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EXHIBIT 10.33
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LENDING AND CREDIT SUPPORT AGREEMENT
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Dated as of April 1, 1998
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RWT HOLDINGS, INC.
REDWOOD RESIDENTIAL FUNDING, INC.
REDWOOD COMMERCIAL FUNDING, INC.
REDWOOD FINANCIAL SERVICES, INC.
as Borrowers
and
REDWOOD TRUST, INC.
as Lender
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TABLE OF CONTENTS
Page
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Section 1. Definitions and Accounting Matters......................................
1.01 Certain Defined Terms............................................
1.02 Accounting Terms and Determinations..............................
Section 2.A. Loans, Notes and Prepayments............................................
2.01 Loans ..........................................................
2.02 Notes ..........................................................
2.03 Procedure for Borrowing..........................................
2.04 Repayment of Loans; Interest.....................................
2.05 Voluntary Prepayments............................................
Section 2.B. Credit Support..........................................................
2.06 Issuance of Credit Support.......................................
2.07 Credit Supports..................................................
2.08 Procedure for Obtaining Credit Supports..........................
2.09 Repayment of Credit Support Disbursements; Interest..............
2.10 Credit Support Fee...............................................
Section 3. Payments; Computations; Etc.............................................
3.01 Payments.........................................................
3.02 Computations.....................................................
Section 4. Collateral Security.....................................................
4.01 Collateral; Security Interest....................................
4.02 Further Documentation............................................
4.03 Changes in Locations, Name, Etc..................................
4.04 Lender's Appointment as Attorney-in-Fact.........................
4.05 Performance by Lender of Borrower's Obligations..................
4.06 Proceeds.........................................................
4.07 Remedies.........................................................
4.08 Limitation on Duties Regarding Presentation of Collateral........
4.09 Powers Coupled with an Interest..................................
4.10 Release of Security Interest.....................................
Section 5. Conditions Precedent....................................................
5.01 Initial Loan and Credit Supports.................................
5.02 Initial and Subsequent Loans and Credit Supports.................
Section 6. Representations and Warranties..........................................
6.01 Existence........................................................
6.02 Financial Condition..............................................
6.03 Litigation.......................................................
6.04 No Breach........................................................
6.05 Action ..........................................................
6.06 Approvals........................................................
6.07 Margin Regulations...............................................
6.08 Taxes ..........................................................
6.09 Investment Company Act...........................................
6.10 Collateral; Collateral Security..................................
6.11 Chief Executive Office...........................................
6.12 Location of Books and Records....................................
Section 7A. Affirmative Covenants of the Borrower...................................
7.01 Financial Statements.............................................
7.02 Litigation.......................................................
7.03 Existence, Etc...................................................
7.04 Cooperation and Access to Records................................
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7.05 Notices..........................................................
7.06 Insurance........................................................
Section 7B. Negative Covenants......................................................
7.07 Total Indebtedness to Adjusted Net Worth Ratio...................
7.08 Loan Indebtedness to GAAP Net Worth..............................
7.09 Minimum GAAP Net Worth...........................................
Section 8. Events of Default.......................................................
Section 9. Remedies Upon Default...................................................
Section 10. No Duty on Lender's Part................................................
Section 11. Miscellaneous ..........................................................
11.01 Waiver ..........................................................
11.02 Notices..........................................................
11.03 Indemnification and Expenses.....................................
11.04 Amendments.......................................................
11.05 Successors and Assigns...........................................
11.06 Survival.........................................................
11.07 Captions.........................................................
11.08 Counterparts.....................................................
11.09 Agreement Constitutes Security Agreement; Governing Law..........
11.10 Submission to Jurisdiction; Waivers..............................
11.11 Waiver of Jury Trial.............................................
11.12 Acknowledgments..................................................
11.13 Termination......................................................
11.14 Servicing........................................................
Exhibit A - Form of Promissory Note
Exhibit B - Form of Loan Commitment
Exhibit C - Form of Credit Support Commitment
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LENDING AND CREDIT SUPPORT AGREEMENT
LENDING AND CREDIT SUPPORT AGREEMENT, dated as of April 1, 1998, between RWT
HOLDINGS, INC., a Delaware corporation ("Holdings"), REDWOOD RESIDENTIAL
FUNDING, INC., a Delaware corporation ("Residential"), REDWOOD COMMERCIAL
FUNDING, INC., a Delaware corporation ("Commercial"), REDWOOD FINANCIAL
SERVICES, INC., a Delaware corporation ("Financial"), and such other
subsidiaries of Holdings as may from time to time execute a copy of this
Agreement and the Note (collectively, the "Borrowers" and each individually, a
"Borrower") and REDWOOD TRUST, INC., a Maryland corporation (the "Lender").
RECITALS
The Borrowers have requested that the Lender from time to time consider making
revolving credit loans to them for working capital purposes or to finance
certain residential and/or commercial mortgage loans owned or to be acquired by
the Borrowers, and the Lender is prepared to consider making such loans upon the
terms and conditions hereof. The Borrowers have further requested that the
Lender from time to time consider lending credit support to the Borrowers to
facilitate Borrowers' financings from third-party lenders and Borrowers' hedging
arrangements with counterparties. Such credit support may be provided by the
Lender by guarantying a Borrower's borrowings from third-party lenders or by
entering into co-borrowing or co-obligor arrangements with a Borrower. The
Lender is prepared to consider lending such credit support upon the terms and
conditions hereof. Accordingly, the parties hereto agree as follows:
Section 1. Definitions and Accounting Matters.
1.01 Certain Defined Terms. As used herein, the following terms shall
have the following meanings (all terms defined in this Section
1.01 or in other provisions of this Agreement in the singular to
have the same meanings when used in the plural and vice versa):
"Adjusted Net Worth" shall mean at any date the sum of (1) GAAP Net
Worth, plus (2) the amount of reserves of Holdings and its consolidated
Subsidiaries, if any, for credit losses (as reflected on the financial
statements referred to in 7.01 below), minus (3) the amount of the
unrealized gains on debt securities (as defined in FASB 115) of Holdings
and its consolidated Subsidiaries, if any, plus (4) the amount of
unrealized losses on debt securities (as defined in FASB 115) of
Holdings and its consolidated Subsidiaries, if any, plus (5) the amount
of Loan Indebtedness, minus (6) the excess of the amount of assets
securing nonrecourse indebtedness over the amount of such nonrecourse
indebtedness.
"Affiliate" means, (i) with respect to Lender, Sequoia Mortgage Funding
Corporation and any other wholly-owned subsidiaries in corporate, trust
or other form, whether owned directly or indirectly, and (ii) with
respect to the Borrowers, any affiliate of any Borrower as such term is
defined in the United States Bankruptcy Code in effect from time to
time.
"Agreement" shall mean this Lending and Credit Support Agreement, as may
be amended, supplemented or otherwise modified from time to time.
"Applicable Margin" shall mean 3.5% unless a different percentage shall
be indicated in the related Commitment pursuant to Section 2.03(b)
hereof.
"Bankruptcy Code" shall mean the United States Bankruptcy Code of 1978,
as amended from time to time.
"Borrower" and "Borrowers" shall have the meanings provided in the
heading hereof.
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"Business Day" shall mean any day other than (i) a Saturday or Sunday,
or (ii) a day in which the New York Stock Exchange, the Federal Reserve
Bank of New York or the Custodian is authorized or obligated by law or
executive order to be closed.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
"Collateral" shall have the meaning assigned to such term in Section
4.01(b) hereof.
"Credit Support" shall have the meaning specified in Section 2.B.
hereof.
"Credit Support Commitment" shall mean a commitment issued pursuant to
Section 2.B. hereof.
"Credit Support Documents" shall mean any form of guarantee or
co-borrowing agreement and related documentation entered into pursuant
to Section 2.B.
"Custodial Agreement" shall mean each Custodial Agreement among a
Borrower, the Custodian and a third-party lender to the Borrower holding
a first priority security interest in Collateral, as the same shall be
modified and supplemented and in effect from time to time.
"Custodian" shall mean Bankers Trust Company of California, N.A., its
successors and permitted assigns, unless a different entity is named in
any Commitment.
"Default" shall mean an Event of Default or an event that with notice or
lapse of time or both would become an Event of Default.
"Dollars" and "$" shall mean lawful money of the United States of
America.
"Effective Date" shall mean the date upon which the conditions precedent
set forth in Section 5.01 shall have been satisfied.
"Eligible Mortgage Loan" shall mean a Mortgage Loan secured by a first
mortgage lien on a one-to-four family residential property or
multifamily or commercial property acceptable to the Lender as
Collateral.
"Event of Default" shall have the meaning assigned thereto in Section 8
hereof.
"Funding Date" shall mean the date on which a Loan is made hereunder or
a Credit Support becomes effective hereunder.
"GAAP" shall mean generally accepted accounting principles as in effect
from time to time in the United States.
"GAAP Net Worth" shall mean the excess of total assets of Holdings and
its consolidated Subsidiaries, if any, over Total Liabilities of
Holdings determined in accordance with GAAP.
"Governmental Authority" shall mean any nation or government, any state
or other political subdivision thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government and any court or arbitrator having jurisdiction
over a Borrower, any of its Subsidiaries or any of its properties.
"Interest Period" shall mean with respect to any Loan:
(a) initially, the period commencing on the Funding Date, with
respect to such Loan and ending one month thereafter; and
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(b) thereafter, each period commencing on the last day of the next
preceding Interest Period applicable to such Loan and ending one
month thereafter.
provided that, all of the foregoing provisions relating to
Interest Periods are subject to the following:
(i) if any Interest Period pertaining to a Loan would otherwise end
on a day which is not a Business Day, such Interest Period shall
be extended to the next succeeding Business Day unless the
result of such extension would be to carry such Interest Period
into another calendar month in which event such Interest Period
shall end on the immediately preceding Business Day;
(ii) any Interest Period that would otherwise extend beyond the
Termination Date shall end on the Termination Date; and
(iii) any Interest Period pertaining to a Loan that begins on the last
Business Day of a calendar month (or on a day for which there is
no numerically corresponding day in the calendar month at the
end of such Interest Period) shall end on the Last Business Day
of a calendar month.
"Lender" shall have the meaning assigned thereto in the heading hereto.
