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EXHIBIT 10(B)
MASTER LOAN AND SECURITY AGREEMENT
---------------------------
DATED AS OF MAY 1, 1998
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SOURCE ONE MORTGAGE SERVICES CORPORATION
AS BORROWER
AND
GREENWICH CAPITAL FINANCIAL PRODUCTS, INC.
AS LENDER
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TABLE OF CONTENTS
Page
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...........................................................-18-
2.03 Procedure for Borrowing.........................................-18-
2.04 Limitation on Types of Advances; Illegality.....................-20-
2.05 Repayment of Advances; Interest.................................-20-
2.06 Mandatory Prepayments or Pledge.................................-21-
2.07 [Intentionally Omitted].........................................-21-
2.08 Optional Prepayments............................................-21-
2.09 Requirements of Law.............................................-22-
2.10 Extension of Termination Date...................................-23-
2.11 Purpose of Advances.............................................-23-
Section 3. Payments; Computations; Etc.....................................-23-
3.01 Payments........................................................-23-
3.02 Computations....................................................-24-
3.03 U.S. Taxes......................................................-24-
Section 4. Collateral Security.............................................-25-
4.01 Collateral; Security Interest...................................-25-
4.02 Further Documentation...........................................-26-
4.03 Changes in Locations, Name, etc.................................-26-
4.04 Lender's Appointment as Attorney-in-Fact........................-26-
4.05 Performance by Lender of Borrower's Obligations.................-27-
4.06 Proceeds........................................................-28-
4.07 Remedies........................................................-28-
4.08 Limitation on Duties Regarding Preservation of Collateral.......-29-
4.09 Release of Security Interest....................................-29-
Section 5. Conditions Precedent............................................-29-
5.01 Initial Advance.................................................-29-
5.02 Initial and Subsequent Loans....................................-31-
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...........................................................-34-
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..........................................-35-
6.14 Location of Books and Records...................................-35-
6.15 True and Complete Disclosure....................................-35-
6.16 Tangible Net Worth..............................................-35-
6.17 ERISA...........................................................-35-
6.18 Intentionally Omitted...........................................-35-
6.19 Relevant States.................................................-36-
6.20 True Sales......................................................-36-
6.21 No Burdensome Restrictions......................................-36-
6.22 Subsidiaries....................................................-36-
6.23 Origination and Acquisition of Mortgage Loans...................-36-
6.24 No Adverse Selection............................................-36-
6.25 Borrower Solvent; Fraudulent Conveyance.........................-36-
Section 7. Covenants of the Borrower.......................................-36-
7.01 Financial Statements............................................-36-
7.02 Litigation......................................................-38-
7.03 Existence, Etc..................................................-39-
7.04 Prohibition of Fundamental Changes..............................-39-
7.05 Borrowing Base Deficiency.......................................-40-
7.06 Notices.........................................................-40-
7.07 Servicing.......................................................-40-
7.08 Intentionally Omitted...........................................-40-
7.09 Underwriting Guidelines.........................................-40-
7.10 Intentionally Omitted...........................................-40-
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....................................-41-
7.15 Limitation on Distributions.....................................-41-
7.16 [Intentionally Omitted.]........................................-41-
7.17 Maintenance of Tangible Net Worth...............................-41-
7.18 Maintenance of Ratio of Total Indebtedness to Tangible Net
Worth...........................................................-42-
7.19 Banking Loan Data File..........................................-42-
7.20 Servicing Loan Data File........................................-42-
7.21 No Amendment or Waiver..........................................-42-
7.22 Maintenance of Property; Insurance..............................-42-
7.23 Mortgage Loan Determined to be Defective........................-42-
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7.24 Interest Rate Protection Agreements..........................-42-
Section 8. Events of Default............................................-42-
Section 9. Remedies Upon Default........................................-45-
Section 10. Intentionally Omitted........................................-45-
Section 11. Miscellaneous..................................................-45-
11.01 Waiver.........................................................-45-
11.02 Notices........................................................-45-
11.03 Indemnification and Expenses...................................-46-
11.04 Amendments.....................................................-47-
11.05 Successors and Assigns.........................................-47-
11.06 Survival.......................................................-47-
11.07 Captions.......................................................-47-
11.08 Counterparts...................................................-47-
11.09 Loan Agreement Constitutes Security Agreement; Governing Law...-47-
11.10 SUBMISSION TO JURISDICTION.....................................-47-
11.11 Intentionally Omitted..........................................-48-
11.12 Acknowledgments................................................-48-
11.13 Hypothecation or Pledge of Collateral..........................-48-
11.14 Assignments; Participations....................................-48-
11.15 Servicing......................................................-49-
11.16 Periodic Due Diligence Review..................................-50-
11.17 Set-Off........................................................-51-
11.18 Intent.........................................................-51-
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
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EXHIBIT D Form of Notice of Borrowing and Pledge
EXHIBIT E Underwriting Guidelines
EXHIBIT F Required Fields for Banking Loan Data File
EXHIBIT F-1 Required Fields for Servicing Loan Data File
EXHIBIT G Required Fields for Mortgage Loan Data File
EXHIBIT H Form of Borrowing Base Certificate
EXHIBIT I Form of Confidentiality Agreement
EXHIBIT J Bank Credit Agreement
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MASTER LOAN AND SECURITY AGREEMENT
MASTER LOAN AND SECURITY AGREEMENT, dated as of May 1, 1998,
between SOURCE ONE MORTGAGE SERVICES CORPORATION, a Delaware corporation (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 and 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 equal in quality to the servicing the Borrower 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
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power for the directors or managing general partners (or their equivalent) or
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 180 days following the date such Eligible Mortgage Loan first becomes
subject to the terms of this Agreement, with respect to each Advance:
(a) in the case of Dry Subprime Loans:
(1) which are current with respect to scheduled principal and
interest payments, 102.5%, (2) which are 30 to 59 days past
due with respect to scheduled principal and interest payments,
90%, (3) which are 60 to 89 days past due with respect to
scheduled principal and interest payments, 80%, (4) which are
90 to 119 days past due with respect to scheduled principal
and interest payments, 70% (5) which are 120 to 149 days past
due with respect to scheduled principal and interest payments,
60%, and (6) which are 150 days or more past due with respect
to scheduled principal and interest payments, 0%;
(b) in the case of Dry High LTV Loans:
(1) which are current with respect to scheduled principal and
interest payments, 100%, (2) which are 30 to 59 days past due
with respect to scheduled principal and interest payments,
80%, (3) which are 60 to 89 days past due with respect to
scheduled principal and interest payments, 50%, and (4) which
are 90 days or more past due with respect to scheduled
principal and interest payments, 0%;
(c) in the case of Wet Subprime Loans:
(1) for which all Required Documents have not been delivered
for 0 to 10 days, 97%, (2) for which all Required Documents
have not been delivered for 11 to 30 days, 90%, (3) for which
all Required Documents have not been delivered within 30 days,
0%; or
(d) in the case of Wet High LTV Loans:
(1) for which all Required Documents have not been delivered
for 0 to 10 days, 95%, (2) for which all Required Documents
have not been delivered for 11 to 30 days, 90%, (3) for which
all Required Documents have not been delivered within 30 days,
0%,
and (ii) thereafter, 0%.
"Applicable Margin" shall mean with respect to Advances that
are Tranche A Advances, Tranche B Advances and Tranche C Advances, respectively,
and which are secured by the Mortgage Loans, the applicable rate per annum set
forth below for each day that such Advances shall be so secured:
Tranche A Advances.....................................1.000%
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Tranche B Advances ....................................1.000%
Tranche C Advances.....................................1.875%;
provided, however, in the case of the Tranche A Advances, the margin shall equal
0.750% after the first securitization for which the Lender acts as sole lead
underwriter to the Borrower pursuant to the Securitization Letter; provided
further, the Borrower shall have the right to pay a one time buydown commitment
fee of $75,000 prior to the initial Advance with respect to Wet Loans, in which
case, the rate per annum for Tranche C Advances shall be 1.250%.
"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.
"Bank Credit Agreement" shall mean the Third Amended and
Restated Revolving Credit Agreement among the Borrower, The Mortgage Authority,
Inc. and Central Pacific Mortgage Company and the First National Bank of Chicago
and certain other lenders dated as of July 25, 1997.
"Banking Loan Data File" shall mean a computer-readable
magnetic tape or other electronic format mutually acceptable to the parties
incorporating the fields identified on Exhibit F.
"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 either by the Lender or the Custodian substantially in the form of
Exhibit H, attached hereto.
"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, or (ii) a day in which the New York Stock Exchange, the Federal Reserve
Bank of New York or the
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Custodian is authorized or obligated by law or executive order to be closed.
"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 (other than White Mountain Holdings, Inc.) 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 the Borrower 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) White Mountain Holdings, Inc.
does not own more than fifty (50%) of such outstanding shares of voting stock.
"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 Applicable Collateral Percentage of the outstanding
principal balance of such Mortgage
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Loan, or (b) the Market Value; provided, that:
(i) the Collateral Value of a Mortgage Loan
originally funded as a Dry Loan which has a Material Exception with
respect thereto shall be calculated in the same manner as a Wet Loan;
and
(ii) 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);
(2) which remains pledged to the Lender hereunder more than
180 days after the date on which it is first included in the
Collateral;
(3) which the Lender determines, in its reasonable discretion
that such Mortgage Loan is not eligible for sale in the
secondary market or for securitization without unreasonable
credit enhancement;
(4) 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 twenty (20)
calendar days (or if such twentieth day is not a Business Day,
the next succeeding Business Day);
(5) 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;
(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; provided, however, Mortgage Loans with an
aggregate current principal amount of less than $2,500,000
shall not be subject to this subclause (6);
(7) (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 or second lien on the Mortgaged Property; or
(8) the Mortgagor has not made its first payment on the
related Mortgage Loan
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within 45 days of its scheduled payment date.
"Combined LTV or CLTV" means with respect to any Mortgage
Loan, (i) the ratio of the original outstanding principal amount of the Mortgage
Loan plus (ii) the Mortgage Loan constituting a first lien on the Mortgaged
Property 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.
"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.
"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 National City Bank of Kentucky, its
successors and permitted assigns.
"Custodian Loan Data File" shall have the meaning assigned
thereto in the Custodial Agreement.
The Custodian shall incorporate on a daily basis all current
data provided by the Borrower to the Custodian into the Custodian Loan Data
File.
"Cut-off Date" means the first day of the month in which the
related Funding Date occurs.
"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.
"Discrepancy" shall have the meaning assigned to such term in
Section 2.05(c) hereof.
"Dollars" and "$" shall mean lawful money of the United States
of America.
"Dry High LTV Loan" shall mean a first or second lien Mortgage
Loan which is underwritten in accordance with the Underwriting Guidelines which
Mortgage File contains all required Mortgage Loan Documents.
"Dry Loan" shall mean either a Dry Subprime Loan or a Dry High
LTV Loan.
"Dry Subprime Loan" shall mean a first or second lien Mortgage
Loan which is
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underwritten in accordance with the Underwriting Guidelines made to a Mortgagor
with a subprime credit history 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 as to each Mortgage Loan
that forms part of the Collateral hereunder (and the related Mortgage, Mortgage
Note, Assignment of Mortgage and Mortgaged Property), a mortgage lien (as
reflected on the Mortgage Loan Data File) as to which (i) the representations
and warranties in Section 6.10 and Schedule 1 hereof are correct and (ii) was
originated or acquired by the Borrower in accordance with the Borrower's
Underwriting Guidelines.
"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 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 the Borrower is a member.
"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 Report" shall mean the exception report prepared by
the Custodian pursuant to the Custodial Agreement.
"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
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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) of recognized standing selected by it.
"FHLMC" means the Federal Home Loan Mortgage Corporation, or
any successor thereto.
