other documents relating thereto, the assignee shall notify the Borrowers of
the outstanding principal balance of the Notes payable to such Lender and shall
execute and deliver to Agent (for delivery to the relevant assignee) new Notes
evidencing such assignee's assigned Loans and, if the assignor Lender has
retained a portion of its Loans, replacement Notes in the principal amount of
the Loans retained by the assignor Lender (such Notes to be in exchange for, but
not in payment of, the Notes held by such Lender).
(b) Participants. Each Lender shall have the right to grant
participations in all or any part of such Lender's Note, Loans and the
associated rights and obligations under all Loan Documents to one or more
pension plans, investment funds, financial institutions or similar purchasers;
provided that (i) each Lender granting a participation shall retain the right to
vote
51
hereunder, and no participant shall be entitled to vote hereunder on decisions
requiring consent or approval of Majority Lenders (except as set forth in (iii)
below), (ii) each Lender and the Borrowers shall be entitled to deal with the
Lender granting a participation in the same manner as if no participation had
been granted, and (iii) no participant shall ever have any right by reason of
its participation to exercise any of the rights of Lenders hereunder, except
that any Lender may agree with any participant that such Lender will not,
without the consent of such participant, consent to any amendment or waiver
described in Section 10.02 requiring approval of 100% of Lenders.
(c) Distribution of Information. It is understood and agreed that any
Lender may provide to assignees and participants and prospective assignees and
participants financial information and reports and data concerning the
Borrowers' properties and operations which was provided to such Lender pursuant
to this Agreement.
(d) Commitment Amount Increases; New Lenders. From time to time, the
Borrowers may agree, with the prior written consent of Agent, to (i) permit a
Lender to increase its Commitment Amount, or (ii) add a bank chartered under the
laws of the United States or any State thereof, an insurance company, another
lender or a mutual fund (a "New Lender") as a "Lender" under this Agreement with
a Commitment, for the purpose of increasing the Aggregate Commitment Amounts;
provided that upon giving effect to any such new Commitment, the Commitment
Amount of the New Bank shall not be less than $15,000,000; and provided,
further, that the Aggregate Commitment Amounts, after giving effect to any such
increase, shall not exceed $350,000,000. The Borrowers and each Lender
increasing its Commitment Amount or New Lender shall agree on the date as of
which the increased Commitment Amount or New Lender's Commitment Amount shall
become effective, and each New Lender shall execute and deliver an instrument in
the form prescribed by Agent to evidence its agreement to be bound by this
Agreement and the other Loan Documents. Upon the effective date of an increase
in any Lender's Commitment Amount or inclusion of a New Lender as a Lender under
this Agreement, Agent shall deliver to the Borrowers and each Lender a revised
Schedule 5 reflecting the revised Aggregate Commitment Amounts and the Borrowers
shall execute and deliver to such Lender or such New Bank a Note increasing its
Commitment Amount.
Section 10.12 Exiting Lenders. On the applicable Exit Date, the
aggregate unpaid principal amount of the Loans made by each Exiting Lender under
the Prior Credit Agreement and related Note issued to such Exiting Lender
thereunder or, in the case of a Lender exiting after the Closing Date, under
this Agreement and the Note issued hereunder to such Exiting Lender, together
with all interest, fees provided for by the applicable sections of the Existing
Credit Agreement or the applicable provisions hereof, as applicable, and other
amounts, if any, payable to such Exiting Lender thereunder or hereunder as of
the Exit Date (as to any Exiting Lender, its "Payoff Amount"), shall be repaid
in full from the proceeds of Loans made by the Lenders and other funds provided
by the Borrowers, and the commitments of the Exiting Lenders under the Existing
Credit Agreement or hereunder, as the case may be, shall terminate. The
Borrowers shall give the Agent notice pursuant to Section 2.03(a) with respect
to such Loans. The Agent shall distribute to each Exiting Lender by not later
than 3:00 P.M. (Minneapolis time) on the Exit Date out of the proceeds of the
Loans made for such purpose and from the other funds provided by the Borrowers,
the amount required to pay such Exiting Lender's Payoff Amount in full,
whereupon: (a) such Exiting Lender shall no longer be a party
52
to the Existing Credit Agreement or this Agreement, as the case may be (except
to the extent provided in Section 10.16 thereof with respect to the survival of
certain provisions, which shall remain in effect as to the Exiting Lenders); and
(b) such Exiting Lenders shall not be deemed to be a "Lender" for any purpose
hereunder.
Section 10.13 Exhibits The exhibits attached to this Agreement are
incorporated herein and shall be considered a part of this Agreement for the
purposes stated herein, except that in the event of any conflict between any of
the provisions of such exhibits and the provisions of this Agreement, the
provisions of this Agreement shall prevail.
Section 10.14 Titles of Articles, Sections and Subsections. All titles
or headings to articles, have any effect or meaning with respect to the other
content of such articles, sections, subsections or other divisions, such other
content being controlling as to the agreement between the parties hereto.
Section 10.15 Counterparts. This Agreement may be executed in
counterparts, and it shall not be necessary that the signatures of both of the
Parties hereto be contained on any one counterpart hereof; each counterpart
shall be deemed an original, but all counterparts together shall constitute one
and the same instrument.
Section 10.16 ENTIRE AGREEMENT. THE NOTES, THIS AGREEMENT, AND THE
OTHER LOAN DOCUMENTS EXECUTED AND DELIVERED AS OF EVEN DATE HEREWITH REPRESENT
THE FINAL AGREEMENT BETWEEN THE PARTIES HERETO AND THERETO AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS
OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.
Section 10.17 Termination; Limited Survival. In its sole and absolute
discretion the Borrowers may at any time that no Obligations are owing elect in
a notice delivered to Agent to terminate this Agreement. Upon receipt by Agent
of such a notice, if no Obligations are then owing, this Agreement and all other
Loan Documents shall thereupon be terminated and the parties thereto released
from all prospective obligations thereunder. Notwithstanding the foregoing or
anything herein to the contrary, any waivers or admissions made by any Person in
any Loan Documents, any Obligations, and any obligations which any Person may
have to indemnify or compensate Agent and any Lender shall survive any
termination of this Agreement or any other Loan Document. At the request and
expense of the Borrowers, Agent shall prepare and execute all necessary
instruments to reflect and effect such termination of the Loan Documents. Agent
is hereby authorized to execute all such instruments on behalf of all Lenders,
without the joinder of or further action by any Lender.
Section 10.18 Confidentiality of Information. The Agent and Lenders
shall use reasonable efforts to assure that information about the Borrowers and
their operations, affairs and financial condition and about the borrowers under
the Mortgage Loans and their financial condition, not generally disclosed to the
public or to trade and other creditors, which is furnished to the Agent and any
Lender pursuant to the provisions hereof is used only for the purposes of this
Agreement and any other relationship between the Agent or any Lender and the
Borrowers and shall not be divulged to any Person other than the Agent and the
Lenders, their Affiliates and
53
their respective officers, directors, employees and agents, except: (a) to their
attorneys and accountants, (b) in connection with the enforcement of the rights
of the Agent and the Lenders hereunder and under the Notes and the Security
Agreement or otherwise in connection with applicable litigation, (c) in
connection with assignments and participations and the solicitation of
prospective assignees and participants referred to in the immediately preceding
section or to a proposed or actual contractual counterparty (or its advisors) to
any swap, hedge, securitization or derivative transaction, and (d) as may
otherwise be required or requested by any regulatory authority having
jurisdiction over the Agent or any Lender or by any applicable law, rule,
regulation or judicial process, the opinion of the Agent's or any Lender's
counsel concerning the making of such disclosure to be binding on the parties
hereto. Neither the Agent nor any Lender shall incur any liability to the
Borrowers by reason of any disclosure permitted by this Section 10.18.
SECTION 10.19 JURY WAIVER. BORROWER, AGENT AND EACH LENDER HEREBY
VOLUNTARILY, KNOWINGLY, IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY RIGHT TO HAVE
A JURY PARTICIPATE IN RESOLVING ANY DISPUTE (WHETHER BASED UPON CONTRACT, TORT
OR OTHERWISE) BETWEEN OR AMONG THE BORROWERS, AGENT OR ANY LENDER ARISING OUT OF
OR IN ANY WAY RELATED TO THIS DOCUMENT, ANY OTHER RELATED DOCUMENT, OR ANY
RELATIONSHIP BETWEEN AGENT OR ANY LENDER AND BORROWER. THIS PROVISION IS A
MATERIAL INDUCEMENT TO AGENT AND LENDERS TO PROVIDE THE FINANCING DESCRIBED
HEREIN OR IN THE OTHER LOAN DOCUMENTS.
Section 10.20 Relationship Among Borrowers.
(a) JOINT AND SEVERAL LIABILITY. THE COMPANY AGREES THAT IT IS
LIABLE FOR THE PAYMENT OF ALL OBLIGATIONS OF THE BORROWERS UNDER THIS
AGREEMENT, AND THAT THE LENDERS AND THE AGENT CAN ENFORCE SUCH
OBLIGATIONS AGAINST THE COMPANY, IN THE LENDERS' OR THE AGENT'S SOLE
AND UNLIMITED DISCRETION. EACH CO-BORROWER AGREES THAT IT IS LIABLE
ONLY FOR THE PAYMENT OF LOANS AND SWINGLINE LOANS MADE TO ENABLE IT TO
ORIGINATE OR ACQUIRE MORTGAGE LOANS, INTEREST ON SUCH LOANS AND
SWINGLINE LOANS, AND FEES, COSTS AND EXPENSES RELATED TO SUCH LOANS AND
SWINGLINE LOANS AND SUCH CO-BORROWER'S PERFORMANCE OR NON-PERFORMANCE
OF ITS OBLIGATIONS HEREUNDER. THE COMPANY AGREES THAT IT IS JOINTLY AND
SEVERALLY LIABLE WITH EACH CO-BORROWER FOR SUCH CO-BORROWER'S
OBLIGATIONS, AS DESCRIBED IN THE PRECEDING SENTENCE.
(b) Waivers of Defenses. The Obligations of the Borrowers
hereunder shall not be released, in whole or in part, by any action or
thing which might, but for this provision of this Agreement, be deemed
a legal or equitable discharge of a surety or guarantor, other than
irrevocable payment and performance in full of the Obligations (except
for contingent indemnity and other contingent Obligations not yet due
and payable) at a time after any obligation of the Lenders hereunder to
make Loans shall have expired or been terminated. The purpose and
intent of this Agreement is that the Obligations constitute
54
the direct and primary obligations of the Company and, to the extent
provided in Section 10.20(a), each Co-Borrower, and that the covenants,
agreements and all obligations of each Borrower hereunder be absolute,
unconditional and irrevocable. Each Borrower shall be and remain liable
for any deficiency remaining after foreclosure of any mortgage, deed of
trust or security agreement securing all or any part of the Obligations
for which it is liable, whether or not the liability of any other
Person for such deficiency is discharged pursuant to statute, judicial
decision or otherwise.
(c) Other Transactions. The Lenders and the Agent are
expressly authorized to exchange, surrender or release with or without
consideration any or all collateral and security which may at any time
be placed with it by any Borrower or by any other Person on behalf of
the Borrowers, or to forward or deliver any or all such collateral and
security directly to the Company or the applicable Co-Borrower for
collection and remittance or for credit. No invalidity, irregularity or
unenforceability of any security for the Obligations or other recourse
with respect thereto shall affect, impair or be a defense to the
Borrowers' obligations under this Agreement. The liabilities of each
Borrower hereunder shall not be affected or impaired by any failure,
delay, neglect or omission on the part of any Lender or the Agent to
realize upon any of the Obligations of any other Borrower to the
Lenders or the Agent, or upon any collateral or security for any or all
of the Obligations, nor by the taking by any Lender or the Agent of (or
the failure to take) any guaranty or guaranties to secure the
Obligations, nor by the taking by any Lender or the Agent of (or the
failure to take or the failure to perfect its security interest in or
other lien on) collateral or security of any kind. No act or omission
of any Lender or the Agent, whether or not such action or failure to
act varies or increases the risk of, or affects the rights or remedies
of a Borrower, shall affect or impair the obligations of the Borrowers
hereunder.
(d) Actions Not Required. Each Borrower, to the extent
permitted by applicable law, hereby waives any and all right to cause a
marshaling of the assets of any other Borrower or any other action by
any court or other governmental body with respect thereto or to cause
any Lender or the Agent to proceed against any security for the
Obligations or any other recourse which any Lender or the Agent may
have with respect thereto and further waives any and all requirements
that any Lender or the Agent institute any action or proceeding at law
or in equity, or obtain any judgment, against any other Borrower or any
other Person, or with respect to any collateral security for the
Obligations, as a condition precedent to making demand on or bringing
an action or obtaining and/or enforcing a judgment against, such
Borrower under this Agreement.
(e) Subrogation. Notwithstanding any payment or payments made
by any Borrower hereunder or any setoff or application of funds of any
Borrower by any Lender or the Agent, such Borrower shall not be
entitled to be subrogated to any of the rights of any Lender or the
Agent against any other Borrower or any other guarantor or any
collateral security or guaranty or right of offset held by any Lender
or the Agent for the payment of the Obligations, nor shall such
Borrower seek or be entitled to seek any contribution or reimbursement
from any other Borrower or any other guarantor in respect of payments
made by such Borrower hereunder, until all amounts owing to the Lenders
and the Agent by the Borrowers on account of the Obligations are
irrevocably paid in
55
full; provided, however, that the Company may seek reimbursement from a
Borrower for payments made by the Company on behalf of such Borrower if
(i) all Obligations owing to the Lenders and the Agent by that Borrower
are irrevocably paid in full and (ii) the Lenders have no further
obligation to make Loans to enable such Borrower to originate Mortgage
Loans. If any amount shall be paid to a Borrower on account of such
subrogation rights at any time when all of the Obligations shall not
have been irrevocably paid in full, such amount shall be held by that
Borrower in trust for the Lenders and the Agent, segregated from other
funds of that Borrower, and shall, forthwith upon receipt by the
Borrower, be turned over to the Agent in the exact form received by the
Borrower (duly indorsed by the Borrower to the Agent, if required), to
be applied against the Obligations, whether matured or unmatured, in
such order as the Agent may determine. From and after the irrevocable
payment in full of all amounts owing to the Lenders and the Agent by
the Borrowers on account of the Obligations, each Co-Borrower shall be
liable to the Company for any amount paid by the Company to the Agent
or the Lenders (and not previously paid to the Company by such
Co-Borrower) as principal of and interest on the Loans and Swingline
Loans made to enable such Co-Borrowers to originate or acquire Mortgage
Loans, fees, costs and expenses relating to such Loans and Swingline
Loans, and such Co-Borrower's performance or non-performance of its
Obligations hereunder.
(f) Application of Payments. Any and all payments upon the
Obligations made by any Borrower, and/or the proceeds of any or all
collateral or security for any of the Obligations provided by any
Borrower, may be applied by the Lenders on such items of the
Obligations for which such Borrower is liable as the Lenders may elect.
(g) Recovery of Payment. If any payment received by the
Lenders or the Agent and applied to the Obligations is subsequently set
aside, recovered, rescinded or required to be returned for any reason
(including, without limitation, the bankruptcy, insolvency or
reorganization of a Borrower or any other obligor), the Obligations to
which such payment was applied shall, to the extent permitted by
applicable law, be deemed to have continued in existence,
notwithstanding such application, and each Borrower liable on such
Obligations shall be jointly and severally liable for such Obligations
as fully as if such application had never been made. References in this
Agreement to amounts "irrevocably paid" or to "irrevocable payment"
refer to payments that cannot be set aside, recovered, rescinded or
required to be returned for any reason.
(h) Borrowers' Financial Condition. The Company is familiar
with the financial condition of each Co-Borrower, each Co-Borrower is
familiar with the financial condition of the Company and each Borrower
has executed and delivered this Agreement based on that Borrower's own
judgment and not in reliance upon any statement or representation of
the Agent or any Lender. The Lenders and the Agent shall have no
obligation to provide any Borrower with any advice whatsoever or to
inform any Borrower at any time of the Lenders' actions, evaluations or
conclusions on the financial condition or any other matter concerning
the Borrowers.
(i) Bankruptcy of the Borrowers. Each Borrower expressly
agrees that, to the extent permitted by applicable law, the liabilities
and obligations of that Borrower under
56
this Agreement shall not in any way be impaired or otherwise affected
by the institution by or against any other Borrower or any other Person
of any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings, or any other similar proceedings for relief
under any bankruptcy law or similar law for the relief of debtors and
that any discharge of any of the Obligations pursuant to any such
bankruptcy or similar law or other law shall not diminish, discharge or
otherwise affect in any way the Obligations of that Borrower under this
Agreement, and that upon the institution of any of the above actions,
such Obligations shall be enforceable against that Borrower.
