EXHIBIT 10.84
EXECUTION VERSION
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MASTER LOAN AND SECURITY AGREEMENT
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DATED AS OF JANUARY 9, 2004
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NEW YORK MORTGAGE FUNDING, LLC
AS BORROWER
AND
GREENWICH CAPITAL FINANCIAL PRODUCTS, INC.
AS LENDER
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TABLE OF CONTENTS
Page
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SECTION 1. Definitions and Accounting Matters .................................................... -1-
1.01 Certain Defined Terms ................................................................. -1-
1.02 Accounting Terms and Determinations ................................................... -17-
SECTION 2. Advances, Note and Prepayments ........................................................ -17-
2.01 Advances .............................................................................. -17-
2.02 Notes ................................................................................. -17-
2.03 Procedure for Borrowing ............................................................... -17-
2.04 Limitation on Types of Advances; Illegality ........................................... -19-
2.05 Repayment of Advances; Interest ....................................................... -19-
2.06 Mandatory Prepayments or Pledge ....................................................... -20-
2.07 Optional Prepayments .................................................................. -20-
2.08 Requirements of Law ................................................................... -20-
2.09 Purpose of Advances ................................................................... -21-
SECTION 3. Payments; Computations; Taxes; ........................................................ -22-
3.01 Payments .............................................................................. -22-
3.02 Computations .......................................................................... -22-
3.03 U.S. Taxes ............................................................................ -22-
SECTION 4. Collateral Security ................................................................... -24-
4.01 Collateral; Security Interest ......................................................... -24-
4.02 Further Documentation ................................................................. -25-
4.03 Changes in Locations, Name, etc ....................................................... -25-
4.04 Lender's Appointment as Attorney-in-Fact .............................................. -25-
4.05 Performance by Lender of Borrower's Obligations ....................................... -27-
4.06 Proceeds .............................................................................. -27-
4.07 Remedies .............................................................................. -27-
4.08 Limitation on Duties Regarding Presentation of Collateral ............................. -28-
4.09 Powers Coupled with an Interest ....................................................... -28-
4.10 Release of Security Interest .......................................................... -28-
SECTION 5. Conditions Precedent .................................................................. -28-
5.01 Initial Advance ....................................................................... -29-
5.02 Initial and Subsequent Advances ....................................................... -30-
SECTION 6. Representations and Warranties ........................................................ -32-
6.01 Existence ............................................................................. -32-
6.02 Financial Condition ................................................................... -32-
6.03 Litigation ............................................................................ -33-
6.04 No Breach ............................................................................. -33-
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6.05 Action ................................................................................ -33-
6.06 Approvals ............................................................................. -33-
6.07 Margin Regulations .................................................................... -33-
6.08 Taxes ................................................................................. -33-
6.09 Investment Company Act ................................................................ -34-
6.10 No Legal Bar .......................................................................... -34-
6.11 No Default ............................................................................ -34-
6.12 Collateral; Collateral Security ....................................................... -34-
6.13 Chief Executive Office; Chief Operating Office ........................................ -35-
6.14 Location of Books and Records ......................................................... -35-
6.15 True and Complete Disclosure .......................................................... -35-
6.16 Tangible Net Worth; Liquidity ......................................................... -35-
6.17 ERISA ................................................................................. -35-
6.18 Licenses .............................................................................. -36-
6.19 Relevant States ....................................................................... -36-
6.20 True Sales ............................................................................ -36-
6.21 No Burdensome Restrictions ............................................................ -36-
6.22 Subsidiaries .......................................................................... -36-
6.24 No Adverse Selection .................................................................. -36-
6.25 Borrower Solvent; Fraudulent Conveyance ............................................... -36-
6.26 Insured Closing Letter ................................................................ -37-
6.27 Escrow Agreement ...................................................................... -37-
SECTION 7. Covenants of the Borrower ............................................................. -37-
7.01 Financial Statements .................................................................. -37-
7.02 Litigation ............................................................................ -39-
7.03 Existence, Etc ........................................................................ -39-
7.04 Prohibition of Fundamental Changes .................................................... -40-
7.05 Borrowing Base Deficiency ............................................................. -40-
7.06 Notices ............................................................................... -40-
7.07 Servicing ............................................................................. -41-
7.08 [Intentionally Omitted.] .............................................................. -41-
7.09 Underwriting Guidelines ............................................................... -41-
7.10 Lines of Business ..................................................................... -41-
7.11 Transactions with Affiliates .......................................................... -41-
7.12 Use of Proceeds ....................................................................... -41-
7.13 Limitation on Liens ................................................................... -41-
7.14 Limitation on Sale of Assets .......................................................... -42-
7.15 Limitation on Distributions ........................................................... -42-
7.17 Maintenance of Tangible Net Worth ..................................................... -42-
7.18 Maintenance of Ratio of Total Indebtedness to Tangible Net Worth ...................... -42-
7.19 Restricted Payments ................................................................... -42-
7.20 Servicing Transmission ................................................................ -42-
7.21 No Amendment or Waiver ................................................................ -43-
7.22 Maintenance of Property; Insurance .................................................... -43-
7.23 Further Identification of Collateral .................................................. -43-
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7.24 Mortgage Loan Determined to be Defective .............................................. -43-
7.25 Interest Rate Protection Agreements ................................................... -43-
7.26 Certificate of a Responsible Officer of the Borrower .................................. -43-
SECTION 8. Events of Default ..................................................................... -44-
SECTION 9. Remedies Upon Default ................................................................. -46-
SECTION 10. No Duty on Lender's Part .............................................................. -47-
SECTION 11. Miscellaneous ......................................................................... -47-
11.01 Waiver ................................................................................ -47-
11.02 Notices ............................................................................... -47-
11.03 Indemnification and Expenses .......................................................... -47-
11.04 Amendments ............................................................................ -48-
11.05 Successors and Assigns ................................................................ -48-
11.06 Survival .............................................................................. -48-
11.07 Captions .............................................................................. -49-
11.08 Counterparts .......................................................................... -49-
11.09 Loan Agreement Constitutes Security Agreement; Governing Law .......................... -49-
11.10 SUBMISSION TO JURISDICTION; WAIVERS ................................................... -49-
11.11 WAIVER OF JURY TRIAL .................................................................. -50-
11.12 Acknowledgments ....................................................................... -50-
11.13 Hypothecation or Pledge of Collateral ................................................. -50-
11.14 Assignments; Participations ........................................................... -50-
11.15 Servicing ............................................................................. -51-
11.16 Periodic Due Diligence Review ......................................................... -52-
11.17 Set-Off ............................................................................... -53-
11.18 Intent ................................................................................ -53-
11.19 Entire Agreement ...................................................................... -53-
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SCHEDULES
SCHEDULE 1 Representations and Warranties re: Mortgage Loans
SCHEDULE 2 Filing Jurisdictions and Offices
SCHEDULE 3 Relevant States
SCHEDULE 4 Subsidiaries
EXHIBITS
EXHIBIT A Form of Promissory Note
EXHIBIT B Form of Custodial Agreement
EXHIBIT C Form of Opinion of Counsel to the Borrower
EXHIBIT D Form of Notice of Borrowing and Pledge
EXHIBIT E Underwriting Guidelines
EXHIBIT F Required Fields for Servicing Transmission
EXHIBIT G Required Fields for Mortgage Loan Data Transmission
EXHIBIT H Form of Borrowing Base Certificate
EXHIBIT I Form of Confidentiality Agreement
EXHIBIT J Form of Instruction Letter
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MASTER LOAN AND SECURITY AGREEMENT
MASTER LOAN AND SECURITY AGREEMENT, dated as of January 9,
2004, between NEW YORK MORTGAGE FUNDING, LLC, a Delaware limited liability
company (the "Borrower") and GREENWICH CAPITAL FINANCIAL PRODUCTS, INC., a
Delaware corporation (the "Lender").
RECITALS
The Borrower wishes to obtain financing from time to time to
provide interim funding for the origination or acquisition of certain Mortgage
Loans (as defined herein), which Mortgage Loans are to be sold or contributed by
the Borrower to one or more trusts or other entities to be sponsored by the
Borrower or an Affiliate (as defined herein) thereof, or to third-parties, and
which Mortgage Loans shall secure Advances (as defined herein) to be made by the
Lender hereunder.
The Lender has agreed, subject to the terms and conditions of
this Loan Agreement (as defined herein), to provide such financing to the
Borrower, with a portion of the proceeds of the sale of all mortgage-backed
securities issued by any such trust or other entity, together with a portion of
the proceeds of any permitted whole loan sales, together with other funds of the
Borrower, if necessary, being used to repay any Advances made hereunder as more
particularly described herein.
Accordingly, for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto hereby
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 Loan Agreement in the singular to have the same
meanings when used in the plural and vice versa):
"Accepted Servicing Practices" shall mean, with respect to any
Mortgage Loan, accepted and prudent mortgage servicing practices of prudent
mortgage lending institutions which service mortgage loans of the same type as
such Mortgage Loans in the jurisdiction where the related Mortgaged Property is
located and in a manner at least equal in quality to the servicing the Borrower
or Borrower's designee provides to mortgage loans which they own in their own
portfolio.
"Advance" shall have the meaning specified in Section 2.01(a)
hereof.
"Affiliate" means, with respect to any Person, any other
Person which, directly or indirectly, controls, is controlled by, or is under
common control with, such Person. For purposes of this definition, "control"
(together with the correlative meanings of "controlled by" and "under common
control with") means possession, directly or indirectly, of the power (a) to
vote 10% or more of the securities (on a fully diluted basis) having ordinary
voting power for the directors or managing general partners (or their
equivalent) of such Person, or (b) to direct or cause the direction of the
management or policies of such Person, whether through the ownership of voting
securities, by contract, or otherwise.
"ALTA" means the American Land Title Association.
"Applicable Collateral Percentage" shall mean (i) for the
first 120 days following the date such Eligible Mortgage Loan first becomes
subject to the terms of this Agreement, with respect to each Advance:
(a) which are "A" credit Mortgage Loans, 98% of the
lesser of (i) the current principal balance and (ii) the
Market Value of the Loans;
(b) which are "Alt-A" credit Mortgage Loans, 96% of
the lesser of (i) the current principal balance and (ii) the
Market Value of the Loans;
(c) which are 30 days past due with respect to
scheduled principal and interest payments, 0%; and
(ii) thereafter, 0%.
"Applicable Margin" shall mean 1.25% per annum. Such
percentage may be adjusted by the Lender in its sole discretion to 0.90% per
annum in the event that the Borrower successfully completes its capital raise
scheduled to close in February, 2004.
"Appraised Value" shall mean the value set forth in an
appraisal made in connection with the origination of the related Mortgage Loan
as the value of the Mortgaged Property.
"Assignment of Mortgage" shall mean, with respect to any
Mortgage, an assignment of the Mortgage, notice of transfer or equivalent
instrument in recordable form, sufficient under the laws of the jurisdiction
wherein the related Mortgaged Property is located to reflect the assignment and
pledge of the Mortgage.
"Attorney Bailee Letter" shall have the meaning assigned to
such term in the Custodial Agreement.
"Bankruptcy Code" shall mean the United States Bankruptcy Code
of 1978, as amended from time to time.
"Best's" means Best's Key Rating Guide, as the same shall be
amended from time to time.
"Borrower" shall have the meaning provided in the heading
hereof.
"Borrowing Base" shall mean the aggregate Collateral Value of
all Eligible Mortgage Loans that have been, and remain pledged to the Lender
hereunder.
"Borrowing Base Certificate" shall mean the certificate
prepared by the Lender substantially in the form of Exhibit H, attached hereto.
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"Borrowing Base Deficiency" shall have the meaning provided in
Section 2.06 hereof.
"Business Day" shall mean any day other than (i) a Saturday or
Sunday, (ii) a day on which the New York Stock Exchange, the Federal Reserve
Bank of New York, the Custodian or banking and savings and loan institutions in
the State of New York, Connecticut or the City of New York or the city or state
in which the Custodian's offices are located are closed, or (iii) a day on which
trading in securities on the New York Stock Exchange or any other major
securities exchange in the United States is not conducted.
"Capital Lease Obligations" shall mean, for any Person, all
obligations of such Person to pay rent or other amounts under a lease of (or
other agreement conveying the right to use) Property to the extent such
obligations are required to be classified and accounted for as a capital lease
on a balance sheet of such Person under GAAP, and, for purposes of this Loan
Agreement, the amount of such obligations shall be the capitalized amount
thereof, determined in accordance with GAAP.
"Cash Equivalents" shall mean (a) securities with maturities
of 90 days or less from the date of acquisition issued or fully guaranteed or
insured by the United States Government or any agency thereof, (b) certificates
of deposit and eurodollar time deposits with maturities of 90 days or less from
the date of acquisition and overnight bank deposits of any commercial bank
having capital and surplus in excess of $500,000,000, (c) repurchase obligations
of any commercial bank satisfying the requirements of clause (b) of this
definition, having a term of not more than seven days with respect to securities
issued or fully guaranteed or insured by the United States Government, (d)
commercial paper of a domestic issuer rated at least A-1 or the equivalent
thereof by Standard and Poor's Ratings Group ("S&P") or P-1 or the equivalent
thereof by Xxxxx'x Investors Service, Inc. ("Moody's") and in either case
maturing within 90 days after the day of acquisition, (e) securities with
maturities of 90 days or less from the date of acquisition issued or fully
guaranteed by any state, commonwealth or territory of the United States, by any
political subdivision or taxing authority of any such state, commonwealth or
territory or by any foreign government, the securities of which state,
commonwealth, territory, political subdivision, taxing authority or foreign
government (as the case may be) are rated at least A by S&P or A by Moody's, (f)
securities with maturities of 90 days or less from the date of acquisition
backed by standby letters of credit issued by any commercial bank satisfying the
requirements of clause (b) of this definition or, (g) shares of money market
mutual or similar funds which invest exclusively in assets satisfying the
requirements of clauses (a) through (f) of this definition.
"Change of Control" means the acquisition by any Person, or
two or more Persons acting in concert, of beneficial ownership (within the
meaning of Rule 13d-3 of the Securities and Exchange Commission under the
Securities Exchange Act of 1934) of outstanding shares of voting stock of such
Person at any time if after giving effect to such acquisition (i) such Person or
Persons owns twenty percent (20%) or more of such outstanding voting stock or
(ii) Xxxxxx X. Xxxxxxx does not own more than fifty (50%) of such outstanding
shares of voting stock; provided, however that the contribution by the members
of the Initial Guarantor of their membership interests in the Initial Guarantor
to NYMT under that certain Contribution Agreement, dated as of December 22,
2003, by and among Xxxxxx X. Xxxxxxx and Xxxxxx X. Xxxxxx, as contributors, and
New York Mortgage Trust, Inc. upon completion of the initial public offering of
NYMT shall not constitute a Change of Control.
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"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.