"First Lien" shall mean with respect to each Mortgaged
Property, the lien of the mortgage, deed of trust or other instrument securing a
mortgage note which creates a first lien on the Mortgaged Property.
"FNMA" means the Federal National Mortgage Association, 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.
"GNMA" shall mean the Government National Mortgage
Association, or any successor thereto.
"Governmental Authority" shall mean any nation or government,
any state or other political subdivision thereof, any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government and any court or arbitrator having jurisdiction over
the Borrower, 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, (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 or (iii) obligations of the Borrower pursuant to Recourse Servicing.
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.
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"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 such Person; (i) Indebtedness of general partnerships of which such Person is
a general partner; (j) Mortgage-Related Indebtedness and (k) 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.
"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 eighth calendar day of the next succeeding month, and
(ii) thereafter, each period commencing on the ninth calendar day of a month and
ending on the eighth calendar day of the next succeeding month. Notwithstanding
the foregoing, no Interest Period may end after the Termination Date. The last
Interest Period shall end on the Termination Date.
"Insurance Proceeds" means with respect to each Mortgage Loan,
proceeds of insurance policies insuring the Mortgage Loan or the related
Mortgaged Property.
"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
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per annum equal to the rate published by Bloomberg as determined on a Monday (or
if such Monday is not a Business Day, the next succeeding Business Day) or if
such rate is not available, the rate per annum published by Xxxxxx-Xxxxxx 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 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 weekly 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 determined each Monday (or next Business Day if
such Monday is not a Business Day) commencing with the first Monday prior to the
initial Advance.
"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.
"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 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
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of the Mortgaged Property.
"Market Value" shall mean as of any date in respect of an
Eligible Mortgage Loan, the price at which such Eligible Mortgage Loan could
readily be sold at the then applicable market price as determined by the Lender
in its reasonable discretion (exercised in good faith), which Market Value may
be determined to be zero. 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 Eligible Mortgage Loans on
a daily basis.
"Material Adverse Effect" shall mean a material adverse effect
on (a) the business, operations or financial condition of the Borrower taken as
a whole, (b) the ability of the Borrower 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 Collateral (other than changes in Market Value).
"Material Exception" shall have the meaning assigned thereto
in the Custodial Agreement.
"Maximum Credit" shall mean $175,000,000; provided, however,
the following limitations on Maximum Credit shall apply:
(1) the Maximum Credit for Mortgage Loans which are Dry
Subprime Loans may not exceed $150 million at any time;
(2) the Maximum Credit for Mortgage Loans which are Dry High
LTV Loans may not exceed $25 million at any time; and
(3) the Maximum Credit for Mortgage Loans which are Wet Loans
may not exceed $15 million at any time.
"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 securing a Mortgage Note, which
creates a first or second lien (as indicated on the Mortgage Loan Data File) on
the fee simple in real property securing 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.
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"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 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 Data File" shall mean a computer-readable
magnetic tape incorporating the fields identified on Exhibit G.
"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 Mortgage Loan number, (ii) the Mortgagor's name
and (iii) the original principal amount of the Mortgage Loan.
"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.
"Mortgage-Related Indebtedness" means, with respect to the
Borrower and its Subsidiaries, any amount arising out of the issuance in the
ordinary course of the mortgage banking business of the Borrower and its
Subsidiaries of (i) mortgage pools, pass-throughs, participation certificates
and other mortgage-related securities to the extent that such amount would not,
in accordance with GAAP, be shown as indebtedness on a consolidated balance
sheet of the Borrower and its Subsidiaries as at such date and (ii)
collateralized mortgage obligations and other mortgage-related securities issued
by a Subsidiary of the Borrower, the payment of principal and interest in
respect of which is secured by a Lien on mortgage loans or other
mortgage-related securities (or other securities in which the Borrower invests
in the ordinary course of its mortgage banking business) conveyed to such
Subsidiary in an amount reasonably anticipated by the Borrower to approximate
the amount required to pay the principal and interest in respect of such
collateralized mortgage obligations or other mortgage-related securities
(whether or not such amount would, in accordance with GAAP, be shown as
indebtedness on a consolidated balance sheet of the Borrower and its
Subsidiaries at such date).
"Mortgagee" means either Borrower or any subsequent holder of
a Mortgage Loan.
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"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
applicable 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).
"Origination Date" shall mean, with respect to each Mortgage
Loan, the date of the Mortgage Note relating to such Mortgage Loan, unless such
information is not provided by the Borrower with respect to such Mortgage Loan,
in which case the Origination Date shall be deemed to be the date that is 40
days prior to the date of the first payment under the Mortgage Note relating to
such Mortgage Loan.
"Payment Date" shall mean the eleventh 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 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 to 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; (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; and (iv) in
the case of a Second Lien Mortgage Loan, a First Lien on the Mortgaged Property.
"Person" shall mean any individual, corporation, company,
voluntary
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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, by 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)(i) the
interest rate otherwise applicable to such Advance or other amount, or (ii) if
no interest rate is otherwise applicable, the LIBO Rate plus (b) 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.
"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 FNMA
and FHLMC.
"Qualified Originator" shall mean (a) the Borrower and (b) any
other originator of Mortgage Loans; provided, however, the Lender shall have the
right to reject an originator (in its reasonable discretion) by delivering
written notice to the Borrower 60 days prior to ceasing to accept Collateral
originated by such party.
"Recourse Servicing" shall mean any servicing rights under a
servicing agreement (other than with GNMA) which obligates the Borrower to
repurchase Mortgage Loans upon default by the borrower thereunder or indemnify
any party having an interest in such Mortgage Loans against any principal loss
arising from such a default.
"Regulations G, T, U and X" shall mean Regulations G, T, U and
X of the Board of Governors of the Federal Reserve System (or any successor), as
the same may be modified and supplemented and in effect from time to time.
"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.
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"Required Documents" shall mean those documents identified in
Section 2(I) of the Custodial Agreement.
"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.
"Second Lien" shall mean with respect to each Mortgaged
Property, the lien of the mortgage, deed of trust or other instrument securing a
mortgage note which creates a second lien on the Mortgaged Property.
"Second Lien Mortgage Loan" shall mean an Eligible Mortgage
Loan secured by the lien on the Mortgaged Property, subject to one prior lien on
such Mortgaged Property securing financing obtained by the related Mortgagor and
to Permitted Exceptions.
"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.
"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 a Custodian and copies of the
Mortgage Loan Documents set forth in Section 2 of the Custodial Agreement.
"Servicing Loan Data File" shall mean a computer-readable
magnetic tape or other electronic format acceptable to the parties containing
the information identified on Exhibit F-1.
"Servicing Records" shall have the meaning assigned thereto 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.
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"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, 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 April 29, 1999, or such earlier
date on which this Loan Agreement shall terminate in accordance with the
provisions hereof or by operation of law as same may be extended pursuant to
Section 2.10.
"Total Indebtedness" shall mean, for any period, the aggregate
Indebtedness of the Borrower and its Subsidiaries during such period, less the
amount of any nonspecific consolidated balance sheet reserves maintained in
accordance with GAAP.
"Tranche A Advances" shall mean Advances so long as, and to
the extent that, they are secured by Dry Subprime Loans.
"Tranche B Advances" shall mean Advances so long as, and to
the extent that, they are secured by Dry High LTV Loans.
"Tranche C Advances" shall mean Advances so long as, and to
the extent that, they are secured by Wet Loans.
"Trust Status" shall mean the determination by the Custodian
which shall be confirmed by the Lender whether a Mortgage Loan is a Dry High LTV
Loan, Dry Subprime Loan, Wet High LTV Loan, Wet Subprime Loan or zero Collateral
Value Mortgage Loan.
"Underwriting Guidelines" shall mean collectively, the
underwriting guidelines attached as Exhibit E hereto (including high LTV
guidelines) as amended from time to time in accordance with Section 7.09.
"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 High LTV Loan" shall mean a wet-funded first or second
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.
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"Wet Loan" shall mean a Wet Subprime Loan or a Wet High LTV
Loan, which in order to be deemed 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 escrow or closing 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
escrow or closing 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 or
second lien on the premises described therein.
"Wet Subprime Loan" shall mean a wet-funded first or second
lien Mortgage Loan which is underwritten in accordance with the Underwriting
Guidelines made to a Mortgagor with a subprime credit history and which does not
contain all the required Mortgage Loan Documents in the Mortgage File.
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.
(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 (provided that an Event of Default
contained in Section 8(j) shall not apply to continuation of Advances requested
by the Borrower, not to exceed Advances outstanding at the time of an occurrence
of an Event of Default pursuant to Section 8(j)), the Lender agrees from time to
time, on the terms and conditions of this Loan Agreement, to make loans
(individually, a "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
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(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.
(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 (subject to Section
2.01(a)) 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
and including the Termination Date, by (i) providing oral notice of the
approximate amount of the principal balance of the Mortgage Loans to be used as
Collateral to the Lender and the Custodian no later than 5:00 p.m. (eastern
time) on the day prior to the requested Funding Date and (ii) delivering to the
Lender, with a copy to the Custodian, a Mortgage Loan Data File and an
irrevocable Notice of Borrowing and Pledge substantially in the form of Exhibit
D hereto (a "Notice of Borrowing and Pledge"), appropriately completed, which
must be received no later than 12:00 p.m (eastern time) on the requested Funding
Date. Such Notice of Borrowing and Pledge clearly indicate those Mortgage Loans
that are intended to be Wet Loans and Dry Loans and shall 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 treasury office of the Borrower agrees to 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) Intentionally Omitted.
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(c) Pursuant to the Custodial Agreement, the Custodian shall
review any Required Documents delivered prior to 10:30 a.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 Data File 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 any Mortgage Loans which have been assigned
a zero value due to, among other things, the time such Mortgage Loans have been
subject to this Agreement, the amount of time such Mortgage Loans have been Wet
Loans and the time the related Mortgage Loan Documents have been released
pursuant to Section 5(a) or 5(b) of the Custodial Agreement. Not later than 4:00
p.m. (eastern time) on each Business Day, the Custodian shall calculate the
Borrowing Base of all Mortgage Loans that are held by the Custodian and forward
to the Lender by facsimile transmission a copy of the Borrowing Base Certificate
in the form of Exhibit H. Notwithstanding the foregoing, the Lender shall have
the right to recalculate the Borrowing Base at any time and such calculation by
the Lender shall be deemed correct, absent manifest error; provided, however,
(i) if the difference in the calculations of the Lender and the Custodian
exceeds $1,000,000, the Borrower shall remit such difference within two Business
Days if not otherwise cured or (ii) if the difference in the calculations of the
Lender and the Custodian is less than or equal to $1,000,000, the parties shall
use best efforts to cure such difference within five Business Days, at the end
of which time, the Borrower shall remit such difference, if any, to the Lender.
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,
Dry Loans and/or those Mortgage Loans with a Collateral Value of zero. The
original copies of such Trust Receipts shall be delivered to Chase Manhattan
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.
Notwithstanding any other provision of this Loan Agreement or
the Custodial Agreement, the Lender shall calculate the Borrowing Base until
such time that the Lender transfers to the Custodian the right to determine the
Borrower Base. The Lender shall determine the Borrowing Base in accordance with
the provisions of this Loan Agreement and shall deliver such calculation to the
Borrower in the same manner as the Custodian.
(d) 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 4:00 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 Custodian. Subject to the foregoing, such borrowing will
be made available
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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.
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 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) it becomes unlawful for the Lender to honor its obligation
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 Borrower shall, at its option, either
prepay such Advances or pay interest on such Advances at a rate per annum equal
to the Federal Funds Rate plus 1%.