(j) Limitation; Insolvency Laws. As used in this Section
10.17(j): (a) the term "Applicable Insolvency Laws" means the laws of
the United States of America or of any State, province, nation or other
governmental unit relating to bankruptcy, reorganization, arrangement,
adjustment of debts, relief of debtors, dissolution, insolvency,
fraudulent transfers or conveyances or other similar laws (including,
without limitation, 11 U. S. C. 547, 548, 550 and other "avoidance"
provisions of Title 11 of the United Stated Code) as applicable in any
proceeding in which the validity and/or enforceability of this
Agreement against any Borrower, or any Specified Lien is in issue; and
(b) "Specified Lien" means any security interest, mortgage, lien or
encumbrance granted by any Borrower securing the Obligations, in whole
or in part. Notwithstanding any other provision of this Agreement, if,
in any proceeding, a court of competent jurisdiction determines that
with respect to any Borrower, this Agreement or any Specified Lien
would, but for the operation of this Section, be subject to avoidance
and/or recovery or be unenforceable by reason of Applicable Insolvency
Laws, this Agreement and each such Specified Lien shall be valid and
enforceable against such Borrower, only to the maximum extent that
would not cause this Agreement or such Specified Lien to be subject to
avoidance, recovery or unenforceability. To the extent that any payment
to, or realization by, the Lenders or the Agent on the Obligations
exceeds the limitations of this Section and is otherwise subject to
avoidance and recovery in any such proceeding, the amount subject to
avoidance shall in all events be limited to the amount by which such
actual payment or realization exceeds such limitation, and this
Agreement as limited shall in all events remain in full force and
effect and be fully enforceable against such Borrower. This Section is
intended solely to reserve the rights of the Lenders and the Agent
hereunder against each Borrower, in such proceeding to the maximum
extent permitted by Applicable Insolvency Laws and neither the
Borrowers, any guarantor of the Obligations nor any other Person shall
have any right, claim or defense under this Section that would not
otherwise be available under Applicable Insolvency Laws in such
proceeding.
Section 10.21 USA Patriot Act Notice. Each Lender and the Agent (on
behalf of itself as Agent and a Lender but not on behalf of the other Lenders)
hereby notify the Borrowers that pursuant to the requirements of the USA Patriot
Act (Title III of Pub. L. 107-56 (signed into law on October 26, 2001)) (the
"Act"), it is required to obtain, verify and record information that identifies
each Borrower, which information includes the name and address of each Borrower
and other information that will allow such Lender or the Agent, as applicable,
to identify the Borrowers in accordance with the Act.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
57
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be duly executed as of the date first above written.
DHI MORTGAGE COMPANY, LTD.,
(FORMERLY KNOWN AS CH
MORTGAGE COMPANY I, LTD.)
By: DHI Mortgage Company GP, Inc.,
(formerly known as CH Mortgage
Company GP, Inc.),its General Partner
By: /s/ Mark C. Winter
Mark C. Winter
Chief Financial Officer and
Vice President
STATE OF TEXAS
COUNTY OF TRAVIS
On this the 8th day of April , 2004, personally appeared Mark C. Winter, as
CFO/Vice President of DHI Mortgage Company, GP, Inc., a Delaware corporation, as
general partner of DHI Mortgage Company , Ltd., a Texas limited partnership (the
"Company"), and before me executed this Amended and Restated Credit Agreement,
on behalf of the Company.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal.
Signature of Notary Public, State of Texas
/s/ Amy L. Moreno
------------------------------------------
(Print, Type or Stamp Commissioned Name of
Notary Public)
Personally known x ; OR Produced
Identification____________________________
Type of ID produced_______________________
(NOTARIAL SEAL)
58
U.S. BANK NATIONAL ASSOCIATION, as
Agent and Lender
By: /s/ Kathleen M. Connor
------------------------------
Kathleen M. Connor
Vice President
COMERICA BANK
By: /s/ Robert W. Marr
------------------------------
Robert W. Marr
Vice President
NATIONAL CITY BANK OF KENTUCKY
By: /s/ Jerry W. Johnson
------------------------------
Title: Senior Vice President
COLONIAL BANK, N.A.
By: /s/ Amy Nunneley
------------------------------
Amy Nunneley
Senior Vice President
BANK OF AMERICA, N.A.
By: /s/ Elizabeth Kurilecz
------------------------------
Elizabeth Kurilecz
Managing Director
59
BNP PARIBAS
By: /s/ Jeff Tebeaux
----------------------
Jeff Tebeaux
Vice President
By: /s/ Henry Setina
----------------------
Henry Setina
Director
WASHINGTON MUTUAL BANK, FA
By: /s/ Michael J. Arnold
---------------------
Michael J. Arnold
Vice President
BANK ONE, NA
By: /s/ Kenneth S. Nelson
------------------------------
Kenneth S. Nelson
Director
JPMORGAN CHASE BANK
By: /s/ Cynthia E. Crites
------------------------------
Cynthia E. Crites
Vice President
60
SCHEDULE 1
ELIGIBLE MORTGAGE LOAN
"Eligible Mortgage Loan" means a Mortgage Loan with respect to which
each of the following statements is accurate and complete (and the Borrowers by
including such Mortgage Loan in any computation of the Borrowing Base shall be
deemed to so represent to Agent and Lenders at and as of the date of such
computation):
(i) Such Mortgage Loan is a binding and valid obligation of
the Obligor thereon, in full force and effect and enforceable in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization or other similar terms affecting
creditor's rights in general and by general principles of equity;
(ii) Such Mortgage Loan is genuine in all respects as
appearing on its face and as represented in the books and records of
the Borrowers, and all information set forth therein is true and
correct;
(iii) To the best knowledge of the Borrowers, such Mortgage
Loan is free of any default (other than as permitted by subparagraph
(iv) below) of any party thereto (including the Borrowers),
counterclaims, offsets and defenses, including the defense of usury,
and from any rescission, cancellation or avoidance, and all right
thereof, whether by operation of law or otherwise;
(iv) No payment under such Mortgage Loan is more than thirty
(30) days past due the payment due date set forth in the underlying
Mortgage Note and Mortgage;
(v) Such Mortgage Loan contains the entire agreement of the
parties thereto with respect to the subject matter thereof, has not
been modified or amended in any respect not expressed in writing
therein and is free of concessions or understandings with the Obligor
thereon of any kind not expressed in writing therein;
(vi) Such Mortgage Loan is in all respects in accordance with
all Requirements of Law applicable thereto, including, without
limitation, the federal Consumer Credit Protection Act and the
regulations promulgated thereunder and all applicable usury laws and
restrictions, and all notices, disclosures and other statements or
information required by law or regulation to be given, and any other
act required by law or regulation to be performed, in connection with
such Mortgage Loan have been given and performed as required;
(vii) All advance payments and other deposits on such Mortgage
Loan have been paid in cash, and no part of said sums has been loaned,
directly or indirectly, by the Borrowers to the Obligor, and, other
than as disclosed to Agent in writing, there have been no prepayments;
E-61
(viii) Such Mortgage Loan was originated, purchased by the
Borrowers or converted from a variable rate Mortgage Loan to a fixed
rate Mortgage Loan, whichever is latest not more than ninety (90) days
prior to the inclusion of such Mortgage Loan in any computation of the
Borrowing Base and matures within 30 years after such date of
origination;
(ix) At all times such Mortgage Loan will be free and clear of
all Liens, except in favor of Agent for the benefit of Lenders and any
other Lien which has been disclosed to Agent in writing and is
permitted hereunder;
(x) The Property covered by such Mortgage Loan is insured
against loss or damage by fire and all other hazards normally included
within standard extended coverage in accordance with the provisions of
such Mortgage Loan with the Borrowers named as a loss payee thereon;
(xi) The Required Mortgage Documents have been delivered to
Agent prior to the inclusion of such Mortgage Loan in any computation
of the Borrowing Base or, if such items have not been delivered to
Agent on or prior to the date such Mortgage Loan is first included in
any computation of the Borrowing Base, (1) the Borrower has agreed to
pledge and deliver all Required Mortgage Documents pursuant to an
Agreement to Pledge delivered to Agent prior to such inclusion, and (2)
the Collateral Value of such Mortgage Loan when added to the Collateral
Value of all other Mortgage Loans for which Agent has not received the
Required Mortgage Documents does not exceed the Wet Warehousing
Sublimit, provided that, all Required Documents with respect to such
Mortgage Loan shall be delivered to Agent within seven (7) Business
Days after the date of the borrowing request with respect thereto and
all other documents requested by Agent pursuant to Section 4.02 of the
Security Agreement shall be delivered to Agent within five Business
Days after such request.
(xii) If such Mortgage Loan is included in the Borrowing Base
and has been withdrawn from the possession of Agent on terms and
subject to conditions set forth in the Security Agreement:
(1) If such Mortgage Loan was withdrawn by the
Borrowers for purposes of correcting clerical or other
non-substantive documentation problems, the promissory note
and other documents relating to such Mortgage Loan are
returned to Agent within twenty (20) calendar days from the
date of withdrawal; and the Collateral Value of such Mortgage
Loan when added to the Collateral Value of other Mortgage
Loans which have been similarly released to the Borrowers and
have not been returned does not exceed $2,500,000;
(2) If such Mortgage Loan was shipped by Agent
directly to a permanent investor for purchase or to a
custodian for the formation of a pool, the full purchase price
therefor has been received by Agent (or such Mortgage Loan has
been returned to Agent) within forty-five (45) days
(seventy-five (75) days in
E-62
the case if such Mortgage Loan is included in a housing bond
program) from the date of shipment by Agent.
(xiii) If such Mortgage Loan is a Jumbo Mortgage Loan, the
Collateral Value of such Mortgage Loan when added to the Collateral
Value of all other Jumbo Mortgage Loans does not exceed the Jumbo
Sublimit.
(xiv) If such Mortgage Loan is a Nonconforming Mortgage Loan,
the Collateral Value of such Mortgage Loan when added to the Collateral
Value of all the Nonconforming Mortgage Loans does not exceed the
Nonconforming Sublimit;
(xv) If such Mortgage Loan is a HELOC Mortgage Loan, the
Collateral Value of such Mortgage Loan when added to the Collateral
Value of all other HELOC Mortgage Loans does not exceed the HELOC
Mortgage Loan Sublimit.
(xvi) Such Mortgage Loan has not been included in the
Borrowing Base for more than (A) ninety (90) days, if such Mortgage
Loan is a Nonconforming Mortgage Loan or a HELOC Mortgage Loan, (B) one
hundred twenty (120) days, if such Mortgage Loan is a Jumbo Mortgage
Loan, (C) one hundred twenty (120) days, if such Mortgage Loan is a
Conforming Mortgage Loan or (D) one hundred eighty (180) days, if such
Mortgage Loan is included in a housing bond program;
(xvii) Such Mortgage Loan is covered by a Take-Out Commitment
which is in full force and effect, and the Borrowers and such Mortgage
Loan are in full compliance therewith;
(xviii) Such Mortgage Loan is secured by a first or second
Mortgage on Property consisting of a completed one-to-four unit single
family residence which is not used for commercial purposes and which is
not a construction loan; and
(xix) The face amount of the Mortgage Note underlying such
Mortgage Loan does not exceed $1,000,000.
Agent may, in its discretion, waive one or more of the foregoing
eligibility requirements with respect to any Mortgage Loan, provided that the
aggregate Collateral Value of all Mortgage Loans with respect to which such
eligibility requirements have been waived shall not at any time exceed
$3,000,000.
E-63
SCHEDULE 2
CORRESPONDENT INVESTOR CONTACT LIST
INVESTOR ADDRESS REP.
-------- ------- ----
ARGENT MORTGAGE
COMPANY LLC
BAYVIEW FINANCIAL
TRADING GROUP
CALIFORNIA HOUSING
FINANCE AGENCY
CHARTER BANK
CHASE MANHATTAN
MORTGAGE CORPORATION
CHASE MANHATTAN
MORTGAGE CORPORATION
CITIMORTGAGE, INC.
(FKA FIRST NATIONWIDE
MORTGAGE CORPORATION)
COLORADO HOUSING AND
FINANCE AUTHORITY
COUNTRYWIDE HOME
LOANS, INC.
COUNTRYWIDE HOME
LOANS, INC.
CREDIT-BASED ASSET
SERVICING AND
SECURITIZATION
E-64
EMC MORTGAGE
CORPORATION
EMPIRE MORTGAGE, INC.
ENCORE CREDIT
CORPORATION
FIRST HORIZON HOME
LOAN CORPORATION
FIRST NATIONAL BANK OF
ARIZONA
GEORGIA DEPARTMENT OF
COMMUNITY AFFAIRS
GREENPOINT MORTGAGE
INDYMAC BANK, F.S.B.
THE LEADER MORTGAGE
COMPANY
MARSH ASSOCIATES, INC.
MATRIX FINANCIAL
SERVICES CORPORATION
MIDWEST FIRST FINANCIAL
NATIONAL CITY MORTGAGE
COMPANY
E-65
NORTH CAROLINA HOUSING
FINANCE AGENCY
NOVASTAR MORTGAGE, INC.
OPTION ONE MORTGAGE
PRINCIPAL RESIDENTIAL
MORTGAGE, INC.
RBMG, INC.
SECURITY NATIONAL
SOUTH CAROLINA STATE
HOUSING FINANCE AND
DEVELOPMENT AUTHORITY
STONEHENGE FINANCIAL
SERVICES
UNION PLANTERS
MORTGAGE, INC.
WASHINGTON MUTUAL
BANK, FA
WASHINGTON STATE
HOUSING FINANCE
COMMISSION
WELLS FARGO BANK, N.A.
WELLS FARGO HOME
MORTGAGE, INC.
E-66
SCHEDULE 3
SUBSIDIARIES
D.R. Horton, Inc. - Los Angeles, a Delaware corporation (100% interest
held by the Company)
CH Funding, LLC, a Delaware limited liability company (100% interest
held by the Company)
E-67
SCHEDULE 4
PERMITTED LIENS
NONE
E-68
SCHEDULE 5
COMMITMENT AMOUNTS AND PERCENTAGE SHARES
Commitment Percentage
Amount Share%
---------- ----------
U.S. Bank National Association $*
Comerica Bank $*
National City Bank of Kentucky $*
Colonial Bank, N.A. $*
Bank of America, N.A. $*
BNP Paribas $*
Washington Mutual Bank, FA $*
Bank One, NA $*
JPMorgan Chase Bank $*
------------
$300,000,000 100%
E-69
EXHIBIT A TO
CREDIT AGREEMENT
FORM OF NOTE
PROMISSORY NOTE
$____________ Minneapolis, Minnesota
________, 2004
________ FOR VALUE RECEIVED, DHI MORTGAGE COMPANY, LTD., (formerly
known as CH MORTGAGE COMPANY I, LTD.), a Texas limited partnership (the "the
Company"), hereby promises to pay to the order of __________(the "Lender") at
the main office of the Agent (as such term and each other capitalized term used
herein are defined in the Credit Agreement hereinafter referred to) in
Minneapolis, Minnesota, in lawful money of the United States of America in
Immediately Available Funds, the principal sum of ________MILLION AND NO/100
DOLLARS ($ _________) or the aggregate unpaid principal amount of all Loans [and
Swingline Loans]* made by the Lender pursuant to the Credit Agreement described
below, whichever is less, and to pay interest in like funds from the date hereof
on the unpaid balance thereof at the rates per annum and at such times as are
specified in the Credit Agreement. Interest (computed on the basis of actual
days elapsed and a year of 360 days) shall be payable at said office at the
times specified in the Credit Agreement.
Principal hereof shall be payable in the amounts and at the times set
forth in the Credit Agreement.
This note is one of the Notes referred to in the Credit Agreement dated
as of April __, 2004, between the Company, the Lender, the other lenders party
thereto and U.S. Bank National Association, as Agent (as the same may be
amended, modified or restated from time to time, the "Credit Agreement"). Unless
otherwise defined herein, capitalized terms used herein shall have the meanings
given to such terms in the Credit Agreement. This note is subject to certain
mandatory and voluntary prepayments and its maturity is subject to acceleration,
in each case upon the terms provided in the Credit Agreement. The Notes are
issued in substitution and replacement, but not in payment, of notes issued
under the Prior Credit Agreement (as defined in the Credit Agreement).
The Company hereby waives diligence, presentment, demand, protest, and
notice (except such notice as is required under the Loan Documents) of any kind
whatsoever. The nonexercise by the Lender of any of its rights hereunder or
under the other Loan Documents in any particular instance shall not constitute a
waiver thereof in any subsequent instance.
The Company reserves the right to prepay the outstanding principal
balance of this Note, in whole or in part at any time and from time to time
without premium or penalty in accordance with the terms of the Credit Agreement.
E-70
This note is entitled to the benefit of the Security Agreement and the
other Loan Documents.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF
MINNESOTA, WITHOUT GIVING EFFECT TO CONFLICT OF LAWS PRINCIPLES THEREOF BUT
GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS. In the event of
default hereunder, the undersigned agrees to pay all costs and expenses of
collection, including but not limited to reasonable attorneys' fees.