"LIBOR" shall mean the arithmetic mean of the London interbank offered
rates for one-month U.S. dollar deposits in the London market based on
quotations at four major banks selected by the Lender, which rates
appear in the display designated as page "LIUS01M" on the Bloomberg
Financial Markets Commodities News (or such other comparable displaying
LIBOR quotations on the Bloomberg service) as of 11:00 a.m., London
Time, on the date of determination. LIBOR shall be determined separately
for each Interest Period.
"Lien" shall mean any mortgage, lien, pledge, charge, security interest
or similar encumbrance.
"Loan" shall have the meaning specified in Section 2.A. hereof.
"Loan Commitment" shall mean a commitment issued pursuant to Section
2.B. hereof.
"Loan Documents" shall mean, collectively, this Agreement, the Note and
the Custodial Agreement.
"Loan Indebtedness" shall mean, at any date, the principal amount of
Loans outstanding on such date.
"Mortgage File" shall have the meaning assigned thereto in the Custodial
Agreement.
"Mortgage Loan" shall mean a mortgage loan which the Borrower has
designated to be pledged to secure a Loan or Credit Support as herein
provided, and which Mortgage Loan includes, without limitation, (i) a
Mortgage Note and related mortgage or deed of trust and/or security
agreements and (ii) all right, title and interest of the Borrower in and
to the Mortgaged Property covered by such mortgage or deed of trust.
"Mortgage Loan Documents" shall mean, with respect to a Mortgage Loan,
the documents comprising the Mortgage File for such Mortgage Loan.
"Mortgage Loan Schedule" shall have the meaning assigned thereto in the
Custodial Agreement.
"Mortgage Note" shall mean the promissory note or other evidence of the
indebtedness of a mortgagor/borrower with respect to a Mortgage Loan.
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"Mortgaged Property" means the real property (including all
improvements, buildings, fixtures, building equipment and personal
property thereon and all additions, alterations and replacements made at
any time with respect to the foregoing) and all other collateral
securing repayment of the debt evidenced by a Mortgage Note.
"Mortgagor" means the obligor on a Mortgage Note.
"Note" shall mean the promissory note provided for by Section 2.02(a)
hereof for Loans and any promissory note delivered in substitution or
exchange therefor, in each case as the same shall be modified and
supplemented and in effect from time to time.
"Person" shall mean any individual, corporation, company, voluntary
association, partnership, joint venture, limited liability company,
trust, unincorporated association or government (or any agency,
instrumentality or political subdivision thereof).
"Post-Default Rate" shall mean, in respect of any principal of any Loan
or any other amount under this Agreement, the Note or any other Loan
Document that is not paid when due to the Lender (whether at stated
maturity, by acceleration, by optional or mandatory prepayment or
otherwise), a rate per annum during the period from and including the
due date to but excluding the date on which such amount is paid in full
equal to 2% per annum plus the rate otherwise applicable.
"Regulations G, T, U and X" shall mean Regulations G, T, U and X of the
Board of Governors of the Federal Reserve System (or any successor), as
the same may be modified and supplemented and in effect from time to
time.
"Requirements of Law" shall mean, as to any person, the Articles or
Certificate of Incorporation and Bylaws or other organization or
governing documents of such Person, and any law, treaty, rule or
regulation, or a final and binding determination of an arbitration or a
determination of a 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.
"Responsible Officer" shall mean, as to any Person, the chief executive
officer or, with respect to financial matters, the chief financial
officer of such Person.
"Secured Obligations" shall have the meaning assigned thereto in Section
4.01(c) hereof.
"Servicer" shall have the meaning assigned thereto in Section 11.14(b)
hereof.
"Servicing Agreement" shall have the meaning assigned thereto in Section
11.14(b) hereof.
"Subsidiary" shall mean, with respect to any Person, any corporation,
partnership or other entity of which at least a majority of the
securities or other ownership interests having by the terms thereof
ordinary voting power to elect a majority of the board of directors or
other persons performing similar functions of such corporation,
partnership or other entity (irrespective of whether or not at the time
securities or other ownership interests of any other class or classes of
such corporation, partnership or other entity shall have or might have
voting power by reason of the happening of any contingency) is at the
time directly or indirectly owned or controlled by such Person or one or
more Subsidiaries of such Person or by such Person and one or more
Subsidiaries of such Person.
"Termination Date" shall mean April 1, 2000 or such earlier date on
which this Agreement shall terminate in accordance with the provisions
hereof or by operation of law.
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"Total Indebtedness" shall mean total indebtedness for borrowed monies
of Holdings and its consolidated Subsidiaries, if any, determined in
accordance with GAAP, less the amount of any nonrecourse indebtedness of
Holdings and its consolidated Subsidiaries.
"Total Liabilities" shall mean total liabilities of Holdings and its
consolidated Subsidiaries, if any, determined in accordance with GAAP.
"Uniform Commercial Code" shall mean the Uniform Commercial Code as in
effect on the date hereof in the State of California; provided that if
by reason of mandatory provisions of law, the perfection or the effect
of perfection or non-perfection of the security interest in any
Collateral is governed by the Uniform Commercial Code as in effect in a
jurisdiction other than California, "Uniform Commercial Code" shall mean
the Uniform Commercial Code as in effect in such other jurisdiction for
purposes of the provisions hereof relating to such perfection or effect
of perfection or non-perfection.
1.02 Accounting Terms and Determinations. Except as otherwise expressly
provided herein, all accounting terms used herein shall be interpreted,
and all financial statements and certificates and reports as to
financial matters required to be delivered to the Lender hereunder shall
be prepared, in accordance with GAAP.
Section 2.A. Loans, Notes and Prepayments.
2.01 Loans.
(a) The Lender agrees to consider from time to time each Borrower's
requests that the Lender make, on the terms and conditions of
this Agreement, loans (individually, a "Loan"; collectively, the
"Loans") to the Borrower in Dollars, from and including the
Effective Date to and including the Termination Date. This
Agreement is not a commitment to lend but rather sets forth the
procedures to be used in connection with periodic requests for
Loans. Each Borrower hereby acknowledges that the Lender is
under no obligation to agree to make, or to make, any Loan
pursuant to this Agreement.
(b) Subject to the terms and conditions of this Agreement, during
such period each Borrower may borrow, repay and reborrow
hereunder.
(c) In no event shall a Loan be made when any Default or Event of
Default has occurred and is continuing.
2.02 Notes.
(a) The Loans made by the Lender shall be evidenced by a single
promissory note of the Borrowers substantially in the form of
Exhibit A hereto (the "Note"), dated the date hereof, payable to
the Lender in a principal amount equal to the amount of the
Loans outstanding from time to time. The Lender shall have the
right to have its Note subdivided, by exchange for promissory
notes of lesser denominations or otherwise.
(b) The date, amount and interest rate of each Loan made by the
Lender to a Borrower, and each payment made on account of the
principal thereof, shall be recorded by the Lender on its books
and, prior to any transfer of the Note, endorsed by the Lender
on the schedule attached to the Note or any continuation
thereof; provided, that the failure of the Lender to make any
such recordation or endorsement shall not affect the obligations
of the Borrower to make a payment when due of any amount owing
hereunder or under the Note in respect of the Loans.
(c) The Borrowers shall be jointly and severally liable for all
loans made hereunder.
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2.03 Procedure for Borrowing.
(a) Each Borrower may request a borrowing hereunder, on any Business
Day during the period from and including the Effective Date to
and including the Termination Date, by delivering to the Lender,
with a copy to the Custodian, an irrevocable written request for
borrowing, which request must be countersigned by Holdings if
Holdings is not the requesting Borrower and must be received by
the Lender prior to 10:00 a.m. (California time) at least three
(3) Business Days prior to the requested Funding Date unless
otherwise agreed by the Lender. Such request for borrowing shall
(i) specify whether the Loan is for working capital purposes or
to finance acquisition of Mortgage Loans, (ii) attach a schedule
identifying the Eligible Mortgage Loans, if any, that the
Borrower proposes to pledge to the Lender and be included in the
Collateral in connection with such borrowing, and (iii) specify
the requested Funding Date.
(b) Upon the Borrower's request for a borrowing, the Lender may, at
its option, offer to make a Loan to the Borrower by executing
and delivering, via telecopy or delivered by hand, a commitment
to the Borrower in the form of Exhibit B (the "Loan Commitment")
attached hereto no later than 11:00 a.m. (California time) one
(1) Business Day after its receipt of such a request for
borrowing. Such Loan Commitment shall identify the Lender and
the Borrower, attach a schedule identifying the Eligible
Mortgage Loans, if any, proposed to be pledged by the Borrower
to the Lender on such Funding Date which are acceptable to the
Lender to be pledged as Collateral hereunder, and shall set
forth (i) the Funding Date, (ii) the amount of the Loan to be
made on such Funding Date, and (iii) the Applicable Margin, and
may contain additional terms or conditions which may or may not
be inconsistent with this Agreement. In the event there is a
conflict between the terms of this Agreement and the terms of
the Loan Commitment, the terms of the Loan Commitment shall
control. Each Loan Commitment, together with this Agreement,
shall be conclusive evidence of the terms of the Loan(s) covered
thereby.
(c) The Borrower shall, no later than 3:00 p.m. (California time) on
the Business Day that it receives a Loan Commitment from the
Lender, either:
(i) decline the offer contained in such Loan Commitment by
notifying the Lender, in accordance with the notice
provision set forth in Section 7.06 hereof, by telephone
so that effect; or
(ii) accept such offer contained in such Loan Commitment by
notifying the Lender, in accordance with the notice
provision set forth in Section 7.06 hereof, by telephone
to that effect.
Notwithstanding the foregoing, the Borrower shall be
deemed to have accepted such offer, and such Loan
Commitment, together with this Agreement, shall be
conclusive evidence of the terms of the Loan covered
thereby, unless the Borrower has declined such offer by
the time set forth above.
(d) The Borrower shall release or cause to be delivered to the
Custodian no later than 12:00 p.m., California time, two (2)
Business Days prior to the requested Funding Date, the Mortgage
File pertaining to each Eligible Mortgage Loan, if any, to be
pledged to the Lender and included in the Collateral on such
requested Funding Date, in accordance with the terms and
conditions of the Custodial Agreement.