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) No later than 11:59 p.m. eastern time on the 8th calendar
day of each month, 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
Custodian Loan Data File, the Servicing Loan Data File and all Banking Loan Data
Files.
(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 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 three (3) Business Days
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 Business Day, the Custodian shall deliver to the
Lender and the Borrower the Custodian Loan Data File. The Custodian shall also
deliver to the Lender and 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 Loan Data File
and each Banking Loan Data File, which shall be delivered by the Borrower in
accordance with Sections 7.19 and 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 Custodian and notified to the
Lender and 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.
Notwithstanding the foregoing, the Lender shall have the right
at any time to calculate the Borrowing Base based upon any information delivered
to the Lender by the Borrower or the Custodian and reasonably determine whether
there is a Borrowing Base Deficiency. The Lender's calculation shall be deemed
correct absent manifest error; provided, however, (i) if the difference in the
calculation determined by the Lender and the Custodian exceeds $1,000,000, the
Borrower shall deliver such difference within two Business Days if not otherwise
cured or (ii) if the difference in the calculation determined by the Lender and
the Custodian is less than or equal to $1,000,000, the parties shall use best
efforts to cure such difference within five Business Days, at the end of which
time, the Borrower shall deliver such difference, if any, to the Lender.
Notwithstanding any other provision of this Loan Agreement or
the Custodial Agreement, the Lender shall calculate the Borrowing Base
Deficiency until such time that the Lender transfers to the Custodian the right
to determine the Borrowing Base Deficiency. The Lender shall determine the
Borrowing Base in accordance with the provisions of this Loan Agreement and
shall deliver such calculation to the Borrower in the same manner as the
Custodian.
2.07 [Intentionally Omitted].
2.08 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 until paid in full. Amounts repaid may be reborrowed in
accordance with the terms of this Loan Agreement. If the
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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. Partial prepayments shall be in
an aggregate principal amount of at least $100,000.
(b) If the Borrower makes a prepayment of the Advances without
providing the Lender with at least two Business Days' notice, 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 reemployment
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 Monday (or next Business Day if such Monday is not a Business Day)
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.
2.09 Requirements of Law.
(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 any franchise taxes to the extent such
franchise taxes are in lieu of 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. 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;
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
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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 its 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.
(d) Notwithstanding the foregoing, if any of the foregoing
circumstances otherwise giving rise to the yield protection provisions of this
Section are imposed solely against Lender as a result of circumstances or
conditions which apply solely to Lender, then the yield protection provisions of
this section shall not apply with respect to such circumstances.
2.10 Extension of Termination Date.
At the request of Borrower, at least thirty (30) days prior to
the then Termination Date, the Lender may in its sole discretion extend the
Termination Date for a period of 364 days by giving written notice of such
extension to the Borrower no later than twenty (20) days, but in no event more
than thirty (30) days, prior to the then current Termination Date.
2.11 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 Mortgage Loan Schedule may be amended from time
to time.
Section 3. Payments; Computations; Etc.
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 The Chase Manhattan Bank: Account
Number 140095961, For the A/C of Greenwich Capital Financial Products, Inc.,
ABA# 000000000, Attn: Xxx Xxxxxx, using best efforts to have such payments
received by 1:00 p.m., eastern time, on the date on which such payment shall
become due (each such payment made after the Federal Reserve has processed all
payments for such day to
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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 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 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
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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).
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, 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;
(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
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all of the foregoing;
(viii) all "accounts", "chattel paper" and "general
intangibles" as defined in the Uniform Commercial Code relating to or
constituting any or all of the foregoing; and
(ix) 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 their 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, the filing of any financing or continuation
statements to be filed under the Uniform Commercial Code in effect in any
jurisdiction with respect to the Liens created hereby. In addition, upon the
written request of the Lender, and at the sole expense of the Lender, the
Borrower will promptly and duly execute and deliver, or will promptly cause to
be executed and delivered such further instruments and documents as are deemed
necessary to obtain or preserve the full benefits of the Loan Agreement and of
the rights and powers herein granted for the benefit of the Lender. Following an
Event of Default, the Borrower also hereby authorizes the Lender to file any
such financing or continuation statement without the signature of the Borrower
to the extent permitted by applicable law. A carbon, photographic or other
reproduction of this 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 operating office
from that specified in Section 6 hereof or (ii) change its name or change the
location where it maintains its records with respect to the Collateral 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
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Borrower and in the name of the Borrower or in its own name, if and only
following the occurrence of an Event of Default, 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 and only following the occurrence of an Event of
Default, 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 thereof and to
enforce any other 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.
(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.
4.05 Performance by Lender of Borrower's Obligations. If the
Borrower fails
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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 (whether
from the Borrower or otherwise) be applied by the Lender against the Secured
Obligations. 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.
4.07 Remedies. 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, may in such circumstances forthwith collect,
receive, appropriate and realize upon the Collateral, 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 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
Collateral so sold. The Borrower further agrees, at the Lender's request, to
assemble the Collateral and make it available to the Lender at a place 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
out-of-pocket expenses incurred therein for 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,
and only after such application and after the payment by the Lender of any other
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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. 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 20 calendar 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 out-of pocket costs of any attorneys reasonably employed by the Lender
to collect such deficiency.
4.08 Limitation on Duties Regarding Preservation 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 and the Lender shall be accountable only for amounts that it actually
receives as a result of the exercise of the powers conferred on the Lender
hereunder (and shall not impart any duty upon it to exercise such powers
regarding the Collateral) unless and to the extent Lender has not so acted in a
commercially reasonably manner.
4.09 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. The obligation of the Lender to make its
initial Advance hereunder is subject to the satisfaction, immediately prior to
or concurrently with the making of such Advance, of the following conditions
precedent:
(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:
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(i) Note. The Note, duly completed and executed; and
(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
Custodial Agreement in order to perfect the security interests
created pursuant to the Loan Agreement.
(c) Organizational Documents. A good standing certificate and
a certificate of corporate resolution for the Borrower with respect to
the execution, delivery and performance of the Loan Documents and each
other document to be delivered by the Borrower 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,
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) Bank Credit Agreement. The Lender shall have received a
copy of the Bank Credit Agreement, a copy of which is attached hereto
as Exhibit J. The Borrower shall deliver to the Lender any amendments,
restatements or replacements of the Bank Credit Agreement promptly upon
execution thereof.
(g) Filings, Registrations, Recordings. 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.
(h) 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 pursuant to Section 11.03(b).
(i) Financial Statements. The Lender shall have received the
financial statements referenced in Section 7.01(a).
(j) Underwriting Guidelines. The Lender and the Borrower have
agreed upon the Borrower's current Underwriting Guidelines for Mortgage
Loans as set forth on Exhibit E.
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(k) 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 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.
(l) 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.
(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 Loans. 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; provided that an Event of Default contained in Section 8(j)
shall not apply to continuation of Advances requested by the Borrower,
not to exceed Advances outstanding at the time of the occurrence of an
Event of Default pursuant to Section 8(j);
(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 6.10 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;
(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 view of the Mortgage Loan Documents
for each Advance and such other
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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 from the Borrower a Notice
of Borrowing and Pledge, Mortgage Loan List and Mortgage Loan Data File
and all other documents required under Section 2.03;
(f) the Lender shall have received from the Custodian a
Borrowing Base Certificate (reasonably satisfactory to Lender in
accordance with Section 2.03), a Custodian Loan Data File 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) if any Mortgage Loans to be pledged hereunder were
acquired by the Borrower, the Lender shall have received Underwriting
Guidelines for such Mortgage Loans acceptable to the Lender in its
reasonable discretion; and
(h) the Lender shall have received all information requested
from the Borrower relating to Interest Rate Protection Agreements
pursuant to Section 7.24, and the Lender shall have reasonably
determined that such Interest Rate Protection Agreements adequately
protect the Borrower from interest rate fluctuations.
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 corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, (b) has all requisite corporate or other
power, and has all governmental licenses, authorizations, consents and
approvals, necessary to own its assets and carry on its business as now being or
as proposed to be conducted, except where the lack of such licenses,
authorizations, consents and approvals would not be reasonably likely to have a
material adverse effect on its business or financial condition; and (c) is
qualified to do business and is in good standing in all other jurisdictions in
which the nature of the business conducted by it makes such qualification
necessary, except where failure so to qualify would not be reasonably likely
(either individually or in the aggregate) to have a material adverse effect on
its business or financial condition and (d) is in compliance in all material
respect 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, 1997 with the opinion thereon
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of KPMG Peat Marwick, 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 period, 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, 1997 there has been no
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 on the business or financial
condition of the Borrower or (ii) which questions the validity or enforceability
of any of the Loan Documents or any action to be taken in connection with the
transactions contemplated hereby and there is a reasonable likelihood of a
material adverse effect or decision.
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
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Regulation G, T, U or X.
6.08 Taxes. The Borrower and its Subsidiaries have filed all
Federal income tax returns and all other material tax returns that are required
to be filed by them and have paid all taxes due pursuant to such returns or
pursuant to any assessment received by any of them, except for any such taxes,
if any, that are being appropriately contested in good faith by appropriate
proceedings diligently conducted and with respect to which adequate reserves
have been provided. The charges, accruals and reserves on the books of the
Borrower and its Subsidiaries in respect of taxes and other governmental charges
are, in the opinion of the Borrower, adequate.
6.09 Investment Company Act. Neither the Borrower nor any of
its Subsidiaries is an "investment company", or a company "controlled" by an
"investment company", within the meaning of the Investment Company Act of 1940,
as amended. 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 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. 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 Borrower, 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
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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 on the Effective Date is located at 00000
Xxxxxxxxxx Xxxx, Xxxxxxxxxx Xxxxx, Xxxxxxxx 00000-0000 and the chief operating
office is located at 000 Xxxxx Xxxxx 00, Xxxxxxx Xxxxxx Xxxx, Xxxxxxxxxxxxx, XX
00000-0000.
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, chief operating office
or, with respect to the Collateral delivered to the Custodian, 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 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 the chief executive officer, the
chief operating officer or the chief financial officer of the Borrower 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. On the Effective Date, Tangible Net
Worth is not less than $350,000,000.
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 Intentionally Omitted.
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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 Mortgage funded in the name of or
acquired by a Qualified Originator which is an Affiliate of the Borrower has
been conveyed to the Borrower pursuant to a legal sale.
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.
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,
applicable, with respect to the Mortgage Loans have been, in all material
respects legal, proper, and prudent 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.
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 liability
(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, debt 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.
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:
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(a) 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, the consolidated balance sheets of the
Borrower and its consolidated Subsidiaries as at the end of such period
and the related unaudited consolidated statements of income and
retained earnings and of cash flows for the Borrower and its
consolidated Subsidiaries for such period and the portion of the fiscal
year through the end of such period, setting forth in each case in
comparative form the figures for the previous year, accompanied by a
certificate of a Responsible Officer of the Borrower. which certificate
shall state that said consolidated financial statements fairly present
the consolidated financial condition and results of operations of the
Borrower 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, the consolidated balance
sheets of the Borrower and its consolidated Subsidiaries as at the end
of such fiscal year and the related consolidated statements of income
and retained earnings and of cash flows for the Borrower and its
consolidated Subsidiaries for such year, setting forth in each case in
comparative form the figures for the previous year, accompanied by an
opinion thereon of independent certified public accountants of
recognized national standing, 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 and its
consolidated Subsidiaries at the end of, and for, such fiscal year in
accordance with GAAP; and
(c) 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 or any of its
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 setting forth details
respecting such event or condition and the action, if any, that the
Borrower 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 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
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intent to terminate any Plan or any action taken by the
Borrower 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 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 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 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;
(v) the institution of a proceeding by a fiduciary of
any Multiemployer Plan against the Borrower 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 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 and there is a reasonable likelihood of adverse
determination which would result in a Material Adverse Effect.