[Notwithstanding the foregoing paragraphs and all other provisions of
this note and the Credit Agreement, none of the terms and provisions of this
note or the Credit Agreement shall ever be construed to create a contract to pay
to the Lender, for the use, forbearance or detention of money, interest in
excess of the maximum amount of interest permitted to be charged by the Lender
to the undersigned under applicable state or federal law from time to time in
effect, and the undersigned shall never be required to pay interest in excess of
such maximum amount. If, for any reason, interest is paid hereon in excess of
such maximum amount (whether as a result of the payment of this note prior to
its maturity or otherwise), then promptly upon any determination that such
excess has been paid the Lender will, at its option, either refund such excess
to the undersigned or apply such excess to the principal owing hereunder. All
interest paid shall, to the extent permitted by applicable law, be amortized,
prorated, allocated and spread throughout the full period of the Company's
credit relationship with the Lender until payment in full of the principal
(including the period of any renewal or extension) so that the interest for such
full period shall not exceed the maximum rate of interest permitted by
applicable law.]**
DHI MORTGAGE COMPANY, LTD.,
(FORMERLY KNOWN AS CH
MORTGAGE COMPANY I, LTD.)
By: DHI Mortgage Company GP,
Inc., (formerly known as CH
Mortgage Company GP, Inc.),
its General Partner
By__________________________
Its_______________________
* Include in Note payable to U.S. Bank.
** Include in Notes payable to Lenders headquartered in the State of Texas.
E-71
EXHIBIT B TO
CREDIT AGREEMENT
FORM OF CONFIRMATION OF
BORROWING/PAYDOWN/CONVERSION
[On the Company's Letterhead]
[Date]
U.S. Bank National Association, as Agent
800 Nicollet Mall
Minneapolis, Minnesota 55402
Attention: Mortgage Banking Services Division BC-MN-HO3B
Re: Confirmation of Borrowing/Paydown/Conversion
Ladies and Gentlemen:
Reference is made to the Credit Agreement dated as of April 9,
2004 (as said Agreement may be amended, supplemented or restated from time to
time, the "Credit Agreement"), between DHI Mortgage Company, Ltd. (the
"Company"), the Lenders party thereto and U.S. Bank National Association ("U.S.
Bank") as Agent for the Lenders (in such capacity, the "Agent"). Each
capitalized term used herein shall have the meaning ascribed to such term in the
Credit Agreement.
The Company and the undersigned hereby confirm and certify to
the Agent as follows:
1. The undersigned is authorized to submit this Confirmation
of Borrowing/Paydown/Conversion on behalf of the Company.
2. On _________, ______, the Company (a) requested the Lenders
to make Loans in the aggregate principal amount of $ _________, (b) requested
U.S. Bank to make a Swingline Loan in the aggregate principal amount of $
_________, (c) made principal payments on outstanding Loans in the aggregate
amount of $ _______, or(d) converted outstanding Advances to outstanding
Advances of another type,* as follows:
- ----------
* For purposes of this Certificate, Advances being converted shall be
described as principal payments, and the new Advances into which such
Advances are being converted shall be described as new Advances.
E-72
Balance
Prime Rate LIBOR Rate Funded Rate
---------- ---------- -----------
Advance $_________ $_________ $_________
Payment $_________ $_________ $_________
Net Amount
Outstanding $_________ $_________ $_________
Interest Rate _________% _________% _________%
3. In connection with any requested Loans or Swingline Loans,
please disburse $_______________as follows [include wire instructions]:
4. In connection with any requested Loans or Swingline Loans:
(a) no Event of Default or Unmatured Event of Default has occurred or will exist
upon the making of any such Loans or Swingline Loans; (b) the representations
and warranties contained in Article IV of the Credit Agreement and in Section 5
of the Security Agreement are true and correct in all material respects with the
same force and effect as if made on and as of the date hereof; and (c) after
giving effect to the Loans or Swingline Loans requested herein, the sum of the
outstanding principal balance under the Notes shall not exceed the Borrowing
Base or the Aggregate Commitment Amounts.
Very truly yours,
DHI MORTGAGE COMPANY, LTD.
By_________________________
Its______________________
E-73
EXHIBIT C TO
CREDIT AGREEMENT
FORM OF
BORROWING BASE CERTIFICATE
[On the Company's Letterhead]
U.S. Bank National Association, as Agent
800 Nicollet Mall
Minneapolis, Minnesota 55402
Attention: Mortgage Banking Services Division BC-MN-HO3B
Ladies and Gentlemen:
We submit this certificate to you in accordance with the terms of the Amended
and Restated Credit Agreement dated as of April 9, 2004 (as the same may be
amended, supplemented or restated from time to time, the "Credit Agreement")
between DHI Mortgage Company , Ltd., the lenders party thereto (the "Lenders")
and U.S. Bank National Association, as Agent for the Lenders (in such capacity,
the "Agent"). Each capitalized term used herein and not defined herein has the
same meaning ascribed to such term in the Credit Agreement or the Security
Agreement.
The undersigned hereby certifies the following as of the close of business on
_____________, ______, the Borrowing Base was calculated as follows:
Collateral Value
(a) Pledged Mortgage Loans $___________
Conforming Mortgage Loans $___________
Nonconforming Mortgage Loans $___________
Jumbo Mortgage Loans $___________
HELOC Mortgage Loans $___________
Less:
(b) Pledged Mortgage Loans with No
Collateral Value (i.e., not
Eligible Mortgage Loans) $___________
Conforming Mortgage Loans and Jumbo
Mortgage Loans - 120 days or more since
origination or acquisition;
E-74
Nonconforming Mortgage Loans
90 days or more since origination or
acquisition; and bond program
loans - 180 days or more since
origination or acquisition $___________
Jumbo Mortgage Loans - 120 days
or more since origination or
acquisition $___________
Nonconforming Mortgage Loans - 90 days or
more since origination or acquisition $___________
Pledged more than 90 days $___________
Promissory Note and/or Collateral Documents
not returned or purchased by an Investor
(45 days/75 days for bond program loans) $___________
Collateral Document not returned (21 days) $___________
In default (one full reporting period) $___________
Requested documents not delivered
(5 Business Days) $___________
Promissory Note and/or Collateral Documents
not delivered (wet funding
loans; 7 Business Days) $___________
Wet funding loans in excess of sublimit $___________
Wet funding loans not closed $___________
Jumbo Mortgage Loans in excess
of applicable sublimit $___________
Nonconforming Mortgage Loans in excess
of applicable sublimit $___________
HELOC Mortgage Loans in excess of
applicable sublimit $________
Not marketable $___________
E-75
Agent does not have perfected, first
priority security interest $___________
Other ineligible $___________
(c) Eligible Mortgage Loans ((a) - (b)) $___________
(d) 2% of (c) $___________
(e) Total Collateral Value (Borrowing Base)
((c) minus (d)) $___________
Attached hereto is a schedule of the "Pledged Mortgage Loans" (as
defined in the Security Agreement) that have no Collateral Value at the date
hereof.
Dated: ___________, 20__
DHI MORTGAGE COMPANY, LTD.
By ________________________
Its _______________________
E-76
EXHIBIT D TO
CREDIT AGREEMENT
FORM OF
COMPLIANCE CERTIFICATE
[On the Company's Letterhead]
U.S. Bank National Association, as Agent
800 Nicollet Mall
Minneapolis, Minnesota 55402
Attention: Mortgage Banking Services
Division BC-MN-HO3B
Ladies and Gentlemen:
We submit this certificate to you in accordance with the terms
of the Amended and Restated Credit Agreement dated as of April 9, 2004 (as the
same may be amended, supplemented or restated from time to time, the "Credit
Agreement") between DHI Mortgage Company, Ltd., the lenders party thereto (the
"Lenders") and U.S. Bank National Association, as Agent for the Lenders (in such
capacity, the "Agent"). Each capitalized term used herein and not defined herein
has the same meaning ascribed to such term in the Credit Agreement.
The undersigned hereby certifies the following as of the close
of business on___________ , __________, the Company's compliance and/or
noncompliance with Sections 6.12, 6.13, 6.14 and 6.15 of the Credit Agreement
was as follows:
Actual (or in
Financial Covenants Required Compliance
- ------------------- -------------------
1) Distributions not more than
(6.12) profit (rolling
four quarters) $________
2) Tangible Net
Worth (6.13) $45,000,000 $________
3) Tangible Net
Worth Ratio (6.14)
not more than 12.0 to 1.0 ____ to 1.0
4) Net Income (6.15) not less than $1.00 $________
The undersigned further certifies as follows:
E-77
(a) The undersigned is the duly elected President, Chief Financial Officer
or Controller of the General Partner of the Company.
(b) The undersigned has reviewed the terms of the Credit Agreement and has
made, or has caused to be made under the supervision of the
undersigned, a detailed review of the transactions and conditions of
the Company during the accounting period covered by this Certificate;
and
(c) These examinations did not disclose, and the undersigned has no
knowledge, whether arising out of such examinations or otherwise, of
the existence of any condition or event that constitutes an Event of
Default or a Default during or at the end of the accounting period
covered by this Certificate, except as described in a separate
attachment to this Certificate, the exceptions listing, in detail, the
nature of the condition or event, the period during which it has
existed and the action that the Company has taken, is taking, or
proposes to take with respect to each such condition or event.
Dated: ________, _____
DHI MORTGAGE COMPANY, LTD.
By_________________________
Its _______________________
E-78
EXHIBIT E TO
AMENDED AND RESTATED CREDIT AGREEMENT
FORM OF
JOINDER AGREEMENT
This Joinder Agreement dated as of ______________ is made by
_______________ (the "New Co-Borrower"), a _____________ corporation, in favor
of the Agent and the Lenders party to that certain Amended and Restated Credit
Agreement dated as of April 9, 2004, as amended (the "Credit Agreement"), by and
between DHI MORTGAGE COMPANY, LTD., a Texas limited partnership (the "Company"),
the "Co-Borrowers" (as defined therein), if any, party thereto, the lenders
which are parties thereto (individually, a "Lender" and, collectively, the
"Lenders") and U.S. BANK NATIONAL ASSOCIATION, a national banking association,
one of the Lenders, as agent for the Lenders (in such capacity, the "Agent"),
and that certain Amended and Restated Pledge and Security Agreement dated as of
April 9, 2004, as amended (the "Pledge and Security Agreement"), by and between
the Company and the Co-Borrowers, if any, and the Agent. Capitalized terms used
in this Joinder Agreement, but not otherwise defined, shall have the meanings
ascribed to them in the Credit Agreement and the Pledge and Security Agreement,
as applicable.
WHEREAS, pursuant to the Credit Agreement, the Company desires that New
Co-Borrower become a "Co-Borrower" under the Credit Agreement and the Pledge and
Security Agreement, to borrow up to $__________ at any time outstanding to
finance Mortgage Loans to be originated or acquired by New Co-Borrower, and to
execute and deliver to the Agent such Loan Documents as the Agent may require,
including without limitation such financing statements and other instruments,
agreements and documents as may be necessary to create in favor of the Agent a
valid and perfected first priority security interest in the Collateral described
in the Pledge and Security Agreement; and
WHEREAS, as a Co-Borrower, the New Co-Borrower will have all the rights
and obligations of a Co-Borrower under the Credit Agreement and under the Pledge
and Security Agreement.
NOW THEREFORE, for and in consideration of the mutual covenants,
conditions, stipulations and agreements set forth in the Credit Agreement and
the Pledge and Security Agreement, and other valuable consideration, the receipt
of which is hereby acknowledged, the undersigned hereby consents and agrees as
follows:
1. Assumptions. The New Co-Borrower hereby assumes and agrees to
perform all of the terms, restrictions, obligations and conditions of a
Co-Borrower under the Credit Agreement and the Pledge and Security Agreement. By
execution of this Joinder Agreement, the New Co-Borrower is hereby designated a
"Co-Borrower" for purposes of, and agrees to be
E-79
bound by, each and all terms of the Credit Agreement, the Pledge and Security
Agreement, the Notes and the other Loan Documents.
2. Security. As collateral security for the due and punctual payment of
the Obligations, the New Co-Borrower does hereby pledge, hypothecate, assign,
transfer and convey to the Agent, for the benefit of the Lenders, and grants to
the Agent, for the benefit of the Lenders, a security interest in and to the
following described property (the "Collateral"):
(a) all right, title and interest of the New Co-Borrower in
and to the Pledged Mortgage Loans and Related Mortgage-backed
Securities and all promissory notes, participation agreements,
participation certificates, or other instruments or agreements which
evidence the Pledged Mortgage Loans and Related Mortgage-backed
Securities;
(b) all right, title and interest of the New Co-Borrower in
and to all Mortgage Notes, Mortgages and other notes, real estate
mortgages, deeds of trust, security agreements, chattel mortgages,
assignments of rent and other security instruments whether now or
hereafter owned, acquired or held by the New Co-Borrower which evidence
or secure (or constitute collateral for any note, instrument or
agreement securing) any of the Pledged Mortgage Loans;
(c) all right, title and interest of the New Co-Borrower under
all agreements between the New Co-Borrower and Persons other than the
New Co-Borrower pursuant to which the New Co-Borrower undertakes to
service Mortgage Loans which are related to Mortgage Notes described in
paragraph (b) above, including without limitation the rights of the New
Co-Borrower to income and reimbursement thereunder.
(d) all right, title and interest of the New Co-Borrower in
and to all financing statements perfecting the security interest of any
of the Pledged Mortgage Loans or property securing any Pledged Mortgage
Loan;
(e) all right, title and interest of the New Co-Borrower in
and to all guaranties and other instruments by which the persons or
entities executing the same guarantee, among other things, the payment
or performance of the Pledged Mortgage Loans;
(f) all right, title and interest of the New Co-Borrower in
and to all title insurance policies, title insurance binders,
commitments or reports insuring or relating to any Pledged Mortgage
Loan or property securing any Pledged Mortgage Loan;
(g) all right, title and interest of the New Co-Borrower in
and to all surveys, bonds, hazard and liability insurance policies,
participation agreements and any other agreement, instrument or
document pertaining to, affecting, obtained by the Borrower in
connection with, or arising out of, the Pledged Mortgage Loans;
E-80
(h) all right, title and interest of the New Co-Borrower in
and to all Take-Out Commitments and other agreements to purchase any
Pledged Mortgage Loans or Related Mortgage-backed Securities;
(i) all right, title and interest of the New Co-Borrower in
and to all collections on, and proceeds of or from, any and all of the
foregoing (hereinafter collectively called "Collections");
(j) all right, title and interest of the Borrower in and to
any other asset of the New Co-Borrower which has been or hereafter at
any time is delivered to the Agent hereunder;
(k) all files, surveys, certificates, correspondence,
appraisals, computer programs, tapes, discs, cards, accounting records,
and other records, information, and data of the New Co-Borrower
relating to the Pledged Mortgage Loans and Related Mortgage-backed
Securities (including all information, data, programs, tapes, discs and
cards necessary to administer and service the Pledged Mortgage Loans
and Related Mortgage-backed Securities);
(l) all private mortgage insurance, FHA insurance and VA
guaranties relating to any Pledged Mortgage Loans and the proceeds of
any such insurance and guaranties; and
(m) any and all balances, credits, deposits, accounts or
moneys of, or in the name of, the New Co-Borrower representing or
evidencing the foregoing or any proceeds thereof, and any and all
proceeds of any of the foregoing.
3. Representations and Warranties. The New Co-Borrower represents to
the Agent and the Lenders that as of the date hereof all of the representations
and warranties set forth in the Credit Agreement applicable to the Co-Borrowers
are true with respect to the New Co-Borrower.
4. Authorization. The New Co-Borrower hereby authorizes the Company, on
its behalf, to execute and deliver subsequent Joinder Agreements, Notes and
amendments to the Loan Documents on its behalf, as and to the extent provided in
the Credit Agreement.
5. Company Fee. As consideration for the Company's execution and
delivery of this Joinder Agreement and the credit to be extended to the New
Co-Borrower pursuant to the Credit Agreement, the New Co-Borrower hereby agrees
to pay to the Company, on or before the date the same becomes due to the Agent
under the Credit Agreement, all principal and interest due on Loans and
Swingline Loans made to enable the New Co-Borrower to originate or acquire
Mortgage Loans, all fees, costs and expenses relating to such Loans and
Swingline Loans and the New Co-Borrower's performance or non-performance of its
Obligations under the Credit Agreement, and a fee (the "Credit Fee") in an
amount equal to ___% per annum on the average outstanding principal amount of
such Loans and Swingline Loans during each month. The Credit Fee is payable with
interest on such Loans and Swingline Loans for each month.
E-81
6. Notices. The New Co-Borrower hereby acknowledges and confirms that
neither the Agent nor any Lender shall be obligated to provide the New
Co-Borrrower with any notices under the Loan Documents. Any notice or request
required or permitted to be given to the New Co-Borrower under or in connection
with the Credit Agreement, the Notes or the other Loan Documents shall be
provided as set forth in Section 10.01 of the Credit Agreement to the following
address:
______________________________
______________________________
______________________________
Attention: __________________
Telephone: (___) ____-________
Telecopier: (___) ____-_______
or at such other addresses or to such individual's or department's attention as
the New Co-Borrower may have furnished to the Agent and the Company in writing.