"Collateral Value" shall mean with respect to each Mortgage
Loan, the lesser of (a) the product of (x) the Applicable Collateral Percentage
and (y) the outstanding principal balance of such Mortgage Loan, and (b) the
Market Value; provided that, the Collateral Value shall be deemed to be zero
with respect to each Mortgage Loan:
(1) in respect of which there is a material breach of a
representation and warranty set forth on Schedule 1 (assuming
each representation and warranty is made as of the date
Collateral Value is determined) or there is an Exception which
was not otherwise waived by Lender;
(2) which the Lender determines, in its reasonable discretion
is not eligible for sale in the secondary market or for
securitization without unreasonable credit enhancement;
(3) which has been released from the possession of the
Custodian under Section 5(a) of the Custodial Agreement to the
Borrower or its bailee for a period in excess of ten (10)
calendar days (or if such tenth day is not a Business Day, the
next succeeding Business Day);
(4) which has been released from the possession of the
Custodian (i) under Section 5(b) of the Custodial Agreement
under any Transmittal Letter in excess of the time period
stated in such Transmittal Letter for release, or (ii) under
Section 5(c) of the Custodial Agreement under an Attorney
Bailee Letter, from and after the date such Attorney's Bailee
Letter is terminated or ceases to be in full force and effect;
(5) which has been subject to this Loan Agreement for greater
than 120 days;
(6) in respect of which (a) the related Mortgaged Property is
the subject of a foreclosure proceeding or (b) the related
Mortgage Note has been extinguished under relevant state law
in connection with a judgment of foreclosure or foreclosure
sale or otherwise;
(7) if (a) the related Mortgage Note or the related Mortgage
is not genuine or is not the legal, valid, binding and
enforceable obligation of the maker thereof, subject to no
right of rescission, set-off, counterclaim or defense, or (b)
such Mortgage, is not a valid, subsisting, enforceable and
perfected first lien on the Mortgaged Property;
(8) in respect of which the related Mortgagor is the subject
of a bankruptcy proceeding;
(9) which is 30 or more days past due;
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(10) if the Mortgagor has not made its first payment on the
related Mortgage Loan prior to its next scheduled payment date
at the time of the funding of the related Advance;
(11) if such Mortgage Loan is a Wet Loan and all Required
Documents have not been delivered to the Custodian within
seven (7) days of the origination of such Wet Loan;
(12) which is a Wet Loan and the Collateral Value of such Wet
Loan, when added to the Collateral Value of all other Wet
Loans that secure Advances hereunder exceeds the lesser of (x)
$10,000,000 and (y) 10% of the Collateral Value of the
Advances outstanding hereunder;
(13) which is an "Alt-A" credit Mortgage Loan and the
Collateral Value of such "Alt-A" credit Mortgage Loan, when
added to the Collateral Value of all other "Alt-A" credit
Mortgage Loans that secure Advances hereunder exceeds the
lesser of (x) $20,000,000 and (y) 20% of the Collateral Value
of the Advances outstanding hereunder;
(14) which is not subject to either a Takeout Commitment or a
hedge trade with Greenwich Capital Markets, Inc., as deemed
appropriate by Lender, and is other than a one-month or
six-month LIBOR ARM; or
(15) which is an "Alt-A" credit Mortgage Loan and either (a)
such "Alt-A" credit Mortgage Loan has a FICO score greater
than 660, (b) such "Alt-A" credit Mortgage Loan has an LTV of
greater than 80% or (c) the inclusion of such "Alt-A" credit
Mortgage Loan in the Borrowing Base causes the weighted
average FICO score of all "Alt-A" credit Mortgage Loans then
subject to the facility to be less than 700.
"Contractual Obligation" shall mean as to any Person, any
material provision of any agreement, instrument or other undertaking to which
such Person is a party or by which it or any of its property is bound or any
material provision of any security issued by such Person.
"Cooperative Corporation" shall mean with respect to any
Cooperative Loan, the cooperative apartment corporation that holds legal title
to the related Cooperative Project and grants occupancy rights to units therein
to stockholders through Proprietary Leases or similar arrangements.
"Cooperative Loan" shall mean a Mortgage Loan that is secured
by a first lien on and a perfected security interest in Cooperative Shares and
the related Proprietary Lease granting exclusive rights to occupy the related
Cooperative Unit in the building owned by the related Cooperative Corporation.
"Cooperative Project" shall mean with respect to any
Cooperative Loan, all real property and improvements thereto and rights therein
and thereto owned by a Cooperative Corporation including without limitation the
land, separate dwelling units and all common elements.
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"Cooperative Shares" shall mean with respect to any
Cooperative Loan, the shares of stock issued by a Cooperative Corporation and
allocated to a Cooperative Unit and represented by a stock certificate.
"Cooperative Unit" shall mean with respect to any Cooperative
Loan, a specific unit in a Cooperative Project.
"Custodial Agreement" shall mean the Custodial Agreement,
dated as of the date hereof, among the Borrower, the Custodian and the Lender,
substantially in the form of Exhibit B hereto, as the same shall be modified and
supplemented and in effect from time to time.
"Custodian" shall mean Deutsche Bank Trust Company Americas,
its successors and permitted assigns.
"Custodian Loan Transmission" shall have the meaning assigned
thereto in the Custodial Agreement.
"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.
"Disbursement Account" shall mean the account established by
the Lender pursuant to which funds shall be disbursed to fund any Wet Loan.
"Dollars" and "$" shall mean lawful money of the United States
of America.
"Dry Loan" shall mean a first lien Mortgage Loan which is
underwritten in accordance with the Underwriting Guidelines which Mortgage File
contains all required Mortgage Loan Documents.
"Due Date" means the day of the month on which the Monthly
Payment is due on a Mortgage Loan, exclusive of any days of grace.
"Due Diligence Review" shall mean the performance by the
Lender of any or all of the reviews permitted under Section 11.16 hereof with
respect to any or all of the Mortgage Loans or the Borrower or related parties,
as desired by the Lender from time to time.
"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, with
respect to any Cooperative Loan, the Proprietary Lease and the related
Cooperative Shares) and as to which (i) the representations and warranties in
Section 6.12 and 6.23 and Schedule 1 hereof are correct, (ii) was originated or
acquired by the Borrower in accordance with the Borrower's or Lender approved
third party's Underwriting Guidelines, (iii) contains all required Mortgage Loan
Documents without Exceptions unless
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otherwise waived by Lender and (iv) such other customary criteria for
eligibility determined by the Lender shall have been satisfied
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended from time to time.
"ERISA Affiliate" shall mean any corporation or trade or
business that is a member of any group of organizations (i) described in Section
414(b) or (c) of the Code of which Borrower or the Guarantor is a member and
(ii) solely for purposes of potential liability under Section 302(c)(11) of
ERISA and Section 412(c)(11) of the Code and the lien created under Section
302(f) of ERISA and Section 412(n) of the Code, described in Section 414(m) or
(o) of the Code of which Borrower is a member.
"Escrow Closing Letter" shall have the meaning provided in the
Custodial Agreement.
"Escrow Payments" means with respect to any Mortgage Loan, the
amounts constituting ground rents, taxes, assessments, water rates, sewer rents,
municipal charges, mortgage insurance premiums, fire and hazard insurance
premiums, condominium charges, and any other payments required to be escrowed by
the Mortgagor with the mortgagee pursuant to the Mortgage or any other document.
"Event of Default" shall have the meaning provided in Section
8 hereof.
"Exception" shall have the meaning assigned thereto in the
Custodial Agreement.
"Exception Report" shall mean the exception report prepared by
the Custodian pursuant to the Custodial Agreement.
"Exit Fee" shall have the meaning assigned to such term in
section 3.04 hereof.
"Xxxxxx Xxx" shall mean FannieMae, or any successor thereto.
"Federal Funds Rate" shall mean, for any day, the weighted
average of the rates on overnight federal funds transactions with members of the
Federal Reserve System arranged by federal funds brokers, as published on the
next succeeding Business Day by the Federal Reserve Bank of New York, or, if
such rate is not so published for any day which is a Business Day, the average
of the quotations for the day of such transactions received by the Lender from
three primary dealers (other than an affiliate of the Lender).
"Xxxxxxx Mac" shall mean Xxxxxxx Mac, or any successor
thereto.
"Funding Date" shall mean the date on which an Advance is made
hereunder.
"GAAP" shall mean generally accepted accounting principles as
in effect from time to time in the United States of America.
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"Governmental Authority" shall mean any nation or government,
any state or other political subdivision, agency or instrumentality thereof, any
entity exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government and any court or arbitrator having
jurisdiction over such Person, any of its Subsidiaries or any of its properties.
"Gross Margin" means with respect to each adjustable rate
Mortgage Loan, the fixed percentage amount set forth in the related Mortgage
Note.
"Guarantee" shall mean, as to any Person, any obligation of
such Person directly or indirectly guaranteeing any Indebtedness of any other
Person or in any manner providing for the payment of any Indebtedness of any
other Person or otherwise protecting the holder of such Indebtedness against
loss (whether by virtue of partnership arrangements, by agreement to keep-well,
to purchase assets, goods, securities or services, or to take-or-pay or
otherwise), provided that the term "Guarantee" shall not include (i)
endorsements for collection or deposit in the ordinary course of business, or
(ii) obligations to make servicing advances for delinquent taxes and insurance,
or other obligations in respect of a Mortgaged Property, to the extent required
by the Lender. The amount of any Guarantee of a Person shall be deemed to be an
amount equal to the stated or determinable amount of the primary obligation in
respect of which such Guarantee is made or, if not stated or determinable, the
maximum reasonably anticipated liability in respect thereof as determined by
such Person in good faith. The terms "Guarantee" and "Guaranteed" used as verbs
shall have correlative meanings.
"Guarantor" shall mean the Initial Guarantor from the
Effective Date until such time as the Guaranty of the Initial Guarantor is
terminated and a new guaranty is executed in favor of the Lender by the
Subsequent Guarantor. After such execution of such guaranty by the Subsequent
Guarantor until the termination of this Loan Agreement, the Subsequent Guarantor
shall be the Guarantor.
"Guaranty" shall mean the guaranty, dated January 9, 2004,
executed by the Initial Guarantor in favor of the Lender which evidences the
guarantee by the Guarantor of the obligations of the Borrowers under this Loan
Agreement and the Note.
"Indebtedness" shall mean, for any Person: (a) obligations
created, issued or incurred by such Person for borrowed money (whether by loan,
the issuance and sale of debt securities or the sale of Property to another
Person subject to an understanding or agreement, contingent or otherwise, to
repurchase such Property from such Person); (b) obligations of such Person to
pay the deferred purchase or acquisition price of Property or services, other
than trade accounts payable (other than for borrowed money) arising, and accrued
expenses incurred, in the ordinary course of business so long as such trade
accounts payable are payable within 90 days of the date the respective goods are
delivered or the respective services are rendered; (c) indebtedness of others
secured by a Lien on the Property of such Person, whether or not the respective
indebtedness so secured has been assumed by such Person; (d) obligations
(contingent or otherwise) of such Person in respect of letters of credit or
similar instruments issued or accepted by banks and other financial institutions
for account of such Person; (e) Capital Lease Obligations of such Person; (f)
obligations of such Person under repurchase agreements or like arrangements; (g)
indebtedness of others Guaranteed by such Person; (h) all obligations of such
Person incurred in connection with the acquisition or carrying of fixed assets
by
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such Person; (i) indebtedness of general partnerships of which such Person is a
general partner; and (j) any other indebtedness of such Person by a note, bond,
debenture or similar instrument.
"Index" means with respect to each adjustable rate Mortgage
Loan, the index set forth in the related Mortgage Note for the purpose of
calculating the interest rate thereon.
"Initial Guarantor" shall mean The New York Mortgage Company,
LLC.
"Instruction Letter" shall mean a letter agreement between the
Borrower and each Subservicer substantially in the form of Exhibit J attached
hereto, in which such Persons acknowledge the Lender's security interest in the
Mortgage Loans, and agree to remit any collections with respect to the Mortgage
Loans as the Lender may so direct from time to time, which Instruction Letter
may be delivered by Lender to such Subservicer in its sole discretion.
"Insurance Proceeds" means with respect to each Mortgage Loan,
proceeds of insurance policies insuring the Mortgage Loan or the related
Mortgaged Property.
"Insured Closing Letter" shall have the meaning assigned to
such term in the Custodial Agreement.
"Interest Period" shall mean, with respect to any Advance, (i)
initially, the period commencing on the Funding Date with respect to such
Advance and ending on the calendar day prior to the next succeeding Payment
Date, and (ii) thereafter, each period commencing on the Payment Date of a month
and ending on the calendar day prior to the Payment Date of the next succeeding
month. Notwithstanding the foregoing, no Interest Period may end after the
Termination Date.
"Interest Rate Adjustment Date" means with respect to each
adjustable rate Mortgage Loan, the date, specified in the related Mortgage Note
and the Mortgage Loan Schedule, on which the Mortgage Interest Rate is adjusted.
"Interest Rate Protection Agreement" shall mean with respect
to any or all of the Mortgage Loans and/or Advances, any interest rate swap, cap
or collar agreement or any other applicable hedging arrangements providing for
protection against fluctuations in interest rates or the exchange of nominal
interest obligations, either generally or under specific contingencies entered
into by Borrower and reasonably acceptable to the Lender.
"Lender" shall have the meaning assigned thereto in the
heading hereto.
"LIBO Base Rate" shall mean with respect to each day an
Advance is outstanding (or if such day is not a Business Day, the next
succeeding Business Day), the rate per annum equal to the rate published by
Bloomberg or if such rate is not available, the rate appearing at page 3750 of
the Telerate Screen as one-month LIBOR on such date, and if such rate shall not
be so quoted, the rate per annum at which the Lender is offered Dollar deposits
at or about 11:00 A.M., eastern time, on such date by prime banks in the
interbank eurodollar market where the eurodollar and foreign currency and
exchange operations in respect of its Advances are then being conducted for
delivery
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on such day for a period of one month and in an amount comparable to the amount
of the Advances to be outstanding on such day.
"LIBO Rate" shall mean with respect to each Interest Period
pertaining to an Advance, a rate (reset on a monthly basis) per annum determined
by the Lender in its sole discretion in accordance with the following formula
(rounded upwards to the nearest l/100th of one percent), which rate as
determined by the Lender shall be conclusive absent manifest error by the
Lender:
LIBO Base Rate
--------------------------------
1.00 - LIBO Reserve Requirements
The LIBO Rate shall be calculated each Funding Date and Payment Date
commencing with the first Funding Date.
"LIBO Reserve Requirements" shall mean for any Interest Period
for any Advance, the aggregate (without duplication) of the rates (expressed as
a decimal fraction) of reserve requirements applicable to the Lender in effect
on such day (including, without limitation, basic, supplemental, marginal and
emergency reserves under any regulations of the Board of Governors of the
Federal Reserve System or other Governmental Authority having jurisdiction with
respect thereto), dealing with reserve requirements prescribed for eurocurrency
funding (currently referred to as "Eurocurrency Liabilities" in Regulation D of
such Board) maintained by a member bank of such Governmental Authority. As of
the Effective Date, the LIBO Reserve Requirements shall be deemed to be zero.
"Lien" shall mean any mortgage, lien, pledge, charge, security
interest or similar encumbrance.
"Loan Agreement" shall mean this Master Loan and Security
Agreement, as may be amended, supplemented or otherwise modified from time to
time as mutually agreed by the parties in writing.
"Loan Documents" shall mean collectively, this Loan Agreement,
the Note, the Guaranty and the Custodial Agreement.
"Loan-to-Value Ratio" or "LTV" means with respect to any
Mortgage Loan, the ratio of the original outstanding principal amount of the
Mortgage Loan to the lesser of (a) the Appraised Value of the Mortgaged Property
at origination or (b) if the Mortgaged Property was purchased within 12 months
of the origination of the Mortgage Loan, the purchase price of the Mortgaged
Property.