7.03 Existence, Etc. The Borrower will:
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(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 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;
(f) permit representatives of the Lender, during normal
business hours upon three (3) Business Days' prior written notice at a
mutually agreeable time discuss its business and affairs with its
officers, all to the extent reasonably requested by the Lender which
discussions will include the most recent month end financial statements
(it being understood that in the event Mortgage Loans have been offered
to a third party and the Lender wishes to purchase such Mortgage Loans
in accordance with the Securitization Letter, the Lender may not
exercise its rights under this paragraph (f) in order to obtain an
unfair advantage in purchasing such Mortgage Loans); and
(g) do all things necessary to maintain, preserve and keep its
properties in good repair and condition, and make all necessary repairs
and lease renewals so that its business carried on in connection
therewith may be properly conducted.
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.
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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;
(b) upon, and in any event within ten (10) calendar days
after, service of process on the Borrower or any of its Subsidiaries,
or any agent thereof for service of process, in respect of any legal or
arbitrable proceedings affecting the Borrower or any of its
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 $2,500,000;
(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 their business that the Mortgaged Property in respect of any
Mortgage Loan or Mortgage Loans with an aggregate unpaid principal
balance of at least $2,500,000 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) of entry of a judgment or decree in an amount in excess of
$2,500,000.
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 has taken or proposes to take with respect thereto.
7.07 Servicing. The Borrower shall not permit any Person other
than the Borrower (or a subservicer) 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 modifications to the Underwriting Guidelines prior to
implementation of such change, and unless the Lender objects in writing within
five (5) Business Days of receipt of notice, the proposed modification shall be
deemed acceptable.
7.10 Intentionally Omitted.
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
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the rendering of any service, with any Affiliate unless such transaction is (a)
not a bulk sale, an attempt to evade creditors or similar event to shelter
assets and (b) 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, 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 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 business or assets (including,
without limitation, receivables and leasehold interests) whether now owned or
hereafter acquired or allow Central Pacific Mortgage Company to Transfer
substantially all of its assets to any Person without Lender's prior consent;
provided, that the Borrower may, after prior written notice to the Lender, allow
such action with respect to Central Pacific Mortgage Company which is not a
material part of the Borrower's overall business operations.
7.15 Limitation on Distributions. After the occurrence and
during the continuation of any uncured Event of Default under Sections 7.17,
7.18, 8(a), 8(b), 8(f), 8(g), 8(k), 8(l) or 8(m), 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 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 [Intentionally Omitted.]
7.17 Maintenance of Tangible Net Worth. The Borrower shall
maintain the Adjusted Consolidated Tangible Net Worth (as defined in the Bank
Credit Agreement) specified in Section 7.9 of the Bank Credit Agreement or, if
the Bank Credit Agreement is amended, restated or replaced, such replacement
financial covenant; provided, however, if any amended, restated or replaced
agreement fails to provide for a tangible net worth financial covenant, the
covenant in the Bank Credit Agreement shall remain in full force and effect.
7.18 Maintenance of Ratio of Total Indebtedness to Tangible
Net Worth. The Borrower shall not permit the ratio of Total Indebtedness to
Tangible Net Worth at any time to be greater than 3.5:1.
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7.19 Banking Loan Data File. The Borrower shall provide to the
Lender, within ten (10) calendar days of the date funds for a Mortgage Loan are
disbursed, a copy of the related Banking Loan Data File. Each Banking Loan Data
File shall contain in a format acceptable to the Lender the information relating
to the Mortgage Loans identified on Exhibit F.
7.20 Servicing Loan Data File. The Borrower shall provide to
the Lender and the Custodian on a monthly basis no later than 11:00 a.m. eastern
time ten (10) days after the last calendar day of the month (or such other day
requested by Lender) the Servicing Loan Data File, 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. The
Servicing Loan Data File shall contain in a format acceptable to the Lender all
information relating to the Mortgage Loans as the Lender may reasonably request.
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
required by FNMA and FHLMC, and shall also maintain such other insurance with
financially sound 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 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.
7.24 Interest Rate Protection Agreements. The Borrower shall
deliver to the Lender any and all information relating to Interest Rate
Protection Agreements.
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
(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
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(c) any representation, warranty or certification made or
deemed made herein or in any other Loan Document by the Borrower or any
certificate furnished to the Lender pursuant to the provisions thereof,
shall prove to have been false or misleading in any material respect as
of the time made or furnished and such representation, warranty or
certification shall not be cured within thirty (30) calendar days
(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 Borrower shall have made
any such representations and warranties with knowledge that they were
materially false or misleading at the time made); or
(d) the Borrower shall fail to comply with the requirements of
Section 7.03(a), Section 7.04, Section 7.06, or Sections 7.09 through
7.24 hereof; or the Borrower shall default in the performance of their
obligations under Section 7.05 hereof, and such default shall continue
unremedied for a period of twenty one (21) calendar days unless not
reasonably curable; 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 $5,000,000 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 any of its 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 or any such Subsidiary shall not, within said period of 60
days, or such longer period during which execution of the same shall
have been stayed or bonded, appeal therefrom and cause the execution
thereof to be stayed during such appeal; or
(f) the Borrower shall admit in writing its inability to pay
its debts as such debts become due; or
(g) the Borrower or any of its 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
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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 or any of its 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 a receiver,
custodian, trustee, examiner, liquidator or the like of the Borrower or
any such Subsidiary or of all or any substantial part of its property,
or (iii) similar relief in respect of the Borrower or any such
Subsidiary under any law relating to bankruptcy, insolvency,
reorganization, winding-up, or composition or adjustment of debts, and
such proceeding or case shall continue undismissed, or an order,
judgment or decree approving or ordering any of the foregoing shall be
entered and continue unstayed and in effect, for a period of 60 or more
days; or an order for relief against the Borrower or any such
Subsidiary shall be entered in an involuntary case under the Bankruptcy
Code; or
(i) the Custodial Agreement 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 Agreement or
Borrower's material obligations hereunder shall cease to be in force
and effect, or the enforceability of the pledge or lien on the
Collateral shall be contested by the Borrower; or
(j) any material adverse change in the business or financial
condition of the Borrower taken as a whole; or
(k) (i) any Person shall engage in any non-exempt "prohibited
transaction" (as defined in Section 406 of ERISA or Section 4975 of the
Code) involving any Plan, (ii) any material "accumulated funding
deficiency" (as defined in Section 302 of ERISA), if 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 or any Commonly
Controlled Entity, (iii) a Reportable Event shall occur with respect
to, or PBGC proceedings shall commence to have a trustee appointed, or
a trustee shall be appointed by PBGC, 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 due to material unfunded liabilities under 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 shall have occurred
without the
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reasonable prior consent of the Lender; or
(m) the Borrower shall knowingly grant, or knowingly suffer to
exist, any Lien on any Collateral except the Liens contemplated hereby.
Section 9. Remedies Upon Default.
(a) Upon the occurrence of one or more Events of Default
(other than in the case of Section 8(j)) (subject to the expiration of
the various applicable cure periods contained therein), the Lender may
then 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 actual 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), 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.
(b) Upon the occurrence of one or more Events of Default
(other than in the case of Section 8(j)), 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. Intentionally Omitted.
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 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
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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 telecopier or
personally delivered or, in the case of a mailed notice, upon receipt, in each
case given or addressed as aforesaid.
11.03 Indemnification and Expenses.
(a) For a period not to exceed two (2) years from the
termination of this Loan Agreement, the Borrower agrees to hold the Lender
harmless from and indemnify the Lender against all liabilities, losses, damages,
judgments, costs and out-of-pocket expenses which may be imposed on, incurred
by, or asserted against the Lender, 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 the Lender's negligence, misconduct
or material breach of the Loan Documents by the Lender which results in
liabilities, losses, damages, judgments, costs and out-of-pocket expenses to the
Lender. In any suit, proceeding or action brought by the Lender in connection
with any Mortgage Loan for any sum owing thereunder, or to enforce any
provisions of any Mortgage Loan, the Borrower will save, indemnify and hold the
Lender 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 the Lender for the Lender's reasonable out-of-pocket costs
and expenses incurred with the enforcement or the preservation of the Lender'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 out-of-pocket expenses 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 will pay (i) all reasonable out-of-pocket
costs and expenses incurred by the Lender (including the fees and out-of-pocket
expenses and other reasonable expenses of counsel to the Lender) for the
preparation, execution and delivery of the Loan Documents and any amendments,
supplements or modifications thereto, and (ii) all reasonable out-of-pocket
costs and expenses incurred by the Lender (including the fees, out-of-pocket
expenses and other reasonable expenses of counsel to the Lender) as to the
enforcement and protection of the Lender under the Loan Documents, other than
any cost and expenses incurred in connection with the Lender's rehypothecation
of the Mortgage Loans prior to an Event of Default.
(c) For a period not to exceed two (2) years from the
termination of this Loan Agreement, the Lender agrees to hold the Borrower
harmless from and indemnify the Borrower against all liabilities, losses,
damages, judgments, costs and out-of-pocket expenses
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which may be imposed on, incurred by, or asserted against the Borrower, 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 the
Borrower's negligence, misconduct or material breach of the Loan Documents by
the Borrower which results in liabilities, losses, damages, judgments, costs and
out-of-pocket expenses to the Borrower.
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 instrument in writing signed by the Borrower and 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. Only the obligations of the Borrower under
Sections 3.03 (for a period not to exceed five years from the termination of
this Loan Agreement) and 11.03 (for a period not to exceed two years from the
termination of this Loan Agreement) 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 (for a period of two years from the termination of
this Loan Agreement), 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. EACH LOAN PARTY HEREBY
IRREVOCABLY AND UNCONDITIONALLY SUBMITS FOR ITSELF AND
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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 NONEXCLUSIVE 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.
11.11 Intentionally Omitted.
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. The Lender shall segregate the
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 with the prior written consent of the Lender which
consent shall not be unreasonably withheld. 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 or obligations under this Loan
Agreement and the other Loan Documents upon written consent of the Borrower,
which consent shall not be unreasonably withheld.
(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 commitment 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 and the Lender 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 Lender also agrees
that each
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Participant shall be entitled to the benefits of Sections 2.08 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 Central Pacific Mortgage Company 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.
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.
(b) It is understood and agreed by the parties that prior to
an uncured Event of Default and termination for cause, the Borrower shall retain
the servicing fees, servicing rights and all economic rights with respect to the
Mortgage Loans.
(c) The Borrower agrees that upon the occurrence of an uncured
Event of Default, the Lender may terminate the Borrower in its capacity as
servicer and transfer 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") to the Lender or its designee, at no cost or expense
to the Lender. The Borrower agrees to cooperate with the Lender in connection
with the transfer of servicing. The Lender shall pay the Borrower or apply the
value of the servicing to the Secured Obligations at the prevailing market price
for the servicing (as determined by averaging values established by CRSI,
Harrison, New York and Bayview Financial, Miami, Florida). Any funds remaining
after the Secured Obligations have been paid in full shall be promptly paid to
the Borrower.
(d) After the Funding Date, until the pledge of any Mortgage
Loan is
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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 the Custodial Agreement.
(e) The Borrower shall permit the Lender to inspect upon
reasonable prior written notice (which shall be no less 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.
(f) In the event servicing of the Mortgage Loans is terminated
without cause prior to an Event of Default and the Servicing Records are
delivered to the Lender or its designee, the Lender shall pay to the Borrower a
termination fee equal to the product of 150 basis points and the outstanding
principal balance of such Mortgage Loans and to which the servicing is
terminated.
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 three (3) Business
Days') prior notice to the Borrower, the Lender or its authorized
representatives will be permitted during normal business hours at a mutually
agreeable time 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 File 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 be
exercised reasonably and in good faith) to perform continuing Due Diligence
Reviews of the Borrower and its Affiliates at Lender's expense.