7. Governing Law and Construction. THE VALIDITY, CONSTRUCTION AND
ENFORCEABILITY OF THIS AGREEMENT SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE
STATE OF MINNESOTA, WITHOUT GIVING EFFECT TO CONFLICT OF LAWS PRINCIPLES
THEREOF, BUT GIVING EFFECT TO FEDERAL LAWS OF THE UNITED STATES APPLICABLE TO
NATIONAL BANKS. Whenever possible, each provision of this Agreement and any
other statement, instrument or transaction contemplated hereby or thereby or
relating hereto or thereto shall be interpreted in such manner as to be
effective and valid under such applicable law, but, if any provision of this
Agreement or any other statement, instrument or transaction contemplated hereby
or thereby or relating hereto or thereto shall be held to be prohibited or
invalid under such applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of such provision or the remaining provisions of this Agreement or any other
statement, instrument or transaction contemplated hereby or thereby or relating
hereto or thereto.
8. Waiver of Jury Trial. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES
ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT.
9. Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and any of the parties hereto may execute this Agreement by signing
any such counterpart.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
E-82
NEW CO-BORROWER: [ ]
By:__________________________
Its: ___________________
COMPANY: DHI MORTGAGE COMPANY, LTD.
By: DHI Mortgage Company GP,
Inc., its General Partner
By___________________________
Its: ___________________
AGENT: U.S. BANK NATIONAL ASSOCIATION,
as Agent
By:__________________________
Its: ____________________
E-83
EXHIBIT F TO AMENDED AND RESTATED CREDIT AGREEMENT
AMENDED AND RESTATED PLEDGE AND SECURITY AGREEMENT
This AMENDED AND RESTATED PLEDGE AND SECURITY AGREEMENT ("Agreement"),
dated as of April 9, 2004, by and between DHI MORTGAGE COMPANY, LTD., a Texas
limited partnership (formerly known as CH Mortgage Company I, Ltd) (the
"Company" and also a "Borrower"), and U. S. BANK NATIONAL ASSOCIATION, a
national banking association, as agent for the "Lenders" (as defined below)
(together with any successor agent under the Credit Agreement referred to below,
the "Agent").
RECITALS:
A. The Company, the lenders party thereto (together with any lender
that subsequently becomes a party to the Credit Agreement, the "Lenders"), and
the Agent have entered into an Amended and Restated Credit Agreement dated as of
April 9, 2004 (as the same may be amended or modified from time to time, the
"Credit Agreement"), pursuant to which the Lenders have agreed to provide
certain credit facilities to the Borrower.
B. It is a condition precedent to the effectiveness of the Credit
Agreement and the Lenders' obligations to extend the various credit
accommodations thereunder that this Agreement be executed and delivered by the
Borrower, which condition precedent the Lenders have not waived and will not
waive.
C. The Borrower finds it advantageous, desirable and in the Borrower's
best interest to comply with the requirement that it execute and deliver this
Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained and in order to induce the Lenders to become parties
to, and to extend credit under, the Credit Agreement, the parties hereto agree
as follows:
Section 1. DEFINITIONS
Each capitalized term used herein which is not otherwise
defined herein shall have the meaning ascribed to such term in the Credit
Agreement, including Exhibits C and E thereto. In addition, the following terms
shall have the following respective meanings:
"Agreement to Pledge": an agreement to pledge substantially in
the form of Attachment 1 hereto.
"Bailee Letter": a letter substantially in the form of
Attachment 2 hereto.
"Borrower": the Company and each Person that becomes a
Co-Borrower under the Credit Agreement. When used herein the term
Borrower shall mean the Borrowers, each Borrower or the applicable
Borrower, as the context may require.
E-84
"Closing Agent": with respect to any Mortgage Loan, the title
company or other Person performing the functions of a title company in
connection with the closing of such Mortgage Loan.
"Collateral": as defined in Section 2 hereof.
"Collections": as defined in Section 2(h) hereof.
"Electronic Tracking Agreement" means that certain Electronic
Tracking Agreement dated as of July 24, 2003, among the Company, the
Agent, MERS, and MERSCORP and as the same may be amended or modified
from time to time.
"Fannie Mae Security": a Mortgage-backed Security guaranteed
or issued by Fannie Mae.
"FIRREA Qualifying Appraisal": with respect to any Pledged
Mortgage Loan, an appraisal of the real estate securing such Pledged
Mortgage Loan which meets the requirements of the applicable appraisal
regulations under Title XI of the Financial Institutions Reform,
Recovery and Enforcement Act of 1989, including, without limitation,
the appraisal regulations applicable to mortgage warehousing loans (but
if said regulations do not require an appraisal with respect to a
Pledged Mortgage Loan, then no appraisal shall be required with respect
thereto hereunder).
"Freddie Mac Security": a Mortgage-backed Security guaranteed
or issued by Freddie Mac.
"Ginnie Mae Security": a Mortgage-backed Security guaranteed
by Ginnie Mae.
"Good Funds Wire Clearing Account": as defined in the Credit
Agreement.
"Loan Detail Listing": a loan detail listing substantially in
the form of Attachment 3(b) hereto or the fields of information set
forth in Attachment 3(a) hereto as electronically transmitted to the
Agent and reproduced by the Agent from such transmission.
"MERS": Mortgage Electronic Registration Systems, Inc.
"MERS Agreements": The Electronic Tracking Agreement and any
other agreement, document or instrument setting forth the terms of or
otherwise affecting the MERS System and the Company's membership in
MERSCORP.
"MERSCORP": MERSCORP, Inc.
E-85
"MERS System": shall mean MERSCORP's mortgage electronic
registry system, as more particularly described in the MERS Procedures
Manual in the form attached to the Electronic Tracking Agreement, as
amended from time to time.
"Obligor": a person or other entity who now or hereafter is or
becomes liable to the Borrower with respect to any of the Collateral.
"Pledged Mortgage Loans": Mortgage Loans deemed to have been
delivered to the Agent as provided in Section 4.01 hereof and Mortgage
Loans delivered to the Agent as provided in Section 4.02 hereof.
"Related Mortgage-backed Security": a Mortgage-backed Security
that represents an interest in, or is secured by, any Mortgage Loans
that were Pledged Mortgage Loans at the time of formation of the
related pool, whether certificated or uncertificated.
"Transmittal Letter": a transmittal letter substantially in
the form of Attachment 4 hereto.
"Trust Receipt": a trust receipt substantially in the form of
Attachment 5 hereto.
E-86
Section 2. PLEDGE
As collateral security for the due and punctual payment of the
Obligations, the Borrower does hereby pledge, hypothecate, assign, transfer and
convey to the Agent, for the benefit of the Lenders, and grants to the Agent,
for the benefit of the Lenders, a security interest in and to the following
described property (the "Collateral"):
(a) all right, title and interest of the Borrower in and to
the Pledged Mortgage Loans and Related Mortgage-backed Securities and
all promissory notes, participation agreements, participation
certificates, or other instruments or agreements which evidence the
Pledged Mortgage Loans and Related Mortgage-backed Securities;
(b) all right, title and interest of the Borrower in and to
all Mortgage Notes, Mortgages and other notes, real estate mortgages,
deeds of trust, security agreements, chattel mortgages, assignments of
rent and other security instruments whether now or hereafter owned,
acquired or held by the Borrower which evidence or secure (or
constitute collateral for any note, instrument or agreement securing)
any of the Pledged Mortgage Loans;
(c) all right, title and interest of the Borrower under all
agreements between the Borrower and Persons other than the Borrower
pursuant to which the Borrower undertakes to service Mortgage Loans
which are related to Mortgage Notes described in paragraph (b) above,
including without limitation the rights of the Borrower to income and
reimbursement thereunder.
(d) all right, title and interest of the Borrower in and to
all financing statements perfecting the security interest of any of the
Pledged Mortgage Loans or property securing any Pledged Mortgage Loan;
(e) all right, title and interest of the Borrower in and to
all guaranties and other instruments by which the persons or entities
executing the same guarantee, among other things, the payment or
performance of the Pledged Mortgage Loans;
(f) all right, title and interest of the Borrower in and to
all title insurance policies, title insurance binders, commitments or
reports insuring or relating to any Pledged Mortgage Loan or property
securing any Pledged Mortgage Loan;
(g) all right, title and interest of the Borrower in and to
all surveys, bonds, hazard and liability insurance policies,
participation agreements and any other agreement, instrument or
document pertaining to, affecting, obtained by the Borrower in
connection with, or arising out of, the Pledged Mortgage Loans;
(h) all right, title and interest of the Borrower in and to
all Take-Out Commitments and other agreements to purchase any Pledged
Mortgage Loans or Related Mortgage-backed Securities;
E-87
(i) all right, title and interest of the Borrower in and to
all collections on, and proceeds of or from, any and all of the
foregoing (hereinafter collectively called "Collections");
(j) all right, title and interest of each Borrower in and to
any other asset of the Borrower which has been or hereafter at any time
is delivered to the Agent hereunder;
(k) all files, surveys, certificates, correspondence,
appraisals, computer programs, tapes, discs, cards, accounting records,
and other records, information, and data of each Borrower relating to
the Pledged Mortgage Loans and Related Mortgage-backed Securities
(including all information, data, programs, tapes, discs and cards
necessary to administer and service the Pledged Mortgage Loans and
Related Mortgage-backed Securities);
(l) all balances, credits and deposits of each Borrower
contained in the Funding and Settlement Account;
(m) all private mortgage insurance, FHA insurance and VA
guaranties relating to any Pledged Mortgage Loans and the proceeds of
any such insurance and guaranties; and
(n) any and all balances, credits, deposits, accounts or
moneys of, or in the name of, each Borrower representing or evidencing
the foregoing or any proceeds thereof, and any and all proceeds of any
of the foregoing.
Section 3. REPORTS CONCERNING EXISTING COLLATERAL AND HEREAFTER
ACQUIRED COLLATERAL; ELECTRONIC REPORTING. From time to time hereafter as
reasonably requested by the Agent, the Company will promptly give a written
report to the Agent describing and listing each document, instrument or other
paper which evidences, secures, guarantees, insures or pertains to any item of
the Collateral whether now or hereafter owned, acquired or held by the
Borrowers. Such written report shall contain sufficient information to enable
the Agent to identify each such document, instrument or other paper. The Company
(a) upon the request of the Agent, shall promptly provide additional information
concerning, or a more complete description of, each such document, instrument or
other paper and (b) at the request of the Agent, shall promptly deliver the same
to the Agent. The Co-Borrowers shall, at the request of the Company, cooperate
with the Company in complying with the requirements of this Section 3. The
Company may execute and deliver to the Agent the U.S. Bank Mortgage Banking
Services Division WEB Authorization Form including the Terms of the U.S. Bank
Mortgage Banking Services Division Internet Based Services as incorporated
therein (the "WEB Authorization Form") and thus use U.S. Bank Mortgage Banking
Services Division internet based services for reporting and transmitting
information and documents to the Agent in conformance with the terms of the WEB
Authorization Form. Notwithstanding the provisions of this Agreement that
require a specific form for submission of reports or transmission of information
or documents to the Agent, the Company may submit such reports and transmit such
information or
E-88
documents electronically as allowed under the WEB Authorization Form and such
reports so submitted and information and documents so transmitted shall satisfy
the applicable requirements of this Agreement.
Section 4. DELIVERY OF COLLATERAL DOCUMENTS
4.01 Delivery of Mortgage Loans. A Mortgage Loan shall
be deemed to have been delivered and pledged to the Agent, for the
benefit of the Lenders, under this Pledge and Security Agreement when:
(a) the Agent has received, with respect to such
Mortgage Loan, (i) an Agreement to Pledge, duly completed and
executed by the Borrower, and (ii) a Loan Detail Listing, duly
completed; and
(b) either
(i) a wire transfer of funds from the Good
Funds Wire Clearing Account has been initiated for the
purpose of funding the origination or purchase of such
Mortgage Loan or funds have been deposited by the Agent
into the Operating Account upon confirmation of
delivery of wire to title company, closing agent or
loan seller;
(ii) a draft drawn upon the Agent for the
purpose of funding the origination or purchase of such
Mortgage Loan has been received by the Agent and has
cleared the Agent's payment process; or
(iii) a check or draft drawn upon the Agent
for the purpose of funding the origination or purchase
of such Mortgage Loan has been accepted by the Agent,
or the Agent has otherwise assured payment thereof.
The documents referred to in clause (a) of the preceding sentence shall
be transmitted to the Agent by telecopier or electronic data
transmission not later than (A) 1:00 P.M. (Minneapolis time) on the
applicable Borrowing Date if such Mortgage Loan is to be financed from
proceeds of Loans and (B) 3:00 P.M. (Minneapolis time) on the
applicable Borrowing Date if such Mortgage Loan is to be financed from
proceeds of a Swingline Loan, and the originally executed copies of
such documents shall be delivered to the Agent by courier on the
following Business Day.
4.02 Delivery of Pledged Mortgage Loan Documentation.
The Borrower shall deliver to the Agent, for the benefit of the
Lenders, with respect to each Pledged Mortgage Loan, the following
described instruments and documents within seven Business Days after
the Borrowing Date on which the applicable
E-89
Loans or Swingline Loans were made for the purpose of funding such
Mortgage Loan:
(a) the original Mortgage Note evidencing such Pledged
Mortgage Loan, duly endorsed in blank as follows:
"Pay to the order of,
_________________________________,
without recourse
DHI MORTGAGE COMPANY, LTD.
(or as listed on Attachment 6)
By: DHI MORTGAGE COMPANY GP, INC.
Its General Partner
By________________________________
Name______________________________
Title_____________________________"
(b) a copy of the Mortgage securing such Pledged
Mortgage Loan, certified by the Closing Agent or the Borrower
to be a true and exact copy of the original Mortgage as
submitted for recording;
(c) a duly executed appropriate assignment of said
Pledged Mortgage Loan (other than any Pledged Mortgage Loan
(i) which is registered on the MERS System under the
Electronic Tracking Agreement and (ii) for which the Borrower
has not withdrawn or re-registered such Pledged Mortgage Loan
on the MERS System as set forth in the Electronic Tracking
Agreement) in blank and in recordable form.
(d) if there are any intermediate assignments of said
Mortgage, two copies of each such assignment, certified by the
Closing Agent or the Borrower to be a true and exact copy of
the original thereof as submitted for recording;
(e) if any of the foregoing documents was executed on
behalf of a party thereto by another Person under a power of
attorney, a copy of the original executed copy of such power
of attorney, certified by the Closing Agent to be a true and
exact copy of the original thereof; and
(f) a Transmittal Letter listing all documents being
delivered to the Agent.
The Agent's responsibility for reviewing the documents
delivered to it pursuant to this Section 4.02 is limited to the
following steps:
E-90
(i) determining that all submitted
documents, including the Transmittal Letter and the
Loan Detail Listing, appear to be consistent as to
borrower name, loan face amount, loan type (FHA, VA,
or conventional; fixed rate or adjustable rate) and
the Borrower's loan number;
(ii) determining that the Mortgage Note and
Mortgage each bears an original signature or
signatures which appear to be those of the person or
persons named as the Obligor(s), or, in the case of a
certified copy of the Mortgage (which certification
shall be by either the closing agent or the
Borrower), such copy bears what appears to be a
reproduction of such signature or signatures;
(iii) except for (a) the endorsement to the
Borrower of the Mortgage Note in the event such
Mortgage Loan was purchased by the Borrower and (b)
the endorsement in blank of the Mortgage Note by the
Borrower, determining that neither the Mortgage Note,
the Mortgage, nor the assignment(s) of the Mortgage
contain any irregular writings which appear on their
face to affect the validity of any such endorsement
or to restrict the enforceability of the document on
which they appear;
(iv) determining that the Mortgage Note is
endorsed in blank, without recourse, and such
endorsement appears to bear an original signature of
an authorized officer of the Borrower, based on the
current list of such officers supplied by the
Borrower; and
(v) determining that the assignment of the
Mortgage (if such assignment is required under
Section 4.02(c) hereof), which shall be in blank,
appears to bear an original signature of an
authorized officer of the applicable Borrower, acting
either for a Borrower or for MERS, based on the
current list of such officers supplied by the
Borrower.