(e) Subject to Section 5 hereof, each loan will be made available to
the Borrower by the Lender transferring, via wire transfer, to
an escrow account or account maintained by the Borrower prior to
3:00 p.m., California time, on the Funding Date, the aggregate
amount of such borrowing in funds immediately available to the
Borrower. The Borrower shall deliver to the Custodian and the
Lender, no later than 11:00 a.m. on the first Business Day after
the Funding
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Date, a notice of the Lender's security interest in respect of
all Mortgage Loans pledged to the Lender on such Funding Date.
2.04 Repayment of Loans; Interest.
(a) Each Borrower hereby promises to repay in full the outstanding
principal amount of each Loan no later than the date (the
"Stated Maturity") which is six months after the Funding Date of
such Loan.
(b) Each Borrower hereby promises to pay to the Lender interest on
the unpaid principal amount of each Loan for the period from and
including the date of such Loan to but excluding the date such
Loan shall be paid in full, at a rate per annum equal to LIBOR
plus the Applicable Margin. Notwithstanding the foregoing, each
Borrower hereby promises to pay to the Lender interest at the
applicable Post-Default Rate on any principal of any Loan and on
any other amount payable by the Borrower hereunder or under the
Note, that shall not be paid in full when due (whether at Stated
Maturity, by acceleration or by mandatory prepayment or
otherwise), for the period from and including the due date
thereof to but excluding the date the same is paid in full.
Accrued interest on each Loan shall be payable monthly
commencing on the date one month from the Funding Date and on
each successive date which is one month thereafter or the date
of final payment of principal on such Loan, except that interest
payable at the Post-Default Rate shall be payable from time to
time on demand. Promptly after the determination of any interest
rate provided for herein or any change therein, the Lender shall
give notice thereof to the Borrowers.
2.05 Voluntary Prepayments. The Borrowers may prepay the outstanding
principal of any Loan, in whole or in part, at any time prior to
the Stated Maturity thereof.
Section 2.B. Credit Support.
2.06 Issuance of Credit Support.
(a) The Lender agrees to consider from time to time each Borrower's
requests that the Lender issue credit support of loans made to
the Borrower by third parties or of hedging arrangements entered
into by the Borrower with counterparties on the terms and
conditions of this Agreement from and including the Effective
Date to and including the Termination Date. Such credit support
could be in the form of guarantees by the Lender or co-borrowing
or co-obligor arrangements with the Borrower in which the Lender
is jointly and severally liable for the Borrower's borrowings
thereunder (individually, a "Credit Support"; collectively, the
"Credit Supports"). This Agreement is not a commitment to enter
into Credit Supports but rather sets forth the procedures to be
used in connection with periodic requests for Credit Supports.
The Borrowers hereby acknowledge that the Lender is under no
obligation to agree to enter into, or to enter into, any Credit
Support pursuant to this Agreement.
(b) Subject to the terms and conditions of this Agreement, during
such period each Borrower may borrow, repay and reborrow amounts
from third parties covered by Credit Supports issued hereunder.
(c) In no event shall Credit Support Documents be entered into when
any Default or Event of Default has occurred and is continuing.
2.07 Credit Supports. The Credit Supports entered by the Lender shall
be evidenced by such Credit
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2.08 Procedure for Obtaining Credit Supports.
(a) Each Borrower may request Credit Support hereunder, on any
Business Day during the period from and including the Effective
Date to and including the Termination Date, by delivering to the
Lender, with a copy to the Custodian, an irrevocable written
request for Credit Support, which request must be received by
the Lender prior to 10:00 a.m. (California time), at least three
(3) Business Days prior to the requested Funding Date unless
otherwise agreed by the Lender. Such request for Credit Support
shall (i) specify whether the Credit Support is for borrowings
from third parties or hedging arrangements, (ii) attach a
schedule identifying the Eligible Mortgage Loans, if any, that
the Borrower proposes to pledge to the Lender and be included in
the Collateral on a subordinated basis in connection with such
Credit Support, and (iii) specify the requested Funding Date.
(b) Upon the Borrower's request for Credit Support, the Lender may,
at its option, offer to enter into Credit Support Documents in
favor of the Borrower by executing and delivering via telecopy
or delivered by hand, a commitment in the form of Exhibit C (the
"Credit Support Commitment") attached hereto no later than 11:00
a.m. (California time), one (1) Business Day after its receipt
of such a request for Credit Support. Such Credit Support
Commitment shall identify the Lender and the Borrower, attach a
schedule identifying the Eligible Mortgage Loans, if any,
proposed to be pledged by the Borrower to the Lender on such
Funding Date which are acceptable to the Lender to be pledged as
Collateral hereunder and shall set forth (i) the Funding Date,
(ii) the amount of the Credit Support to be entered into on such
Funding Date, and (iii) the Applicable Margin, and may contain
additional terms and conditions which may or may not be
inconsistent with this Agreement. In the event there is a
conflict between the terms of this Agreement and the terms of
the Credit Support Commitment, the terms of the Credit Support
Commitment shall control. Each Credit Support Commitment,
together with this Agreement, shall be conclusive evidence of
the terms of the Credit Support(s) covered thereby.
(c) The Borrower shall, no later than 3:00 p.m. (California time) on
the Business Day that it receives a Credit Support Commitment
from the Lender, either:
(i) decline the offer contained in such Credit Support
Commitment by notifying the Lender, in accordance with
the notice provision set forth in Section 7.06 hereof,
by telephone to that effect; or
(ii) accept such offer contained in such Credit Support
Commitment by notifying the Lender, in accordance with
the notice provision set forth in Section 7.06 hereof,
by telephone to that effect.
Notwithstanding the foregoing, the Borrower shall be
deemed to have accepted such offer, and such Credit
Support Commitment, together with this Agreement, shall
be conclusive evidence of the terms of the Credit
Support covered thereby, unless the Borrower has
declined such offer by the time set forth above.
(d) The Borrower shall release or cause to be delivered to the
Custodian no later than 12:00 p.m., California time, two (2)
Business Days prior to the requested Funding Date, the Mortgage
File pertaining to each Eligible Mortgage Loan, if any, to be
pledged to the Lender and included in the Collateral on such
requested Funding Date, in accordance with the terms and
conditions of the Custodial Agreement.
(e) Subject to Section 5 hereof, such Credit Support will be made
available to the Borrower by the Lender on or prior to 3:00
p.m., California time, on such Funding Date. The Borrower shall
deliver to the Custodian and the Lender, no later than 11:00
a.m. on the first Business Day after
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the Funding Date, a notice of the Lender's security interest in
respect of all Mortgage Loans pledged to the Lender on such
Funding Date.
2.09 Repayment of Credit Support Disbursements; Interest. Each
Borrower hereby promises to make payments to the Lender in
respect of any amount expended by the Lender pursuant to any
Credit Support on the following terms and conditions, unless
otherwise provided in the related Credit Support Commitment:
(a) The amount of any such expenditure, whether used to repay
principal, interest or other amounts due to the third-party
lender, shall be treated as principal of a Loan, the Stated
Maturity of which is the first Business Day following the date
of the expenditure; and
(b) Interest will be payable on such constructive Loan at the
Post-Default Rate and on the same terms as if such Loan was in
default with respect to repayment of principal due on the Stated
Maturity thereof as set forth in (a) above.
2.10 Credit Support Fee. As compensation for the Lender's issuance of
each Credit Support, the Borrowers agree to pay the Lender a
Credit Support Fee on each Funding Date in an amount equal to
.0035 per annum times the principal amount of the loan or other
payment obligation or exposure which is the subject of such
Credit Support, unless a different fee amount is otherwise agreed
upon and reflected on the Credit Support Commitment. Such amount
will be calculated based on the actual number of days such Credit
Support is in effect and a 360-day year and will be payable
monthly, in arrears.
Section 3. Payments; Computations; Etc.
3.01 Payments.
(a) Except to the extent otherwise provided herein, all payments of
principal, interest and other amounts to be made by the
Borrowers under this Agreement and the Note, shall be made in
Dollars, in immediately available funds, without deduction,
set-off or counterclaim, to the Lender at the following account
maintained by the Lender: [ ], For the A/C of
[ ], ABA# [ ], Attn: [ ], not later
than 1:00 p.m., California time, on the date on which such
payment shall become due (each such payment made after such time
on such due date to be deemed to have been made on the next
succeeding Business Day). The Borrowers acknowledge that they
have no rights of withdrawal from the foregoing account.
(b) Except to the extent otherwise expressly provided herein, if the
due date of any payment under this Agreement or the Note would
otherwise fall on a day that is not a Business Day, such date
shall be extended to the next succeeding Business Day, and
interest shall be payable for any principal so extended for the
period of such extension.
3.02 Computations. Interest on the Loans shall be computed on the
basis of a 360-day year for the actual days elapsed (including
the first day but excluding the last day) occurring in the
period for which payable.
Section 4. Collateral Security.
4.01 Collateral; Security Interest.
(a) The Custodian shall hold the Mortgage Loan Documents as bailee
and agent for the Lender, as holder of a subordinated security
interest in the Collateral.
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(b) All of each Borrower's right, title and interest in, to and
under each of the following items of property, whether now owned
or hereafter acquired, now existing or hereafter created and
wherever located, is hereinafter referred to as the
"Collateral":
(i) all Mortgage Loans;
(ii) all Mortgage Loan Documents, including without
limitation all promissory notes and any other collateral
pledged or otherwise relating to such Mortgage Loans,
together with all files, documents, instruments,
surveys, certificates, correspondence, appraisals,
computer programs, computer storage media, accounting
records and other books and records relating thereto;
(iii) all mortgage guaranties and insurance (issued by
governmental agencies or otherwise) and any mortgage
insurance certificate or other document evidencing such
mortgage guaranties or insurance relating to all
Mortgage Loans pledged to the Lender hereunder and all
claims and payments thereunder;
(iv) all agreements pursuant to which Mortgage Loans are
acquired and all documents related thereto;
(v) all other insurance policies and insurance proceeds
relating to all Mortgage Loans pledged to the Lender
hereunder or the related Mortgaged Property;
(vi) all "general intangibles" as defined in the Uniform
Commercial Code relating to or constituting any and all
of the foregoing; and
(v) any and all replacements, substitutions, distributions
on or proceeds of any and all of the foregoing.