"Market Value" shall mean the value, determined by the Lender
in its sole reasonable discretion, of the Mortgage Loans if sold in their
entirety to a single third-party purchaser. The Lender's determination of Market
Value shall be conclusive upon the parties, absent manifest error on the part of
the Lender. The Lender shall have the right to xxxx to market the Mortgage Loans
on a daily basis which Market Value with respect to one or more of the Mortgage
Loans may be determined to be zero. The Borrower acknowledges that the Lender's
determination of Market Value
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is for the limited purpose of determining Collateral Value for lending purposes
hereunder without the ability to perform customary purchaser's due diligence and
is not necessarily equivalent to a determination of the fair market value of the
Mortgage Loans achieved by obtaining competing bids in an orderly market in
which the originator/servicer is not in default under a revolving debt facility
and the bidders have adequate opportunity to perform customary loan and
servicing due diligence.
"Material Adverse Effect" shall mean a material adverse effect
on (a) the property, business, operations, financial condition or prospects of
the Borrower or the Guarantor, (b) the ability of the Borrower or the Guarantor
to perform in all material respects its obligations under any of the Loan
Documents to which it is a party, (c) the validity or enforceability in all
material respects of any of the Loan Documents, (d) the rights and remedies of
the Lender under any of the Loan Documents, (e) the timely payment of the
principal of or interest on the Advances or other amounts payable in connection
therewith or (f) the Collateral.
"Maximum Credit" shall mean $100,000,000.
"Monthly Payment" means the scheduled monthly payment of
principal and interest on a Mortgage Loan as adjusted in accordance with changes
in the Mortgage Interest Rate pursuant to the provisions of the Mortgage Note
for an adjustable rate Mortgage Loan.
"Mortgage" shall mean with respect to a Mortgage Loan, the
mortgage, deed of trust or other instrument, which creates a first lien on
either (i) with respect to a Mortgage Loan other than a Cooperative Loan, the
fee simple or leasehold estate in such real property or (ii) with respect to a
Cooperative Loan, the Proprietary Lease and related Cooperative Shares, which in
either case secures the Mortgage Note.
"Mortgage File" shall have the meaning assigned thereto in the
Custodial Agreement.
"Mortgage Interest Rate" means the annual rate of interest
borne on a Mortgage Note, which shall be adjusted from time to time with respect
to adjustable rate Mortgage Loans.
"Mortgage Interest Rate Cap" means with respect to an
adjustable rate Mortgage Loan, the limit on each Mortgage Interest Rate
adjustment as set forth in the related Mortgage Note.
"Mortgage Loan" shall mean a mortgage loan or a Cooperative
Loan which the Custodian has been instructed to hold for the Lender pursuant to
the Custodial Agreement, and which Mortgage Loan includes, without limitation,
(i) a Mortgage Note, the related Mortgage and all other Mortgage Loan Documents
and (ii) all right, title and interest of the Borrower in and to the Mortgaged
Property covered by such Mortgage.
"Mortgage Loan Documents" shall mean, with respect to a
Mortgage Loan, the documents comprising the Mortgage File for such Mortgage
Loan.
"Mortgage Loan List" shall mean the hard copy report provided
by the Borrower which shall include with respect to each Mortgage Loan to be
included as Collateral: (i) the
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Mortgage Loan number, (ii) the Mortgagor's name, (iii) the original principal
amount of the Mortgage Loan and (iv) the current principal balance of the
Mortgage Loan.
"Mortgage Loan Data Transmission" shall mean a
computer-readable magnetic or other electronic format incorporating the fields
identified on Exhibit G.
"Mortgage Note" shall mean the original executed promissory
note or other evidence of the indebtedness of a mortgagor/borrower with respect
to a Mortgage Loan.
"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.
"Mortgagee" means either Borrower or any subsequent holder of
a Mortgage Loan.
"Mortgagor" means the obligor on a Mortgage Note.
"Multiemployer Plan" shall mean a multiemployer plan defined
as such in Section 3(37) of ERISA to which contributions have been or are
required to be made by Borrower or any ERISA Affiliate and that is covered by
Title IV of ERISA.
"Net Income" shall mean, for any period, the net income of the
Borrower for such period as determined in accordance with GAAP.
"Net Worth" shall mean, with respect to any Person, the excess
of total assets of such Person, over total liabilities of such Person,
determined in accordance with GAAP.
"Note" shall mean the promissory note provided for by Section
2.02(a) hereof for Advances 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.
"Notice of Borrowing and Pledge" shall have the meaning
assigned to such term in Section 2.03(a).
"NYMT" shall mean New York Mortgage Trust, Inc.
"Payment Date" shall mean the seventh day of each calendar
month, or if such day is not a Business Day, the next succeeding Business Day.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or
any entity succeeding to any or all of its functions under ERISA.
"Permitted Exceptions" shall mean the exceptions to lien
priority including but not limited to: (i) the lien of current real property
taxes and assessments not yet due and payable; (ii) covenants, conditions and
restrictions, rights of way, easements and other matters of the public
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record as of the date of recording acceptable to mortgage lending institutions
generally and specifically referred to in the lender's title insurance policy
delivered to the originator of the Mortgage Loan and (A) referred to or
otherwise considered in the appraisal (if any) made for the originator of the
Mortgage Loan or (B) which do not adversely affect the appraised value of the
Mortgaged Property set forth in such appraisal; and (iii) other matters to which
like properties are commonly subject which do not materially interfere with the
benefits of the security intended to be provided by the Mortgage or the use,
enjoyment, value or marketability of the related Mortgaged Property.
"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).
"Plan" shall mean an employee benefit or other plan
established or maintained by either Borrower or any ERISA Affiliate and that is
covered by Title IV of ERISA, other than a Multiemployer Plan.
"PMI Policy" or "Primary Insurance Policy" means a policy of
primary mortgage guaranty insurance issued by a Qualified Insurer.
"Post-Default Rate" shall mean, in respect of any principal of
any Advance or any other amount under this Loan Agreement, the Note or any other
Loan Document that is not paid when due to the Lender (whether at stated
maturity, by acceleration 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 (a) the
interest rate otherwise applicable to such Advance or other amount, or (b) if no
interest rate is otherwise applicable, the LIBO Rate plus the Applicable Margin.
"Property" shall mean any right or interest in or to property
of any kind whatsoever, whether real, personal or mixed and whether tangible or
intangible.
"Proprietary Lease" shall mean the lease on a Cooperative Unit
evidencing the possessory interest of the owner of the Cooperative Shares in
such Cooperative Unit.
"Qualified Insurer" means an insurance company duly qualified
as such under the laws of the states in which the Mortgaged Property is located,
duly authorized and licensed in such states to transact the applicable insurance
business and to write the insurance provided, and approved as an insurer by
Xxxxxx Mae and Xxxxxxx Mac and whose claims paying ability is rated in the two
highest rating categories by any of the rating agencies with respect to primary
mortgage insurance and in the two highest rating categories by Best's with
respect to hazard and flood insurance.
"Qualified Originator" shall mean (a) the Borrower and (b) any
other originator of Mortgage Loans as may be approved by the Lender in writing
from time to time.
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"Regulations T, U and X" shall mean Regulations 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.
"Requirement of Law" shall mean as to any Person, the
certificate of incorporation and by-laws or other organizational or governing
documents of such Person, and any law, treaty, rule or regulation or
determination of an arbitrator or 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.
"Required Documents" shall mean those documents identified in
Section 2 of the Custodial Agreement.
"Rescission" shall mean the right of a Mortgagor to rescind
the related Mortgage Note and related documents pursuant to applicable law.
"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; provided, that in the event any such officer is
unavailable at any time he or she is required to take any action hereunder,
Responsible Officer shall mean any officer authorized to act on such officer's
behalf as demonstrated by a certificate of corporate resolution.
"Restricted Payments" shall mean with respect to any Person,
collectively, all dividends or other distributions of any nature (cash,
securities, assets or otherwise), and all payments, by virtue of redemption or
otherwise, on any class of equity securities (including, without limitation,
warrants, options or rights therefor) issued by such Person, whether such
securities are now or may hereafter be authorized or outstanding and any
distribution in respect of any of the foregoing, whether directly or indirectly.
"Secured Obligations" shall have the meaning assigned thereto
in Section 4.01(c) hereof.
"Securitization Letter" shall mean that certain letter
agreement by and between Borrower and Lender dated the date hereof, outlining
rights and obligations with respect to securitizations and whole loan sales of
Mortgage Loans subject to this Loan Agreement from time to time.
"Servicer" shall mean the Borrower in its capacity as servicer
or master servicer of the Mortgage Loans.
"Servicing Agreement" shall have the meaning provided in
Section 11.15(c) hereof.
"Servicing File" means with respect to each Mortgage Loan, the
file retained by the Borrower consisting of originals of all material documents
in the Mortgage File which are not delivered to the Custodian and copies of the
Mortgage Loan Documents set forth in Section 2 of the Custodial Agreement.
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"Servicing Records" shall have the meaning assigned thereto in
Section 11.15(b) hereof.
"Servicing Transmission" shall mean a computer-readable
magnetic or other electronic format acceptable to the parties containing the
information identified on Exhibit F.
"Settlement Agent" shall have the meaning provided in the
Custodial Agreement.
"Subsequent Guarantor" shall mean NYMT.
"Subservicer" shall have the meaning provided in Section
11.15(c) 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.
"Takeout Commitment" shall mean, with respect to any Mortgage
Loan, an irrevocable commitment issued by a Takeout Investor in favor of the
Borrower pursuant to which such Takeout Investor agrees to purchase such
Mortgage Loan at a specific price on a forward delivery basis acceptable to the
Lender in its sole discretion.
"Takeout Investor" shall mean a third party, acceptable to
Lender, which has agreed to purchase Mortgage Loans pursuant to a Takeout
Commitment.
"Tangible Net Worth" shall mean, with respect to any Person,
as of any date of determination, the consolidated Net Worth of such Person and
its Subsidiaries, less the consolidated net book value of all assets of such
Person and its Subsidiaries (to the extent reflected as an asset in the balance
sheet of such Person or any Subsidiary at such date) which will be treated as
intangibles under GAAP, including, without limitation, such items as deferred
financing expenses, deferred taxes, net leasehold improvements, good will,
trademarks, trade names, service marks, copyrights, patents, licenses and
unamortized debt discount and expense; provided, that residual securities issued
by such Person or its Subsidiaries shall not be treated as intangibles for
purposes of this definition.
"Termination Date" shall mean January 8, 2005, or such earlier
date on which this Loan Agreement shall terminate in accordance with the
provisions hereof or by operation of law.
"Total Indebtedness" shall mean with respect to any Person,
for any period, the aggregate Indebtedness of such Person and its Subsidiaries
during such period, less the amount of any nonspecific consolidated balance
sheet reserves maintained in accordance with GAAP.
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"Trust Receipt" shall have the meaning provided in the
Custodial Agreement.
"Underwriting Guidelines" shall mean the underwriting
guidelines of the Borrower attached as Exhibit E hereto as amended from time to
time in accordance with Section 7.09, or such other third party's underwriting
as are acceptable to the Lender.
"Uniform Commercial Code" shall mean the Uniform Commercial
Code as in effect on the date hereof in the State of New York; 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 New York, "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.
"Wet Loan" shall mean a wet-funded first lien Mortgage Loan
which is underwritten in accordance with the Underwriting Guidelines and does
not contain all the required Mortgage Loan Documents in the Mortgage File, which
in order to be deemed to an Eligible Mortgage Loan shall have the following
additional characteristics:
(a) the proceeds thereof have been funded (or, on the date of
the Advance supported by a Notice of Borrowing and Pledge are being
funded) by wire transfer or cashier's check, cleared check or draft or
other form of immediately available funds to the Settlement Agent for
such Wet Loan;
(b) the Borrower expects such Wet Loan to close and become a
valid lien securing actual indebtedness by funding to the order of the
Mortgagor thereunder;
(c) the proceeds thereof have not been returned to the Lender
from the Settlement Agent for such Wet Loan;
(d) the Borrower has not learned that such Wet Loan will not
be closed and funded to the order of the Mortgagor; and
(e) upon recordation such Mortgage Loan will constitute a
first lien on the premises described therein.
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. Advances, Note and Prepayments.
2.01 Advances.
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(a) Subject to fulfillment of the conditions precedent
set forth in Sections 5.01 and 5.02 hereof, and provided that no Default shall
have occurred and be continuing hereunder, the Lender may, in its sole
discretion, from time to time, on the terms and conditions of this Loan
Agreement, to make loans (individually, an "Advance"; collectively, the
"Advances") to the Borrower in Dollars, on any Business Day from and including
the Effective Date to but excluding the Termination Date in an aggregate
principal amount at any one time outstanding up to but not exceeding the lesser
of (i) the Maximum Credit (which shall be further subject to the limitations in
the definition of Collateral Value) and (ii) the Borrowing Base as in effect
from time to time. It is acknowledged and agreed that, notwithstanding any other
provision of this Loan Agreement to the contrary, the facility provided under
this Loan Agreement is an uncommitted facility and the Lender shall have no
obligation to make any Advance hereunder. Any Advance hereunder shall be made in
the sole discretion of the Lender. The Lender may, at any time, terminate this
Loan Agreement by providing written notice to the Borrower. Within thirty (30)
Business Days of receipt of such notice, the Borrower agrees to repay the
aggregate outstanding amount of all Advances including all interest accrued
thereon. The Lender shall have a right of first refusal, with a last look, with
respect to any Mortgage Loan which is sold following the receipt of such notice.
(b) Subject to the terms and conditions of this Loan
Agreement, during such period the Borrower may borrow, repay and reborrow
hereunder.
(c) In no event shall an Advance be made when any Default
or Event of Default has occurred and is continuing.
2.02 Notes.
(a) The Advances made by the Lender shall be evidenced by
a single promissory note of the Borrower 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 Maximum Credit as originally in effect and
otherwise duly completed. 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 Advance
made by the Lender to the 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, noted by the Lender on the grid attached to the Note
or any continuation thereof; provided, that the failure of the Lender to make
any such recordation or notation 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 Advances.
2.03 Procedure for Borrowing.
(a) Borrowing Procedure for Requesting an Advance. The
Borrower may request a borrowing to be secured by any Mortgage Loans hereunder,
on any Business Day during the period from and including the Effective Date to
the Termination Date, by delivering to the Lender, with a copy to the Custodian,
a Mortgage Loan Data Transmission and an irrevocable Notice of Borrowing and
Pledge substantially in the form of Exhibit D hereto (a "Notice of Borrowing and
Pledge"), appropriately completed, and a Mortgage Loan Data Transmission which
Notice of Borrowing and
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Pledge and Mortgage Loan Data Transmission must be received no later than 5:00
p.m (eastern time) two Business Days prior to the requested Funding Date. Such
Notice of Borrowing and Pledge shall clearly indicate those Mortgage Loans that
are intended to be Wet Loans and Dry Loans and include a Mortgage Loan List in
respect of the Eligible Mortgage Loans that the Borrower proposes to pledge to
the Lender and to be included in the Borrowing Base in connection with such
borrowing. The Borrower agrees to immediately report to the Custodian and the
Lender by facsimile transmission within one Business Day of discovery that any
Wet Loans that were previously pledged to the Borrower do not close for any
reason including, but not limited to, a Recission.