4.03 Delivery of Additional Mortgage Loan Documents Upon
Request. Within five Business Days after receiving a written request from the
Agent to deliver the same with respect to any Pledged Mortgage Loan, the
Borrower shall deliver to the Agent the following:
(a) All original guaranties, assignments of rents and other
instruments and documents relating to security for and payment of such
Pledged Mortgage Loan, together with duly executed assignments thereof;
(b) A mortgagee's title insurance policy (or commitment
therefor) in the form of an American Land Title Association standard
policy (revised coverage, most recent form) from a substantial and
reputable title insurance company acceptable to Fannie Mae and Freddie
Mac in favor of the Borrower insuring the
E-91
lien of the Mortgage securing such Pledged Mortgage Loan (subject only
to such liens and encumbrances as are generally acceptable to reputable
lending institutions, mortgage investors and securities dealers) or, if
such a mortgagee's title policy (or commitment therefor) is generally
not available in the state in which the real property subject to such
Mortgage is located, an opinion of an attorney reasonably acceptable to
the Agent to the effect that the Mortgage securing such Pledged
Mortgage Loan is a valid first lien free and clear of all other liens,
encumbrances and restrictions except such as are generally acceptable
to reputable lending institutions, mortgage investors and securities
dealers;
(c) Evidence satisfactory to the Agent that the premises
covered by the Mortgage securing such Pledged Mortgage Loan is insured
against fire and perils of extended coverage for an amount at least
equal to the lesser of (i) the greater of 80% of the full insurable
value of such premises and the outstanding principal balance of such
Pledged Mortgage Loan or (ii) the full replacement cost of such
premises;
(d) With respect to each Pledged Mortgage Loan and each
Related Mortgage-backed Security, copies of the applicable Take-Out
Commitment and all documents and instruments called for thereunder,
together with a certificate signed by an officer of the Borrower that,
as of the date of delivery thereof, such Pledged Mortgage Loan or
Related Mortgage-backed Security, as the case may be, and all
documentation therefor satisfies all requirements and conditions of the
applicable Take-Out Commitment;
(e) With respect to each Pledged Mortgage Loan secured by a
Mortgage which is insured by the FHA or guaranteed by the VA, a
certificate signed by an officer of the Borrower that, as of the date
of delivery thereof, the Borrower either has possession of the
applicable FHA insurance certificate or VA guarantee covering such
Pledged Mortgage Loan, or has complied with all requirements and
conditions for obtaining possession of such applicable FHA insurance
certificate or VA guarantee;
(f) Originals, or photocopies, as the Agent may request, of
surveys (or plat maps, if surveys are not available) and all other
instruments, documents and other papers pertaining to each such Pledged
Mortgage Loan which are in the possession or control of the Borrower or
which the Borrower has the right to possess or control;
(g) The original of each Mortgage referred to in Section
4.02(b) hereof, together with satisfactory evidence of its recordation,
or, if the original recorded Mortgage has not been returned to the
Borrower by the applicable recording officer, a copy of the original
recorded Mortgage certified as a true and exact copy thereof by the
applicable recording officer;
(h) Evidence satisfactory to the Agent that the Borrower has
obtained and maintains in its files, as agent for the Agent and the
Lenders, a FIRREA
E-92
Qualifying Appraisal with respect to such Pledged Mortgage Loan, which
evidence may include, but is not limited to, a copy of such FIRREA
Qualifying Appraisal certified by the Borrower to be a true and exact
copy of the original thereof as maintained in the Borrower's files; and
(i) copies of all truth-in-lending disclosures as required by
Regulation Z of the Board of Governors of the Federal Reserve System
and copies of all disclosures under the Real Estate Settlement
Procedures Act of 1974, as amended.
4.04 Form of Assignments. All assignments executed and
delivered by the Borrower pursuant to this Section 4 shall be in form
satisfactory for recording in the real estate records of the applicable
jurisdiction and in form and substance acceptable to and approved by the Agent.
4.05 Effect of Transmittal Letters. Any Transmittal Letter
delivered to the Agent hereunder, together with the documents accompanying such
Transmittal Letter, shall conclusively be presumed to have been delivered to the
Agent on behalf of the Borrower by a person who has been authorized in writing
to do so by the Borrower through its Board of Directors or otherwise.
4.06 Endorsement and Delivery of Checks, Etc. The Borrower
will from time to time whenever an Event of Default exists, upon the request of
the Agent, endorse and deliver to the Agent any draft, check, note or other
writing which evidences a right to the payment of money which constitutes
Collateral.
4.07 Defects in Collateral Documentation; Loss of Collateral
Value. A Pledged Mortgage Loan which has been delivered to the Agent under this
Pledge and Security Agreement in accordance with Section 4.01 or Section 4.02
hereof shall be and remain Collateral which is subject to the lien and security
interest granted to the Agent under Section 2 hereof until such Pledged Mortgage
Loan is sold to an Investor in accordance with Sections 10.02 and 10.03 hereof
(in which case the proceeds thereof, including, without limitation, any Related
Mortgage-backed Security, shall constitute Collateral) or released pursuant to
Section 10.04 hereof or until this Pledge and Security Agreement terminates in
accordance with Section 19 hereof, notwithstanding (a) any defect in any
document delivered to the Agent pursuant to Section 4.01, 4.02, or 4.03 hereof,
(b) the failure of such Pledged Mortgage Loan to have or continue to have
Collateral Value, as applicable, (c) the failure of the Borrower to make timely
delivery of any document required to be delivered to the Agent under Section
4.02 hereof, (d) the failure of the Borrower to make timely delivery of any
document required to be delivered to the Agent under Section 4.03 hereof, or (e)
any other fact, circumstance, condition or event whatsoever. For purposes of the
preceding sentence, the funding of the origination or purchase of a Pledged
Mortgage Loan from the proceeds of Loans or Swing-Line Loans and/or the
assignment of Collateral Value to such Pledged Mortgage Loan by the Agent shall
be deemed to be conclusive evidence of the delivery of such Pledged Mortgage
Loan under Section 4.01 hereof, notwithstanding any subsequent determination by
the Agent that the documentation delivered for such Pledged Mortgage Loan was
incomplete or defective in any respect or that such Pledged Mortgage Loan should
not
E-93
have been assigned Collateral Value; provided that, in the exercise of its
reasonable discretion, the Agent may reduce the Collateral Value to zero for any
Pledged Mortgage Loan due to any material defect in any deed, power of attorney
or assignment of mortgage related to such Pledged Mortgage Loan as to which the
Agent has given notice to the Borrower of such material defect, if such material
defect is not corrected within 3 Business Days after such notice from the Agent.
Section 5. REPRESENTATIONS AND WARRANTIES
The Borrower hereby represents and warrants that:
(a) all of the representations and warranties set forth in the
Credit Agreement are true and correct;
(b) the Borrower is or will be the legal and equitable owner
of the Collateral and its interests therein are or will be free and
clear of all liens, security interests, charges and encumbrances of
every kind and nature (other than as created hereunder or under
Take-Out Commitments or under assignments to purchasers under such
Take-Out Commitments);
(c) no financing statement or other evidence of lien covering
any of the Collateral is or will be on file in any public office other
than financing statements filed with respect to the Borrower as debtor
and the Agent as secured party;
(d) the Borrower has good right, power and lawful authority to
pledge, assign and deliver the Collateral in the manner hereby done or
contemplated;
(e) no consent or approval of any governmental body,
regulatory authority, person, trust, or entity is or will be (i)
necessary to the validity or enforceability of the rights created
hereunder or (ii) required prior to the assignment, transfer and
delivery of any of the Collateral to the Agent;
(f) to the Borrower's knowledge, no material dispute, right of
setoff, counterclaim or defense exists with respect to all or any part
of the Collateral;
(g) this Pledge and Security Agreement constitutes the legal,
valid and binding obligation of the Borrower enforceable against the
Borrower and the Collateral in accordance with its terms (subject to
limitations as to enforceability which might result from bankruptcy,
reorganization, arrangement, insolvency or other similar laws affecting
creditors' rights generally);
(h) in making and closing each Pledged Mortgage Loan, the
Borrower has or will have fully complied in all material respects with,
and all collateral documents delivered with respect to such Pledged
Mortgage Loan comply or will comply in all material respects with, all
applicable federal, state and local laws, regulations and rules,
including, but not limited to, (i) usury laws, (ii) if applicable, the
Real Estate Settlement Procedures Act of 1974, (iii) if applicable, the
Equal Credit Opportunity Act, (iv) if applicable, the Federal Truth in
Lending
E-94
Act, (v) if applicable, Regulation Z of the Board of Governors of the
Federal Reserve System and (vi) all other consumer protection and
truth-in-lending laws which may apply, and in each case with the
regulations promulgated in connection therewith, as the same may be
amended from time to time; and the Borrower shall maintain sufficient
documentary evidence in its files with respect to such Pledged Mortgage
Loans to substantiate such compliance;
(i) the Borrower has obtained or will obtain prior to the
delivery of any Mortgage Loan to the Agent in accordance with Section
4.01 hereof, and will maintain in its files as agent for the Agent and
the Lenders, a FIRREA Qualifying Appraisal with respect to such
Mortgage Loan;
(j) immediately upon the last to occur of (i) the execution
and delivery of the Credit Agreement, the Notes and the other Loan
Documents, (ii) the acquisition by the Borrower of rights in a Mortgage
Loan funded by a Loan, and (iii) the delivery of a Mortgage Loan to the
Agent, for the benefit of the Lenders, pursuant to Section 4.01 or
Section 4.02 hereof, the Agent, for the benefit of the Lenders, will
have a valid and perfected first priority security interest in such
Mortgage Loan and in the related Mortgage Note and Mortgage evidencing
and securing such Mortgage Loan (even if the Agent has not taken
possession of said Mortgage Note);
(k) immediately upon (i) the execution and delivery of the
Credit Agreement, the Notes and the other Loan Documents, (ii) the
acquisition by the Borrower of rights in such Collateral and (iii) the
filing with the Secretary of State of Texas of a financing statement
showing the Borrower as debtor and the Agent as secured party and
describing the Collateral, the Agent, for the benefit of the Lenders,
shall have a valid and perfected first priority security interest in
the Collateral which is other than as described in clause (j) of this
Section 5, to the extent that a security interest in such other
Collateral can be perfected by filing a financing statement;
(l) each Pledged Mortgage Loan has been fully advanced and is
a first or second lien on the premises described therein;
(m) each Pledged Mortgage Loan complies with all requirements
of this Agreement and the Credit Agreement applicable thereto;
(n) except as described in the reports provided by the Company
to the Lenders pursuant to Section 4.01 of the Credit Agreement, or as
otherwise disclosed to the Agent, there is no monetary default existing
under any Pledged Mortgage Loan that remains in effect on the date the
Borrowing Base Certificate for the month in which such default occurred
is required to be delivered to the Lenders pursuant to the Credit
Agreement and, to the knowledge of the Company, there is no other
default existing under any Pledged Mortgage Loan; and
E-95
(o) all Pledged Mortgage Loans secured by properties located
in special flood hazard areas designated by the Secretary of Housing
and Urban Development are and shall continue to be covered by flood
insurance under the National Flood Insurance Program.
Section 6. POSSESSION OF COLLATERAL; STANDARD OF CARE
The Agent shall exercise reasonable care in the custody and
preservation of the Collateral, shall keep the documents delivered to it in
connection with Pledged Mortgage Loans at a facility protected against fire and
shall keep the Collateral separate from similar collateral furnished by third
parties. The Agent shall be deemed to have exercised reasonable care in the
custody and preservation of any of the Collateral in its possession if it takes
such action for that purpose as Borrower requests in writing, but failure of the
Agent to comply with any such request shall not itself be deemed a failure to
exercise reasonable care, and no failure of the Agent to preserve or protect any
rights with respect to such Collateral not so requested by the Borrower shall be
deemed a failure to exercise reasonable care in the custody or preservation of
such Collateral. The Agent shall also be deemed to have exercised reasonable
care in the custody and preservation of any Collateral in its possession if such
Collateral is accorded treatment substantially equal to that which the Agent
accords its own property of like kind. The Agent agrees to maintain its status
as a "Member" of MERSCORP as defined in the MERS Agreements so long as this
Agreement is in effect.
Section 7. COLLECTIONS ON COLLATERAL BY THE BORROWER; ACCOUNTING
Until the Agent gives notice to the Borrower pursuant to the
penultimate sentence of this Section 7 or exercises its rights under Sections 8
or 13, the Borrower shall be entitled to receive all Collections and use the
same in the normal course of business. Upon notice from the Agent to the
Borrower given after the occurrence and during the continuation of an Event of
Default or a Default, the Borrower shall furnish to the Agent not later than the
tenth Business Day after the end of each month a report on all Collections
received during the preceding month and provide the same accounting therefor as
the Borrower customarily furnishes the permanent investors therein, including
with respect to Collections on each Pledged Mortgage Loan: (a) the name of the
Obligor(s), (b) the Borrower's loan number for such Pledged Mortgage Loan, (c)
the current principal balance of such Pledged Mortgage Loan, (d) the current
escrow balance with respect to such Pledged Mortgage Loan, (e) the number and
amount of past due payments on such Pledged Mortgage Loan and (f) the amount of
the collections received during such month with respect to such Pledged Mortgage
Loan, itemized to show (i) principal portion, (ii) interest portion and (iii)
portion thereof representing amounts paid in escrow for real estate taxes and
insurance.
Upon notice from the Agent to the Borrower given after the
occurrence and during the continuation of an Event of Default or of a Default,
the Borrower shall hold all collections representing principal payments and
prepayments and escrows for real estate taxes and insurance in trust for the
Lenders and shall promptly remit the same
E-96
to the Agent. All amounts representing the principal payments and prepayments
delivered to the Agent pursuant to the preceding sentence shall be deposited in
the Funding and Settlement Account and all amounts representing real estate
taxes and insurance escrows delivered to the Agent pursuant to the preceding
sentence shall be deposited in an escrow account with any bank satisfactory to
the Borrower and the Agent.
Section 8. COLLECTIONS ON COLLATERAL BY THE AGENT
Upon the occurrence and during the continuation of an Event of
Default or a Default, the Agent may (and shall, if so directed by the Majority
Lenders) at any time and from time to time, notify and direct any or all
Obligors with respect to any of the Collateral thereafter to make all payments
on such Collateral directly to the Agent, regardless of whether the Borrower was
previously making collections thereon. The Agent shall promptly account to the
Borrower for all such payments received by the Agent. Each Obligor making such
payment to the Agent shall be fully protected in relying on the written
statement of the Agent that the Agent then holds the security interests herein
granted and assigned, which entitle the Agent to receive such payment, and the
receipt of the Agent for such payment shall be full acquittance therefor to the
Obligor making such payment.
Section 9. DEFAULTED LOANS; COLLECTION AND FORECLOSURE PROCEEDINGS
If the Borrower wishes to institute collection or foreclosure
proceedings with respect to a Pledged Mortgage Loan, it shall substitute other
Collateral or pay down the amount outstanding under such Pledged Mortgage Loan
so that it is entitled pursuant to the terms of the Credit Agreement and/or this
Agreement to a release of such Pledged Mortgage Loan. If the Borrower does not
own sufficient other Collateral to obtain a release of such Pledged Mortgage
Loan, then so long as an Event of Default or a Default has not occurred and is
continuing, the Agent, upon written request of the Borrower, will deliver, upon
such terms and conditions as the Agent in its sole discretion may establish, to
an attorney at law, as the agent of the Agent and the Lenders, to the extent
necessary for the purpose of enabling said attorney to institute, in the name of
the Borrower or the Agent, or in their names or in the names of their nominees,
as the Agent may determine, collection and/or foreclosure proceedings on any
Pledged Mortgage Loan in default the following: (a) the promissory note or other
instrument evidencing such Pledged Mortgage Loan in default and (b) the mortgage
or deed of trust, if any, that secures such promissory note, or other Collateral
needed by said attorney in connection with such collection and/or foreclosure
proceedings in such manner and in such form as the Agent deems necessary or
desirable to preserve its security interests in such Collateral, provided such
Collateral and all proceeds of any such collection and/or foreclosure efforts
shall remain subject to this Agreement and the security interests granted herein
and all such proceeds shall be delivered to the Agent as and when and in the
form received to the extent required by the terms of the Credit Agreement. The
Borrower hereby covenants and agrees that, without first obtaining the prior
written consent of the Agent, it will not request or accept any discount on, or
any conveyance, endorsement, transfer or assignment of any right, title or
interest in and to any of the real, personal or mixed
E-97
properties sold, pledged, mortgaged, hypothecated, assigned, transferred, set
over or conveyed to the Agent as security for, any of the promissory notes or
other instruments or agreements which evidence Pledged Mortgage Loans in lieu of
foreclosure proceedings if, after giving effect to any such proposed
transaction, the Borrowing Base would be less than the aggregate unpaid
principal amount of the outstanding Loans and Swing-Line Loans. At such time as
such delivery of the Collateral is no longer required in connection with said
collection and/or foreclosure efforts, to the extent such Collateral has not
been released pursuant to this Agreement, the same shall be reassigned and
redelivered to the Agent.
Section 10. SALES AND RELEASES OF COLLATERAL
10.01 Redelivery of Collateral for Correction. If no Event of
Default or Default exists, the Agent may redeliver to the Borrower, for
correction, any instrument or document which constitutes or relates to any of
the Collateral; provided, that any such redelivery shall be made against a Trust
Receipt duly completed and executed by the Borrower requiring, within 20 days
after the redelivery thereof to the Borrower, the return to the Agent of each
such instrument and document. The Borrower shall deliver to the Agent each such
instrument and document as soon as it has completed the correction thereof and,
in any event, within 20 days after its receipt thereof.