(c) Each Borrower hereby assigns, pledges and grants, effective as
of the first Business Day after the related Funding Date, a
security interest in all of its right, title and interest in, to
and under the Collateral, subject to the rights of any
third-party lenders holding a first priority security interest
therein, to the Lender to secure the repayment of principal of
and interest on all Loans and all other amounts owing to the
Lender hereunder, under the Note, any Credit Supports entered
into by the Lender and under the other Loan Documents
(collectively, the "Secured Obligations"). Each Borrower agrees
to mark its computer records and tapes to evidence the interests
granted to the Lender hereunder.
4.02 Further Documentation. At any time and from time to time, upon
the written request of the Lender, and at the sole expense of
the Borrowers, the Borrowers will promptly and duly execute and
deliver, or will promptly cause to be executed and delivered,
such further instruments and documents and take such further
action as the Lender may reasonably request for the purpose of
obtaining or preserving the full benefits of this Agreement and
of the rights and owners herein granted, including, without
limitation, the filing of any financing or continuation
statements under the Uniform Commercial Code in effect in any
jurisdiction with respect to the Liens created hereby. The
Borrowers also hereby authorize the Lender to file any such
financing or continuation statement without the signature of the
Borrower to the extent permitted by applicable law. A carbon,
photographic or other reproduction of this Agreement shall be
sufficient as a financing statement for filing in any
jurisdiction.
4.03 Changes in Locations, Name, Etc. No Borrower shall (i) change
the location of its chief executive office/chief place of
business from that specified in Section 6 hereof or (ii) change
its name, identity or corporate structure (or the equivalent) or
change the location where it maintains its records with respect
to the Collateral unless it shall have given the Lender at least
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30 days prior written notice thereof and shall have delivered to
the Lender all Uniform Commercial Code financing statements and
amendments thereto as Lender may request and taken all other
actions deemed necessary by Lender to continue its perfected
status in the Collateral with the same or better priority.
4.04 Lender's Appointment as Attorney-in-Fact.
(a) Each Borrower hereby irrevocably constitutes and appoints the
Lender and any officer or agent thereof, with full power of
substitution, as its true and lawful attorney-in-fact with full
irrevocable power and authority in the place and stead of the
Borrower and in the name of the Borrower or in its own name,
from time to time in the Lender's discretion (which the Lender
shall exercise only in the event of an Event of Default shall
have occurred and be continuing), for the purpose of carrying
out the terms of this Agreement, to take any and all appropriate
action and to execute any and all documents and instruments
which may be necessary or desirable to accomplish the purposes
of this Agreement, and, without limiting the generality of the
foreign, the Borrower hereby gives the Lender the power and
right, on behalf of the Borrower, without assent by, but with
notice to, the Borrower, to do the following, subject to the
rights of any third-party lenders with a first priority security
interest in the applicable Collateral:
(i) in the name of the Borrower or its own name, or
otherwise, to take possession of and endorse and collect
any checks, drafts, notes, acceptances or other
instruments of the payment of moneys due under any
mortgage insurance or with respect to any other
Collateral and to file any claim or to take any other
action or proceeding in any court of law or equity or
where otherwise deemed appropriate by the Lender for the
purpose of collecting any and all such moneys due under
any such mortgage insurance or with respect to any other
Collateral whenever payable;
(ii) to pay or discharge taxes and Liens levied or placed on
or threatened against the Collateral; and
(a) to direct any party liable for any payment under
any Collateral to make payment of any and all
moneys due or to become due thereunder directly
to the Lender or as the Lender shall direct; (B)
to ask or demand for, collect, receive payment
of and receipt for, any and all moneys, claims
and other amounts due or to become due at any
time in respect of or arising out of any
Collateral; (C) to sign and endorse any
invoices, assignments, verifications, notices
and other documents in connection with any of
the Collateral; (D) to commence and prosecute
any suits, actions or proceedings at law or in
equity in any court of competent jurisdiction to
collect the Collateral or any thereof and to
enforce any right in respect of any Collateral;
(E) to defend any suit, action or proceeding
brought against the Borrower with respect to any
Collateral; (F) to settle, compromise or adjust
any suit, action or proceeding described in
clause (E) above and, in connection therewith,
to give such discharges or releases as the
Lender may deem appropriate; and (G) generally,
to sell, transfer, pledge and make any agreement
with respect to or otherwise deal with any of
the Collateral as fully and completely as though
the Lender were the absolute owner thereof for
all purposes, and to do, at Lender's option and
the Borrower's expense, at any time, or from
time to time, all acts and things which the
Lender deems necessary to protect, preserve or
realize upon the Collateral and the Lender's
Liens thereon and to effect the intent of this
Agreement, all as fully and effectively as the
Borrower might do.
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Each Borrower hereby ratifies all that said attorneys
shall lawfully do or cause to be done by virtue hereof.
This power of attorney is a power coupled with an
interest and shall be irrevocable.
(b) Each Borrower also authorizes the Lender, at any
time and from time to time, to execute, in
connection with the sale provided in Section
4.07 hereof, any endorsements, assignments or
other instruments of conveyance or transfer with
respect to the Collateral.
(c) The powers conferred on the Lender are solely to
protect the Lender's interests in the Collateral
and shall not impose any duty upon the Lender to
exercise any such powers. The Lender shall be
accountable only for amounts that it actually
receives as a result of the exercise of such
powers, and neither the Lender nor any of its
officers, directors or employees shall be
responsible to the Borrowers for any act or
failure to act hereunder, except for its own
gross negligence or willful misconduct.
4.05 Performance by Lender of Borrower's Obligations. If any Borrower
fails to perform or comply with any of its agreements contained
in the Loan Documents and the Lender shall itself perform or
comply, or otherwise cause performance or compliance, with such
agreement, the expenses of the Lender incurred in connection
with such performance or compliance, together with interest
thereon at a rate per annum equal to the Post-Default Rate,
shall be payable by the Borrower to the Lender on demand and
shall constitute Secured Obligations.
4.06 Proceeds. Subject to the rights of any third-party lenders with
first priority security interests in any Collateral, if an Event
of Default shall occur and be continuing, (a) all proceeds of
Collateral received by any Borrower consisting of cash, checks
and other near-cash items shall be held by the Borrower in trust
for the Lender, segregated from other funds of the Borrower, and
shall forthwith upon receipt by the Borrower be turned over to
the Lender in the exact form received by the Borrower (duly
endorsed by the Borrower to the Lender, if required) and (b) any
and all such proceeds received by the Lender (whether from the
Borrower or otherwise) may, in the sole discretion of the
Lender, be held by the Lender as collateral security for, and/or
then or at any time thereafter may be applied by the Lender
against, the Secured Obligations (whether matured or unmatured),
such application to be in such order as the Lender shall elect.
Any balance of such proceeds remaining after the Secured
Obligations shall have been paid in full and this Agreement
shall have been terminated shall be paid over to the Borrowers
or to whomever may be lawfully entitled to receive the same. For
purposes hereof, proceeds shall include, but not be limited to,
all principal and interest payments, all prepayments and
payoffs, insurance claims, condemnation awards, sale proceeds,
real estate owned rents and any other income and all other
amounts received with respect to the Collateral.
4.07 Remedies. Subject to the rights of any third-party lenders with
first priority security interests in the Collateral, if an Event
of Default shall occur and be continuing, the Lender may
exercise, in addition to all other rights and remedies granted
to it in this Agreement and in any other instrument or agreement
securing, evidencing or relating to the Secured Obligations, all
rights and remedies of a secured party under the Uniform
Commercial Code. Without limiting the generality of the
foregoing, the Lender without demand of performance or other
demand, presentment, protest, advertisement or notice of any
kind (except any notice required by law referred to below) to or
upon the Borrowers or any other Person (all and each of which
demands, defenses, advertisements and notices are hereby
waived), may in such circumstances forthwith collect, receive,
appropriate and realize upon the Collateral, or any part
thereof, and/or may forthwith sell, lease, assign, give option
or options to purchase, or otherwise dispose of and deliver the
Collateral or any part thereof (or contract to do any of the
foregoing), in one or more parcels or as an entirety at public
or private sale or sales, at any exchange, broker's
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board or office of the Lender or elsewhere upon such terms and
conditions as it may deem advisable and at such prices as it may
deem best, for cash or on credit or for future delivery without
assumption of any credit risk. The Lender shall have the right
upon any such public sale or sales, and, to the extent permitted
by law, upon any such private sale or sales, to purchase the
whole or any part of the Collateral so sold, free of any right
or equity of redemption in the Borrowers, which right or equity
is hereby waived or released. Each Borrower further agrees, at
the Lender's request, to assemble the Collateral and make it
available to the Lender at places which the Lender shall
reasonably select, whether at the Borrower's premises or
elsewhere. The Lender shall apply the net proceeds of any such
collection, recovery, receipt, appropriation, realization or
sale, after deducting all reasonable costs and expenses of every
kind incurred therein or incidental to the care or safekeeping
of any of the Collateral or in any way relating to the
Collateral or the rights of the Lender hereunder, including,
without limitation, reasonable attorneys' fees and
disbursements, to the payment in whole or in part of the Secured
Obligations, in such order as the Lender may elect, and only
after such application and after the payment by the Lender of
any other amount required or permitted by any provision of law,
including, without limitation, Section 9-504(1)(c) of the
Uniform Commercial Code, need the Lender account for the
surplus, if any, to the Borrowers. To the extent permitted by
applicable law, each Borrower waives all claims, damages and
demands it may acquire against the Lender arising out of the
exercise by the Lender of any of its rights hereunder, other
than those claims, damages and demands arising from the gross
negligence or willful misconduct of the Lender. If any notice of
a proposed sale or other disposition of Collateral shall be
required by law, such notice shall be deemed reasonable and
proper if given at least 10 days before such sale or other
disposition. Each Borrower shall remain liable for any
deficiency if the proceeds of any sale or other disposition of
the Collateral are sufficient to pay the Secured Obligations and
the fees and disbursements of any attorneys employed by the
Lender to collect such deficiency.