(b) Pursuant to the Custodial Agreement, the Custodian
shall review any Required Documents delivered prior to 12:00 p.m. (eastern time)
on any Business Day in time to include the related Mortgage Loans in such
Borrowing Base determination on the same day. Not later than 3:00 p.m. (eastern
time) on each Business Day, the Custodian shall deliver to the Lender, via
electronic transmission acceptable to the Lender, the Custodian Loan
Transmission and an Exception Report showing the status of all Mortgage Loans
then held by the Custodian, including but not limited to the Wet Loans and Dry
Loans which are subject to document exceptions, and the time the related
Mortgage Loan Documents have been released pursuant to Section 5(a) or 5(b) of
the Custodial Agreement. From time to time, the Lender shall calculate the
Borrowing Base of all Mortgage Loans that are held by the Custodian and forward
to the Borrower by facsimile transmission a copy of the Borrowing Base
Certificate in the form of Exhibit H. In addition, the Custodian shall deliver
to the Lender no later than 4:00 p.m. (eastern time) by facsimile transmission
on each Funding Date, one or more Trust Receipts (as defined in the Custodial
Agreement) relating to either Wet Loans or Dry Loans. The original copies of
such Trust Receipts shall be delivered to JPMorgan Chase Bank at Four New York
Plaza, Ground Floor, Outsourcing Department, New York, New York 10004,
Attention: Xxxxxxxx Xxxx for the account of Greenwich Capital Markets (telephone
number (000) 000-0000), as agent for the Lender by overnight delivery using a
nationally recognized insured overnight delivery service.
(c) Upon the Borrower's request for a borrowing pursuant
to Section 2.03(a) above, the Lender shall, assuming all conditions precedent
set forth in this Section 2.03 and in Section 5.01 and 5.02 have been met, and
provided no Default shall have occurred and be continuing (in accordance with
Section 2.01), not later than 5:00 p.m. (eastern time) on the requested Funding
Date make an Advance (determined by the Lender) in an amount which would not
cause the aggregate amount of Advances then outstanding to exceed the lesser of
(i) the Maximum Credit or (ii) the Borrowing Base shown on the latest Borrowing
Base Certificate of the Lender. Subject to the foregoing, such borrowing will be
made available to the Borrower by the Lender transferring, via wire transfer
(pursuant to wire transfer instructions provided by the Borrower on or prior to
such Funding Date), in the aggregate amount of such borrowing in funds
immediately available to the Borrower; provided, however, that the Lender may,
at its sole option, elect not to make any Advance hereunder.
2.04 Limitation on Types of Advances; Illegality. Anything
herein to the contrary notwithstanding, if, on or prior to the determination of
any LIBO Base Rate:
(a) the Lender determines, which determination shall be
conclusive, that quotations of interest rates for the relevant deposits
referred to in the definition of "LIBO
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Base Rate" in Section 1.01 hereof are not being provided in the
relevant amounts or for the relevant maturities for purposes of
determining rates of interest for Advances as provided herein; or
(b) the Lender determines, which determination shall be
conclusive, that the Applicable Margin plus the relevant rate of
interest referred to in the definition of "LIBO Base Rate" in Section
1.01 hereof upon the basis of which the rate of interest for Advances
is to be determined is not likely adequately to cover the cost to the
Lender of making or maintaining Advances; or
(c) it becomes unlawful for the Lender to make or
maintain Advances hereunder using a LIBO Rate;
then the Lender shall give the Borrower prompt notice thereof and, so long as
such condition remains in effect, the Lender shall not make additional Advances,
and the Borrower shall, at its option, either prepay such Advances or pay
interest on such Advances at a rate per annum as determined by the Lender taking
into account the increased cost to the Lender of making and maintaining the
Advances.
2.05 Repayment of Advances; Interest.
(a) The Borrower shall repay in full on the Termination
Date the then aggregate outstanding principal amount of the Advances (as
evidenced by the Note).
(b) Interest on the Advances shall be payable in arrears
monthly on the Payment Date in respect of the previous calendar month and on the
Termination Date. No later than the Business Day prior to each Payment Date, the
Lender shall provide to the Borrower a report which shall state the interest
amount due for the current interest period on the Advance. The calculation on
such report shall be based upon information provided in the Servicing
Transmission and the report provided pursuant to Section 7.20.
(c) The Borrower shall pay to the Lender interest on the
unpaid principal amount of each Advance for the period from and including the
date of such Advance to but excluding the date such Advance shall be paid in
full, at a rate per annum equal to the LIBO Rate plus the Applicable Margin.
Notwithstanding the foregoing, the Borrower shall pay to the Lender interest at
the applicable Post-Default Rate on any principal of any Advance 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 Advance as calculated in Section 2.05(b) above shall be payable
monthly on each Payment Date and on the Termination Date, except that interest
payable at the Post-Default Rate shall accrue daily and shall be payable
promptly upon receipt of invoice. Promptly after the determination of any
interest rate provided for herein or any change therein, the Lender shall give
written notice thereof to the Borrower.
2.06 Mandatory Prepayments or Pledge.
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On each Advance Date or other date on which there is a change
in the Mortgage Loans held by the Custodian, the Custodian shall deliver to the
Lender and the Borrower the Custodian Loan Transmission. The Lender shall
deliver to the Borrower a Borrowing Base Certificate in the form attached hereto
as Exhibit H, the calculation in such certificate to be based on the delinquency
status and principal balance of the Eligible Mortgage Loans as of the later of
the funding date balance or the last calendar day of the prior month. Such
information shall be ascertained from the Servicing Transmission which shall be
delivered or caused to be delivered by the Borrower in accordance with Section
7.20 and shall include all Mortgage Loans which were funded on or prior to the
last calendar day of the previous month.
In the event that such Borrowing Base Certificate indicates or
if at any time the aggregate outstanding principal amount of Advances exceeds
the Borrowing Base (a "Borrowing Base Deficiency"), as determined by the Lender
and notified to the Borrower on any Business Day, the Borrower shall no later
than one Business Day after receipt of such written notice, either prepay the
Advances in part or in whole or pledge additional Eligible Mortgage Loans (which
Collateral shall be in all respects acceptable to the Lender) to the Lender,
such that after giving effect to such prepayment or pledge the aggregate
outstanding principal amount of the Advances does not exceed the Borrowing Base.
2.07 Optional Prepayments.
(a) The Advances are prepayable without premium or penalty, in
whole or in part on each Payment Date. The Advances are prepayable at any other
time, in whole or in part, in accordance herewith and subject to clause (b)
below. Any amounts prepaid shall be applied to repay the outstanding principal
amount of any Advances (together with interest thereon) until paid in full.
Amounts repaid may be reborrowed in accordance with the terms of this Loan
Agreement. If the Borrower intends to prepay an Advance in whole or in part from
any source, the Borrower shall give two (2) Business Days' prior written notice
thereof to the Lender. If such notice is given, the amount specified in such
notice shall be due and payable on the date specified therein, together with
accrued interest to such date on the amount prepaid. Partial prepayments shall
be in an aggregate principal amount of at least $100,000.
(b) If the Borrower makes a prepayment of the Advances on any
day which is not a Payment Date, the Borrower shall indemnify the Lender and
hold the Lender harmless from any actual loss or expense which the Lender may
sustain or incur arising from (a) the re-employment of funds obtained by the
Lender to maintain the Advances hereunder or from (b) fees payable to terminate
the deposits from which such funds were obtained, in either case, which actual
loss or expense shall be equal to an amount equal to the excess, as reasonably
determined by the Lender, of (i) its cost of obtaining funds for such Advances
for the period from the date of such payment through the following Payment Date
over (ii) the amount of interest likely to be realized by such Lender in
redeploying the funds not utilized by reason of such payment for such period.
This Section 2.07 shall survive termination of this Loan Agreement and payment
of the Note.
2.08 Requirements of Law.
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(a) If any Requirement of Law (other than with respect to any
amendment made to the Lender's certificate of incorporation and by-laws or other
organizational or governing documents) or any change in the interpretation or
application thereof or compliance by the Lender with any request or directive
(whether or not having the force of law) from any central bank or other
Governmental Authority made subsequent to the date hereof:
(i) shall subject the Lender to any tax of any kind whatsoever
with respect to this Loan Agreement, the Note or any Advance made by it
(excluding net income taxes) or change the basis of taxation of
payments to the Lender in respect thereof;
(ii) shall impose, modify or hold applicable any reserve,
special deposit, compulsory advance or similar requirement against
assets held by deposits or other liabilities in or for the account of
Advances or other extensions of credit by, or any other acquisition of
funds by any office of the Lender which is not otherwise included in
the determination of the LIBO Base Rate hereunder;
(iii) shall impose on the Lender any other condition;
and the result of any of the foregoing is to increase the cost to the Lender, by
an amount which the Lender deems to be material, of making, continuing or
maintaining any Advance or to reduce any amount receivable hereunder in respect
thereof, then, in any such case, the Borrower shall promptly pay the Lender such
additional amount or amounts as will compensate the Lender for such increased
cost or reduced amount receivable thereafter incurred.
(b) If the Lender shall have determined that the adoption of
or any change in any Requirement of Law (other than with respect to any
amendment made to the Lender's certificate of incorporation and by-laws or other
organizational or governing documents) regarding capital adequacy or in the
interpretation or application thereof or compliance by the Lender or any
corporation controlling the Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any Governmental
Authority made subsequent to the date hereof shall have the effect of reducing
the rate of return on the Lender's or such corporation's capital as a
consequence of any obligations hereunder to a level below that which the Lender
or such corporation (taking into consideration the Lender's or such
corporation's policies with respect to capital adequacy) by an amount deemed by
the Lender to be material, then from time to time, the Borrower shall promptly
pay to the Lender such additional amount or amounts as will thereafter
compensate the Lender for such reduction.
(c) If the Lender becomes entitled to claim any additional
amounts pursuant to this subsection, it shall promptly notify the Borrower of
the event by reason of which it has become so entitled. A certificate as to any
additional amounts payable pursuant to this subsection submitted by the Lender
to the Borrower shall be conclusive in the absence of manifest error.
2.09 Purpose of Advances.
Each Advance shall be used to finance the origination or
purchase of Eligible Mortgage Loans identified to the Lender in writing on each
Mortgage Loan Schedule as such
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Mortgage Loan Schedule may be amended from time to time.
SECTION 3. Payments; Computations; Taxes.
3.01 Payments.
Except to the extent otherwise provided herein, all payments
of principal, interest and other amounts to be made by the Borrower under this
Loan 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 at JPMorgan Chase Bank: Account
Number 140095961, For the A/C of Greenwich Capital Financial Products, Inc.,
ABA# 000000000, Attn: Xxxxxxx Xxxxxx, not later than 1:00 p.m., eastern 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 Borrower acknowledges that it has no rights of withdrawal
from the foregoing account.
3.02 Computations. Interest on the Advances 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.
3.03 U.S. Taxes.
(a) The Borrower agrees to pay to the Lender such
additional amounts as are necessary in order that the net payment of any amount
due to the Lender hereunder after deduction for or withholding in respect of any
U.S. Tax (as defined below) imposed with respect to such payment (or in lieu
thereof, payment of such U.S. Tax by the Lender), will not be less than the
amount stated herein to be then due and payable; provided, that the foregoing
obligation to pay such additional amounts shall not apply:
(i) to any payment to the Lender hereunder unless the
Lender is entitled to submit a Form 1001 (relating to the Lender and
entitling it to a complete exemption from withholding on all interest
to be received by it hereunder in respect of the Advances) or Form 4224
(relating to all interest to be received by the Lender hereunder in
respect of the Advances), or
(ii) to any U.S. Tax imposed solely by reason of the
failure by the Lender to comply with applicable certification,
information, documentation or other reporting requirements concerning
the nationality, residence, identity or connections with the United
States of America of the Lender if such compliance is required by
statute or regulation of the United States of America as a precondition
to relief or exemption from such U.S. Tax.
For the purposes of this Section 3.03(a), (w) "Form 1001" shall mean Form 1001
(Ownership, Exemption, or Reduced Rate Certificate) of the Department of the
Treasury of the United States of America, (x) "Form 4224" shall mean Form 4224
(Exemption from Withholding of Tax on Income Effectively Connected with the
Conduct of a Trade or Business in the United States) of the Department of the
Treasury of the United States of America (or in relation to either such Form
such
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successor and related forms as may from time to time be adopted by the relevant
taxing authorities of the United States of America to document a claim to which
such Form relates), and (y) "U.S. Taxes" shall mean any present or future tax,
assessment or other charge or levy imposed by or on behalf of the United States
of America or any taxing authority thereof or therein.
(b) Within 30 days after paying any such amount to the
Lender, and within 30 days after it is required by law to remit such deduction
or withholding to any relevant taxing or other authority, the Borrower shall
deliver to the Lender evidence satisfactory to the Lender of such deduction,
withholding or payment (as the case may be).
(c) The Lender represents and warrants to the Borrower
that on the date hereof the Lender is either incorporated under the laws of the
United States or a State thereof or is entitled to submit a Form 1001 (relating
to the Lender and entitling it to a complete exemption from withholding on all
interest to be received by it hereunder in respect of the Advances) or Form 4224
(relating to all interest to be received by the Lender hereunder in respect of
the Advances).
3.04 Exit Fee. In the event that any of the Mortgage Loans
subject to this Agreement are sold to a third party buyer (other than the
Lender), the Borrower shall pay the Lender a fee equal to 0.125% of the
outstanding principal balance of such Mortgage Loan as of the date of the sale
to such third party buyer or securitization. The Lender may in its sole
discretion, net such exit fee from the proceeds of any Advance made to the
Borrower.
SECTION 4. Collateral Security.
4.01 Collateral; Security Interest.
(a) Pursuant to the Custodial Agreement, the Custodian
shall hold the Mortgage Loan Documents as exclusive bailee and agent for the
Lender pursuant to the terms of the Custodial Agreement and shall deliver to the
Lender Trust Receipts with Exception Reports (as such terms are defined in the
Custodial Agreement) to the effect that it has reviewed such Mortgage Loan
Documents in the manner required by the Custodial Agreement and identifying any
deficiencies in such Mortgage Loan Documents as so reviewed.
(b) Each of the following items or types 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 identified on a Notice of
Borrowing and Pledge delivered by the Borrower to the Lender and the
Custodian from time to time;
(ii) all Mortgage Loan Documents, including
without limitation all promissory notes, and all Servicing Records (as
defined in Section 11.15(b) below), and any other collateral pledged or
otherwise relating to such Mortgage Loans, together with all files,
material documents, instruments, surveys (if available), certificates,
correspondence, appraisals, computer records, computer storage media,
Mortgage Loan accounting records and other books and records relating
thereto;
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(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 any Mortgage Loans and all claims
and payments thereunder;
(iv) all other insurance policies and insurance
proceeds relating to any Mortgage Loans or the related Mortgaged
Property;
(v) all Interest Rate Protection Agreements
relating to any or all of the foregoing;
(vi) any purchase agreements or other agreements
or contracts relating to or constituting any or all of the foregoing;
(vii) all purchase or take-out commitments
relating to or constituting any or all of the foregoing;
(viii) all "accounts", "chattel paper", "commercial
tort claims", "deposit accounts", "documents," "equivalent", "general
intangibles", "goods", "instruments", "inventory", "investment
property", "letter of credit rights", and "securities' accounts" as
each of those terms is defined in the Uniform Commercial Code and all
cash and Cash Equivalents and all products and proceeds relating to or
constituting any or all of the foregoing;
(ix) all interests in real property owned by the
Borrower or collateralizing any Mortgage Loans; and
(x) any and all replacements, substitutions,
distributions on or proceeds of any or all of the foregoing.