10.02 Delivery for Sale of Pledged Mortgage Loans. If no Event
of Default or Default exists, the Borrower shall direct the Agent to, and the
Agent will, transmit on behalf of the Borrower Pledged Mortgage Loans,
accompanied by a duly completed and executed Bailee Letter, to an Investor who
has issued a Take-Out Commitment. All sale proceeds transferred to the Agent
pursuant to such Bailee Letter and all Mortgage Notes and other documents
returned to the Agent pursuant to such Bailee Letter shall remain a part of the
Collateral unless and until released pursuant to Section 10.04 of this Pledge
and Security Agreement. If required by the applicable Take-Out Commitment,
Pledged Mortgage Loans may be duly assigned of record to the issuer of such
Take-Out Commitment subject to reassignment if not purchased and with beneficial
title to any such assigned Pledged Mortgage Loans being subject to the
above-stated escrow condition. All Pledged Mortgage Loans which are so
transmitted or otherwise delivered but not paid for shall constitute Collateral
and shall, subject to the limits contained herein, be included in determining
the Borrowing Base. The Borrower further agrees that the initial certifications
and the settlements in connection with Fannie Mae, Freddie Mac and Ginnie Mae
pools are to be performed by the Agent or its designated agent. The proceeds
received by the Agent from the sale of any Pledged Mortgage Loans pursuant to
this Section 10.02 shall be deposited by the Agent in the Funding and Settlement
Account and shall be promptly applied to the payment of principal of the Notes;
provided, however, that if an Event of Default has occurred and is continuing,
such proceeds shall be applied in accordance with Section 17 hereof.
10.03 Formation of Pools. (a) With respect to each Pledged
Mortgage Loan which is intended for inclusion in a pool of Mortgage Loans
backing Ginnie Mae Securities, the Borrower shall enter into and conform with
such custody and related agreements and procedures as are reasonably required by
the Agent to permit the
E-98
creation, transmittal to, maintenance and sale of Ginnie Mae Securities in both
certificated and uncertificated book-entry form. The Agent may enter into such
agreements as may be necessary or appropriate in the sole discretion of the
Agent in order to effectuate the issuance, maintenance and transfer of such
Ginnie Mae Securities under any such book-entry system or program.
(b) With respect to each Pledged Mortgage Loan which is
intended for inclusion in a Fannie Mae or Freddie Mac Mortgage Loan pool to back
book-entry Fannie Mae Securities or Freddie Mac Securities, the Borrower agrees
that it will enter into and conform to such agreements and procedures as are
established by the Agent in its reasonable judgment from time to time for the
delivery of Pledged Mortgage Loans to a Freddie Mac or Fannie Mae pool custodian
(or directly to Freddie Mac or Fannie Mae, as the case may be) and the issuance,
maintenance and transfer of Freddie Mac Securities or Fannie Mae Securities
under such book-entry system or program. The Agent may enter into such
agreements as may be necessary or appropriate in the reasonable judgment of the
Agent in order to effectuate the issuance, maintenance and transfer of such
Fannie Mae Securities or Freddie Mac Securities under such book-entry system or
program.
(c) The Agent or its designated agent will use its best
efforts to complete documents in a timely manner and otherwise to cooperate with
the Borrower in the issuance of Mortgage-backed Securities and the formation of
pools of Mortgage Loans as contemplated by this Section 10.03, subject, however,
to the provisions of Sections 6 and 20 hereof, and will cause all Mortgage Loans
delivered to a pool custodian to be accompanied by a Bailee Letter. The Agent
and its designated agent shall be entitled to rely on the written instructions
of the Borrower and the written instructions and published guidelines of the
applicable Investor in this regard and shall have no obligation to act in the
absence of such written instructions or published guidelines.
10.04 Release of Particular Collateral. (a) If no Event of
Default or Default has occurred which is continuing, the Agent shall, at the
written request of the Company, release its security interest in any item of
Collateral specified by the Company in such written request, provided that,
after giving effect to such requested release, the Borrowing Base (including
therein the Collateral Value of any Collateral given in substitution for the
Collateral to be released) shall not be less than the aggregate principal amount
outstanding under the Notes. If the Company requests and is entitled to a
release of a Pledged Mortgage Loan pursuant to the preceding sentence, the Agent
shall promptly redeliver to the Company the Mortgage Note evidencing such
Pledged Mortgage Loan, with any previous endorsement or assignment, without
recourse upon or representation or warranty by the Agent or the Lenders, of any
part of the Collateral that secures such Mortgage Note.
(b) Whether or not the Borrower, by terms of this Section
10.04, is entitled to a release of the Agent's security interest in the
Collateral, the Agent shall release such security interest in any Pledged
Mortgage Loan to the extent necessary to permit the Borrower to execute any full
or partial release of any mortgage, deed of trust, security agreement, financing
statement or other security instrument or deed which the
E-99
Borrower is contractually obligated to release upon payment thereof, provided
the Borrower arranges to have such payment remitted directly by the Obligor or
closing agent to the Agent for application upon the unpaid principal amount
outstanding under the Notes, as provided in the Credit Agreement, unless an
Event of Default has occurred which is continuing, in which case such payment
shall be applied as provided in Section 17 hereof.
(c) Upon the Agent's receipt of the proceeds from the sale of
a Pledged Mortgage Loan delivered to an Investor pursuant to Section 10.02
hereof, the security interest of the Agent in such Pledged Mortgage Loan and in
the Mortgage Note and other documents related thereto shall terminate without
further action by the Agent, provided that (i) the Agent's security interest in
the proceeds of such Pledged Mortgage Loan, Mortgage Note and other documents
shall continue in full force and effect, and (ii) the Agent shall be authorized
to execute any release required in order to obtain such proceeds.
(d) Upon the Agent's receipt of the proceeds from the sale of
a Related Mortgage-backed Security representing an interest in, or which is
secured by, Pledged Mortgage Loans delivered pursuant to Section 10.03 hereof,
the security interest of the Agent in such Related Mortgage-backed Security and
in such Pledged Mortgage Loans shall terminate without further action by the
Agent, provided that (i) the Agent's security interest in the proceeds of such
Mortgage-backed Security shall continue in full force and effect, and (ii) the
Agent shall be authorized to execute any release required in order to obtain
such proceeds.
Section 11. FURTHER ASSURANCES
The Borrower, upon the request of the Agent, will promptly
correct any patent defect, error or omission which may be discovered in the
contents of this Agreement or in the execution hereof and will do such further
acts and things, and execute, acknowledge, endorse and deliver such further
instruments, agreements, schedules and certificates, including, but not limited
to, notes, mortgages, deeds of trust, assignments, chattel mortgages, security
agreements and financing statements covering the title to any real, personal or
mixed property now owned or hereafter acquired by the Borrower and now or
hereafter constituting Collateral, schedules and certificates respecting all or
any of the Collateral at the time subject to the security interest hereunder,
the items or amounts received by the Borrower in full or partial payment, or
otherwise as proceeds of any of the Collateral and supplements to and amendments
of this Agreement, that the Agent may at any time and from time to time
reasonably request in connection with the administration or enforcement of this
Agreement or related to the Collateral or any part thereof or in order to assure
and confirm unto the Agent the rights, powers and remedies hereunder or to
subject all of the real, personal or mixed properties now owned or hereafter
acquired by the Borrower and now or hereafter constituting Collateral to, or to
confirm or clearly establish that all of said properties are subject to and
encumbered by, a lien to secure the due and punctual payment of the Obligations.
Any such instrument, agreement, schedule or certificate shall be executed by a
duly
E-100
authorized officer of the Borrower and shall be in such form and detail as the
Agent may reasonably specify.
The Borrower will do all acts and things, and will execute and
file or record all instruments (including mortgages, pledges, assignments,
security agreements, financing statements, amendments to financing statements,
continuation statements, etc.) required or reasonably requested by the Agent to
establish, perfect, maintain and continue the perfection and priority of the
security interest of the Agent, for the benefit of the Lenders, in the
Collateral and will pay the costs and expenses of: all filings and recordings,
including taxes thereon; all searches necessary or reasonably deemed necessary
by the Agent to establish and determine the validity and the priority of such
security interest of the Agent; and also to satisfy all other liens which in the
reasonable opinion of the Agent might prejudice, imperil or otherwise affect the
Collateral or the existence or priority of such security interest. A carbon,
photographic or other reproduction of this Agreement or of a financing statement
shall be sufficient as a financing statement and may be filed in lieu of the
original in any or all jurisdictions which accept such reproductions.
Section 12. COVENANTS OF THE BORROWER
12.01 Covenants Generally. So long as this Agreement shall
remain in effect, the Borrower will (a) defend the right, title and interest of
the Agent, for the benefit of the Lenders, in the Collateral against the claims
and demands of all Persons; (b) not amend, modify, or waive any of the terms and
conditions of, or settle or compromise any claim in respect of, any Collateral
in a manner which would materially adversely affect the interests of the Agent,
for the benefit of the Lenders; (c) not sell, assign, transfer, or otherwise
dispose of, or grant any option with respect to, or pledge or otherwise
encumber, or release, any of the Collateral or any interest therein except in a
manner whereby the Agent alone would be entitled to receive the proceeds
therefrom; (d) notify the Agent monthly of any default that continues beyond any
applicable notice or grace period under any Pledged Mortgage Loan which has
Collateral Value; (e) maintain, or cause to be maintained, in its chief
executive office or in the offices of a computer service bureau approved by the
Agent, for the processing of Mortgage Notes and Mortgage-backed Securities,
originals, or copies if the original has been delivered to the Agent, of its
Mortgage Notes and all files, surveys, certificates, correspondence, appraisals,
computer programs, tapes, discs, cards, accounting records and other records,
information and data, relating to the Collateral, and give the Agent written
notice of the place where such records, information and data will be maintained;
and (f) maintain sufficient documentary evidence in its files with respect to
each Pledged Mortgage Loan to substantiate compliance with all applicable
federal, state and local laws, regulations and rules, including but not limited
to those specified in Section 5(h) hereof.
12.02 MERS Covenants. So long as this Agreement shall remain
in effect, the Borrower will (a) be a "Member" (as defined in the MERS
Agreements) of MERSCORP, (b) maintain the Electronic Tracking Agreement in full
force and effect and timely perform all of its obligations thereunder, (c)
provide the Agent with copies of any new MERS Agreement or any amendment,
supplement or other modification of any
E-101
MERS Agreement (other than the Electronic Tracking Agreement), (d) not amend,
terminate or revoke, or enter into any agreement that contradicts, the
Electronic Tracking Agreement, (e) identify to the Agent each Pledged Mortgage
Loan that is registered in the MERS System, at the earlier of the time it is so
registered or the time it is pledged or deemed pledged hereunder, as so
registered, (f) at any time at the request of the Agent, take such actions as
may be necessary to register the pledge of any Pledged Mortgage Loan to the
Agent on the MERS System, (g) at the request of the Agent, take such actions as
may be requested by the Agent to (i) transfer beneficial ownership of any
Pledged Mortgage Loan to the Agent on the MERS System, or (ii) de-register or
re-register any Pledged Mortgage Loan on, or withdraw any Pledged Mortgage Loan
from, the MERS System, (h) provide the Agent with copies of any or all of the
following reports with respect to the Pledged Mortgage Loans registered on the
MERS System, at the request of the Agent: (v) Co-existing Security Interest
Reports, (w) Release of Security Interest by Interim Funding Reports, (x) Paid
in Full Verification Reports, (y) Interim Funding Rejects Reports, and (z) such
other reports as the Agent may request to verify the status of any Pledged
Mortgage Loan on the MERS System, (i) notify the Agent of any withdrawal or
deemed withdrawal of the Borrower's membership in the MERS System or any
deregistration of any Pledged Mortgage Loan previously registered on the MERS
System, and (j) obtain the prior written consent of the Majority Lenders before
entering into an electronic tracking agreement (other than the Electronic
Tracking Agreement) with any other Person.
Section 13. AGENT APPOINTED ATTORNEY-IN-FACT
Effective upon the occurrence and continuation of an Event of
Default or a Default, the Borrower hereby appoints the Agent the Borrower's
attorney-in-fact, with full power of substitution, to submit any Pledged
Mortgage Loan or Mortgage-backed Security which constitutes Collateral and
related documents to a purchaser under a Take-Out Commitment and for the purpose
of carrying out the provisions of this Agreement and taking any action and
executing in the name of the Borrower without recourse to the Agent or any
Lender any instrument, including, but not limited to, the instruments described
in Section 2 hereof, which the Agent may deem necessary or advisable to
accomplish the purpose hereof, which appointment is irrevocable and coupled with
an interest. Without limiting the generality of the foregoing, the Agent shall
have the right and power to receive, endorse and collect checks and other orders
for the payment of money made payable to the Borrower representing any payment
or reimbursement made under, or pursuant or with respect to, the Collateral or
any part thereof and to give full discharge for the same. Whether or not an
Event of Default or a Default shall have occurred or be continuing, the Borrower
hereby authorizes the Agent in its discretion at any time and from time to time
to (i) complete or cause to be completed any assignment of real estate mortgage
or deed of trust which heretofore was, or hereafter at any time may be, executed
and delivered by the Borrower to the Agent so that such assignment describes a
real estate mortgage or deed of trust which is security for any Pledged Mortgage
Loan now or hereafter at any time constituting Collateral and (ii) complete or
cause to be completed any other assignment or endorsement that was delivered in
blank hereunder.
E-102
Section 14. EVENTS OF DEFAULT; REMEDIES
If one or more Events of Default shall occur and be
continuing, then the Agent, in addition to any and all other rights and remedies
which it may then have hereunder, under the Credit Agreement or any other Loan
Document, or under any other instrument, or which the Agent, the Lenders or the
Majority Lenders may have at law, in equity or otherwise, may, at its option,
(a) in the name of the Borrower, or otherwise, demand, collect, receive and
receipt for, compound, compromise, settle and give acquittance for, and
prosecute and discontinue any suits or proceedings in respect of any or all of
the Collateral; (b) take any action which the Agent may deem necessary or
desirable in order to realize on the Collateral, including, without limitation,
the power to perform any contract, endorse in the name of the Borrower without
recourse to the Borrower any checks, drafts, notes or other instruments or
documents received in payment of or on account of the Collateral; (c) enter upon
the premises where any of the Collateral not in the possession of the Agent is
located and take possession thereof and remove the same, with or without
judicial process; (d) at the direction of the Majority Lenders, reduce the
claims of the Agent and the Lenders to judgment or foreclosure or otherwise
enforce the security interests herein granted and assigned, in whole or in part,
by any available judicial procedure; (e) after notification, if any, provided
for herein (the Borrower agrees that, to the extent notice of sale shall be
required at law, at least ten days' prior notice to the Borrower of the time and
place of any public sale or the time after which any private sale is to be made
shall constitute reasonable notification), sell, lease, or otherwise dispose of,
at the office of the Agent, on the premises of the Borrower, or elsewhere, all
or any part of the Collateral, in its then condition or following any
commercially reasonable preparation or processing, and any such sale or other
disposition may be as a unit or in parcels, by public or private proceedings,
and by way of one or more contracts at any exchange, broker's board, or at any
of the Agent's offices or elsewhere, for cash, or credit, or for future
delivery, without assumption of any credit risk, and upon such other terms as
the Agent may deem commercially reasonable (it being agreed that the sale of any
part of Collateral shall not exhaust the power of sale granted hereby, but sales
may be made from time to time, and at any time, until all the Collateral has
been sold or until all Obligations have been fully paid and performed, and it
being further agreed that the Agent shall not be obligated to make any sale of
Collateral regardless of notice of sale having been given, and that the Agent
may adjourn any public or private sale from time to time by announcement at the
time and place fixed therefor, and such sale may, without further notice, be
made at the time and place to which it was adjourned), and at any such sale it
shall not be necessary to exhibit any of the Collateral; (f) at its discretion,
surrender any policies of insurance on the Collateral consisting of real or
personal property owned by the Borrower and receive the unearned premiums, and
in connection therewith the Borrower hereby appoints the Agent as the agent and
attorney-in-fact for the Borrower to collect such premiums; (g) at its
discretion, retain the Collateral in satisfaction of the Obligations whenever
the circumstances are such that the Agent and the Lenders are entitled to do so
under the Code or otherwise; (h) exercise any and all other rights, remedies and
privileges which the Agent may have under this Agreement, or any of the other
promissory notes, assignments, mortgages, deeds of trust, chattel mortgages,
security agreements, transfers of lien, and any other instruments, documents,
and agreements executed and delivered pursuant to the terms hereof or
E-103
pursuant to the terms of the Credit Agreement; and (i) exercise any other remedy
available to it as a secured party under the Uniform Commercial Code of the
State of Minnesota or of any other pertinent jurisdiction (the "Code"). The
Borrower acknowledges and agrees that (x) a private sale of the Collateral
pursuant to any Take-Out Commitment shall be deemed to be a sale of the
Collateral in a commercially reasonable manner and (y) the Collateral is
intended to be sold or refinanced and that none of the Collateral is a type or
kind intended by the Borrower to be held for investment or any purpose other
than for sale.