11.17 Set-Off. Upon the occurrence of an Event of Default, the
expiration of
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the applicable cure period and with prior written notice to the Borrower, the
Lender shall, in addition to any rights and remedies provided by this Loan
Agreement and by law, have the right 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
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 agrees promptly to
notify the Borrower prior to any such set-off made by the Lender; provided that
the failure to give such notice shall not affect the validity of such set-off.
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.
[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.
BORROWER
SOURCE ONE MORTGAGE SERVICES CORPORATION
By:/s/ Xxxxxx X. Xxxxxxxx
----------------------------
Xxxxxx X. Xxxxxxxx
Title: Vice President
Address for Notices:
00000 Xxxxxxxxxx Xxxx
Xxxxxxxxxx Xxxxx, Xxxxxxxx 00000-0000
Attention: Chief Financial Officer
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
With a copy to:
Attention: Vice President/Treasury
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
LENDER
GREENWICH CAPITAL FINANCIAL PRODUCTS, INC.
By: /s/ Xxxx Xxxxxxxx
------------------------
Title: Vice President
Address for Notices:
000 Xxxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxx Xxxxxxxx / Vice President
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
58
SCHEDULE 1
REPRESENTATIONS AND WARRANTIES RE: MORTGAGE LOANS
Eligible Mortgage Loans
As to each Mortgage Loan that forms part of the Collateral
hereunder (and the related Mortgage, Mortgage Note, Assignment of Mortgage and
Mortgaged Property), each Borrower shall be deemed to make the following
representations and warranties to the Lender as of such date and as of each date
Collateral Value is determined:
(a) Mortgage Loans as Described. The information set forth in
the Mortgage Loan Data File with respect to the Mortgage Loan is complete, true
and correct in all material respects.
(b) Payments Current. The first Monthly Payment shall have
been made within forty-five (45) days of its scheduled payment date.
(c) No Outstanding Charges. There are no defaults in complying
with the terms of the Mortgage securing the Mortgage Loan, and all taxes,
governmental assessments, insurance premiums, water, sewer and municipal
charges, leasehold payments or ground rents which previously became due and
owing have been paid, or an escrow of funds has been established in an amount
sufficient to pay for every such item which remains unpaid and which has been
assessed but is not yet due and payable. Neither the Borrower nor the Qualified
Originator from which the Borrower acquired the Mortgage Loan has advanced
funds, or induced, solicited or knowingly received any advance of funds by a
party other than the Mortgagor, directly or indirectly, for the payment of any
amount required under the Mortgage Loan, except for interest accruing from the
date of the Mortgage Note or date of disbursement of the proceeds of the
Mortgage Loan, whichever is more recent, to the day which precedes by one month
the Due Date of the first installment of principal and interest thereunder.
(d) Original Terms Unmodified. The terms of the Mortgage Note
and Mortgage have not been impaired, waived, altered or modified in any respect,
from the date of origination; except by a written instrument which has been
recorded, if necessary to protect the interests of the Lender, and which has
been delivered to the Custodian and the terms of which are reflected in the
Mortgage Loan Schedule. The substance of any such waiver, alteration or
modification has been approved by the title insurer, to the extent required by
the title insurance policy, and its terms are reflected on the Mortgage Loan
Schedule. No Mortgagor in respect of the Mortgage Loan has been released, in
whole or in part, except in connection with an assumption agreement approved by
the title insurer, to the extent required by such policy, and which assumption
agreement is part of the Mortgage File delivered to the Custodian and the terms
of which are reflected in the Mortgage Loan Schedule.
(e) No Defenses. The Mortgage Loan is not subject to any right
of rescission, setoff, counterclaim or defense, including without limitation the
defense of usury,
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nor will the operation of any of the terms of the Mortgage Note or the Mortgage,
or the exercise of any right thereunder, render either the Mortgage Note or the
Mortgage unenforceable, in whole or in part and no such right of rescission,
set-off, counterclaim or defense has been asserted with respect thereto.
(f) Hazard Insurance. The Mortgaged Property is insured by a
fire and extended perils insurance policy, issued by a Qualified Insurer, and
such other hazards as are applicable and available in the area where the
Mortgaged Property is located, and to the extent required by the Borrower as of
the date of origination consistent with the Underwriting Guidelines, against
risks insured against by Persons operating like properties in the locality of
the Mortgaged Property, in an amount not less than the greatest of (i) 100% of
the replacement cost of all improvements to the Mortgaged Property, (ii) the
outstanding principal balance of the Mortgage Loan with respect to each First
Lien Mortgage Loan, (iii) the amount necessary to avoid the operation of any
co-insurance provisions with respect to the Mortgaged Property, and consistent
with the amount that would have been required as of the date of origination in
accordance with the Underwriting Guidelines or (iv) the amount necessary to
fully compensate for any damage or loss to the improvements that are part of
such property on a replacement cost basis. If any portion of the Mortgaged
Property is in an area identified by any federal Governmental Authority as
having special flood hazards, and flood insurance is available, a flood
insurance policy meeting the current guidelines of the Federal Insurance
Administration is in effect with a generally acceptable insurance carrier, in an
amount representing coverage not less than the least of (1) the outstanding
principal balance of the Mortgage Loan, (2) the full insurable value of the
Mortgaged Property, and (3) the maximum amount of insurance available under the
Flood Disaster Protection Act of 1973, as amended. All such insurance policies
(collectively, the "hazard insurance policy") contain a standard mortgagee
clause naming the Borrower, its successors and assigns (including without
limitation, subsequent owners of the Mortgage Loan), as mortgagee, and may not
be reduced, terminated or canceled without 10 days' prior written notice to the
mortgagee. All premiums due and owing on such insurance policy have been paid.
The related Mortgage obligates the Mortgagor to maintain all such insurance and,
at such Mortgagor's failure to do so, authorizes the mortgagee to maintain such
insurance at the Mortgagor's cost and expense and to seek reimbursement therefor
from such Mortgagor. Where required by state law or regulation, the Mortgagor
has been given an opportunity to choose the carrier of the required hazard
insurance, provided the policy is not a "master" or "blanket" hazard insurance
policy covering a condominium, or any hazard insurance policy covering the
common facilities of a planned unit development. The hazard insurance policy is
the valid and binding obligation of the insurer and is in full force and effect.
The Borrower has not engaged in, and has no knowledge of the Mortgagor's having
engaged in, any act or omission which would impair the coverage of any such
policy, the benefits of the endorsement provided for herein, or the validity and
binding effect of either including, without limitation, no unlawful fee,
commission, kickback or other unlawful compensation or value of any kind has
been or will be received, retained or realized by any attorney, firm or other
Person, and no such unlawful items have been received, retained or realized by
the Borrower.
(g) Compliance with Applicable Laws. Any and all requirements
of any federal, state or local law including, without limitation, usury,
truth-in-lending, real estate
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settlement procedures, consumer credit protection, equal credit opportunity or
disclosure laws applicable to the Mortgage Loan have been complied with, the
consummation of the transactions contemplated hereby will not involve the
violation of any such laws or regulations, and the Borrower shall maintain or
shall cause its agent to maintain in its possession, available for the
inspection of the Lender, and shall deliver to the Lender, upon five (5)
Business Days' request, evidence of compliance with all such requirements.
(h) No Satisfaction of Mortgage. The Mortgage has not been
satisfied, canceled, subordinated or rescinded, in whole or in part, and the
Mortgaged Property has not been released from the lien of the Mortgage, in
whole-or in part, nor has any instrument been executed that would effect any
such release, cancellation, subordination or rescission other than in the case
of a release of a portion of the land comprising a Mortgaged Property or a
release of a blanket mortgage which release will not cause the Mortgage Loan to
fail to satisfy the Underwriting Guidelines. The Borrower has not waived the
performance by the Mortgagor of any action, if the Mortgagor's failure to
perform such action would cause the Mortgage Loan to be in default, nor has the
Borrower waived any default resulting from any action or inaction by the
Mortgagor.
(i) Location and Type of Mortgaged Property. The Mortgaged
Property is located in the state identified in the Mortgage Loan Schedule and
consists of a single parcel of real property with an attached or detached single
family residence erected thereon, or a two- to eight-family dwelling, or an
individual condominium unit in a condominium project, or an individual unit in a
planned unit development or a de minimis planned unit development, provided,
however, that any condominium unit or planned unit development shall conform
with the applicable FNMA and FHLMC requirements regarding such dwellings and
that no residence or dwelling is a mobile home or a manufactured dwelling.
(j) Valid Lien. The Mortgage is a valid, subsisting,
enforceable and perfected (A) first lien and first priority security interest
with respect to each Mortgage Loan which is indicated by the Borrower to be a
First Lien (as reflected on the Mortgage Loan Data File), or (B) second lien and
second priority security interest with respect to each Mortgage Loan which is
indicated by the Borrower to be a Second Lien (as reflected on the Mortgage Loan
Data File), in either case, on the real property included in the Mortgaged
Property, including all buildings on the Mortgaged Property and all
installations and mechanical, electrical, plumbing, heating and air conditioning
systems located in or annexed to such buildings, and all additions, alterations
and replacements made at any time with respect to the foregoing. The lien of the
Mortgage is subject only to:
(1) the lien of current real property taxes and assessments
not yet to the penalty date;
(2) covenants, conditions and restrictions, rights of way,
easements and other matters of the public record as of the date of
recording acceptable to prudent 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 made for the originator of the
Mortgage Loan or
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(b) which do not adversely affect the Appraised Value of the Mortgaged
Property set forth in such appraisal;
(3) 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; and
(4) with respect to each Mortgage Loan which is indicated by
the Borrower to be a Second Lien Mortgage Loan (as reflected on the
Mortgage Loan Data File) a First Lien on the Mortgaged Property.
Any security agreement, chattel mortgage or equivalent
document related to and delivered in connection with the Mortgage Loan
establishes and creates a valid, subsisting and enforceable (A) first lien and
first priority security interest with respect to each Mortgage Loan which is
indicated by the Borrower to be a First Lien (as reflected on the Mortgage Loan
Data File), or (B) second lien and second priority security interest with
respect to each Mortgage Loan which is indicated by the Borrower to be a Second
Lien Mortgage Loan (as reflected on the Mortgage Loan Data File), in either
case, on the property described therein and the Borrower has full right to
pledge and assign the same to the Lender.
(k) Validity of Mortgage Documents. The Mortgage Note and the
Mortgage and any other agreement executed and delivered by a Mortgagor or
guarantor, if applicable, in connection with a Mortgage Loan are genuine, and
each is the legal, valid and binding obligation of the maker thereof enforceable
in accordance with its terms. All parties to the Mortgage Note, the Mortgage and
any other such related agreement had legal capacity to enter into the Mortgage
Loan and to execute and deliver the Mortgage Note, the Mortgage and any such
agreement, and the Mortgage Note, the Mortgage and any other such related
agreement have been duly and properly executed by such related parties. No
fraud, error, omission, misrepresentation, negligence or similar occurrence with
respect to a Mortgage Loan has taken placed on the part of any Person,
including, without limitation, the Mortgagor, any appraiser, any builder or
developer, or any other party involved in the origination of the Mortgage Loan.
The Borrower has reviewed all of the documents constituting the Servicing File
and has made such inquiries as it deems necessary to make and confirm the
accuracy of the representations set forth herein.
(l) Full Disbursement of Proceeds. The proceeds of the
Mortgage Loan have been fully disbursed and there is no further requirement for
future advances thereunder, and any and all requirements as to completion of any
on-site or off-site improvement and as to disbursements of any escrow funds
therefor have been complied with. All costs, fees and expenses incurred in
making or closing the Mortgage Loan and the recording of the Mortgage were paid,
and the Mortgagor is not entitled to any refund of any amounts paid or due under
the Mortgage Note or Mortgage.