4.08 Limitation on Duties Regarding Presentation of Collateral. The
Lender's duty with respect to the custody, safekeeping and
physical preservation of the Collateral in its possession, under
Section 9-207 of the Uniform Commercial Code or otherwise, shall
be to deal with it in the same manner as the Lender deals with
similar property for its own account. Neither the Lender nor any
of its directors, officers or employees shall be liable for
failure to demand, collect or realize upon all or any part of
the Collateral or for any delay in doing so or shall be under
any obligation to sell or otherwise dispose of any Collateral
upon the request of any Borrower or otherwise.
4.09 Powers Coupled with an Interest. All authorizations and agencies
herein contained with respect to the Collateral are irrevocable
and powers coupled with an interest.
4.10 Release of Security Interest. Upon termination of this Agreement
and repayment to the Lender of all Secured Obligations and the
performance of all obligations under all Credit Supports and
other Loan Documents, the Lender shall release its security
interest in any remaining Collateral.
Section 5. Conditions Precedent.
5.01 Initial Loan and Credit Supports. The obligation of the Lender
to make its initial Loan and enter into the initial Credit
Supports hereunder is subject to the satisfaction, immediately
prior to or concurrently with the making of such Loan and the
issuance of such Credit Supports, of the following conditions
precedent: (a) Loan Documents. The Lender shall have received
the following documents, each of which shall be satisfactory to
the Lender in form and substance:
(i) Note. the Note, duly completed and executed;
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(ii) Custodial Agreement. the Custodial Agreement, if any,
duly executed and delivered by the related Borrower and
the Custodian; and
(iii) Credit Supports. one or more agreements constituting
Credit Supports, duly executed and delivered by the
Borrower and the Lender.
In addition, the Borrowers shall have taken such other
action as the Lender shall have requested in order to
perfect the security interests created pursuant to the
Agreement; and
(b) Organization Documents. A good standing certificate and
certified copies of the charter and bylaws (or equivalent
documents) of each Borrower and of all corporate or other
authority for each Borrower with respect to the execution,
delivery and performance of the Loan Documents and each other
document to be delivered by the Borrowers from time to time in
connection herewith (and the Lender may conclusively rely on
such certificate until it receives notice in writing from any
Borrower to the contrary);
(c) Legal Opinion. A legal opinion of counsel to the Borrowers, with
such scope and substance and in such form as may be acceptable
to the Lender; and
(d) Other Documents. Such other documents as the Lender may
reasonably request.
5.02 Initial and Subsequent Loans and Credit Supports. The making of
each Loan to a Borrower and issuance of each Credit Support
(including the initial Loan and initial Credit Supports) on any
Business Day is subject to the following further conditions
precedent, both immediately prior to the making of such Loan or
issuance of such Credit Support and also after giving effect
thereto and to the intended use thereof:
(a) no Default or Event of Default shall have occurred and
be continuing;
(b) (i) both immediately prior to the making of such Loan or
issuance of such Credit Support and also after giving
effect thereto and to the intended use thereof, the
representations and warranties made by each Borrower in
Section 6 hereof, and in each of the other Loan
Documents, shall be true and complete on and as of the
date of the making of such Loan or issuance of such
Credit Support in all material respects (in the case of
the representations and warranties in Section 6.10,
solely with respect to Mortgage Loans included in the
Collateral, if any) with the same force and effect as if
made on and as of such date (or, if any such
representation or warranty is expressly stated to have
been made as of a specific date, as of such specific
date) and (ii) with respect to any Credit Support being
issued to support a third party borrowing to finance the
acquisition or maintenance of assets, the value of such
assets must be equal to or greater than the sum of such
third party indebtedness plus any Loan obtained to
facilitate such acquisition or maintenance. The Lender
shall have received an officer's certificate signed by a
Responsible Officer of the Borrower certifying as to the
truth and accuracy of the above, which certificate shall
specifically include a statement that the Borrower is in
compliance with all governmental licenses and
authorizations and is qualified to do business and in
good standing in all required jurisdictions;
(c) the aggregate outstanding principal amount of the Loans
at the time shall not exceed $100,000,000 and the
aggregate outstanding principal amount covered by Credit
Supports at the time shall not exceed $1,000,000,000;
and
(d) the Lender shall have completed its due diligence review
of the Mortgage Loan Documents for each Loan and such
other documents, records, agreements, instruments,
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mortgaged properties or information relating to such
Loans as the Lender deems necessary to review, including
without limitation, a review of any related Servicing
Agreement, and such review shall be satisfactory to the
Lender in its sole discretion.
Section 6. Representations and Warranties.
Each Borrower represents and warrants to the Lender that throughout the
term of this Agreement:
6.01 Existence. The Borrower (a) is a corporation duly organized,
validly existing and in good standing under the laws of the
jurisdiction of its organization; (b) has all requisite
corporate or other power, and has all governmental licenses,
authorizations, consents and approvals, necessary to own its
assets and carry on its business as now being or as proposed to
be conducted, the lack of which would be reasonably likely to
have a material adverse effect on its property, business or
financial condition, or prospects; and (c) is qualified to do
business and is in good standing in all other jurisdictions in
which the nature of the business conducted by it makes such
qualification necessary and where failure so to qualify would be
reasonably likely (either individually or in the aggregate) to
have a material adverse effect on its property, business or
financial condition, or prospects.
6.02 Financial Condition. Holdings has heretofore furnished to the
Lender a copy of its consolidated balance sheets and the
consolidated balance sheets of its consolidated Subsidiaries for
the first quarterly fiscal period of 1998. Holdings has also
heretofore furnished to the Lender the related consolidated
statements of income and retained earnings and of cash flows for
Holdings and its consolidated Subsidiaries for the first
quarterly fiscal period of 1998. All such financial statements
are complete and correct and fairly present the consolidation
financial condition of Holdings and its Subsidiaries and the
consolidated results of their operations for the fiscal period
needed on said date, all in accordance with GAAP applied on a
consistent basis.
6.03 Litigation. There are no actions, suits, arbitrations,
investigations or proceedings pending or, to its knowledge,
threatened against the Borrower or any of its Subsidiaries or
affecting any of the property thereof before any Governmental
Authority, (i) as to which individually or in the aggregate
there is a reasonable likelihood of an adverse decision which
would be reasonably likely to have a material adverse effect on
the property, business or financial condition, or prospects of
the Borrower or (ii) which questions the validity or
enforceability of any of the Loan Documents or any action to be
taken in connection with the transactions contemplated hereby.
6.04 No Breach. Neither (a) the execution and delivery of the Loan
Documents or (b) the consummation of the transactions therein
contemplated in compliance with the terms and provisions thereof
will conflict with or result in a breach of the charter or
bylaws of the Borrower, or any applicable law, rule or
regulation, or any order, writ, injunction or decree of any
Governmental Authority, or any Servicing Agreement or other
material agreement or instrument to which the Borrower, or any
of its Subsidiaries, is a party or by which any of them or any
of their property is bound or to which any of them is subject,
or constitute a default under any such material agreement or
instrument, or (except for the Liens created pursuant to this
Agreement) result in the creation or imposition of any Lien upon
any property of the Borrower or any of its Subsidiaries pursuant
to the terms of any such agreement or instrument.
6.05 Action. The Borrower has all necessary corporate or other power,
authority and legal right to execute, deliver and perform its
obligations under each of the Loan Documents; the execution,
delivery and performance by the Borrower of each of the Loan
Documents have been duly authorized by all necessary corporate
or other action on its part; and each Loan Document has been
duly and validly executed and delivered by the Borrower and
constitutes a legal, valid and
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binding obligation of the Borrower, enforceable against the
Borrower in accordance with its terms.
6.06 Approvals. No authorizations, approvals or consents of, and no
filings or registrations with, any Governmental Authority, or
any securities exchange, are necessary for the execution,
delivery or performance by the Borrower of the Loan Documents or
for the legality, validity or enforceability thereof, except for
filings and recordings in respect of the Liens created pursuant
to this Agreement.
6.07 Margin Regulations. Neither the making of any Loan hereunder,
nor the use of the proceeds thereof, will violate or be
consistent with the provisions of Regulation G, T, U or X.
6.08 Taxes. The Borrower and its Subsidiaries have filed all Federal
income tax returns and all other material tax returns that are
required to be filed by them and have paid all taxes due
pursuant to such returns or pursuant to any assessment received
by any of them, except for any such taxes, if any, that are
being appropriately contested in good faith by appropriate
proceedings diligently conducted and with respect to which
adequate reserves have been provided. The charges, accruals and
reserves on the books of the Borrower and its Subsidiaries in
respect of taxes and other governmental charges are, in the
opinion of the Borrower, adequate.
6.09 Investment Company Act. Neither the Borrower nor any of its
Subsidiaries is an "investment company," or a company
"controlled" by an "investment company," within the meaning of
the Investment Company Act of 1940, as amended.
6.10 Collateral; Collateral Security.
(a) The Borrower has not assigned, pledged, or otherwise conveyed or
encumbered any Mortgage Loan to any other Person, and
immediately prior to the pledge of such Mortgage Loan, the
Borrower was the sole owner of such Mortgage Loan and had good
and marketable title thereto, free and clear of all Liens, in
each case except for Liens granted in favor of third-party
lenders to the Borrower identified to the Lender prior to each
Funding Date or Liens to be released simultaneously with the
Liens granted in favor of the Lender hereunder.
(b) The provisions of this Agreement are effective to create in
favor of the Lender a valid security interest in all right,
title and interest of the Borrower in, to and under the
Collateral.
(c) Upon receipt by the Custodian of each Mortgage Note, duly
endorsed in blank, the Lender shall have a valid security
interest therein, in the Mortgage Loan evidenced thereby and in
the Borrower's interest in the related Mortgaged Property, which
security interest may be subordinate to the security interest of
third-party lenders to the Borrower.
(d) Upon the filing of financing statements on Form UCC-1 naming the
Lender as "Secured Party" and the Borrower as "Debtor," and
describing the Collateral, in the appropriate jurisdictions and
recording offices, the security interests granted hereunder in
the Collateral will constitute fully perfected security
interests under the Uniform Commercial Code in all right, title
and interest of the Borrower in, to and under such Collateral
the perfection of a security interest in which can be effected
by filing under the Uniform Commercial Code, which security
interest may be subordinate to the security interest of
third-party lenders to the Borrower.