Section 15. WAIVERS
The Borrower, for itself and all who may claim under the
Borrower, as far as the Borrower now or hereafter lawfully may, also waives all
right to have all or any portion of the Collateral marshalled upon any
foreclosure hereof and agrees that any court having jurisdiction over this
Agreement may order the sale of all or any portion of the Collateral as an
entirety. Any sale of, or the grant of options to purchase (for the option
period thereof or after exercise thereof), or any other realization upon, all or
any portion of the Collateral under clause (e) of Section 14 hereof shall
operate to divest all right, title, interest, claim and demand, either at law or
in equity, of the Borrower in and to the Collateral so sold, optioned or
realized upon, and shall be a perpetual bar both at law and in equity against
the Borrower and against any and all persons claiming or attempting to claim the
Collateral so sold, optioned or realized upon or any part thereof, from, through
and under the Borrower. No delay on the part of the Agent in exercising any
power of sale, lien, option or other right hereunder and no notice or demand
which may be given to or made upon the Borrower with respect to any power of
sale, lien, option or right hereunder shall constitute a waiver thereof, or
limit or impair the right of the Agent or any Lender to take any action or to
exercise any power of sale, lien, option or any other right under this Agreement
or the Credit Agreement, or otherwise, nor shall any single or partial exercise
thereof, or the exercise of any power, lien, option or other right under this
Agreement or otherwise, all without notice or demand (except as otherwise
provided by the terms of this Agreement), prejudice their rights against the
Borrower in any respect. Each and every remedy given the Agent or the Lenders
shall, to the extent permitted by law, be cumulative and shall be in addition to
any other remedy given hereunder or now or hereafter existing at law or in
equity or by statute.
Section 16. NOTICES. Reasonable notification of the time and place of
any public sale of any Collateral, or reasonable notification of the time after
which any private sale or other intended disposition of any of the Collateral is
to be made shall be sent to the Company (with a copy to any applicable
Co-Borrower) and to any other person entitled under the Code to notice;
provided, that if any of the Collateral threatens to decline speedily in value,
or is of a type customarily sold on a recognized market, the Agent may sell or
otherwise dispose of the Collateral without notification, advertisement, or
other notice of any kind. The Borrowers acknowledge and agree that Mortgage
Loans are property of a type subject to widely distributed standard price
quotations and Mortgage-backed Securities are property of a type ordinarily sold
on a recognized market, and agrees that the Agent may purchase Mortgage Loans
and Mortgage-backed Securities at a private sale thereof and may sell
Mortgage-backed Securities without
E-104
providing prior notice thereof to the Borrower. It is agreed that notice sent or
given not less than ten (10) calendar days prior to the taking of the action to
which the notice relates is reasonable notification and notice of the purposes
of this Section 16. All notices and other communications provided for in this
Agreement shall be given to the parties at their respective addresses set forth
in the Credit Agreement or, as to each such party, at such other address as
shall be designated by such party in a written notice to the other parties in
accordance with the Credit Agreement. All such notices and other communications
shall be given by one or more of the means specified in Section 10.01 of the
Credit Agreement and, upon being so given, shall be deemed to have been given as
of the earliest time specified in said Section 10.01 for the means so used. Each
Co-Borrower hereby authorizes the Agent to send all notices of sale of any
Collateral to the Company, on behalf of such Co-Borrower, and the Company
undertakes to provide such notices to the applicable Co-Borrower(s).
Section 17. APPLICATION OF PROCEEDS
Until all Obligations owed to the Agent and the Lenders have
been paid in full, any and all proceeds ever received by the Agent from any sale
or other disposition of the Collateral, or any part thereof, or the exercise of
any other remedy pursuant to Section 8 hereof or by virtue of Section 14 hereof,
shall be applied by the Agent as follows:
First: ratably to the payment of the Agent fees and the costs
and expenses of the Agent and the Lenders in connection with
the enforcement of this Agreement (including, without
limitation, the sale or other disposition of the Collateral)
and the reasonable fees and out-of-pocket expenses of counsel
employed in connection therewith, to the payment of all costs
and expenses incurred by the Agent in connection with the
administration of this Agreement and to the payment of all
advances made by the Agent and the Lenders for the account of
the Borrower hereunder, to the extent that such costs,
expenses and advances have not been reimbursed to the Agent or
the Lenders, as the case may be;
Second: to the payment in full of the principal of, accrued
interest on and Balances Deficiency Fees with respect to
Swingline Loans;
Third: to the payment in full of the principal of, accrued
interest on and Balances Deficiency Fees and facility fees
with respect to the Loans and Commitments;
Fourth: to the payment in full of the other Obligations; and
Fifth: the balance (if any) of such proceeds shall be paid to
the Borrowers, their successors or assigns, or as a court of
competent jurisdiction may direct, provided, that if such
proceeds are not sufficient to satisfy the Obligations in
full, the Company and, to the extent provided in Section 10.20
of the Credit Agreement, each Co-Borrower, shall remain liable
to the Agent and the Lenders for any deficiency.
E-105
Section 18. INDEMNIFICATION AND COSTS AND EXPENSES
The Borrower will (a) pay all reasonable out-of-pocket
expenses, including, without limitation, any recording or filing fees, fees of
title insurance companies in connection with records or filings, costs of
mortgage insurance policies and endorsements thereof and mortgage registration
taxes (or any similar fees or taxes), incurred by the Agent and the Lenders in
connection with the enforcement and administration of this Agreement (whether or
not the transactions hereby contemplated shall be consummated), the Credit
Agreement and the other Loan Documents, the enforcement of the rights of the
Agent and the Lenders in connection with this Agreement, the Credit Agreement
and the other Loan Documents, including, without limitation, the reasonable fees
and disbursements of counsel for the Agent and the Lenders; (b) pay, and hold
the Agent and the Lenders harmless from and against, any and all present and
future stamp and other similar taxes with respect to the foregoing matters and
save the Agent and the Lenders harmless from and against any and all liabilities
with respect to or resulting from any delay in paying or omission to pay such
taxes; and (c) pay, and indemnify and hold harmless the Agent and the Lenders
from and against, any and all liabilities, obligations, losses, damages,
penalties, judgments, suits, costs, expenses and disbursements of any kind
whatsoever (the "Indemnified Liabilities") which may be imposed on, incurred by
or asserted against it in any way relating to or arising out of this Agreement,
the Credit Agreement, the other Loan Documents or any of the transactions
contemplated hereby or thereby, WHETHER OR NOT THE SAME ARE CAUSED BY THE SIMPLE
NEGLIGENCE OF THE AGENT OR ANY LENDER, unless the same are caused by the gross
negligence or willful misconduct of the Agent or any Lender, as the case may be.
The undertakings of the Borrower set forth in this Section 18 shall survive the
payment in full of the Obligations and the termination of this Agreement, the
Credit Agreement and the other Loan Documents.
Section 19. TERMINATION
This Agreement shall terminate when all the Obligations have
been fully paid and performed and the Commitments have expired, at which time
the Agent shall reassign and redeliver, without recourse upon, or representation
or warranty by, the Agent or the Lenders and at the expense of the Borrower, to
the Borrower, or to such other person or persons as the Borrower shall
designate, against receipt, such of the Collateral (if any) as shall not have
been sold or otherwise disposed of by the Agent pursuant to the terms hereof, of
the Credit Agreement or of the other Loan Documents, and shall still be held by
the Agent, together with appropriate instruments of reassignment and release;
provided, however, that this Agreement shall continue to be effective or be
reinstated, as the case may be, if at any time any payment of any of the
Obligations is rescinded or must otherwise be returned by the Agent, the Lenders
or any other Person upon the insolvency, bankruptcy or reorganization of the
Borrower or otherwise, all as though such payment had not been made.
Section 20. NON-ASSUMPTION OF LIABILITY; NO FIDUCIARY RESPONSIBILITY
E-106
Nothing herein contained shall relieve the Borrower from
performing any covenant, agreement or obligation on the part of the Borrower to
be performed under or in respect of any of the Collateral or from any liability
to any party or parties having an interest therein or impose any liability on
the Agent or the Lenders for the acts or omissions of the Borrower in connection
with any of the Collateral. The Agent and the Lenders shall not assume or become
liable for, nor shall any of them be deemed or construed to have assumed or
become liable for, any obligation of the Borrower with respect to any of the
Collateral, or otherwise, by reason of the grant to the Agent, for the benefit
of the Lenders, of security interests in the Collateral. While the Agent shall
use reasonable care in the custody and preservation of the Collateral as
provided in Section 6 hereof, the Agent shall not have any fiduciary
responsibility to the Borrower with respect to the holding, maintenance or
transmittal of the Collateral delivered hereunder.
Section 21. WAIVERS, ETC.
No failure on the part of the Agent to exercise and no delay
in exercising, any power or right hereunder, shall operate as a waiver thereof;
nor shall any single or partial exercise of any power or right preclude any
other or further exercise thereof or the exercise of any other power or right.
The remedies herein provided are cumulative and not exclusive of any remedies
provided by law. This Agreement may not be amended or waived except in
accordance with Section 10.02 of the Credit Agreement.
Section 22. GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY
TRIAL
THIS AGREEMENT SHALL BE A CONTRACT MADE UNDER AND GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAW, BUT NOT THE LAW OF
CONFLICTS, OF THE STATE OF MINNESOTA, WITHOUT GIVING EFFECT TO CONFLICT OF LAWS
PRINCIPLES THEREOF, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL
BANKS. THE BORROWER HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION
AND VENUE OF ANY MINNESOTA STATE OR FEDERAL COURT SITTING IN HENNEPIN OR RAMSEY
COUNTIES, STATE OF MINNESOTA, FOR ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT, THE NOTES AND THE OTHER LOAN DOCUMENTS, AND THE
BORROWER HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION
OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH MINNESOTA STATE COURT OR, TO
THE EXTENT PERMITTED BY LAW, IN SUCH FEDERAL COURT. THE BORROWER HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO, THE DEFENSE
OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF ANY SUCH ACTION OR PROCEEDING.
THE BORROWER HEREBY WAIVES PERSONAL SERVICE OF PROCESS AND CONSENTS THAT SERVICE
OF PROCESS UPON IT MAY BE MADE BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT
REQUESTED, AT ITS ADDRESS SPECIFIED OR DETERMINED IN ACCORDANCE WITH THE
PROVISIONS OF SECTION 8.02 OF THE CREDIT AGREEMENT, AND SERVICE SO MADE SHALL
E-107
BE DEEMED COMPLETED ON THE THIRD BUSINESS DAY AFTER SUCH SERVICE IS DEPOSITED IN
THE MAIL. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE AGENT, ANY LENDER OR ANY
OTHER INDEMNIFIED PERSON TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.
THE BORROWER AND THE AGENT HEREBY IRREVOCABLY WAIVE ALL RIGHT TO TRIAL BY JURY
IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM (WHETHER BASED UPON CONTRACT, TORT OR
OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
Section 23. MISCELLANEOUS
(a) Benefit of Agreement. This Agreement shall be binding upon
and inure to the benefit of the Borrower and the Agent and their
respective successors and assigns, and shall inure to the benefit of
the Lenders and their respective successors and assigns, except that
the Borrower may not assign or transfer any of its rights or
obligations under this Agreement without the prior written consent of
the Lenders.
(b) Survival of Representations, Warranties and Covenants. All
representations, warranties and covenants made by the Borrower to the
Agent or the Lenders in connection with this Agreement shall survive
the execution and delivery of this Agreement. All statements contained
in any certificate or other instrument delivered to the Agent or the
Lenders pursuant to this Agreement shall be deemed representations,
warranties and covenants hereunder of the Borrower.
(c) Headings. Section headings in this Agreement are for
convenience of reference only, and shall not govern the interpretation
of any of the provisions of this Agreement.
(d) Execution in Counterparts. This Agreement may be executed
in any number of counterparts, all of which taken together shall
constitute one and the same instrument and either of the parties hereto
may execute this Agreement by signing any such counterpart.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
E-108
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the day and year first above written.
DHI MORTGAGE COMPANY, LTD.
By___________________________
Its________________________
U. S. BANK NATIONAL
ASSOCIATION,
as Agent
By___________________________
Its________________________
E-109
ATTACHMENT 1 AMENDED AND RESTATED PLEDGE
AND SECURITY AGREEMENT
AGREEMENT TO PLEDGE
(SECURITY AGREEMENT AS PROVIDED FOR
BY THE UNIFORM COMMERCIAL CODE OF MINNESOTA)
For new value this day received, and as collateral security
for the payment of any and all indebtedness and liability of the undersigned
under that certain Amended and Restated Credit Agreement dated as of April 9,
2004 (as the same may be amended, restated, modified or supplemented and in
effect from time to time, the "Credit Agreement") between DHI Mortgage Company,
Ltd.(the "Company"), the "Co-Borrowers" (as defined in the Credit Agreement), if
any, party thereto, the "Lenders" (as defined in the Credit Agreement) party
thereto and U.S. Bank National Association, a national banking association, as
agent for the Lenders (together with any successor agent under the Pledge and
Security Agreement referred to below, the "Agent"), and consistent with the
terms of that certain Amended and Restated Pledge and Security Agreement dated
as of April 9, 2004 (as the same may be amended, restated, modified or
supplemented and in effect from time to time, the "Pledge and Security
Agreement") between the Company and the Agent and each Joinder Agreement between
the Agent, the Company and each Co-Borrower, the Borrower hereby pledges to the
Agent for the benefit of the Agent and the Lenders, creates and grants in favor
of the Agent, for the benefit of the Agent and the Lenders, a security interest
in and to the documents and Mortgage Loans described in the Loan Detail Listing
of even date herewith as electronically transmitted to the Agent and all
proceeds thereof. The Agent is authorized to reproduce the Loan Detail Listing
as electronically transmitted and attach the same hereto to identify the
documents subject to the pledge and security interest so granted. Each Loan
Detail Listing so transmitted and reproduced is made a part hereof.
Capitalized terms used herein which are defined in the Credit
Agreement or the Pledge and Security Agreement and not otherwise defined herein
shall have the meanings ascribed to such terms in the Credit Agreement or the
Pledge and Security Agreement.
The Borrower agrees to deliver the instruments and documents
described in Section 4.02 of the Pledge and Security Agreement to the Agent
within seven Business Days following the date hereof, as provided in said
Section 4.02. The Borrower further agrees to deliver the instruments and
documents described in Section 4.03 of the Pledge and Security Agreement to the
Agent within five Business Days after the Borrower's receipt of the Agent's
written request therefor.
The Borrower further agrees that the Agent does not assume any
duty or responsibility in respect of any of the documents described in each Loan
Detail Listing as electronically transmitted and made a part hereof, and that
the Agent does not waive any right of possession to any of such documents for
the failure to demand or receive such possession.
E-110
In connection with each such Mortgage Loan, the [COMPANY]
[CO-BORROWER] hereby certifies that the [COMPANY] [CO-BORROWER] has not pledged
or delivered, and will not, pledge or deliver, such Mortgage Loan, any
assignment thereof, or other instrument, document or paper related thereto to
any party other than the Agent, unless released to the [COMPANY] [CO-BORROWER]
and then only pursuant to the terms of such release.
The Borrower further agrees that this Agreement to Pledge
shall be binding upon and inure to the benefit of the legal representatives,
successors or assigns of the Borrower.
The Borrower further agrees that all rights, interests, duties
and liabilities arising hereunder shall be determined according to the laws of
the State of Minnesota, without giving effect to conflict of laws principles
thereof.
Dated as of ______________, ______.
[DHI MORTGAGE COMPANY, LTD.]
[CO-BORROWER]
By
Its
E-111
ATTACHMENT 2 TO
AMENDED AND RESTATED PLEDGE AGREEMENT
FORM OF BAILEE LETTER
[Letterhead of U.S. Bank National Association]
[Date]
[NAME OF CUSTODIAN], AS CUSTODIAN {INCLUDE IF APPLICABLE
FOR [NAME OF INVESTOR]
[ADDRESS OF CUSTODIAN]
[NAME AND ADDRESS OF INVESTOR] {INCLUDE IF NO CUSTODIAN
Re: Mortgage Loan No(s)._________
Seller: [DHI MORTGAGE COMPANY, LTD.] [NAME OF CO-BORROWER]
Ladies/Gentlemen:
Pursuant to the terms and conditions set forth below, we hereby deliver
to [____________________________, AS CUSTODIAN (IN SUCH CAPACITY, THE
"CUSTODIAN") FOR] _______________________________ (the "Investor"), with this
letter, the original executed promissory note(s) (the "Note(s)") evidencing the
mortgage loan(s) described on the schedule attached hereto (the "Loan(s)"). U.S.