(m) Ownership. The Borrower is the sole owner and holder of
the Mortgage Loan. All Mortgage Loans acquired by the Borrower from third
parties (including
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Affiliates) were acquired in a true and legal sale. The Mortgage Loan is not
assigned or pledged, and the Borrower has good, indefeasible and marketable
title thereto, and has full right to transfer, pledge and assign the Mortgage
Loan to the Lender free and clear of any encumbrance, equity, participation
interest, lien, pledge, charge, claim or security interest, and has full right
and authority subject to no interest or participation of, or agreement with, any
other party, to assign, transfer and pledge each Mortgage Loan pursuant to this
Loan Agreement and following the pledge of each Mortgage Loan, the Lender will
hold such Mortgage Loan free and clear of any encumbrance, equity, participation
interest, lien, pledge, charge, claim or security interest except any such
security interest created pursuant to the terms of this Loan Agreement (other
than an interest in the Servicing Records which may be held by a subservicer for
a period of up to thirty days from the Funding Date).
(n) Doing Business. All parties which have had any interest in
the Mortgage Loan, whether as mortgagee, assignee, pledgee or otherwise, are
(or, during the period in which they held and disposed of such interest, were)
(i) in compliance with any and all applicable licensing requirements of the laws
of the state wherein the Mortgaged Property is located, and (ii) either (A)
organized under the laws of such state, (B) qualified to do business in such
state, (C) a federal savings and loan association, a savings bank or a national
bank having a principal office in such state or (D) not doing business in such
state.
(o) LTV. As of the date of origination of the Mortgage Loan,
the LTV and CLTV (if available) are as identified on the Mortgage Loan Data
File.
(p) Title Insurance. The Mortgage Loan is covered by either
(i) an attorney's opinion of title and abstract of title, the form and substance
of which is acceptable to prudent mortgage lending institutions making mortgage
loans in the area wherein the Mortgaged Property is located or (ii) an ALTA
Lender's title insurance policy or other generally acceptable form of policy or
insurance acceptable to FNMA or FHLMC and each such title insurance policy is
issued by a title insurer acceptable to FNMA or FHLMC and qualified to do
business in the jurisdiction where the Mortgaged Property is located, insuring
the Borrower, its successors and assigns, as to the first priority lien of the
Mortgage in the original principal amount of the Mortgage Loan (or to the extent
a Mortgage Note provides for negative amortization, the maximum amount of
negative amortization in accordance with the Mortgage), subject only to the
exceptions contained in clauses (1), (2), (3) and, with respect to each Mortgage
Loan which is indicated by the Borrower to be a Second Lien Mortgage Loan (as
reflected on the Mortgage Loan Data File) clause (4) of paragraph (j) of this
Part I of Schedule 1, and in the case of adjustable rate Mortgage Loans, against
any loss by reason of the invalidity or unenforceability of the lien resulting
from the provisions of the Mortgage providing for adjustment to the Mortgage
Interest Rate and Monthly Payment. Where required by state law or regulation,
the Mortgagor has been given the opportunity to choose the carrier of the
required mortgage title insurance. Additionally, such Lender's title insurance
policy affirmatively insures ingress and egress and against encroachments by or
upon the Mortgaged Property or any interest therein. The title policy does not
contain any special exceptions (other than the standard exclusions) for zoning
and uses and has been marked to delete the standard survey exception or to
replace the standard survey exception with a specific survey reading. The
Borrower, its successors and assigns, are the sole insureds of such Lender's
title insurance
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policy, and such Lender's title insurance policy is valid and remains in full
force and effect and will be in force and effect upon the consummation of the
transactions contemplated by this Loan Agreement. No claims have been made under
such Lender's title insurance policy, and no prior holder or servicer of the
related Mortgage, including the Borrower, has done, by act or omission, anything
which would impair the coverage of such Lender's title insurance policy,
including, without limitation, no unlawful fee, commission, kickback or other
unlawful compensation or value of any kind has been or will be received,
retained or realized by any attorney, firm or other Person, and no such unlawful
items have been received, retained or realized by the Borrower.
(q) No Defaults. There is no default, breach, violation or
event of acceleration existing under the Mortgage or the Mortgage Note and no
event has occurred which, with the passage of time or with notice and the
expiration of any grace or cure period, would constitute a default, breach,
violation or event of acceleration, and neither the Borrower nor its
predecessors have waived any default, breach, violation or event of
acceleration. With respect to each Mortgage Loan which is indicated by the
Borrower to be a Second Lien Mortgage Loan (as reflected on the Mortgage Loan
Data File) (i) the First Lien is in full force and effect, (ii) there is no
default, breach, violation or event of acceleration existing under such First
Lien mortgage or the related mortgage note, (iii) no event which, with the
passage of time or with notice and the expiration of any grace or cure period,
would constitute a default, breach, violation or event of acceleration
thereunder.
(r) No Mechanics' Liens. At origination, there were no
mechanics' or similar liens or claims which have been filed for work, labor or
material (and no rights are outstanding that under the law could give rise to
such liens) affecting the Mortgaged Property which are or may be liens prior to,
or equal or coordinate with the lien of the Mortgage.
(s) Location of Improvements: No Encroachments. All
improvements which were considered in determining the Appraised Value of the
Mortgaged Property lie wholly within the boundaries and building restriction
lines of the Mortgaged Property, and no improvements on adjoining properties
encroach upon the Mortgaged Property. No improvement located on or being part of
the Mortgaged Property is in violation of any applicable zoning and building
law, ordinance or regulation.
(t) Origination: Payment Terms. The Mortgage Loan was
originated by or in conjunction with a mortgagee approved by the Secretary of
Housing and Urban Development pursuant to Sections 203 and 211 of the National
Housing Act, a savings and loan association, a savings bank, a commercial bank,
credit union, insurance company or similar banking institution which is
supervised and examined by a federal or state authority. Principal payments on
the Mortgage Loan commenced no more than sixty (60) days after funds were
disbursed in connection with the Mortgage Loan. The Mortgage Interest Rate is
adjusted, with respect to adjustable rate Mortgage Loans, on each Interest Rate
Adjustment Date to equal the Index plus the Gross Margin (rounded up or down to
the nearest .125 %), subject to the Mortgage Interest Rate Cap. The Mortgage
Note is payable on the day set forth in the Mortgage Note in equal monthly
installments of principal and interest, which installments of interest, with
respect to adjustable rate Mortgage Loans, are subject to change
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due to the adjustments to the Mortgage Interest Rate on each Interest Rate
Adjustment Date, with interest calculated and payable in arrears over an
original term of not more than 30 years from commencement of amortization. The
due date of the first payment under the Mortgage Note is no more than 60 days
from the date of the Mortgage Note.
(u) Customary Provisions. The Mortgage Note has a stated
maturity. The Mortgage contains customary and enforceable provisions such as to
render the rights and remedies of the holder thereof adequate for the
realization against the Mortgaged Property of the benefits of the security
provided thereby, including, (i) in the case of a Mortgage designated as a deed
of trust, by trustee's sale, and (ii) otherwise by judicial foreclosure. Upon
default by a Mortgagor on a Mortgage Loan and foreclosure on, or trustee's sale
of, the Mortgaged Property pursuant to the proper procedures, the holder of the
Mortgage Loan will be able to deliver good and merchantable title to the
Mortgaged Property. There is no homestead or other exemption available to a
Mortgagor which would interfere with the right to sell the Mortgaged Property at
a trustee's sale or the right to foreclose the Mortgage.
(v) Conformance with Underwriting Guidelines and Agency
Standards. The Mortgage Loan was underwritten in accordance with the applicable
Underwriting Guidelines. The Mortgage Note and Mortgage are on forms similar to
those used by FHLMC or FNMA and the Borrower has not made any representations to
a Mortgagor that are inconsistent with the mortgage instruments used.
(w) Occupancy of the Mortgaged Property. As of the Funding
Date the Mortgaged Property is either vacant or lawfully occupied under
applicable law. All inspections, licenses and certificates required to be made
or issued with respect to all occupied portions of the Mortgaged Property and,
with respect to the use and occupancy of the same, including but not limited to
certificates of occupancy and fire underwriting certificates, have been made or
obtained from the appropriate authorities. The Borrower has not received written
notification from any governmental authority that the Mortgaged Property is in
material non-compliance with such laws or regulations, is being used, operated
or occupied unlawfully or has failed to have or obtain such inspection, licenses
or certificates, as the case may be. The Borrower has not received notice of any
violation or failure to conform with any such law, ordinance, regulation,
standard, license or certificate.
(x) No Additional Collateral. The Mortgage Note is not and has
not been secured by any collateral except the lien of the corresponding Mortgage
and the security interest of any applicable security agreement or chattel
mortgage referred to in clause (j) above.
(y) Deeds of Trust. In the event the Mortgage constitutes a
deed of trust, a trustee, authorized and duly qualified under applicable law to
serve as such, has been properly designated and currently so serves and is named
in the Mortgage, and no fees or expenses are or will become payable by the
Custodian or the Lender to the trustee under the deed of trust, except in
connection with a trustee's sale after default by the Mortgagor.
(z) Delivery of Mortgage Documents. If the Mortgage Loan is a
Dry
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Loan, the Mortgage Note, the Mortgage, the Assignment of Mortgage and any other
documents required to be delivered under the Custodial Agreement for each
Mortgage Loan have been delivered to the Custodian. The Borrower or its agent is
in possession of a materially complete, true and materially accurate Mortgage
File in compliance with the Custodial Agreement, except for such documents the
originals of which have been delivered to the Custodian.
(aa) Transfer of Mortgage Loans. If the Mortgage Loan is a Dry
Loan, the Assignment of Mortgage is in recordable form and is acceptable for
recording under the laws of the jurisdiction in which the Mortgaged Property is
located.
(bb) Due-On-Sale. The Mortgage contains an enforceable
provision for the acceleration of the payment of the unpaid principal balance of
the Mortgage Loan in the event that the Mortgaged Property is sold or
transferred without the prior written consent of the mortgagee thereunder.
(cc) No Buydown Provisions: No Graduated Payments or
Contingent Interests. The Mortgage Loan does not contain provisions pursuant to
which Monthly Payments are paid or partially paid with funds deposited in any
separate account established by the Borrower, the Mortgagor, or anyone on behalf
of the Mortgagor, or paid by any source other than the Mortgagor nor does it
contain any other similar provisions which may constitute a "buydown" provision.
The Mortgage Loan is not a graduated payment mortgage loan and the Mortgage Loan
does not have a shared appreciation or other contingent interest feature.
(dd) Consolidation of Future Advances. Any future advances
made to the Mortgagor prior to the Cut-off Date have been consolidated with the
outstanding principal amount secured by the Mortgage, and the secured principal
amount, as consolidated, bears a single interest rate and single repayment term.
The lien of the Mortgage securing the consolidated principal amount is expressly
insured as having (A) first lien priority with respect to each Mortgage Loan
which is indicated by the Borrower to be a First Lien (as reflected on the
Mortgage Loan Data File), or (B) second lien priority with respect to each
Mortgage Loan which is indicated by the Borrower to be a Second Lien Mortgage
Loan (as reflected on the Mortgage Loan Data File), in either case, by a title
insurance policy, an endorsement to the policy insuring the mortgagee's
consolidated interest or by other title evidence acceptable to FNMA and FHLMC.
The consolidated principal amount does not exceed the original principal amount
of the Mortgage Loan.
(ee) Mortgaged Property Undamaged. The Mortgaged Property is
undamaged by waste, fire, earthquake or earth movement, windstorm, flood,
tornado or other casualty so as to affect adversely the value of the Mortgaged
Property as security for the Mortgage Loan or the use for which the premises
were intended. There have not been any condemnation proceedings with respect to
the Mortgaged Property and the Borrower has no knowledge of any such
proceedings.