(c) The Borrower hereby assigns, pledges and grants a
security interest to the Lender in all of its right, title and interest in, to
and under all the Collateral, whether now owned or hereafter acquired, now
existing or hereafter created and wherever located, to secure the repayment of
principal of and interest on all Advances and all other amounts owing to the
Lender hereunder, under the Note and under the other Loan Documents
(collectively, the "Secured Obligations"). The Borrower agrees to xxxx its
computer records and tapes to evidence the security 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
Borrower, the Borrower 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 Loan Agreement
and of the rights and powers 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
Borrower also hereby authorizes the Lender to file any such financing or
continuation
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statement without the signature of the Borrower to the extent permitted by
applicable law. A carbon, photographic or other reproduction of this Loan
Agreement shall be sufficient as a financing statement for filing in any
jurisdiction.
4.03 Changes in Locations, Name, etc. The Borrower shall
not (i) change the location of its chief executive office/chief place of
business from that specified in Section 6 hereof, (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, or (iii) reincorporate or
reorganize under the laws of another jurisdiction unless it shall have given the
Lender at least 30 days prior written notice thereof and shall have delivered to
the Lender all Uniform Commercial Code financing statements and amendments
thereto as the Lender shall request and taken all other actions deemed
reasonably necessary by the 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) The 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,
for the purpose of carrying out the terms of this Loan 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 Loan
Agreement, and, without limiting the generality of the foregoing, the Borrower
hereby gives the Lender the power and right, on behalf of the Borrower, without
assent by, but with notice to, the Borrower, if an Event of Default shall have
occurred and be continuing, to do the following:
(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 for 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 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
(iii) (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 part thereof and to enforce any other
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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 the 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 Loan
Agreement, all as fully and effectively as the Borrower might do.
The 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) The Borrower also authorizes the Lender, at any time
and from time to time, to execute, in connection with the sale provided for 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 Borrower 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
the Borrower fails to perform or comply with any of its material agreements
contained in the Loan Documents and the Lender may itself perform or comply, or
otherwise cause performance or compliance, with such agreement, the reasonable
out-of-pocket 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. If an Event of Default shall occur and be
continuing, (a) all proceeds of Collateral received by the 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 will 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 Loan Agreement shall have been terminated shall be
promptly paid over to the Borrower or to whomsoever 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.
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4.07 Remedies. If a Default shall occur and be continuing,
the Lender may, at its option, enter into one or more Interest Rate Protection
Agreements covering all or a portion of the Mortgage Loans pledged to the Lender
hereunder, and the Borrower shall be responsible for all 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 such Interest Rate Protection
Agreements; including without limitation any losses resulting from such Interest
Rate Protection Agreements. 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 Loan 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
Borrower or any other Person (all and each of which demands, defenses,
presentments, protests, 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 board or office of the Lender or elsewhere upon such terms
and conditions and at prices that are consistent with the prevailing market for
similar collateral 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 act in good faith to obtain the best execution
possible under prevailing market conditions. 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 Borrower,
which right or equity is hereby waived or released. The 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 Borrower. To the extent permitted
by applicable law, the 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. The Borrower shall remain liable for any
deficiency (plus accrued interest thereon as contemplated pursuant to Section
2.05(b) hereof) if the proceeds of any sale or other disposition of the
Collateral are insufficient to pay the Secured Obligations and the reasonable
fees and disbursements incurred by the Lender, including reasonable fees and
expenses of any attorneys employed by the Lender to collect such deficiency.
Because the Borrower recognizes that it may not be possible to purchase or sell
all of the Collateral on a particular Business Day, or in a
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transaction with the same purchaser, or in the same manner because the market
for such Collateral may not be liquid, the Borrower agrees that liquidation of
the Collateral does not require a public purchase or sale and that a good faith
private purchase or sale shall be deemed to have been made in a commercially
reasonable manner. Accordingly, the Lender may elect, in its sole discretion,
the time and manner of liquidating any Collateral and nothing contained herein
shall (A) obligate the Lender to liquidate any Collateral on the occurrence of
an Event of Default or to liquidate all Collateral in the same manner or on the
same Business Day or (B) constitute a waiver of any of the Lender's rights or
remedies.
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 the 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 Loan Agreement and repayment to the Lender of all Secured Obligations and
the performance of all obligations under the Loan Documents the Lender shall
release its security interest in any remaining Collateral; provided that if any
payment, or any part thereof, of any of the Secured Obligations is rescinded or
must otherwise be restored or returned by the Lender upon the insolvency,
bankruptcy, dissolution, liquidation or reorganization of the Borrower, or upon
or as a result of the appointment of a receiver, intervenor or conservator of,
or a trustee or similar officer for the Borrower or any substantial part of its
Property, or otherwise, this Loan Agreement, all rights hereunder and the Liens
created hereby shall continue to be effective, or be reinstated, until such
payments have been made.
SECTION 5. Conditions Precedent.
5.01 Initial Advance. Immediately prior to or concurrently
with the making by the Lender of its initial Advance hereunder, the following
conditions precedent must be satisfied:
(a) Loan Agreement. The Lender shall have received this
Loan Agreement, executed and delivered by a duly authorized officer of the
Borrower.
(b) 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;
(ii) Custodial Agreement. The Custodial
Agreement, duly executed and delivered by the Borrower and the
Custodian. In addition, the Borrower shall have filed all
Uniform Commercial Code and related filings and performed
under the
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Custodial Agreement and taken such other action as the Lender
shall have requested in order to perfect the security
interests created pursuant to the Loan Agreement; and
(iii) Guaranty. The Guaranty, duly executed and delivered
by the Guarantor.
(c) Organizational Documents. A good standing certificate
and certified copies of the charter and by-laws (or equivalent documents) of the
Borrower and the Guarantor and of all corporate or other authority for the
Borrower and the Guarantor with respect to the execution, delivery and
performance of the Loan Documents and each other document to be delivered by the
Borrower or the Guarantor from time to time in connection herewith (and the
Lender may conclusively rely on such certificate until it receives notice in
writing from the Borrower to the contrary).
(d) Legal Opinion. A legal opinion of counsel to the
Borrower and the Guarantor, substantially in the form attached hereto as Exhibit
C.
(e) Securitization Letter. The Lender shall have received
the Securitization Letter, in form and substance satisfactory to the Lender and
executed by a duly authorized officer of the Borrower.
(f) Filings, Registrations, Recordings. (i) Any documents
(including, without limitation, financing statements) required to be filed,
registered or recorded in order to create, in favor of the Lender, a perfected,
first-priority security interest in the Collateral, subject to no Liens other
than those created hereunder, shall have been properly prepared and executed for
filing (including the applicable county(ies) if the Lender determines such
filings are necessary in its reasonable discretion), registration or recording
in each office in each jurisdiction in which such filings, registrations and
recordations are required to perfect such first-priority security interest; and
(ii) UCC lien searches in such jurisdictions as shall be applicable to the
Borrower and the Collateral, the results of which shall be satisfactory to the
Lender.
(g) Fees and Expenses. The Lender shall have received all
fees and expenses required to be paid by the Borrower on or prior to the initial
Funding Date, which fees and expenses may be netted out of any Advance made by
the Lender hereunder.
(h) Financial Statements. The Lender shall have received
the financial statements referenced in Section 7.01(a).
(i) Underwriting Guidelines. The Lender and the Borrower
shall have agreed upon the Borrower's current Underwriting Guidelines for
Mortgage Loans and the Lender shall have received a copy thereof.
(j) Consents, Licenses, Approvals, etc. The Lender shall
have received copies certified by the Borrower of all consents, licenses and
approvals, if any, required in connection with
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the execution, delivery and performance by the Borrower of, and the validity and
enforceability of, the Loan Documents, which consents, licenses and approvals
shall be in full force and effect.
(k) Insurance. The Lender shall have received evidence in
form and substance satisfactory to the Lender showing compliance by the Borrower
as of such initial Funding Date with Section 7.22 hereof.
(l) Instruction Letter. The Lender shall have received an
Instruction Letter in the form attached hereto as Exhibit J executed by the
Borrower.
(m) Other Documents. The Lender shall have received such
other documents as the Lender or its counsel may reasonably request.
5.02 Initial and Subsequent Advances. The making of each
Advance to the Borrower (including the initial Advance) on any Business Day is
subject to the following further conditions precedent, both immediately prior to
the making of such Advance 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) both immediately prior to the making of such Advance
and also after giving effect thereto and to the intended use thereof,
the representations and warranties made by the 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 Advance in all
material respects (in the case of the representations and warranties in
Section 6.23 and Schedule 1, solely with respect to Mortgage Loans
included in the Borrowing Base) 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). At the request of the Lender, 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
Advances shall not exceed the Borrowing Base or the Maximum Credit;
(d) subject to the Lender's right to perform one or more
Due Diligence Reviews pursuant to Section 11.16 hereof, the Lender
shall have completed its due diligence review of the Mortgage Loan
Documents for each Advance and such other documents, records,
agreements, instruments, mortgaged properties or information relating
to such Advances as the Lender in its reasonable discretion deems
appropriate to review and such review shall be satisfactory to the
Lender in its reasonable discretion;
(e) the Lender shall have received a Notice of Borrowing
and Pledge, Loan List and Mortgage Loan Data Transmission and all other
documents required under Section 2.03;
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(f) the Lender shall have received from the Custodian a
Custodian Loan Transmission and one or more Trust Receipts in respect
of Mortgage Loans to be pledged hereunder on such Business Day and an
Exception Report, in each case dated such Business Day and duly
completed;
(g) in the event that the Mortgage Loans to be pledged
would cause the aggregate outstanding principal balance of Mortgage
Loans pledged secured by Mortgaged Property from any state to exceed
10% of the aggregate outstanding principal balance of Mortgage Loans
pledged hereunder, then the Borrower shall, upon request by the Lender,
deliver an opinion of counsel acceptable to the Lender in such state,
substantially in the form of items number 12 and 13 of Exhibit C;
(h) with respect to any Mortgage Loan that was funded in
the name of or acquired by a Qualified Originator which is an Affiliate
of the Borrower, the Lender may, in its sole discretion, require the
Borrower to provide evidence sufficient to satisfy the Lender that such
Mortgage Loan was acquired in a legal sale, including without
limitation, an opinion, in form and substance and from an attorney, in
both cases, acceptable to the Lender in its sole discretion, that such
Mortgage Loan was acquired in a legal sale;
(i) none of the following shall have occurred and/or be
continuing:
(i) an event or events resulting in the
inability of the Lender to finance any Advances with
traditional counterparties at rates which would have been
reasonable prior to the occurrence of such catastrophic event
or events or a material adverse change in the financial
condition of the Lender which affects (or can reasonably be
expected to affect) materially and adversely the ability of
the Lender to fund any obligations under or otherwise comply
with the terms of this Loan Agreement; or
(ii) any other event beyond the control of the
Lender which the Lender reasonably determines may result in
the Lender's inability to perform any obligations under this
Loan Agreement including, without limitation, acts of God,
strikes, lockouts, riots, acts of war or terrorism, epidemics,
nationalization, expropriation, currency restrictions, fire,
communication line failures, computer viruses, power failures,
earthquakes, or other disasters of a similar nature to the
foregoing.
(j) if any Mortgage Loans to be pledged hereunder were
acquired by the Borrower, such Mortgage Loans shall conform to the Borrower's
Underwriting Guidelines or the Lender shall have received Underwriting
Guidelines for such Mortgage Loans acceptable to the Lender in its reasonable
discretion;
(k) the Lender shall have received all information
requested from the Borrower relating to Interest Rate Protection Agreements
pursuant to Section 7.25, and the Lender shall have reasonably determined that
such Interest Rate Protection Agreements adequately protect the Borrower from
interest rate fluctuations; and
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(l) the Lender shall have received, no later than 10:00
a.m. three (3) days prior to the requested Funding Date, an Instruction Letter,
executed by the Borrower, with the related Servicing Agreement attached thereto,
which such Servicing Agreement shall be in form and substance acceptable to
Lender.
Each request for a borrowing by the Borrower hereunder shall constitute a
certification by the Borrower to the effect set forth in this Section (both as
of the date of such notice, request or confirmation and as of the date of such
borrowing).
SECTION 6. Representations and Warranties. The Borrower
represents and warrants to the Lender that throughout the term of this Loan
Agreement:
6.01 Existence. The Borrower (a) is a limited liability
company 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, except where the lack of such licenses,
authorizations, consents and approvals would not be reasonably likely to have a
Material Adverse Effect, (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, except where failure so to qualify would not
be reasonably likely (either individually or in the aggregate) to have a
Material Adverse Effect, and (d) is in compliance in all material respects with
all Requirements of Law.
6.02 Financial Condition. The Borrower has heretofore
furnished to the Lender a copy of its audited consolidated balance sheets and
the audited consolidated balance sheets of its consolidated Subsidiaries, each
as at December 31, 2002 with the opinion thereon of Deloitte & Touche LLP, a
copy of which has been provided to Lender. The Borrower has also heretofore
furnished to the Lender the related consolidated statements of income and
retained earnings and of cash flows for the Borrower and its consolidated
Subsidiaries for the one year period ending December 31, 2002, setting forth
comparative form the figures for the previous year. All such financial
statements are materially complete and correct and fairly present the
consolidated financial condition of the Borrower and its Subsidiaries and the
consolidated results of their operations for the fiscal year ended on said date,
all in accordance with GAAP applied on a consistent basis. Since December 31,
2002 there has been no development or event nor any prospective development or
event which has had or should reasonably be expected to have a Material Adverse
Effect.
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 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 and there is a reasonable likelihood of a Material Adverse Effect or
adverse decision.
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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 by-laws of the Borrower, or any
applicable law, rule or regulation, or any order, writ, injunction or decree of
any Governmental Authority, 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 Loan 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 to which it is a party; the
execution, delivery and performance by the Borrower of each of the Loan
Documents to which it is a party has 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 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
other Person, are necessary for the execution, delivery or performance by the
Borrower of the Loan Documents to which it is a party or for the legality,
validity or enforceability thereof, except for filings and recordings in respect
of the Liens created pursuant to this Loan Agreement.
6.07 Margin Regulations. Neither the making of any Advance
hereunder, nor the use of the proceeds thereof, will violate or be inconsistent
with the provisions of Regulation 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. The Borrower is not subject to any Federal or state statute or
regulation which limits its ability to incur indebtedness.
6.10 No Legal Bar. The execution, delivery and performance
of this Loan Agreement and the Note, the borrowings hereunder and the use of the
proceeds thereof will not violate any Requirement of Law or Contractual
Obligation of the Borrower or of any of its Subsidiaries and will not result in,
or require, the creation or imposition of any Lien (other than the
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Liens created hereunder) on any of its or their respective properties or
revenues pursuant to any such Requirement of Law or Contractual Obligation.
6.11 No Default. Neither the Borrower nor any of its
Subsidiaries is in default under or with respect to any of its Contractual
Obligations in any respect which should reasonably be expected to have a
Material Adverse Effect. No Default or Event of Default has occurred and is
continuing.
6.12 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 any 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 to be released simultaneously with
the Liens granted in favor of the Lender hereunder and no Person other than the
Borrower has any Lien on any Mortgage Loan.
(b) The provisions of this Loan 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,
endorsed in blank by a duly authorized officer of the payee or last endorsee,
the Lender shall have a fully perfected first priority security interest
therein, in the Mortgage Loan evidenced thereby and in the Borrower's interest
in the related Mortgaged Property.