Bank National Association, as agent for certain lenders (in such capacity, the
"Agent") has a perfected first lien security interest in the Loan(s) for the
benefit of such lenders pursuant to an Amended and Restated Pledge and Security
Agreement between the Agent and the Seller [AND A JOINDER AGREEMENT BETWEEN DHI
MORTGAGE COMPANY, LTD., THE AGENT AND THE SELLER]. The Agent expressly retains
and reserves all of its rights in the Loan(s), the Note(s) and all related
security instruments, files, and documents (the "Loan Documents") until the
Investor has paid the Agent the Warehouse Purchase Amount (as hereinafter
defined) for the Loan(s) in accordance with this letter ("this Bailee Letter").
By taking physical possession of this Bailee Letter, the Note(s) and
the other Loan Documents, [THE INVESTOR] [THE CUSTODIAN] hereby agrees:
(i) to hold in trust, as bailee for the Agent, the Note(s) and
all other Loan Documents which it receives related to the Loan(s),
until its status as bailee is terminated as set forth herein;
(ii) not to release or deliver, or authorize the release or
delivery of, the Note(s) or any other Loan Document to the Seller or
any other entity or person or take any other action with respect to the
Note(s) or any other Loan Document which release, delivery or
E-112
other action could cause the security interest of the Agent to become
unperfected or which could otherwise jeopardize the perfected security
interest of the Agent in the Loan(s);
(iii) in the case of any Note(s) that are endorsed in blank,
not to complete such blank endorsements unless and until (A) the
Loan(s) evidenced by such Note(s) have been accepted for purchase by
the Investor and (B) the Warehouse Purchase Amount has been irrevocably
paid to the Agent in accordance with the terms hereof;
(iv) to return the Note(s) and any related Loan Documents
immediately to the Agent (A) upon receipt of a written request by the
Agent or (B) in the event that the Note(s) require completion and/or
correction;
(v) not to honor any requests or instructions from the Seller
relating to any Note (other than for correction), or any other
documents relating thereto (other than for correction or replacement
thereof or to supplement such documents);
(vi) promptly upon the Investor's acceptance or rejection of
the Loan(s) for purchase, and in any event within forty-five (45) days
after the date of delivery of this Bailee Letter, to either (A) remit
the Warehouse Purchase Amount to the Agent or (b) return the Notes and
any related Loan Documents to the Agent;
(vii) to deliver, or to cause to be delivered, the Warehouse
Purchase Amount or the Notes and related Loan Documents, as the case
may be, only to the Agent pursuant to the terms set forth below and to
honor a change in such terms only upon receipt of written instructions
from the Agent; and
(viii) that any interest it may have in the Loan(s), the
Note(s) and/or the Loan Documents, including without limitation any
claim of setoff it may at any time have, is subject to and subordinate
to the security interest of the Agent in the Loan(s), the Note(s) and
the other Loan Document(s) and that it will not exercise any right with
respect to the Loan(s), the Note(s) or the other Loan Documents without
the prior written consent of the Agent.
Please note that should the Investor remit the Warehouse Purchase
Amount to any other entity or person, the Agent will not consider the Warehouse
Purchase Amount to have been paid and will not release its security interest or
terminate the responsibilities of the [INVESTOR] [CUSTODIAN] as bailee for the
Agent until the Warehouse Purchase Amount has been properly remitted to the
Agent as set forth herein.
The Agent agrees that its security interest in the Loan(s) shall be
fully released and the responsibilities of the [INVESTOR] [CUSTODIAN] as bailee
shall terminate upon the Investor's irrevocable payment to the Agent of an
amount (the "Warehouse Purchase Amount") equal to the greater of (1) the
purchase price for the Loan(s) agreed to by the Investor and the Seller and (2)
$________, which is the aggregate collateral value assigned by the Agent to the
Loan(s). All payments by the Investor shall be remitted via federal funds
pursuant to the following wire transfer instructions:
E-113
Receiving Bank: U.S. Bank National Association
Address: Minneapolis, Minnesota
ABA Number: 091000022
Account Name: DHI Mortgage Company, Ltd.
Funding and Settlement Account
Account Number: 104756234365
Note(s) and other Loan Documents which are to be returned to the Agent
should be delivered, by overnight air courier, to:
U.S. Bank National Association
Mortgage Banking Services Division
U.S. Bancorp Center - BC-MN-HO3B
800 Nicollet Mall
Minneapolis, Minnesota 55402
If you have any questions, please address your inquiries to Jeannine L.
Coyne, Mortgage Banking Officer of the Agent, whose phone number is (612)
303-3958 or Kathleen M. Connor, Vice President, whose phone number is (612)
303-3581.
We request that you acknowledge receipt of this Bailee Letter by
signing in the space provided at the foot of the enclosed counterpart hereof and
returning it to the Agent at the address set forth above (but your failure to do
so in no way nullifies your agreements resulting from your acceptance of the
enclosed Note(s), as set forth in this Bailee Letter).
In the event of any inconsistency between the provisions of this Bailee
Letter and the provisions of any other instrument or document delivered by the
Agent to the Investor [OR THE CUSTODIAN] with this letter or in connection with
the Loan(s), including, without limitation, any "release" or similar document,
the provisions of this Bailee Letter shall control.
U.S. BANK NATIONAL ASSOCIATION,
as Agent
By
Its
E-114
Receipt acknowledged:
[__________________________, {include if no Custodian
AS INVESTOR
BY________________________
TITLE ______________________
DATE _____________
[__________________________, {include if applicable
AS CUSTODIAN
BY________________________
TITLE ______________________
DATE _____________
Enclosures
cc: [NAME AND ADDRESS OF {INCLUDE IF LETTER IS ADDRESSED
INVESTOR] TO CUSTODIAN
E-115
ATTACHMENT 3(a) TO AMENDED AND RESTATED PLEDGE AND SECURITY AGREEMENT
MORTGAGE LOAN DETAIL LISTING
(Transmission of the following data fields)
MORTGAGE LOAN INFORMATION
Loan Number
Borrower First and Last Name
Property Address
City
State
Zipcode
Product Type FHA, VA, Conventional, HELOC
Property Type Condo, Manufactured, Multifamily, PUD
Amortization Type: ARM, Balloon,
Interest Rate
Term
Lien Position First or Second
Note Date
Note Amount
Unpaid Principal Balance Required for HELOCs
FICO Score
Investor Name
Investor Commitment Price
Mers Identification Number
WIRE TRANSFER INFORMATION
Receiving Bank Name
ABA Number
Dollar Amount of Wire
Crediting Account Name
Crediting Account Number
Reference Information
E-116
Attachment 3(b) to Amended and Restated Pledge & Security Agreement
REQUEST TO WAREHOUSE LOANS
(date)
PLEASE TRANSFER FUNDS $_________
TOTALING
From our Collateral Account (Acct#)
To our Operating Account (Acct#)
Listed below are loans (with detail) that we
wired from
our Operating Account and now should be
warehoused.
BRANCH WAREHOUSE MORTAGAGE
INTEREST RATE LOAN TYPE LIEN TYPE LOAN NUMBER NUMBER BORROWER'S NAME AMOUNT ** LOAN AMOUNT WIRE AMOUNT DATE
- ------------- --------- --------- ----------- ------ --------------- --------- ----------- ----------- ----
TOTALS
** Please note that the Warehouse Amount is 98% of the Loan Amount or 98% of the
Investor Amount, whichever is less.
E-117
Thank you,
Clay Allen
Cash Manager
DHI Mortage Company
E-118
ATTACHMENT 4
TRANSMITTAL LETTER
WAREHOUSE COLLATERAL PACKAGE
BORROWER'S NAME: _______________________________________________________________
LOAN #: ________________________________________________________________________
LOAN TYPE: _____________________________________________________________________
NOTE DATE: _____________________________________________________________________
PRINCIPAL AMOUNT: ______________________________________________________________
INTEREST RATE: _________________________________________________________________
TERM: __________________________________________________________________________
Assemble in the following order in a manila file folder. Print borrower last
name & loan # on the tab.
________ ORIGINAL NOTE - ENDORSED IN BLANK AND APPLICABLE ADDENDUMS
________ CERTIFIED COPY OF THE BORROWER'S POWER OF ATTORNEY (IF APPLICABLE)
________ CERTIFIED COPY OF THE DEED OF TRUST/MORTGAGE AND APPLICABLE RIDERS
________ ORIGINAL EXECUTED ASSIGNMENT (IN BLANK) IN RECORDABLE FORM, IF NOT MERS
REGISTERED
________ TWO CERTIFIED COPIES OF EACH INTERVENING ASSIGNMENT (IF APPLICABLE)
We hereby certify that this loan is pledged to U.S. Bank National Association,
as Agent, in accordance with the Pledge and Security Agreement between us and
U.S. Bank National Association. Capitalized terms used herein have the meanings
ascribed thereto in said Credit Agreement.
E-119
We also certify that this loan is subject to a Take-Out Commitment, and certify
that sufficient fire and extended insurance coverage is in effect and will be
maintained on the property. All other documents pertaining to this loan will be
held and maintained by us for U.S. Bank National Association, as Agent, for the
Lenders.
DHI MORTGAGE COMPANY, LTD.
_____________________Regional Closing Center
Phone: (512) 502-0545 Fax: (512) 533-1569
Forward overnight to:
U.S. Bank National Association
Mortgage Banking Services
800 NICOLLET MALL - BC-MN-H03B
Minneapolis, MN 55402-7020
Attention: Jennifer Jacobson
(612) 303-3545
Note: If any errors, U.S. Bank will fax a list daily to the Regional Closing
Center showing any loans where documents need to be corrected.
E-120
ATTACHMENT 5 TO
AMENDED AND RESTATED PLEDGE AND SECURITY AGREEMENT
TRUST RECEIPT
TEMPORARY RELEASE OF COLLATERAL
The undersigned hereby acknowledges receipt this _____ day of
____________, _____, from U.S. Bank National Association(the "Agent") of the
following described property (hereinafter called "Collateral"):
Loan # _________ Mortgagor Name: _______________________
The undersigned represents, warrants and agrees that:
1. The undersigned has requested and obtained possession of the Collateral from
the Agent for one of the purposes set forth below and for no other purpose:
Correction of: __________________________________
2. The Collateral and the proceeds thereof are and will remain subject to the
security interest held by the Agent and the undersigned will keep the Collateral
and any such proceeds segregated and identifiable and free and clear of all
liens, charges and encumbrances.
3. The Collateral will be redelivered to the Agent or its designee as soon as
the purpose for which possession was taken has been accomplished, and in any
event within twenty (20) days from the date of taking possession.
4. In the event of any default in the performance of any term or condition of
this Trust Receipt, all or any part of the indebtedness secured by the
Collateral may be declared immediately due and payable without notice or demand.
5. Additional limitations, if any:
[DHI MORTGAGE COMPANY, LTD.]
[CO-BORROWER]
By
Its
E-121
Receipt acknowledged:
[_______________________,
AS INVESTOR
BY
TITLE
DATE ]
Enclosures
E-122
Attachment 6
Official name in various states
STATE NAME STATE ID CLOSING DOC NAME
Alabama AL DHI Mortgage Company, LTD.
Arizona AZ DHI Mortgage Company, LTD., Limited Partnership
California CA DHI Mortgage Company, LTD., L.P.
Colorado CO DHI Mortgage Company, LTD.
Florida FL DHI Mortgage Company, LTD.
Georgia GA Awaiting final name notification
Hawaii HI DHI Mortgage Company, LTD.
Illinois IL DHI Mortgage Company, Ltd.
Maryland MD DHI Mortgage Company, LTD.
Minnesota MN DHI Mortgage Company Limited Partnership
New Mexico NM DHI Mortgage Company, LTD.
North Carolina NC DHI Mortgage Company, Limited Partnership
Oregon OR DHI Mortgage Company, LTD., Limited Partnership
South Carolina SC DHI Mortgage Company, LTD.
Texas TX DHI Mortgage Company, LTD.
Virginia VA Awaiting final name notification
Wisconsin WI DHI Mortgage Company Limited Partnership
E-123
TABLE OF CONTENTS
Page
----
ARTICLE I 1
Section 1.01 Certain Definitions 1
Section 1.02 Other Definitional Provisions 15
Section 1.03 Exhibits and Schedules 15
Section 1.04 Calculations and Determinations 15
ARTICLE II 15
Section 2.01 Commitments and Discretionary Swingline Commitment 16
Section 2.02 Promissory Notes 16
Section 2.03 Obtaining Loans; Refinancing of Swingline Loans 16
Section 2.04 Interest; Balances Deficiency Fees; Continuations and Conversions 19
Section 2.05 Fees 21
Section 2.06 Mandatory Repayments 21
Section 2.07 Payments to Lenders 21
Section 2.08 Increased Capital Requirements 22
Section 2.09 Provisions Relating to LIBOR Rate Advances and Balance Funded Rate Advances 23
ARTICLE III 24
Section 3.01 Initial Borrowing 24
Section 3.02 All Borrowings 25
ARTICLE IV 28
Section 4.01 Organization and Good Standing 28
Section 4.02 Authorization and Power 28
Section 4.03 No Conflicts or Consents 28
Section 4.06 Financial Condition of the Borrowers 29
Section 4.07 Full Disclosure 29
Section 4.08 No Default 29
Section 4.09 No Litigation 29
Section 4.10 Taxes 30
Section 4.11 Principal Office, etc 30
Section 4.12 Compliance with ERISA 30
Section 4.13 Subsidiaries 30
Section 4.14 Indebtedness 30
E-72
Section 4.15 Permits 30
Section 4.16 Status Under Certain Federal Statutes 30
Section 4.17 No Approvals Required 31
Section 4.18 Individual Mortgage Loans 31
Section 4.19 Year 2000 Compliance 32
ARTICLE V 32
Section 5.01 Financial Statement and Reports 33
Section 5.02 Taxes and Other Liens 34
Section 5.03 Maintenance 34
Section 5.04 Further Assurances 34
Section 5.05 Reimbursement of Expenses 34
Section 5.06 Insurance 35
Section 5.07 Accounts and Records 35
Section 5.08 Right of Inspection 35
Section 5.09 Notice of Certain Events 36
Section 5.10 Performance of Certain Obligations and Information Regarding Investors. 36
Section 5.11 Use of Proceeds; Margin Stock 36
Section 5.12 Notice of Default 36
Section 5.13 Compliance with Loan Documents 36
Section 5.14 Operations and Properties 36
Section 5.15 Year 2000 Compliance 37
ARTICLE VI 37
Section 6.01 No Merger 37
Section 6.02 Limitation on GAAP Indebtedness and Contingent Indebtedness 37
Section 6.03 Business 37
Section 6.04 Liquidations, Dispositions of Substantial Assets 38
Section 6.05 Loans, Advances, and Investments 38
Section 6.06 Use of Proceeds. 38
Section 6.07 Actions with Respect to Mortgage Collateral 39
Section 6.08 Transactions with Affiliates 39
Section 6.09 Liens 39
Section 6.10 ERISA Plans 39
Section 6.11 Change of Principal Office; Fiscal Year 39
Section 6.12 Limitation on Distributions and Redemptions 40
Section 6.13 Tangible Net Worth 40
Section 6.14 Tangible Net Worth Ratio 40
Section 6.15 Net Income 40
Section 6.16 Custodian 40
ARTICLE VII 40
E-73
Section 7.01 Nature of Event 40
Section 7.02 Default Remedies 42
ARTICLE VIII 43
Section 8.01 Indemnification 43
Section 8.02 Limitation of Liability 43
ARTICLE IX 43
Section 9.01 Appointment and Authorization 43
Section 9.02 Note Holders 44
Section 9.03 Consultation With Counsel 44
Section 9.04 Documents 44
Section 9.05 Agent and Affiliates 44
Section 9.06 Action by Agent 44
Section 9.07 Credit Analysis 45
Section 9.08 Notices of Event of Default, etc 45
Section 9.09 Indemnification 45
Section 9.10 Payments 46
Section 9.11 Sharing of Set-Offs and Other Payments 46
Section 9.12 Successor Agent 46
Section 9.13 Notice of New Investors 47
ARTICLE X 47
Section 10.01 Notices 47
Section 10.02 Amendments, Etc 48
Section 10.03 Invalidity 49
Section 10.04 Survival of Agreements 49
Section 10.05 Renewal, Extension or Rearrangement 49
Section 10.06. Waivers 49
Section 10.07 Cumulative Rights 49
Section 10.08 Construction 49
Section 10.09 Limitation on Interest 50
Section 10.10 Bank Accounts; Offset 50
Section 10.11 Assignments, Participations, Commitment Amount Increases and New Lenders 51
Section 10.12 Exhibits 52
Section 10.13 Titles of Articles, Sections and Subsections 53
Section 10.14 Counterparts 53
Section 10.15 ENTIRE AGREEMENT 53
Section 10.16 Termination; Limited Survival 53
Section 10.17 Confidentiality of Information 53
SECTION 10.18 JURY WAIVER 53
E-74
CREDIT AGREEMENT
DHI MORTGAGE COMPANY, LTD.
the Company,
U.S. BANK NATIONAL ASSOCIATION
as Agent and a Lender
and
the other Lenders referred to herein
April 9, 2004
E-75