6.11 Chief Executive Office. Holdings' and Residential's chief
executive offices on the Effective Date are each located at 591
Redwood Highway, Suite 3140, Mill Valley, California 94941; and
Commercial's chief executive office on the Effective Date is
located at 6160 Plumas Street, Reno, Nevada 89509.
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6.12 Location of Books and Records. The location where the Borrower
keeps its books and records, including all computer tapes and
records relating to the Collateral is its chief executive
office.
Section 7A. Affirmative Covenants of the Borrower.
Each Borrower covenants and agrees with the Lender that, so long as any Loan or
Credit Support is outstanding and until payment in full of all Secured
Obligations:
7.01 Financial Statements. Holdings shall deliver to the Lender as
soon as available all financial statements it prepares,
including at a minimum the following:
(a) as soon as available and in any event within 20 days
after the end of each of the first three quarterly
fiscal periods of each fiscal year of Holdings, the
consolidated balance sheets of Holdings and its
consolidated Subsidiaries as at the end of such period
and the related unaudited consolidated statements of
income and retained earnings and of cash flows for
Holdings and its consolidated Subsidiaries for such
period and the portion of the fiscal year through the
end of such period, setting forth in each case in
comparative form the figures for the previous year,
accompanied by a certificate of a Responsible Officer of
Holdings, which certificate shall state that said
consolidated financial statements fairly present the
consolidated financial condition and results of
operations of Holdings and its Subsidiaries in
accordance with GAAP, consistently applied, as at the
end of, and for, such period (subject to normal year-end
audit adjustments);
(b) as soon as available and in any event within 60 days
after the end of each fiscal year of Holdings, the
consolidated balance sheets of Holdings and its
consolidated Subsidiaries as at the end of such fiscal
year and the related consolidated statements of income
and retained earnings and of cash flows for Holdings and
its consolidated Subsidiaries for such year, setting
forth in each case in comparative form the figures for
the previous year, accompanied by an opinion thereon of
independent certified public accountants of recognized
national standing previously approved by the Lender,
which opinion shall not be qualified as to scope of
audit or going concern and shall state that said
consolidated financial statements fairly present the
consolidated financial condition and results of
operations of Holdings and its consolidated Subsidiaries
as at the end of, and for, such fiscal year in
accordance with GAAP, and a certificate of such
accountants stating that, in making the examination
necessary for their opinion, they obtained no knowledge,
except as specifically stated, of any Default or Event
of Default;
(c) from time to time such other information regarding the
financial condition, operations, or business of Holdings
as the Lender may reasonably request, including but not
limited to quarterly audited financial statements.
Holdings agrees to cooperate fully and in a timely
fashion with its independent accountants in connection
with their audits. Holdings will furnish to the Lender,
at the time it furnishes each set of financial
statements pursuant to paragraphs (a) and (b) above, a
certificate of a Responsible Officer of Holdings to the
effect that, to the best of such Responsible Officer's
knowledge, the Borrower and its consolidated
Subsidiaries during such fiscal period or year have
observed or performed all of their covenants and other
agreements, and satisfied every condition, contained in
this Agreement and the other Loan Documents to be
observed, performed or satisfied by them, and that such
Responsible Officer has obtained no knowledge of any
Default or Event of Default except as specified in such
certificate (and, if any Default or Event of Default has
occurred and is continuing, describing the same in
reasonable detail and describing the action Holdings has
taken or proposes to take with respect thereto).
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7.02 Litigation. The Borrower will promptly, and in any event within
10 days after service of process on any of the following, give
the Lender notice of all legal or arbitrable proceedings
affecting the Borrower or any of its Subsidiaries that questions
or challenges the validity or enforceability of any of the Loan
Documents or as to which there is a reasonable likelihood of
adverse determination which would result in a material adverse
effect.
7.03 Existence, Etc. The Borrower will:
(a) preserve and maintain its legal existence and all of its
material rights, privileges, licenses and franchises
(provided, that nothing in this Section 7.03 shall
prohibit any transaction expressly permitted under
Section 7.04 hereof);
(b) comply with the requirements of all applicable laws,
rules, regulations and orders of Government Authorities
(including, without limitation, all environmental laws)
if failure to comply with such requirements would be
reasonably likely (either individually or in the
aggregate) to have a material adverse effect on its
property, business or financial condition, or prospects;
(c) keep adequate records and books of account, in which
complete entries will be made in accordance with GAAP
consistently applied; and
(d) not move its chief executive office from the address
referred to in Section 6.11 unless it shall have
provided the Lender 30 days prior written notice of such
change.
7.04 Cooperation and Access to Records. The Borrower agrees to
cooperate fully and in a timely fashion with the Lender's
requests for information or access to data, reports, records and
personnel made for purposes of the Lender's compliance with
securities law reporting and filing requirements, federal and
state tax reporting and filing requirements or any other legal
or regulatory reporting and filing requirements applicable to
it. As part of this cooperation, the Borrower will agree to
provide the following information:
(a) keep proper books of record and account in which full,
true and correct entries in conformity with GAAP and all
Requirements of Law shall be made of all dealings and
transactions in relation to its business and activities;
and
(b) permit: (i) representatives of the Lender to (A) visit
and inspect any of its properties and examine and make
abstracts from any of its books and records at any
reasonable time and as often as may reasonably be
desired by the Lender (but, prior to the occurrence of
an Event of Default, only upon not less than two (2)
Business Days' prior notice), and (B) discuss the
business, operations, properties and financial and other
condition of the Borrower with officers and employees of
the Borrower, and with its independent certified public
accountants, and (ii) representatives of the Lender to
conduct periodic operational audits of the Borrower's
business and operations
7.05 Notices. The Borrower shall give notice to the Lender:
(a) promptly of the occurrence of any Default or Event of
Default; and
(b) promptly of any default related to any Collateral and
any event or change in circumstances, in each case which
could reasonably be expected to have a material adverse
effect on the Borrower's property, business or financial
condition, or prospects.
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Each notice pursuant to this Section shall be
accompanied by a statement of a Responsible Officer of
the Borrower setting forth details of the occurrence
referred to therein and stating what action the Borrower
has taken or proposes to take with respect thereto.
7.06 Insurance. The Borrower agrees to obtain and maintain insurance
with responsible companies in such amounts and against such
risks as are usually carried by corporations engaged in similar
businesses similarly situated, and furnish the Lender on request
full information as to all such insurance, and to provide within
five (5) days after receipt, certificates or other documents
evidencing the renewal of each such policy. The Borrower will
file claims and process recoveries under any such policy or any
policy of the Lender.
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Section 7B. Negative Covenants.
Each Borrower covenants and agrees with the Lender that, so long as any Loan or
Credit Support is outstanding and until payment in full of all Secured
Obligations:
7.07 Total Indebtedness to Adjusted Net Worth Ratio. Holdings will
not permit its ratio at any date of Total Indebtedness to
Adjusted Net Worth to be more than 10.0:1.0.
7.08 Loan Indebtedness to GAAP Net Worth. Holdings will not permit
its ratio at any date of Loan Indebtedness to GAAP Net Worth to
be more that 2.0:1.0.
7.09 Minimum GAAP Net Worth. Holdings will not permit its GAAP Net
Worth as of the last day of any fiscal quarter to be less than
the sum of (1) $7,000,000, plus (2) fifty percent (50%) of (A)
the cash proceeds of any sale or issuance of equity securities
of any Borrower (or of any options, warrants or rights in
respect of any such equity securities) which issuance takes
place after the date of this Agreement, plus (B) cumulative
after-tax earnings earned after the date hereof less cumulative
dividends paid after the date of this Agreement.
Section 8. Events of Default.
Each of the following events shall constitute an event of default (an "Event of
Default") hereunder:
(a) the Borrowers shall default in the payment of any
principal of or interest on any Loan when due (whether
at Stated Maturity, upon acceleration or at mandatory or
optional prepayment) or any Credit Support when due; or
(b) the Borrowers shall default in the payment of any other
amount payable hereunder or under any other Loan
Document after notification by the Lender of such
default, and such default shall have continued
unremedied for five Business Days; or
(c) any representation, warranty or certification made or
deemed made herein or in any other Loan Document by any
Borrower or any certificate furnished to the Lender
pursuant to the provisions thereof, shall prove to have
been false or misleading in any material respect as of
the time made or furnished; or
(d) any Borrower shall fail to comply with the requirements
of Section 7.03 (as to existence), Section 7.04, Section
7.05, Section 7.06, Section 7.07 or Section 7.08 hereof;
or any Borrower shall otherwise fail to comply with the
requirements of Section 7.03 hereof and such default
shall continue unremedied for a period of five Business
Days; or any Borrower shall fail to observe or perform
any other agreement contained in this Agreement or any
other Loan Document and such failure to observe or
perform shall continue unremedied for a period of seven
Business Days; or
(e) a final judgment or judgments for the payment of money
in excess of $5,000,000 in the aggregate shall be
rendered against any Borrower or any Subsidiary of a
Borrower by one or more courts, administrative tribunals
or other bodies having jurisdiction over them and the
same shall not be discharged (or provision shall not be
made for such discharge) or bonded, or a stay of
execution thereof shall not be procured, within 60 days
from the date of entry thereof and the Borrower or any
such Subsidiary shall not, within said period of 60
days, or such longer period during which execution of
the same shall have been stayed or bonded, appeal
therefrom and cause the execution thereof to be stayed
during such appeal; or
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(f) any Borrower shall admit in writing its inability to pay
its debts as such debts become due; or
(g) any Borrower or any Subsidiary of a Borrower shall (i)
apply for or consent to the appointment of, or the
taking of possession by, a receiver, custodian, trustee,
examiner or liquidator of itself or of all or a
substantial part of its property, (ii) make a general
assignment for the benefit of its creditors, (iii)
commerce a voluntary case under the Bankruptcy Code,
(iv) file a petition seeking to take advantage of any
other law relating to bankruptcy, insolvency, file a
petition seeking to take advantage of any other law
relating to bankruptcy, insolvency, reorganization,
liquidation, dissolution, arrangement or winding-up, or
composition or readjustment of debts, (v) fail to
controvert in a timely and appropriate manner, or
acquiesce in writing to, any petition filed against it
in an involuntary case under the Bankruptcy Code or (vi)
take any corporate or other action for the purpose of
effecting any of the foregoing; or
(h) a proceeding or case shall be commenced with respect to
any Borrower or any Subsidiary of a Borrower, without
the application or consent of the Borrower or any such
Subsidiary, in any court of competent jurisdiction,
seeking (i) its reorganization, liquidation,
dissolution, arrangement or winding-up, or the
composition or readjustment of its debts, (ii) the
appointment of a receiver, custodian, trustee, examiner,
liquidator or the like of the Borrower or any such
Subsidiary or of all or any substantial part of its
property, or (iii) similar relief in respect of the
Borrower or any such Subsidiary under any law relating
to bankruptcy, insolvency, reorganization, winding-up,
or composition or adjustment of debts, and such
proceeding or case shall continue undismissed, or an
order, judgment or decree approving or ordering any of
the foregoing shall be entered and continue unstayed and
in effect, for a period of 60 or more days; or an order
for relief against the Borrower or any such Subsidiary
shall be entered in an involuntary case under the
Bankruptcy Code; or
(i) the Custodial Agreement shall for whatever reason be
terminated or cease to be in full force and effect, or
the enforceability thereof shall be contested by any
Borrower; or
(j) any Borrower grants, or suffers to exist, any Lien not
contemplated herein or the Liens contemplated hereby
cease to be perfected Liens on any Collateral; or
(i) any materially adverse change in the properties,
business or financial condition, or prospects of any
Borrower or any Subsidiary of a Borrower, in each case
as determined by the Lender in its sole discretion, or
the existence of any other condition which, in the
Lender's sole discretion, constitutes a material
impairment of the Borrowers' collective ability to
perform their obligations under this Agreement, the
Note, the Credit Supports or any other Loan Document.