(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 jurisdictions and recording offices listed on
Schedule 2 attached hereto, the security interests granted hereunder in the
Collateral will constitute fully perfected first priority security interests
under the Uniform Commercial Code in all right, title and interest of the
Borrower in, to and under such Collateral, which can be perfected by filing
under the Uniform Commercial Code.
6.13 Chief Executive Office; Chief Operating Office. The
Borrower's chief executive office and chief operating office on the Effective
Date is located at 1301 Avenue of the Xxxxxxxx, 0xx Xxxxx, Xxx Xxxx, Xxx Xxxx
00000.
6.14 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 or chief operating
office or the offices of the Custodian.
6.15 True and Complete Disclosure. The information,
reports, financial statements, exhibits and schedules furnished in writing by or
on behalf of the Borrower to the Lender in connection with the negotiation,
preparation or delivery of this Loan Agreement and the other Loan Documents or
included herein or therein or delivered pursuant hereto or thereto, when taken
as a whole, do not contain any untrue statement of material fact or omit to
state any material fact
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necessary to make the statements herein or therein, in light of the
circumstances under which they were made, not misleading. All written
information furnished after the date hereof by or on behalf of the Borrower to
the Lender in connection with this Loan Agreement and the other Loan Documents
and the transactions contemplated hereby and thereby will be true, complete and
accurate in every material respect, or (in the case of projections) based on
reasonable estimates, on the date as of which such information is stated or
certified. There is no fact known to a Responsible Officer that, after due
inquiry, could reasonably be expected to have a Material Adverse Effect that has
not been disclosed herein, in the other Loan Documents or in a report, financial
statement, exhibit, schedule, disclosure letter or other writing furnished to
the Lender for use in connection with the transactions contemplated hereby or
thereby.
6.16 Tangible Net Worth; Liquidity. The Initial
Guarantor's Tangible Net Worth (plus the principal amount of any subordinated
debt) is not less than $12,000,000 and the Initial Guarantor has Cash
Equivalents in an amount not less than $2,000,000. The ratio of the Initial
Guarantor's Total Indebtedness to Tangible Net Worth is not greater than 20:1.
The Initial Guarantor shall at all times have cash, Cash Equivalents and unused
borrowing capacity on unencumbered assets that could be drawn against (taking
into account required haircuts) under committed warehouse and repurchase
facilities in an amount equal to not less than $4,000,000.
6.17 ERISA. Each Plan to which the Borrower or its
Subsidiaries make direct contributions, and, to the knowledge of the Borrower,
each other Plan and each Multiemployer Plan, is in compliance in all material
respects with, and has been administered in all material respects in compliance
with, the applicable provisions of ERISA, the Code and any other Federal or
State law. No event or condition has occurred and is continuing as to which the
Borrower would be under an obligation to furnish a report to the Lender under
Section 7.01(d) hereof.
6.18 Licenses. The Lender will not be required as a result
of financing or taking a pledge of the Mortgage Loans to be licensed, registered
or approved or to obtain permits or otherwise qualify (i) to do business in any
state in which it currently so required or (ii) under any state consumer
lending, fair debt collection or other applicable state statute or regulation.
6.19 Relevant States. Schedule 3 sets forth all of the
states or other jurisdictions (the "Relevant States") in which the Borrower
originates Mortgage Loans in its own name or through brokers on the date of this
Loan Agreement.
6.20 True Sales. Any and all interest of a Qualified
Originator in, to and under any Mortgage funded in the name of or acquired by
such Qualified Originator or seller which is an Affiliate of the Borrower has
been sold, transferred, conveyed and assigned to the Borrower pursuant to a
legal sale and such Qualified Originator retains no interest in such Mortgage
Loan, and if so requested by the Lender, is covered by an opinion of counsel to
that effect in form and substance acceptable to the Lender.
6.21 No Burdensome Restrictions. No Requirement of Law or
Contractual Obligation of the Borrower or any of its Subsidiaries has a Material
Adverse Effect.
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6.22 Subsidiaries. All of the Subsidiaries of the Borrower
at the date hereof are listed on Schedule 4 to this Loan Agreement.
6.23 Origination and Acquisition of Mortgage Loans. The
Mortgage Loans were originated or acquired by the Borrower, and the origination
and collection practices used by the Borrower or Qualified Originator, as
applicable, with respect to the Mortgage Loans have been, in all material
respects legal, proper, prudent and customary in the residential mortgage loan
servicing business, and in accordance with the Underwriting Guidelines. With
respect to Mortgage Loans acquired by the Borrower, all such Mortgage Loans are
in conformity with the Underwriting Guidelines. Each of the Mortgage Loans
complies with the representations and warranties listed in Schedule I hereto.
6.24 No Adverse Selection. The Borrower used no selection
procedures that identified the Mortgage Loans as being less desirable or
valuable than other comparable Mortgage Loans owned by the Borrower.
6.25 Borrower Solvent; Fraudulent Conveyance. As of the
date hereof and immediately after giving effect to each Advance, the fair value
of the assets of the Borrower is greater than the fair value of the liabilities
(including, without limitation, contingent liabilities if and to the extent
required to be recorded as a liability on the financial statements of the
Borrower in accordance with GAAP) of the Borrower and the Borrower is and will
be solvent, is and will be able to pay its debts as they mature and does not and
will not have an unreasonably small capital to engage in the business in which
it is engaged and proposes to engage. Borrower does not intend to incur, or
believe that it has incurred, debts beyond its ability to pay such debts as they
mature. Borrower is not contemplating the commencement of insolvency,
bankruptcy, liquidation or consolidation proceedings or the appointment of a
receiver, liquidator, conservator, trustee or similar official in respect of
Borrower or any of its assets. Borrower is not transferring any Mortgage Loans
with any intent to hinder, delay or defraud any of its creditors.
6.26 Insured Closing Letter. As of the date hereof and as
of the date of each delivery of a Wet Loan, the Settlement Agent has obtained an
Insured Closing Letter, closing protection letter or similar authorization
letter from a nationally recognized title insurance company approved by the
Lender, copies of which shall be delivered by the Borrower to the Custodian
prior to the Funding Date. Upon request by the Lender, all such Insured Closing
Letters or similar letters in possession of the Borrower shall be made available
for audit by the Lender or its designee.
6.27 Escrow Agreement. As of the date hereof and as of the
date of each delivery of a Wet Loan, the Settlement Agent has executed an escrow
agreement or letter stating that in the event of a Rescission of any other
reason the Mortgage Loan fails to fund on a given day, the party conducting the
closing is holding all funds which would have been disbursed on behalf of the
Mortgagor as agent for an for the benefit of the Lender and such funds shall be
redeposited in the Disbursement Account for benefit of the Lender not later than
one Business Day after the date of Rescission or other failure of the Mortgage
Loan to fund on a given day. Upon request by the Lender, all such Escrow Letters
in possession of the Borrower shall be delivered to the Lender or made available
for audit by the Lender or its designee, as requested by the Lender.
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SECTION 7. Covenants of the Borrower. The Borrower covenants
and agrees with the Lender that, so long as any Advance is outstanding and until
payment in full of all Secured Obligations:
7.01 Financial Statements. The Borrower shall deliver to
the Lender:
(a)(i) as soon as available and in any event within 30 days
after the end of each month, the consolidated balance sheets of the
Borrower, the Guarantor and each of their consolidated Subsidiaries as
at the end of such month and the related unaudited consolidated
statements of income and retained earnings for the Borrower the
Guarantor and each of their consolidated Subsidiaries for such month
and the portion of the fiscal year through the end of such month,
setting forth in each case in comparative form the figures for the
previous year, accompanied by a certificate of a Responsible Officer of
the Borrower or Guarantor, which certificate shall state that said
consolidated financial statements fairly present the consolidated
financial condition and results of operations of the Borrower or the
Guarantor, as the case may be, and its Subsidiaries in accordance with
GAAP, consistently applied, as at the end of, and for, such month
(subject to normal year-end audit adjustments);
(ii) as soon as available and in any event within 45 days
after the end of each of the first three quarterly fiscal periods of
each fiscal year of the Borrower or Guarantor, the consolidated balance
sheets of the Borrower, the Guarantor and each of their 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 the Borrower, the Guarantor and each of their 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 the Borrower, which certificate shall state that
said consolidated financial statements fairly present the consolidated
financial condition and results of operations of the Borrower or the
Guarantor, as the case may be, 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 90 days
after the end of each fiscal year of the Borrower or Guarantor, the
consolidated balance sheets of the Borrower, the Guarantor and each of
their 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 the Borrower, the Guarantor and each of their
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, 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 the Borrower or the
Guarantor, as the case may be, and its consolidated Subsidiaries 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;
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(c) from time to time such other information regarding
the financial condition, operations, or business of the Borrower or the
Guarantor as the Lender may reasonably request; and
(d) as soon as reasonably possible, and in any event
within thirty (30) days after a Responsible Officer knows, or with
respect to any Plan or Multiemployer Plan to which the Borrower, the
Guarantor or any of their Subsidiaries makes direct contributions, has
reason to believe, that any of the events or conditions specified below
with respect to any Plan or Multiemployer Plan has occurred or exists,
a statement signed by a senior financial officer of the Borrower on
Guarantor, as the case may be, setting forth details respecting such
event or condition and the action, if any, that the Borrower or the
Guarantor or its ERISA Affiliate proposes to take with respect thereto
(and a copy of any report or notice required to be filed with or given
to PBGC by the Borrower or the Guarantor or an ERISA Affiliate with
respect to such event or condition):
(i) any reportable event, as defined in Section
4043(b) of ERISA and the regulations issued thereunder, with
respect to a Plan, as to which PBGC has not by regulation or
otherwise waived the requirement of Section 4043(a) of ERISA
that it be notified within thirty (30) days of the occurrence
of such event (provided that a failure to meet the minimum
funding standard of Section 412 of the Code or Section 302 of
ERISA, including, without limitation, the failure to make on
or before its due date a required installment under Section
412(m) of the Code or Section 302(e) of ERISA, shall be a
reportable event regardless of the issuance of any waivers in
accordance with Section 412(d) of the Code); and any request
for a waiver under Section 412(d) of the Code for any Plan;
(ii) the distribution under Section 4041(c) of
ERISA of a notice of intent to terminate any Plan or any
action taken by the Borrower or the Guarantor or an ERISA
Affiliate to terminate any Plan;
(iii) the institution by PBGC of proceedings under
Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Plan, or the
receipt by the Borrower or the Guarantor or any ERISA
Affiliate of a notice from a Multiemployer Plan that such
action has been taken by PBGC with respect to such
Multiemployer Plan;
(iv) the complete or partial withdrawal from a
Multiemployer Plan by the Borrower or the Guarantor or any
ERISA Affiliate that results in liability under Section 4201
or 4204 of ERISA (including the obligation to satisfy
secondary liability as a result of a purchaser default) or the
receipt by the Borrower or the Guarantor or any ERISA
Affiliate of notice from a Multiemployer Plan that it is in
reorganization or insolvency pursuant to Section 4241 or 4245
of ERISA or that it intends to terminate or has terminated
under Section 4041A of ERISA;
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(v) the institution of a proceeding by a
fiduciary of any Multiemployer Plan against the Borrower or
the Guarantor or any ERISA Affiliate to enforce Section 515 of
ERISA, which proceeding is not dismissed within 30 days; and
(vi) the adoption of an amendment to any Plan
that, pursuant to Section 401(a)(29) of the Code or Section
307 of ERISA, would result in the loss of tax-exempt status of
the trust of which such Plan is a part if the Borrower or the
Guarantor or an ERISA Affiliate fails to timely provide
security to such Plan in accordance with the provisions of
said Sections.
The Borrower 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 the Borrower to the effect that, to the best of such
Responsible Officer's knowledge, the Borrower during such fiscal period or year
has observed or performed all of its covenants and other agreements, and
satisfied every material condition, contained in this Loan Agreement and the
other Loan Documents to be observed, performed or satisfied by it, 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 the Borrower has taken or proposes to take with respect
thereto).
7.02 Litigation. The Borrower will promptly, and in any
event within 7 days after service process on any of the following, give to 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. Each of the Borrower and its
Subsidiaries will:
(a) preserve and maintain its legal existence and all of
its material rights, privileges, licenses and franchises;
(b) comply with the requirements of all applicable laws,
rules, regulations and orders of Governmental Authorities (including,
without limitation, truth in lending, real estate settlement procedures
and 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;
(c) keep adequate records and books of account, in which
complete entries will be made in accordance with GAAP consistently
applied;
(d) not move its chief executive office or chief
operating office from the addresses referred to in Section 6.13 unless
it shall have provided the Lender 30 days prior written notice of such
change;
(e) pay and discharge all taxes, assessments and
governmental charges or levies imposed on it or on its income or
profits or on any of its Property prior to the date on which
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penalties attach thereto, except for any such tax, assessment, charge
or levy the payment of which is being contested in good faith and by
proper proceedings and against which adequate reserves are being
maintained; and
(f) permit representatives of the Lender, during normal
business hours upon three (3) Business Days' prior written notice at a
mutually desirable time or at any time during the continuance of an
Event of Default, to examine, copy and make extracts from its books and
records, to inspect any of its Properties, and to discuss its business
and affairs with its officers, all to the extent reasonably requested
by the Lender.
7.04 Prohibition of Fundamental Changes. The Borrower
shall not enter into any transaction of merger or consolidation or amalgamation,
or liquidate, wind up or dissolve itself (or suffer any liquidation, winding up
or dissolution) or sell all or substantially all of its assets; provided, that
the Borrower may merge or consolidate with (a) any wholly owned subsidiary of
the Borrower, or (b) any other Person if the Borrower is the surviving
corporation; and provided further, that if after giving effect thereto, no
Default would exist hereunder.
7.05 Borrowing Base Deficiency. If at any time there
exists a Borrowing Base Deficiency the Borrower shall cure same in accordance
with Section 2.06 hereof.
7.06 Notices. The Borrower shall give notice to the Lender
promptly:
(a) upon the Borrower becoming aware of, and in any event
within one (1) Business Day after, the occurrence of any Default or
Event of Default or any event of default or default under any other
material agreement of the Borrower or the Guarantor;
(b) upon, and in any event within three (3) Business Days
after, service of process on the Borrower or the Guarantor or any of
their Subsidiaries, or any agent thereof for service of process, in
respect of any legal or arbitrable proceedings affecting the Borrower
or any of their Subsidiaries (i) that questions or challenges the
validity or enforceability of any of the Loan Documents or (ii) in
which the amount in controversy exceeds $1,000,000;
(c) upon the Borrower becoming aware of any default
related to any Collateral, any Material Adverse Effect and any event or
change in circumstances which should reasonably be expected to have a
Material Adverse Effect;
(d) upon the Borrower becoming aware during the normal
course of its business that the Mortgaged Property in respect of any
Mortgage Loan or Mortgage Loans with an aggregate unpaid principal
balance of at least $1,000,000 has been damaged by waste, fire,
earthquake or earth movement, windstorm, flood, tornado or other
casualty, or otherwise damaged so as to materially and adversely affect
the Collateral Value of such Mortgage Loan;
(e) upon the entry of a judgment or decree in an amount
in excess of $1,000,000 against the Guarantor or the Borrower.
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Each notice pursuant to this Section 7.06 (other than 7.06(e)) 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 or the Guarantor has taken or proposes to take with respect thereto.