(ff) Collection Practices: Escrow Deposits: Interest Rate
Adjustments. The origination and collection practices used by the originator,
each servicer of the Mortgage Loan
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and the Borrower with respect to the Mortgage Loan have been in all material
respects in compliance with Accepted Servicing Practices, applicable laws and
regulations, and have been in all respects legal and proper. With respect to
escrow deposits and Escrow Payments (other than with respect to each Mortgage
Loan which is indicated by the Borrower to be a Second Lien Mortgage Loan and
for which the mortgagee under the First Lien is collecting Escrow Payments (as
reflected on the Mortgage Loan Data File), all such payments are in the
possession of, or under the control of, the Borrower and there exist no
deficiencies in connection therewith for which customary arrangements for
repayment thereof have not been made. All Escrow Payments have been collected in
full compliance with state and federal law. An escrow of funds is not prohibited
by applicable law and has been established in an amount sufficient to pay for
every item that remains unpaid and has been assessed but is not yet due and
payable. No escrow deposits or Escrow Payments or other charges or payments due
the Borrower have been capitalized under the Mortgage or the Mortgage Note. All
Mortgage Interest Rate adjustments have been made in strict compliance with
state and federal law and the terms of the related Mortgage Note. Any interest
required to be paid pursuant to state, federal and local law has been properly
paid and credited.
(gg) Conversion to Fixed Interest Rate. With respect to
adjustable rate Mortgage Loans, the Mortgage Loan is not convertible to a fixed
interest rate Mortgage Loan.
(hh) Other Insurance Policies. No action, inaction or event
has occurred and no state of facts exists or has existed that has resulted or
will result in the exclusion from, denial of, or defense to coverage under any
applicable special hazard insurance policy, PMI Policy or bankruptcy bond,
irrespective of the cause of such failure of coverage. In connection with the
placement of any such insurance, no commission, fee, or other compensation has
been or will be received by the Borrower or by any officer, director, or
employee of the Borrower or any designee of the Borrower or any corporation in
which the Borrower or any officer, director, or employee had a financial
interest at the time of placement of such insurance.
(ii) Soldiers' and Sailors' Civil Relief Act. The Mortgagor
has not notified the Borrower, and the Borrower has no knowledge, of any relief
requested or allowed to the Mortgagor under the Soldiers' and Sailors' Civil
Relief Act of 1940.
(jj) Appraisal. The Mortgage File contains an appraisal of the
related Mortgaged Property signed prior to the approval of the Mortgage Loan
application by a qualified appraiser, duly appointed by the Borrower or the
Qualified Originator, who had no interest, direct or indirect in the Mortgaged
Property or in any loan made on the security thereof, and whose compensation is
not affected by the approval or disapproval of the Mortgage Loan, and the
appraisal and appraiser both satisfy the requirements of FNMA or FHLMC and Title
XI of the Federal Institutions Reform, Recovery, and Enforcement Act of 1989 as
amended and the regulations promulgated thereunder, all as in effect on the date
the Mortgage Loan was originated.
(kk) Disclosure Materials. The Mortgagor has executed a
statement to the effect that the Mortgagor has received all disclosure materials
required by applicable law with
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respect to the making of adjustable rate mortgage loans, and the Borrower
maintains such statement in the Mortgage File.
(ll) Construction or Rehabilitation of Mortgaged Property. No
Mortgage Loan was made in connection with the construction or rehabilitation of
a Mortgaged Property (other than a construction-to-permanent loan which has
converted to a permanent loan) or facilitating the trade-in or exchange of a
Mortgaged Property.
(mm) No Defense to Insurance Coverage. No action has been
taken or failed to be taken, no event has occurred and no state of facts exists
or has existed on or prior to the Funding Date (whether or not known to the
Borrower on or prior to such date) which has resulted or will result in an
exclusion from, denial of, or defense to coverage under any private mortgage
insurance (including, without limitation, any exclusions, denials or defenses
which would limit or reduce the availability of the timely payment of the full
amount of the loss otherwise due thereunder to the insured) whether arising out
of actions, representations, errors, omissions, negligence, or fraud of the
Borrower, the related Mortgagor or any party involved in the application for
such coverage, including the appraisal, plans and specifications and other
exhibits or documents submitted therewith to the insurer under such insurance
policy, or for any other reason under such coverage, but not including the
failure of such insurer to pay by reason of such insurer's breach of such
insurance policy or such insurer's financial inability to pay.
(nn) Capitalization of Interest. The Mortgage Note does not by
its terms provide for the capitalization or forbearance of interest.
(oo) No Equity Participation. No document relating to the
Mortgage Loan provides for any contingent or additional interest in the form of
participation in the cash flow of the Mortgaged Property or a sharing in the
appreciation of the value of the Mortgaged Property. The indebtedness evidenced
by the Mortgage Note is not convertible to an ownership interest in the
Mortgaged Property or the Mortgagor and the Borrower has not financed nor does
it own directly or indirectly, any equity of any form in the Mortgaged Property
or the Mortgagor.
(pp) Withdrawn Mortgage Loans. If the Mortgage Loan has been
released to the Borrower pursuant to a Request for Release as permitted under
Section 5 of the Custodial Agreement, then the promissory note relating to the
Mortgage Loan was returned to the Custodian within 15 days (or if such fifteenth
day was not a Business Day, the next succeeding Business Day).
(qq) No Exception. There are no exceptions other than those
noted on the Exception Report (as defined in the Custodial Agreement) which
would materially adversely affect the Mortgage Loan or the Lender's security
interest, granted by the Borrower, in the Mortgage Loan.
(rr) Qualified Originator. The Mortgage Loan has been
originated by, and, if applicable, purchased by the Borrower from, a Qualified
Originator.
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(ss) Mortgage Submitted for Recordation. The Mortgage has been
submitted for recordation in the appropriate governmental recording office of
the jurisdiction where the Mortgaged Property is located.
(tt) First Lien Consent. With respect to each Mortgage Loan
which is a Second Lien, (i) if the related first lien provides for negative
amortization, the LTV was calculated at the maximum principal balance of such
first lien that could result upon application of such negative amortization
feature, and (ii) either no consent for the Mortgage Loan is required by the
holder of the first lien or such consent has been obtained and is contained in
the Mortgage File.
(uu) Environmental Matters. The Mortgaged Property is free
from any and all toxic or hazardous substances and there exists no violation of
any local, state or federal environmental law, rule or regulation
(vv) Ground Leases. With respect to each ground lease to which
the Mortgaged Property is subject (a "Ground Lease"): (i) the Mortgagor is the
owner of a valid and subsisting interest as tenant under the Ground Lease; (ii)
the Ground Lease is in full force and effect, unmodified and not supplemented by
any writing or otherwise; (iii) all rent, additional rent and other charges
reserved therein have been paid to the extent they are payable to the date
hereof; (iv) the Mortgagor enjoys the quiet and peaceful possession of the
estate demised thereby, subject to any sublease; (v) the Mortgagor is not in
default under any of the terms thereof and there are no circumstances which,
with the passage of time or the giving of notice or both, would constitute an
event of default thereunder; (vii) the lessor under the Ground Lease is not in
default under any of the terms or provisions thereof on the part of the lessor
to be observed or performed; (vii) the lessor under the Ground Lease has
satisfied all of its repair or construction obligations, if any, to date
pursuant to the terms of the Ground Lease; and (ix) the execution, delivery and
performance of the Mortgage do not require the consent (other than those
consents which have been obtained and are in full force and effect) under, and
will not contravene any provision of or cause a default under, the Ground Lease.
(ww) Value of Mortgage Property. The Borrower has no knowledge
of any circumstances existing that should reasonably be expected to adversely
affect the value or the marketability of the Mortgaged Property or the Mortgage
Loan or to cause the Mortgage Loan to prepay during any period materially faster
or slower than the Mortgage Loans originated by the Borrower generally.
(xx) Section 32 Mortgages; Overages. The Borrower has provided
the related Mortgagor with all disclosure materials required by Section 226.32
of the Federal Reserve Board Regulation Z with respect to any Mortgage Loans
subject to such Section of the Federal Reserve Board Regulation Z. The Borrower
has not made or caused to be made any payment in the nature of an "overage" or
"yield spread premium" to a mortgage broker or like Person which has not been
fully disclosed to the Mortgagor.
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SCHEDULE 2
Secretary of State of Michigan
70
SCHEDULE 3
Mortgage Loan Origination will occur
in all 50 States and the District
of Columbia
71
Schedule 4
FUND AMERICAN ENTERPRISES
WHITE MOUNTAIN HOLDING
(PARENT)
Source One Mortgage Services
(full service mortgage corporation)
The Mortgage Authority, CMC Insurance Agency, Inc. MHMC Insurance SOMSC Services,
Inc. (whole loan/broker (credit insurance agency) Agency (credit Inc. (biweekly
purchasing) insurance agency) mortgage payment
admin.)
Central Pacific Mortgage Company
(full service mortgage corporation)
Northwest Pacific Mortgage
Company
72
EXHIBIT A
[FORM OF PROMISSORY NOTE]
$175,000,000
May 1, 0000
Xxx Xxxx, Xxx Xxxx
FOR VALUE RECEIVED, SOURCE ONE MORTGAGE SERVICES
CORPORATION, a Delaware corporation (the "Borrower"), hereby promise to pay to
the order of GREENWICH CAPITAL FINANCIAL PRODUCTS, INC. (the "Lender"), at the
principal office of the Lender at 000 Xxxxxxxxx Xxxx, Xxxxxxxxx, Xxxxxxxxxxx
00000, in lawful money of the United States, and in immediately available funds,
the principal sum of ONE HUNDRED SEVENTY-FIVE MILLION DOLLARS ($175,000,000) (or
such lesser amount as shall equal the aggregate unpaid principal amount of the
Advances made by the Lender to the Borrower under the Loan Agreement), on the
dates and in the principal amounts provided in the Loan Agreement, and to pay
interest on the unpaid principal amount of each such Advance, at such office, in
like money and funds, for the period commencing on the date of such Advance
until such Advance shall be paid in full, at the rates per annum and on the
dates provided in the Loan Agreement.
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 this Note, endorsed by the Lender on the schedule attached hereto or any
continuation thereof; provided, that the failure of the Lender to make any such
recordation or endorsement shall not affect the obligations of the Borrower to
make a payment when due of any amount owing under the Loan Agreement or
hereunder in respect of the Advances made by the Lender.
This Note is the Note referred to in the Master Loan and
Security Agreement dated as of May 1, 1998 (as amended, supplemented or
otherwise modified and in effect from time to time, the "Loan Agreement")
between the Borrower, and the Lender, and evidences Advances made by the Lender
thereunder. Terms used but not defined in this Note have the respective meanings
assigned to them in the Loan Agreement.
The Borrower agrees to pay all the Lender's costs of
collection and enforcement (including reasonable attorneys' fees and
disbursements of Lender's counsel) in respect of this Note when incurred as a
result of Borrower's default .
Notwithstanding the pledge of the Collateral, the Borrower
hereby acknowledges, admits and agrees that the Borrower's obligations under
this Note are recourse obligations of the Borrower to which the Borrower pledges
its full faith and credit.