Section 9. Remedies Upon Default.
(a) Upon the occurrence of one or more Events of Default other than
those referred to in Section 8(g) or (h), the Lender may
immediately declare the principal amount of the Loans then
outstanding under the Note to be immediately due and payable,
together with all interest thereon and fees and expenses
accruing under this Agreement; provided that upon the occurrence
of an Event of Default referred to in Sections 8(g) or (h) such
amounts shall immediately and automatically become due and
payable without any further action by any Person. Upon such
declaration or such automatic acceleration, the balance then
outstanding on the Note shall become immediately due and
payable, without presentment, demand, protest or other
formalities of any kind, all of which are hereby expressly
waived by the Borrowers.
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(b) Upon the occurrence of one or more Events of Default, the Lender
shall have the right to obtain physical possession of the files
of the Borrowers relating to the Collateral and all documents
relating to the Collateral which are then or may thereafter come
in to the possession of any Borrower or any third party acting
for any Borrower and each Borrower shall deliver to the Lender
such assignments as the Lender shall request. The Lender shall
be entitled to specific performance of all agreements of the
Borrowers contained in this Agreement.
Section 10. No Duty on Lender's Part.
The powers conferred on the Lender hereunder are solely to protect the Lender's
interests in the Collateral and shall not impose any duty upon it to exercise
any such powers. The Lender shall be accountable only for amounts that it
actually receives as a result of the exercise of such powers, and neither it nor
any of its officers, directors, employees or agents shall be responsible to the
Borrowers for any act or failure to act hereunder, except for its own gross
negligence or willful misconduct.
Section 11. Miscellaneous.
11.01 Waiver. No failure on the part of the Lender to exercise and no
delay in exercising, and no course of dealing with respect to,
any right, power or privilege under any Loan Document shall
operate as a waiver thereof, nor shall any single or partial
exercise of any right, power or privilege under any Loan
Document preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The remedies
provided herein are cumulative and not exclusive of any remedies
provided by law.
11.02 Notices. Except as otherwise expressly permitted by this
Agreement, all notices, requests and other communications
provided for herein and under the Custodial Agreement
(including, without limitation, any modifications of, or
waivers, requests or consents under, this Agreement) shall be
given or made in writing (including, without limitation, by
telex or telecopy) delivered to the intended recipient at the
"Address for Notices" specified below its name on the signature
pages hereof); or, as to any party, at such other address as
shall be designated by such party in a written notice to each
other party. Except as otherwise provided in this Agreement and
except for notices given under Section 2 (which shall be
effective only on receipt), all such communications shall be
deemed to have been duly given when transmitted by telex or
telecopier or personally delivered or, in the case of a mailed
notice, upon receipt, in each case given or addressed as
aforesaid.
11.03 Indemnification and Expenses.
(a) The Borrowers agree, jointly and severally, to hold the Lender
harmless from and indemnify the Lender against all liabilities,
losses, damages, judgments, costs and expenses of any kind which
may be imposed on, incurred by, or asserted against the Lender,
relating to or arising out of, this Agreement, the Note, the
Credit Supports, any other Loan Document or any transaction
contemplated hereby or thereby, or any amendment, supplement or
modification of, or any waiver or consent under or in respect
of, this Agreement, the Note, the Credit Supports, any other
Loan Document or any transaction contemplated hereby or thereby,
that, in each case, results from anything other than the
Lender's gross negligence or willful misconduct. In any suit,
proceeding or action brought by the Lender in connection with
any Mortgage Loan for any sum owing thereunder, or to enforce
any provisions of any Mortgage Loan, the Borrowers will save,
indemnify and hold the Lender harmless form and against all
expense, loss or damage suffered by reason of any defense,
set-off, counterclaim, recoupment or reduction or liability
whatsoever of the account debtor or obligor thereunder, arising
out of a breach by a Borrower of any obligations thereunder or
arising out of any other agreement, indebtedness or liability at
any time owing to or in favor of such account debtor or obligor
or its successors from a Borrower. The Borrowers also agree to
reimburse the Lender for all of its costs and expenses incurred
in
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connection with the enforcement or the preservation of the
Lender's rights under this Agreement, the Note, the Credit
Supports, any other Loan Document or any transaction
contemplated hereby or thereby, including without limitation the
reasonable fees and disbursements of its counsel. The Borrowers
hereby acknowledge that, notwithstanding the fact that the Note
and Credit Supports are secured by the Collateral, the
obligations of the Borrowers under the Note and Credit Supports
are recourse obligations of the Borrowers.
(b) The Borrowers agree to pay as and when billed by the Lender all
of the out-of-pocket costs and expenses incurred by the Lender
in connection with the development, preparation and execution
of, and any amendment, supplement or modification to, this
Agreement, the Note, the Credit Supports, any other Loan
Document or any other documents prepared in connection herewith
or therewith. The Borrowers agree to pay as and when billed by
the Lender all of the out-of-pocket costs and expenses incurred
in connection with the consummation and administration of the
transactions contemplated hereby and thereby including, without
limitation, (i) all the reasonable fees, disbursements and
expenses of Tobin & Tobin, counsel to the Lender and any local
counsel to the Lender, and (ii) all the reasonable due
diligence, inspection, testing and review costs and expenses
incurred by the Lender with respect to Collateral under this
Agreement, including, but not limited to, those costs and
expenses incurred by the Lender pursuant to Section 11.14
hereto.
11.04 Amendments. Except as otherwise expressly provided in this
Agreement, any provision of this Agreement may be modified or
supplemented only by an instrument in writing signed by the
Borrowers and the Lender and any provision of this Agreement may
be waived by the Lender.
11.05 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
11.06 Survival. The obligations of the Borrowers under Sections 3.03
and 11.03 hereof shall survive the repayment of the Loans and
the Credit Supports and the termination of this Agreement. In
addition, each representation and warranty made, or deemed to be
made by a request for a borrowing, herein or pursuant hereto
shall survive the making of such representation and warranty,
and the Lender shall not be deemed to have waived, by reason of
making any Loan, any Default that may arise by reason of such
representation or warranty proving to have been false or
misleading, notwithstanding that the Lender may have had notice
or knowledge or reason to believe that such representation or
warranty was false or misleading at the time such Loan was made.
11.07 Captions. The table of contents and captions and section
headings appearing herein are included solely for convenience of
reference and are not intended to affect the interpretation of
any provision of this Agreement.
11.08 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.
11.09 Agreement Constitutes Security Agreement; Governing Law. This
Agreement shall be governed by California law without reference
to choice of law doctrine, and shall constitute a security
agreement within the meaning of the Uniform Commercial Code.
11.10 SUBMISSION TO JURISDICTION; WAIVERS. EACH BORROWER HEREBY
IRREVOCABLY AND UNCONDITIONALLY:
(A) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION
OR PROCEEDING RELATING TO THIS AGREEMENT, THE NOTE, THE
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CREDIT SUPPORTS, AND THE OTHER LOAN DOCUMENTS, OR FOR
RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN RESPECT
THEREOF, TO THE NON-EXCLUSIVE GENERAL JURISDICTION OF
THE COURTS OF THE STATE OF CALIFORNIA, THE FEDERAL
COURTS OF THE UNITED STATES OF AMERICA FOR THE NORTHERN
DISTRICT OF CALIFORNIA, AND APPELLATE COURTS FROM ANY
THEREOF;
(B) CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE
BROUGHT IN SUCH COURTS AND, TO THE EXTENT PERMITTED BY
LAW, WAIVES ANY OBJECTION THAT IT MAY NOW OR THEREAFTER
HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN
ANY SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS
BROUGHT IN AN INCONVENIENT COURT AND AGREES NOT TO PLEAD
OR CLAIM THE SAME;
(C) AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR
PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY
REGISTERED OR CERTIFIED MAIL (OR ANY SUBSTANTIALLY
SIMILAR FORM OF MAIL), POSTAGE PREPAID, TO ITS ADDRESS
SET FORTH UNDER ITS SIGNATURE BELOW OR AT SUCH OTHER
ADDRESS OF WHICH THE LENDER SHALL HAVE BEEN NOTIFIED;
AND
(D) AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO
EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED
BY LAW OR SHALL LIMIT THE RIGHT TO SUE IN ANY OTHER
JURISDICTION.
11.11 WAIVER OF JURY TRIAL. EACH OF THE BORROWERS AND THE LENDER
HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY
OTHER LOAN DOCUMENT OR TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY.
11.12 Acknowledgments. Each Borrower hereby acknowledges that:
(a) the Lender has no fiduciary relationship to the
Borrower, and the relationship between the Borrower and
the Lender is solely that of debtor and creditor; and
(b) no joint venture exists between the Lender and the
Borrower.