7.07 Servicing. Except as provided in Section 11.15(c),
the Borrower shall not permit any Person other than the Borrower to service
Mortgage Loans without the prior written consent of the Lender, which consent
shall not be unreasonably withheld.
7.08 [Intentionally Omitted.]
7.09 Underwriting Guidelines. The Borrower shall notify
the Lender in writing of any material modifications to the Underwriting
Guidelines prior to implementation of such change, and unless the Lender objects
in writing within 5 Business Days of receipt of notice, the proposed
modifications shall be deemed acceptable.
7.10 Lines of Business. The Borrower will not engage to
any substantial extent in any line or lines of business activity other than the
businesses generally carried on by it as of the Effective Date.
7.11 Transactions with Affiliates. The Borrower will not
enter into any transaction, including, without limitation, any purchase, sale,
lease or exchange of property or the rendering of any service, with any
Affiliate unless such transaction is (a) otherwise permitted under this Loan
Agreement, (b) in the ordinary course of the Borrower's business and (c) upon
fair and reasonable terms no less favorable to the Borrower than it would obtain
in a comparable arm's length transaction with a Person which is not an
Affiliate, or make a payment that is not otherwise permitted by this Section
7.11 to any Affiliate.
7.12 Use of Proceeds. The Borrower will use the proceeds
of the Advances solely to originate, purchase, fund, manage and service Eligible
Mortgage Loans.
7.13 Limitation on Liens. The Borrower will not, nor will
it permit or allow others to, create, incur or permit to exist any Lien,
security interest or claim on or to any of its Property, except for (i) Liens
(not otherwise permitted hereunder) which are created in connection with the
purchase of fixed assets and equipment necessary in the ordinary course of the
Borrower's business or to finance residual certificates issued in connection
with securitizations of mortgage loans completed by the Borrower which are
financed solely based on a pledge of such residual certificates; and (ii) Liens
on the Collateral created pursuant to this Loan Agreement. The Borrower will
defend the Collateral against, and will take such other action as is necessary
to remove, any Lien, security interest or claim on or to the Collateral, other
than the security interests created under this Loan Agreement, and the Borrower
will defend the right, title and interest of the Lender in and to any of the
Collateral against the claims and demands of all persons whomsoever.
7.14 Limitation on Sale of Assets. The Borrower shall not
convey, sell, lease, assign, transfer or otherwise dispose of (collectively,
"Transfer"), all or substantially all of its Property, business or assets
(including, without limitation, receivables and leasehold interests)
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whether now owned or hereafter acquired or allow any Subsidiary to Transfer
substantially all of its assets to any Person; provided, that the Borrower may
after prior written notice to the Lender allow such action with respect to any
Subsidiary which is not a material part of the Borrower's overall business
operations.
7.15 Limitation on Distributions. Without the Lender's
consent, the Borrower shall not make any payment on account of, or set apart
assets for a sinking or other analogous fund for the purchase, redemption,
defeasance, retirement or other acquisition of, any stock or senior or
subordinate debt of the Borrower, whether now or hereafter outstanding, or make
any other distribution in respect thereof, either directly or indirectly,
whether in cash or property or in obligations of the Borrower.
7.16 Maintenance of Liquidity. The Borrower shall insure
that, as of the end of each calendar month, the Initial Guarantor has Cash
Equivalents in an amount of not less than $2,000,000. The Borrower shall insure
that the Initial Guarantor has Cash Equivalents and unused borrowing capacity on
unencumbered assets that could be drawn against (taking into account required
haircuts) under committed warehouse and repurchase facilities in an amount equal
to not less than $4,000,000. The Borrower shall insure that, as of the end of
each calendar month, beginning March 31, 2004, the Subsequent Guarantor has (a)
Cash Equivalents in an amount of not less than $5,000,000 and (b) Cash
Equivalents and unused borrowing capacity on unencumbered assets that could be
drawn against (taking into account required haircuts) under committed warehouse
and repurchase facilities in an amount equal to not less than $10,000,000.
7.17 Maintenance of Tangible Net Worth. The Borrower shall
not permit the Initial Guarantor's Tangible Net Worth at any time to be less
than $12,000,000 and the Borrower shall not permit the Subsequent Guarantor's
Tangible Net Worth at any time to be less than $125,000,000, or such higher
amount provided under any other repurchase, financing, credit or other similar
facility entered into by Borrower.
7.18 Maintenance of Ratio of Total Indebtedness to
Tangible Net Worth. The Borrower shall not permit the ratio of the Total
Indebtedness to Tangible Net Worth of the Initial Guarantor or the Subsequent
Guarantor at any time to be greater than 20:1; and each of the Borrower and the
Guarantor shall have quarterly net income greater than $1.
7.19 Restricted Payments. The Borrower shall not make any
Restricted Payments following an Event of Default.
7.20 Servicing Transmission. The Borrower shall provide to
the Lender on a monthly basis no later than 11:00 a.m. eastern time two (2)
Business Days prior to each Payment Date (or such other day requested by Lender)
(i) the Servicing Transmission, on a loan-by-loan basis and in the aggregate,
with respect to the Mortgage Loans serviced hereunder by the Borrower which were
funded prior to the first day of the current month, summarizing the Borrower's
delinquency and loss experience with respect to Mortgage Loans serviced by the
Borrower (including, in the case of the Mortgage Loans, the following
categories: current, 30-59, 60-89, 90-119, 120-149 and 150+) and (ii) any other
information reasonably requested by the Lender with respect to the Mortgage
Loans.
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7.21 No Amendment or Waiver. The Borrower will not, nor
will it permit or allow others to amend, modify, terminate or waive any
provision of any Mortgage Loan to which the Borrower is a party in any manner
which shall reasonably be expected to materially and adversely affect the value
of such Mortgage Loan as Collateral.
7.22 Maintenance of Property; Insurance. The Borrower
shall keep all property useful and necessary in its business in good working
order and condition. The Borrower shall maintain errors and omissions insurance
and/or mortgage impairment insurance and blanket bond coverage in such amounts
as are in effect on the Effective Date (as disclosed to Lender in writing) and
shall not reduce such coverage without the written consent of the Lender, and
shall also maintain such other insurance with financially sound and reputable
insurance companies, and with respect to property and risks of a character
usually maintained by entities engaged in the same or similar business similarly
situated, against loss, damage and liability of the kinds and in the amounts
customarily maintained by such entities.
7.23 Further Identification of Collateral. The Borrower
will furnish to the Lender from time to time statements and schedules further
identifying and describing the Collateral and such other reports in connection
with the Collateral as the Lender or any Lender may reasonably request, all in
reasonable detail.
7.24 Mortgage Loan Determined to be Defective. Upon
discovery by the Borrower or the Lender of any breach of any representation or
warranty listed on Schedule 1 hereto applicable to any Mortgage Loan, the party
discovering such breach shall promptly give notice of such discovery to the
other.
7.25 Interest Rate Protection Agreements. Upon the
Lender's request, the Borrower shall deliver to the Lender any and all
information relating to Interest Rate Protection Agreements.
7.26 Certificate of a Responsible Officer of the Borrower.
At the time that the Borrower delivers financial statements to the Lender in
accordance with Section 7.01 hereof, the Borrower shall forward to the Lender a
certificate of a Responsible Officer of the Borrower which demonstrates that the
Borrower is in compliance with the covenants set forth in Sections 7.16, 7.17
and 7.18 above.
7.27 Additional Warehouse Facility. At all times following
June 30, 2004, the Borrower shall maintain, with a nationally recognized and
established lender (other than the Lender) at least one committed loan facility
that provides funding on a committed basis, and which has a committed and term
at least equal to that provided hereunder (with not less than $[40]million
available for wet loans).
7.28 Alternative Collateral. The Borrower shall not cause
any Eligible Mortgage Loan which is at any time used as collateral for an
Advance hereunder to be subsequently used as collateral pursuant to any other
financing, note purchase, loan warehouse, repurchase or similar facility
maintained by the Borrower with any third party without the express written
consent of the Lender, unless such Mortgage Loan is no longer an Eligible
Mortgage Loan.
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7.29 Capital Raise. The Subsequent Guarantor shall raise
$150,000,000 in additional capital and shall execute a guaranty in favor of the
Lender in a form acceptable to the Lender on or before March 31, 2004.
SECTION 8. Events of Default. Each of the following events
shall constitute an event of default (an "Event of Default") hereunder:
(a) the Borrower shall default in the payment of any
principal of or interest on any Advance when due (whether at stated
maturity, upon acceleration or at mandatory prepayment) or the
Guarantor shall default in the payment of any amount required to be
paid by it under the Guaranty; or
(b) the Borrower shall default in the payment of any
other amount payable by it hereunder or under any other Loan Document
after notification by the Lender of such default, and such default
shall have continued unremedied for three Business Days; or
(c) any representation, warranty or certification made or
deemed made herein or in any other Loan Document by either the Borrower
or the Guarantor 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 (other than the
representations and warranties set forth in Schedule 1 which shall be
considered solely for the purpose of determining the Collateral Value
of the Mortgage Loans; unless (i) the Borrower shall have made any such
representations and warranties with knowledge that they were materially
false or misleading at the time made or (ii) any such representations
and warranties have been determined by the Lender in its sole
discretion to be materially false or misleading on a regular basis); or
(d) the Borrower shall fail to comply with the
requirements of Section 7.03(a), Section 7.04, Section 7.06 (a) or (c),
Sections 7.12 through 7.19, or Section 7.22 hereof; or the Borrower
shall default in the performance of its obligations under Section 7.05
hereof, or the Guarantor shall fail to comply with any covenant in the
Guaranty; and such default shall continue unremedied for a period of
one (1) Business Day; or the Borrower shall otherwise fail to observe
or perform any other agreement contained in this Loan Agreement or any
other Loan Document and such failure to observe or perform shall
continue unremedied for a period of five (5) Business Days; or
(e) a final judgment or judgments for the payment of
money in excess of $2,000,000 in the aggregate (to the extent that it
is, in the reasonable determination of the Lender, uninsured and
provided that any insurance or other credit posted in connection with
an appeal shall not be deemed insurance for these purposes) shall be
rendered against the Borrower or the Guarantor or any of their
Subsidiaries 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, the Guarantor or
any such Subsidiary shall not, within said period of 60 days, or such
longer
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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
(f) the Borrower or the Guarantor shall admit in writing
its inability to pay its debts as such debts become due; or
(g) the Borrower, the Guarantor or any of their
Subsidiaries 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) commence a voluntary case under the Bankruptcy Code,
(iv) 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, without the
application or consent of the Borrower, the Guarantor or any of their
Subsidiaries, 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,
or taking of possession by, a receiver, custodian, trustee, examiner,
liquidator or the like of the Borrower, the Guarantor or any such
Subsidiary or of all or any substantial part of its property, or (iii)
similar relief in respect of the Borrower, the Guarantor or any such
Subsidiary under any law relating to bankruptcy, insolvency,
reorganization, liquidation, dissolution, arrangement or 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, the Guarantor or any such Subsidiary shall be
entered in an involuntary case under the Bankruptcy Code; or
(i) the Custodial Agreement or any Loan Document shall
for whatever reason (including an event of default thereunder) be
terminated or the lien on the Collateral created by this Loan Agreement
or Borrower's material obligations hereunder shall cease to be in full
force and effect, or the enforceability thereof shall be contested by
the Borrower; or
(j) any materially adverse change in the Properties,
business or financial condition, or prospects of the Borrower, the
Guarantor or any of their Subsidiaries or Affiliates, 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 Borrower's ability to perform its
obligations under this Loan Agreement, the Note or any other Loan
Document or the Guarantor's ability to perform its obligations under
the Guaranty; or
(k) (i) any Person shall engage in any "prohibited
transaction" (as defined in Section 406 of ERISA or Section 4975 of the
Code) involving any Plan, (ii) any material
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"accumulated funding deficiency" (as defined in Section 302 of ERISA),
whether or not waived, shall exist with respect to any Plan or any Lien
in favor of the PBGC or a Plan shall arise on the assets of the
Borrower, the Guarantor or any Commonly Controlled Entity, (iii) a
Reportable Event shall occur with respect to, or proceedings shall
commence to have a trustee appointed, or a trustee shall be appointed,
to administer or to terminate, any Single Employer Plan, which
Reportable Event or commencement of proceedings or appointment of a
trustee is, in the reasonable opinion of the Lenders, likely to result
in the termination of such Plan for purposes of Title IV of ERISA, (iv)
any Single Employer Plan shall terminate for purposes of Title IV of
ERISA, (v) the Borrower or any Commonly Controlled Entity shall, or in
the reasonable opinion of the Lenders is likely to, incur any liability
in connection with a withdrawal from, or the insolvency or
reorganization of, a Multiemployer Plan or (vi) any other event or
condition shall occur or exist with respect to a Plan; and in each case
in clauses (i) through (vi) above, such event or condition, together
with all other such events or conditions, if any, could reasonably be
expected to have a Material Adverse Effect; or
(l) any Change of Control of the Borrower or the
Guarantor shall have occurred without the prior consent of the Lender;
or
(m) the Borrower shall grant, or suffer to exist, any
Lien on any Collateral except the Liens contemplated hereby; or the
Liens contemplated hereby shall cease to be first priority perfected
Liens on the Collateral in favor of the Lender or shall be Liens in
favor of any Person other than the Lender; or
(n) the Lender shall reasonably request, specifying the
reasons for such request, information, and/or written responses to such
requests, regarding the financial well-being of the Borrower or the
Guarantor and such information and/or responses shall not have been
provided within three Business Days of such request; or
(o) the Borrower or the Guarantor or any subsidiary or
Affiliate of either entity shall default under, or fail to perform as
required under, or shall otherwise materially breach the terms of any
instrument, agreement or contract between the Borrower, Guarantor or
such other entity, on the one hand, and the Lender or any of the
Lender's Affiliates on the other; or the Borrower, the Guarantor or any
Subsidiary or Affiliate of the Borrower or Guarantor shall default
under, or fail to perform as requested under, the terms of any
repurchase agreement, loan and security agreement or similar credit
facility or agreement for borrowed funds entered into by the Borrower,
the Guarantor or such other entity and any third party, which default
or failure entitles any party to require acceleration or prepayment of
any indebtedness thereunder.
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 Advances then outstanding under the Note to
be immediately due and payable, together with all interest thereon and
reasonable fees and out-of-pocket expenses accruing under this Loan Agreement;
provided that upon the occurrence of an Event of Default referred to in Sections
8(g) or
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(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
Borrower and may thereupon exercise any remedies available to it at law and
pursuant to the Loan Documents, including, but not limited to, the transfer of
servicing or the liquidation of the Collateral on a servicing released basis.
(b) Upon the occurrence of one or more Events of Default,
the Lender shall have the right to obtain physical possession of the Servicing
Records and all other files of the Borrower relating to the Collateral and all
documents relating to the Collateral which are then or may thereafter come in to
the possession of the Borrower or any third party acting for the Borrower and
the 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 Borrower contained in this Loan 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 Borrower for any act
or failure to act hereunder, except for its or their 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 Loan 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 Loan 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 Loan 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.