11.13 Termination. This Agreement may be terminated by the Lender or
Holdings by delivering written notice of such termination to
each of the other parties hereto at least 60 days prior to the
effective date of termination. Termination of this Agreement
shall not affect the terms of Loans or Credit Supports at the
time outstanding and shall otherwise be subject to Section 11.06
hereof.
11.14 Servicing.
(a) The Borrowers covenant to cause the servicing of the Mortgage
Loans to be maintained in conformity with accepted and prudent
servicing practices in the industry for the same type of
mortgage loans as the Mortgage Loans and in a manner at least
equal in quality to the servicing the Borrowers provide to other
mortgage loans which they own.
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(b) The Mortgage Loans will be serviced by one or more third-party
servicers (each such third-party servicer, the "Servicer"). The
Borrowers (i) shall provide a copy of each servicing agreement
to the Lender, which servicing agreement shall be in form and
substance acceptable to the Lender (the "Servicing Agreement");
and (ii) hereby irrevocably assign to the Lender and Lender's
successors and assigns all right, title, interest and the
benefits of the Servicing Agreements with respect to the
Mortgage Loans.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered as of the day and year first above written.
BORROWERS
RWT HOLDINGS, INC.
By: /s/ Vickie L. Rath
---------------------------------
Title: Treasurer
------------------------------
Address for Notices:
591 Redwood Highway
Suite 3140
Mill Valley, California 94941
Attn: Vickie L. Rath
Telecopier No.: (415) 381-1773
Telephone No.: (415) 389-7373
REDWOOD RESIDENTIAL
FUNDING, INC.
By: /s/ Vickie L. Rath
---------------------------------
Title: Treasurer
------------------------------
Address for Notices:
591 Redwood Highway
Suite 3140
Mill Valley, California 94941
Attn: Vickie L. Rath
Telecopier No.: (415) 381-1773
Telephone No.: (415) 389-7373
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REDWOOD COMMERCIAL
FUNDING, INC.
By: /s/ Vickie L. Rath
---------------------------------
Title: Treasurer
------------------------------
Address for Notices:
6160 Plumas Street
Reno, Nevada 89509
Attn: Vickie L. Rath
Telecopier No.: (415) 381-1773
Telephone No.: (415) 389-7373
REDWOOD FINANCIAL SERVICES, INC.
By: /s/ Vickie L. Rath
---------------------------------
Title: Treasurer
------------------------------
Address for Notices:
591 Redwood Highway
Suite 3140
Mill Valley, California 94941
Attn: Vickie L. Rath
Telecopier No.: (415) 381-1773
Telephone No.: (415) 389-7373
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LENDER
REDWOOD TRUST, INC.
By: /s/ Douglas B. Hansen
---------------------------------
Title: President
------------------------------
Address for Notices:
591 Redwood Highway
Suite 3100
Mill Valley, California 94941
Attn: Douglas B. Hansen, President
Telecopier No.: (415) 381-1773
Telephone No.: (415) 389-7373
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EXHIBIT A
[FORM OF PROMISSORY NOTE]
FOR VALUE RECEIVED, RWT HOLDINGS, INC., a Delaware corporation ("Holdings"),
REDWOOD RESIDENTIAL FUNDING, INC., a Delaware corporation ("Residential"),
REDWOOD COMMERCIAL FUNDING, INC., a Delaware corporation ("Commercial"), REDWOOD
FINANCIAL SERVICES, INC., a Delaware corporation ("Financial"), and each
additional subsidiary of Holdings that may sign this Note (collectively, the
"Borrowers" and each individually, a "Borrower") hereby promise, jointly and
severally, to pay to the order of REDWOOD TRUST, INC., a Maryland corporation
(the "Lender"), at the principal office of the Lender at 591 Redwood Highway,
Suite 3100, Mill Valley, California 94941, in lawful money of the United States,
and in immediately available funds, the principal sum of the aggregate unpaid
principal amount of the Loans made by the Lender to the Borrowers under the
Agreement, on the dates and in the principal amounts provided in the related
Loan Commitments issued under the Agreement, and to pay interest on the unpaid
principal amount of each such Loan, at such office, in like money and funds, for
the period commencing on the date of such Loan until such Loan shall be paid in
full, at the rates per annum and on the dates provided in each such Loan
Commitment.
The date, amount and interest rate of each Loan made by the Lender to a
Borrower, and each payment made on account of the principal thereof, shall be
recorded by the Lender on its books and, prior to any transfer of the Note,
endorsed by the Lender on the schedule attached hereto or any continuation
thereof; provided, that the failure of the Lender to make any such recordation
or endorsement shall not affect the obligations of the Borrower to make a
payment when due of any amount owing under the Agreement or hereunder in respect
of the Loans made by the Lender.
This Note is the Note referred to in the Lending and Credit Support Agreement
dated as of April 1, 1998 (as amended, supplemented or otherwise modified and in
effect from time to time, the "Agreement") between the Borrowers and the Lender,
and evidences Loans made by the Lender thereunder. Terms used but not defined in
this Note have the respective meanings assigned to them in the Agreement.
The Borrowers agree to pay all the Lender's costs of collection and enforcement
(including reasonable attorneys' fees and disbursements of Lender's counsel) in
respect of this Note when incurred, including, without limitation, reasonable
attorneys' fees through appellate proceedings.
Notwithstanding the pledge of the Collateral, each Borrower hereby acknowledges,
admits and agrees that the Borrower's obligations under this Note are recourse
obligations of the Borrower to which the Borrower pledges its full faith and
credit.
The Borrowers, and any indorsers or guarantors hereof, (a) severally waive
diligence, presentment, protest and demand and also notice of protest, demand,
dishonor and nonpayments of this Note, (b) expressly agree that this Note, or
any payment hereunder, may be extended from time to time, and consent to the
acceptance of further Collateral, the release of any Collateral for this Note,
the release of any party primarily or secondarily liable hereon, and (c)
expressly agree that it will not be necessary for the Lender, in order to
enforce payment of this Note, to first institute or exhaust the Lender's
remedies against the Borrowers or any other party liable hereon or against any
Collateral for this Note. No extension of time for the payment of this Note, or
any installment hereof, made by agreement by the Lender with any person now or
hereafter liable for the payment of this Note, shall affect the liability under
this Note of any Borrower, even if the Borrower is not a party to such
agreement; provided, however, that the Lender and any Borrower, by written
agreement between them, may affect the liability of the Borrower.
Any reference herein to the Lender shall be deemed to include and apply to every
subsequent holder of this Note. Reference is made to the Agreement for
provisions concerning prepayments, Collateral, acceleration and other material
terms affecting this Note.
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THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED UNDER THE LAWS OF THE STATE OF
CALIFORNIA (WITHOUT REFERENCE TO CHOICE OF LAW DOCTRINE) WHOSE LAWS THE BORROWER
EXPRESSLY ELECTS TO APPLY TO THIS NOTE. THE BORROWER AGREES THAT ANY ACTION OR
PROCEEDING BROUGHT TO ENFORCE OR ARISING OUT OF THIS NOTE MAY BE COMMENCED IN
THE COURTS OF THE STATE OF CALIFORNIA.
RWT HOLDINGS, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
REDWOOD RESIDENTIAL
FUNDING, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
REDWOOD COMMERCIAL
FUNDING, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
REDWOOD FINANCIAL SERVICES, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
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SCHEDULE OF LOANS
This Note evidences Loans made under the within-described Agreement to the
Borrowers, on the dates, in the principal amounts and bearing interest at the
rates set forth below, and subject to the payments and prepayments of principal
set forth below:
Principal Amount Amount Paid Unpaid Principal Notation
Date Made Borrower of Loan or Prepaid Amount Made By
--------- -------- ------- ---------- ------ -------
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[FORM OF LOAN COMMITMENT]
VIA FACSIMILE
RWT Holdings, Inc. [or other Borrower]
591 Redwood Highway, Suite 3140
Mill Valley, California 94941
Loan Commitment No.:_______________
Ladies and Gentlemen:
We hereby offer to make a Loan to you with the characteristics set forth below,
subject to the terms and conditions set forth in the Lending and Credit Support
Agreement, dated as of April 1, 1998 (the "Agreement"; capitalized terms used
but not otherwise defined herein shall have the meaning given them in the
Agreement), you and us:
Lender: Redwood Trust, Inc.
Borrower: RWT Holdings, Inc. [or other Borrower]
Loan Amount: $_______________
Funding Date: ________________
Applicable Margin: ________basis points (_________%)
Mortgage Loans to be
Pledged on Funding Date: See Schedule I attached hereto
Borrower's account information
and wire transfer instructions: ________________
If you would like to accept or decline our offer set forth above, please notify
us by telephone immediately. If we have not heard from you within one (1)
Business Day from the date set forth under our signature below, you will be
deemed to have accepted our offer.
REDWOOD TRUST, INC.
By:_________________________________
Name:_______________________________
Title:______________________________
Date:_______________________________
36
EXHIBIT C
[FORM OF CREDIT SUPPORT COMMITMENT]
VIA FACSIMILE
RWT Holdings, Inc. [or other Borrower]
591 Redwood Highway, Suite 3140
Mill Valley, California 94941
Credit Support Commitment No.:____________
Ladies and Gentlemen:
We hereby offer to extend Credit Support in your favor with the characteristics
set forth below, subject to the terms and conditions set forth in the Lending
and Credit Support Agreement, dated as of April 1, 1998 (the "Agreement";
capitalized terms used but not otherwise defined herein shall have the meaning
given them in the Agreement), you and us:
Lender: Redwood Trust, Inc.
Borrower: RWT Holdings, Inc. [or other Borrower]
Loan Amount: $_______________
Funding Date: ________________
Applicable Margin: ________basis points (_________%)
Mortgage Loans to be
Pledged on Funding Date (if any): See Schedule I attached hereto
Third-Party Lender:. ___________________________
Credit Support Documents: ___________________________
Credit Support Fee: ___________________________
1
37
If you would like to accept or decline our offer set forth above, please notify
us by telephone immediately. If we have not heard from you within one (1)
Business Day from the date set forth under our signature below, you will be
deemed to have accepted our offer.
REDWOOD TRUST, INC.
By:_________________________________
Name:_______________________________
Title:______________________________
Date:_______________________________
2