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(a) The Borrower agrees to hold the Lender, and its
Affiliates and their officers, directors, employees, agents and advisors (each
an "Indemnified Party") harmless from and indemnify any Indemnified Party
against all liabilities, losses, damages, judgments, costs and expenses of any
kind which may be imposed on, incurred by or asserted against such Indemnified
Party (collectively, the "Costs") relating to or arising out of this Loan
Agreement, the Note, 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 Loan Agreement, the Note, any
other Loan Document or any transaction contemplated hereby or thereby, that, in
each case, results from anything other than any Indemnified Party's gross
negligence or willful misconduct. Without limiting the generality of the
foregoing, the Borrower agrees to hold any Indemnified Party harmless from and
indemnify such Indemnified Party against all Costs with respect to all Mortgage
Loans relating to or arising out of any violation or alleged violation of any
environmental law, rule or regulation or any consumer credit laws, including
without limitation laws with respect to unfair or deceptive lending practices
and predatory lending practices, the Truth in Lending Act and/or the Real Estate
Settlement Procedures Act, that, in each case, results from anything other than
such Indemnified Party's gross negligence or willful misconduct. In any suit,
proceeding or action brought by an Indemnified Party in connection with any
Mortgage Loan for any sum owing thereunder, or to enforce any provisions of any
Mortgage Loan, the Borrower will save, indemnify and hold such Indemnified Party
harmless from 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 the
Borrower of any obligation 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 the Borrower. The Borrower also agrees
to reimburse an Indemnified Party as and when billed by such Indemnified Party
for all such Indemnified Party's costs and expenses incurred in connection with
the enforcement or the preservation of such Indemnified Party's rights under
this Loan Agreement, the Note, any other Loan Document or any transaction
contemplated hereby or thereby, including without limitation the reasonable fees
and disbursements of its counsel. The Borrower hereby acknowledges that,
notwithstanding the fact that the Note is secured by the Collateral, the
obligation of the Borrower under the Note is a recourse obligation of the
Borrower.
(b) The Borrower agrees 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 Loan Agreement, the Note, any
other Loan Document or any other documents prepared in connection herewith or
therewith. The Borrower agrees 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 counsel to the Lender and (ii) all the due
diligence, inspection, testing and review costs and expenses incurred by the
Lender with respect to Collateral under this Loan Agreement, including, but not
limited to, those costs and expenses incurred by the Lender pursuant to Sections
11.03(a), 11.14 and 11.16 hereof.
11.04 Amendments. Except as otherwise expressly provided in
this Loan Agreement, any provision of this Loan Agreement may be modified or
supplemented only by an
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instrument in writing signed by the Borrower and the Lender and any provision of
this Loan Agreement may be waived by the Lender.
11.05 Successors and Assigns. This Loan 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 Borrower under
Sections 3.03 and 11.03 hereof shall survive the repayment of the Advances and
the termination of this Loan 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
Advance, 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 Advance 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 Loan Agreement.
11.08 Counterparts. This Loan 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 Loan
Agreement by signing any such counterpart.
11.09 Loan Agreement Constitutes Security Agreement;
Governing Law. This Loan Agreement shall be governed by New York law without
reference to choice of law doctrine (but with reference to Section 5-1401 of the
New York General Obligations Law, which by its terms applies to this Loan
Agreement), and shall constitute a security agreement within the meaning of the
Uniform Commercial Code.
11.10 SUBMISSION TO JURISDICTION; WAIVERS. EACH LOAN PARTY
HEREBY IRREVOCABLY AND UNCONDITIONALLY:
(A) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL
ACTION OR PROCEEDING RELATING TO THIS LOAN AGREEMENT, THE NOTE 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
NEW YORK, THE FEDERAL COURTS OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN
DISTRICT OF NEW YORK, 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 HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING
IN ANY SUCH COURT OR THAT SUCH
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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 XXX IN ANY OTHER JURISDICTION.
11.11 WAIVER OF JURY TRIAL. EACH OF THE BORROWER 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 LOAN AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY.
11.12 Acknowledgments. The Borrower hereby acknowledges
that:
(a) it has been advised by counsel in the negotiation,
execution and delivery of this Loan Agreement, the Note and the other
Loan Documents to which it is a party;
(b) 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
(c) no joint venture exists among or between the Lender
and the Borrower.
11.13 Hypothecation or Pledge of Collateral. The Lender
shall have free and unrestricted use of all Collateral and nothing in this Loan
Agreement shall preclude the Lender from engaging in repurchase transactions
with the Collateral or otherwise pledging, repledging, transferring,
hypothecating, or rehypothecating the Collateral. Nothing contained in this Loan
Agreement shall obligate the Lender to segregate any Collateral delivered to the
Lender by the Borrower.
11.14 Assignments; Participations.
(a) The Borrower may assign any of its rights or
obligations hereunder or under the Note only with the prior written consent of
the Lender. The Lender may assign or transfer to any bank or other financial
institution that makes or invests in loans or any Affiliate of the Lender all or
any of its rights under this Loan Agreement and the other Loan Documents.
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(b) The Lender may, in accordance with applicable law, at
any time sell to one or more lenders or other entities ("Participants")
participating interests in any Advance, the Note, its right to make Advances, or
any other interest of the Lender hereunder and under the other Loan Documents.
In the event of any such sale by the Lender of participating interests to a
Participant, the Lender's obligations under this Loan Agreement to the Borrower
shall remain unchanged, the Lender shall remain solely responsible for the
performance thereof, the Lender shall remain the holder of the Note for all
purposes under this Loan Agreement and the other Loan Documents, and the
Borrower shall continue to deal solely and directly with the Lender in
connection with the Lender's rights and obligations under this Loan Agreement
and the other Loan Documents. The Borrower agrees that if amounts outstanding
under this Loan Agreement and the Note are due or unpaid, or shall have been
declared or shall have become due and payable upon the occurrence of an Event of
Default, each Participant shall be deemed to have the right of set-off in
respect of its participating interest in amounts owing under this Loan Agreement
and the Note to the same extent as if the amount of its participating interest
were owing directly to it as a Lender under this Loan Agreement or the Note;
provided, that such Participant shall only be entitled to such right of set-off
if it shall have agreed in the agreement pursuant to which it shall have
acquired its participating interest to share with the Lender the proceeds
thereof. The Lender also agrees that each Participant shall be entitled to the
benefits of Sections 2.07 and 11.03 with respect to its participation in the
Advances outstanding from time to time; provided, that the Lender and all
Participants shall be entitled to receive no greater amount in the aggregate
pursuant to such Sections than the Lender would have been entitled to receive
had no such transfer occurred.
(c) The Lender may furnish any information concerning the
Borrower or any of its Subsidiaries in the possession of such Lender from time
to time to assignees and Participants (including prospective assignees and
Participants) only after notifying the Borrower in writing and securing signed
confidentiality statements (a form of which is attached hereto as Exhibit I) and
only for the sole purpose of evaluating participations and for no other purpose.
(d) The Borrower agrees to cooperate with the Lender in
connection with any such assignment and/or participation, to execute and deliver
such replacement notes, and to enter into such restatements of, and amendments,
supplements and other modifications to, this Loan Agreement and the other Loan
Documents in order to give effect to such assignment and/or participation. The
Borrower further agrees to furnish to any Participant identified by the Lender
to the Borrower copies of all reports and certificates to be delivered by the
Borrower to the Lender hereunder, as and when delivered to the Lender.
11.15 Servicing.
(a) The Borrower covenants to maintain or cause the
servicing of the Mortgage Loans to be maintained in conformity with Accepted
Servicing Practices. In the event that the preceding language is interpreted as
constituting one or more servicing contracts, each such servicing contract shall
terminate automatically upon the earliest of (i) an Event of Default, or (ii)
the date on which all the Secured Obligations have been paid in full, or (iii)
the transfer of servicing to any entity approved by the Lender.
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(b) During the period the Borrower is servicing the
Mortgage Loans, (i) the Borrower agrees that Lender has a first priority
perfected security interest in all servicing records, including but not limited
to any and all servicing agreements, files, documents, records, data bases,
computer tapes, copies of computer tapes, proof of insurance coverage, insurance
policies, appraisals, other closing documentation, payment history records, and
any other records relating to or evidencing the servicing of such Mortgage Loans
(the "Servicing Records"), and (ii) the Borrower grants the Lender a security
interest in all servicing fees and rights relating to the Mortgage Loans and all
Servicing Records to secure the obligation of the Borrower or its designee to
service in conformity with this Section and any other obligation of Borrower to
the Lender. The Borrower covenants to safeguard such Servicing Records and to
deliver them promptly to the Lender or its designee (including the Custodian) at
the Lender's request. It is understood and agreed by the parties that prior to
an Event of Default, the Borrower shall retain the servicing fees with respect
to the Mortgage Loans.
(c) If the Mortgage Loans are serviced by any other third
party servicer (such third party servicer, the "Subservicer") the Borrower shall
provide a copy of the related servicing agreement with a properly executed
Instruction Letter to the Lender at least three (3) Business Days prior to the
applicable Funding Date or the date on which the Subservicer shall begin
subservicing the Mortgage Loans, which shall be in the form and substance
acceptable to Lender (the "Servicing Agreement") and shall have obtained the
written consent of the Lender for such Subservicer to subservice the Mortgage
Loans. Initially, the Subservicer shall be [Cenlar.]
(d) The Borrower agrees that upon the occurrence of an
Event of Default, the Lender may terminate the Borrower in its capacity as
servicer and terminate any Servicing Agreement and transfer such servicing to
the Lender or its designee, at no cost or expense to the Lender. In addition,
the Borrower shall provide to the Lender an Instruction Letter from the Borrower
to the effect that upon the occurrence of an Event of Default, the Lender may
terminate any Subervicer or Servicing Agreement and direct that collections with
respect to the Mortgage Loans be remitted in accordance with the Lender's
instructions. The Borrower agrees to cooperate with the Lender in connection
with the transfer of servicing.
(e) After the Funding Date, until the pledge of any
Mortgage Loan is relinquished by the Custodian, the Borrower will have no right
to modify or alter the terms of the Mortgage Loan or consent to the modification
or alteration of the terms of any Mortgage Loan, and the Borrower will have no
obligation or right to repossess any Mortgage Loan or substitute another
Mortgage Loan, except as provided in any Custodial Agreement.
(f) The Borrower shall permit the Lender to inspect upon
reasonable prior written notice (which shall be no more than five (5) Business
Days prior to such date) at a mutually convenient time, the Borrower's or its
Affiliate's servicing facilities, as the case may be, for the purpose of
satisfying the Lender that the Borrower or its Affiliate, as the case may be,
has the ability to service the Mortgage Loans as provided in this Loan
Agreement. In addition, with respect to any Subservicer which is not an
Affiliate of the Borrower, the Borrower shall use its best efforts to enable the
Lender to inspect the servicing facilities of such Subservicer.
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11.16 Periodic Due Diligence Review. The Borrower
acknowledges that the Lender has the right to perform continuing due diligence
reviews with respect to the Mortgage Loans, for purposes of verifying compliance
with the representations, warranties and specifications made hereunder, or
otherwise, and the Borrower agrees that upon reasonable (but no less than one
(1) Business Day's) prior notice to the Borrower, the Lender or its authorized
representatives will be permitted during normal business hours to examine,
inspect, make copies of, and make extracts of, the Mortgage Files and any and
all documents, records, agreements, instruments or information relating to such
Mortgage Loans in the possession, or under the control, of the Borrower and/or
the Custodian. The Borrower also shall make available to the Lender a
knowledgeable financial or accounting officer for the purpose of answering
questions respecting the Mortgage Files and the Mortgage Loans. Without limiting
the generality of the foregoing, the Borrower acknowledges that the Lender shall
make Advances to the Borrower based solely upon the information provided by the
Borrower to the Lender in the Mortgage Loan Data Transmission and the
representations, warranties and covenants contained herein, and that the Lender,
at its option, has the right, at any time to conduct a partial or complete due
diligence review on some or all of the Mortgage Loans securing such Advance,
including, without limitation, ordering new credit reports, new appraisals on
the related Mortgaged Properties and otherwise re-generating the information
used to originate such Mortgage Loan. The Lender may underwrite such Mortgage
Loans itself or engage a mutually agreed upon third party underwriter to perform
such underwriting. The Borrower agrees to cooperate with the Lender and any
third party underwriter in connection with such underwriting, including, but not
limited to, providing the Lender and any third party underwriter with access to
any and all documents, records, agreements, instruments or information relating
to such Mortgage Loans in the possession, or under the control, of the Borrower.
In addition, the Lender has the right to perform continuing Due Diligence
Reviews of the Borrower and its Affiliates, directors, officers, employees and
significant shareholders. The Borrower and Lender further agree that all
out-of-pocket costs and expenses incurred by the Lender in connection with the
Lender's activities pursuant to this Section 11.16 shall be paid by the
Borrower.
11.17 Set-Off. In addition to any rights and remedies of
the Lender provided by this Loan Agreement and by law, the Lender shall have the
right, without prior notice to the Borrower, any such notice being expressly
waived by the Borrower to the extent permitted by applicable law, upon any
amount becoming due and payable by the Borrower hereunder (whether at the stated
maturity, by acceleration or otherwise) to set-off and appropriate and apply
against such amount any and all Property and deposits (general or special, time
or demand, provisional or final), in any currency, and any other credits,
indebtedness or claims, in any currency, in each case whether direct or
indirect, absolute or contingent, matured or unmatured, at any time held or
owing by the Lender or any Affiliate thereof to or for the credit or the account
of the Borrower. The Lender may set-off cash, the proceeds of the liquidation of
any Collateral and all other sums or obligations owed by the Lender or its
Affiliates to Borrower against all of Borrower's obligations to the Lender or
its Affiliates, whether under this Loan Agreement or under any other agreement
between the parties or between Borrower and any affiliate of the Lender, or
otherwise, whether or not such obligations are then due, without prejudice to
the Lender's or its Affiliate's right to recover any deficiency. The Lender
agrees promptly to notify the Borrower after any such set-off and application
made by the Lender; provided that the failure to give such notice shall not
affect the validity of such set-off and application.
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11.18 Intent. The parties recognize that each Advance is a
"securities contract" as that term is defined in Section 741 of Title 11 of the
United States Code, as amended.
11.19 Replacement by Repurchase Agreement. The Borrower
hereby acknowledges and agrees that this Loan Agreement may at any time and
without any further cost to the Borrower, in the sole discretion of the Lender,
be replaced by a repurchase facility with substantially similar terms as those
contained in this Loan Agreement. The Borrower hereby agrees to take such action
and execute such documents and instruments as is necessary to effectuate such
conversion.
11.20 Entire Agreement. This Loan Agreement embodies the
entire agreement and understanding of the parties hereto and supersedes any and
all prior agreements, arrangements and understandings relating to the matters
provided for herein. No alteration, waiver, amendments, or change or supplement
hereto shall be binding or effective unless the same is set forth in writing by
a duly authorized representative of each party hereto.
[SIGNATURE PAGES FOLLOW]
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IN WITNESS WHEREOF, the parties hereto have caused this Loan
Agreement to be duly executed and delivered as of the day and year first above
written.
NEW YORK MORTGAGE FUNDING, LLC
By: /s/ Xxxxxx X. Xxxxxxx
_________________________
Title: President
Address for Notices:
1301 Avenue of the Xxxxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxx, CEO
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
With a copy to:
Attention: Xxxxxxx Xxxxx
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
LENDER
GREENWICH CAPITAL FINANCIAL PRODUCTS, INC.
By: /s/ Xxxxxxx Xxxxxxxxx
__________________________
Title: Vice President
Address for Notices:
000 Xxxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxxxx Xxxxxxxxx
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
With a copy to:
Attention: General Counsel
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