The Borrower, and any endorsers or guarantors hereof, (a)
expressly agree that this Note, or any payment hereunder, may be extended from
time to time, and consent to the acceptance of further Collateral, the release
of any Collateral for this Note, the release of any
73
party primarily or secondarily liable hereon, and (b) expressly agree that it
will not be necessary for the Lender, in order to enforce payment of this Note,
to first institute or exhaust the Lender's remedies against the Borrower or any
other party liable hereon or against any Collateral for this Note. No extension
of time for the payment of this Note, or any installment hereof, made by
agreement by the Lender with any person now or hereafter liable for the payment
of this Note, shall affect the liability under this Note of the Borrower, even
if the Borrower is not a party to such agreement; provided, however, that the
Lender and the Borrower, by written agreement between them, may affect the
liability of the Borrower.
Any reference herein to the Lender shall be deemed to include
and apply to every subsequent holder of this Note. Reference is made to the Loan
Agreement for provisions concerning optional and mandatory prepayments,
Collateral, acceleration and other material terms affecting this Note.
The Borrower hereby submits to New York jurisdiction with
respect to any action brought with respect to this Note.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED UNDER THE LAWS OF
THE STATE OF NEW YORK (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 NOTE) WHOSE LAWS THE BORROWER EXPRESSLY ELECTS TO
APPLY TO THIS NOTE. THE BORROWER AGREES THAT ANY ACTION OR PROCEEDING BROUGHT TO
ENFORCE OR ARISING OUT OF THIS NOTE MAY BE COMMENCED IN THE SUPREME COURT OF THE
STATE OF NEW YORK, BOROUGH OF MANHATTAN, OR IN XXX XXXXXXXX XXXXX XX XXX XXXXXX
XXXXXX FOR THE SOUTHERN DISTRICT OF NEW YORK.
SOURCE ONE MORTGAGE SERVICES CORPORATION
By:/s/ Xxxxxx X. Xxxxxxxx
-------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Vice President
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SCHEDULE OF LOANS
This Note evidences Advances made under the within-described Loan
Agreement to the Borrower, on the dates, in the principal amounts and bearing
interest at the rates set forth below, and subject to the payments and
prepayments of principal set forth below:
------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT OF AMOUNT PAID UNPAID PRINCIPAL NOTATION
DATE MADE LOAN OR PREPAID AMOUNT MADE BY
--------- ------------------- ----------- ---------------- ----------
------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------
75
EXHBIT B
FORM OF CUSTODIAL AGREEMENT
76
EXECUTION COPY
CUSTODIAL AGREEMENT
CUSTODIAL AGREEMENT (this "Custodial Agreement") dated as of May 1,
1998, made by and among:
(i) SOURCE ONE MORTGAGE SERVICES CORPORATION, a Delaware
corporation (the "Borrower");
(ii) NATIONAL CITY BANK OF KENTUCKY, as custodian and
collateral agent for the Lender pursuant to the Loan
Agreement referred to below (in such capacity, the
"Custodian"); and
(iii) GREENWICH CAPITAL FINANCIAL PRODUCTS, INC., a
Delaware corporation (the "Lender").
RECITALS
The Borrower and the Lender are parties to the Master Loan and Security
Agreement, dated as of the date hereof (as amended, supplemented or otherwise
modified and in effect from time to time, the "Loan Agreement"), pursuant to
which the Lender has agreed, subject to the terms and conditions of the Loan
Agreement, to make revolving credit loans to the Borrower to finance Eligible
Mortgage Loans (as defined therein) owned by the Borrower.
It is a condition precedent to the effectiveness of the Loan Agreement
that the parties hereto execute and deliver this Custodial Agreement to provide
for the appointment of the Custodian as custodian and collateral agent
hereunder. Accordingly, the parties hereto agree as follows:
Section 1. Definitions.
Unless otherwise defined herein, terms defined in the Loan Agreement
shall have their respective assigned meanings when used herein, and the
following terms shall have the following meanings:
"Advance" shall mean a loan made by the Lender to the Borrower from
time to time, on the terms and conditions set forth in the Loan Agreement.
"Advance Balance" shall mean the aggregate outstanding principal
balance of an Advance secured by the applicable pledged Mortgage Loans.
"Approved Purchaser" shall mean a third party purchaser approved by the
Lender in its reasonable discretion, as set forth on Annex 16.
"Assignment of Mortgage" shall mean 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 transfer of the Mortgage.
"Authorized Representative" shall have the meaning specified in Section
18 hereof.
"Collateral" shall have the meaning assigned thereto in the Loan
Agreement.
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"Custodial Delivery Failure" shall have the meaning specified in
Section 13 hereof.
"Custodian Loan Data File" shall mean in the case of each Mortgage
Loan, a computer-readable data file or OTHER ELECTRONIC FORMAT MUTUALLY
ACCEPTABLE TO THE PARTIES containing the following information to be delivered
by the Custodian to the Lender pursuant to the Custodial Agreement: the Mortgage
Loan number, Trust Status, Mortgagor's name, codes indicating Exceptions and
codes indicating cleared Exceptions.
The Custodian shall incorporate on a daily basis all current data
provided by the Borrower to the Custodian into the Custodian Loan Data File.
"Dry High LTV Loan" shall mean a first or second lien Mortgage Loan
which is underwritten in accordance with the Underwriting Guidelines which
Mortgage File contains all required Mortgage Loan Documents and there are no
Material Exceptions.
"Dry Loan" shall mean either a Dry Subprime Loan or a Dry High LTV
Loan.
"Dry Subprime Loan" shall mean a first or second lien Mortgage Loan
which is underwritten in accordance with the Underwriting Guidelines made to a
Mortgagor with a subprime credit history which Mortgage File contains all
required Mortgage Loan Documents and there are no Material Exceptions.
"Exception" shall mean, with respect to any Mortgage Loan, any of the
following: (i) any variance from the requirements of Section 2 hereof with
respect to the Mortgage Files (giving effect to the Borrower's right to deliver
certified copies in lieu of original documents in certain circumstances); (ii)
an Eligible Mortgage Loan which has been pledged to the Lender under the Loan
Agreement for more than 180 calendar days; (iii) the release of a Mortgage Loan
to the Borrower pursuant to Section 5(a) hereof in excess of the time period
stated in the Transmittal Letter for release; (iv) the release of such Mortgage
Loan under Section 5(b) hereof under any Transmittal Letter in excess of the
time period stated in such Transmittal Letter for release; or (v) any Mortgage
Loan with respect to which the Custodian receives written notice or has actual
knowledge of a lien subject or security interest in favor of a Person other than
the Lender with respect to such Mortgage Loan.
"Exception Report" means a list, in the format of Annex 17 of Mortgage
Loans delivered by the Custodian to the Lender on each Business Day, reflecting
the Mortgage Loans held by the Custodian for the benefit of the Lender, which
includes codes indicating any Exceptions with respect to each Mortgage Loan
listed thereon and with respect to Wet Loans, those Mortgage Loans for which
Required Documents have not been delivered within 11-30 days from the related
Funding Date. Each Exception Report shall set forth (a) the Mortgage Loans being
pledged to the Lender on any applicable Funding Date as well as the Mortgage
Loans previously pledged to the Lender and held by the Custodian hereunder,
which such Mortgage Loans shall be listed separately from those funded on the
current Funding Date, and (b) all Exceptions with respect thereto, with any
updates thereto from the time last delivered.
"Funding Date" means the date on which an Advance is made pursuant to
the Loan Agreement.
"Last Endorsee" shall have the meaning specified in Section 2(I)(a)
hereof.
"Material Exception" shall mean, with respect to any Mortgage Loan, any
Exception listed on the Exception Report consisting of a variance described as a
"Material Exception" on Annex 14 or the absence
78
from the Mortgage File, or deficiency in respect of, any of the Mortgage Loan
Documents set forth in Sections 2(I)(a)-(f) of this Custodial Agreement.
"Mortgage" shall mean the mortgage, deed of trust or other instrument
securing a Mortgage Note, which creates a first or second lien on the fee simple
in real property or in a leasehold interest securing the Mortgage Note.
"Mortgage File" shall mean, as to each Mortgage Loan, those documents
listed in Sections 2(I)(a)- (g) (and if reasonably requested by the Lender,
Sections 2(I)(h)-(j)) of this Custodial Agreement that are delivered to the
Custodian or which at any time come into the possession of the Custodian.
"Mortgage Loan" shall mean a mortgage loan which the Custodian has been
instructed to hold for the Lender pursuant to this Agreement, and which Mortgage
Loan includes, without limitation, (i) a Mortgage Note, 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 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 Mortgage Loan number, (ii) the Mortgagor's name, and
(iii) the original principal amount of the Mortgage Loan.
"Mortgage Loan Data File" shall mean a computer-readable data file in a
format acceptable to the Lender and Custodian incorporating the field identified
on Annex 1.
"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.
"Notice of Borrowing and Pledge" shall mean an irrevocable Notice of
Borrowing and Pledge substantially in the form of Exhibit D to the Loan
Agreement.
"Officer's Certificate" shall mean a certificate signed by a
Responsible Officer of the Person delivering such certificate and delivered as
required by this Custodial Agreement.
"Opinion of Counsel" shall mean a written opinion letter of counsel in
form and substance reasonably acceptable to the party receiving such opinion
letter.
"Pledgee" shall have the meaning specified in Section 25 hereof.
"Proceeds" shall mean whatever is receivable or received when
Collateral or proceeds are sold, collected, exchanged or otherwise disposed of,
whether such disposition is voluntary or involuntary, and includes, without
limitation, all rights to payment, including return premiums, with respect to
any insurance relating thereto.
"Qualified Originator" shall have the meaning set forth in the Loan
Agreement.
"Review Procedures" shall have the meaning specified in Section 3(b)
hereof.
"Transmittal Letter" shall mean a letter substantially in the form of
Annex 11 or Annex 12 hereto, as applicable.
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"Trust Receipt" shall mean a trust receipt in the form annexed hereto
as Annex 2 delivered to the Lender by the Custodian covering any of the Mortgage
Loans subject to this Custodial Agreement from time to time, as reflected on the
Mortgage Loan Tape and the Exception Report accompanied therewith in accordance
with Section 3(e) hereof. Separate Trust Receipts will be delivered in
connection with Wet B&C Loans, Wet High LTV Loans, Dry High LTV Loans, Dry B&C
Loans and zero Collateral Value Mortgage Loans.
"Trust Receipt Interest" shall mean an interest in the Mortgage Loans
covered by the Trust Receipt which the Lender has pledged to a third party.
"Trust Status" shall mean have the meaning set forth in the Loan
Agreement.
"Wet High LTV Loan" shall mean a wet-funded first or second 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.
"Wet Loan" shall mean a Wet Subprime Loan or a Wet High LTV Loan, which
in order to be deemed 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 escrow or closing 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
escrow or closing 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 or
second lien on the premises described therein.
"Wet Subprime Loan" shall mean a wet-funded first or second lien
Mortgage Loan which is underwritten in accordance with the Underwriting
Guidelines made to a Mortgagor with a subprime credit history and which does not
contain all the required Mortgage Loan Documents in the Mortgage File.
"Zero Value Trust Receipt" shall have the meaning set forth in Section
3(g).
Section 2. Delivery of Mortgage File.
With respect to each Advance, (a) the Borrower shall provide oral
notice to the Lender and the Custodian of the approximate amount of the
principal balance of the Mortgage Loans to be used as Collateral no later than
5:00 p.m. eastern time on the day prior to the requested Funding Date and (b) no
80
later than 10:30 a.m. eastern time on the Funding Date, the Borrower shall
deliver to the Custodian the following original documents pertaining to the
Eligible Mortgage Loans to be pledged to the Lender on such Funding Date each of
which Mortgage Loans shall be identified in a Mortgage Loan Data File delivered
by 12:00 p.m. eastern time on the requested Funding Date, to both the Custodian
and the Lender by electronic medium acceptable to the Custodian and the Lender:
(I) In the case of Dry Loans:
a) The original Mortgage Note bearing all intervening
endorsements showing a complete chain of endorsements
from the originator of such Mortgage Loan to the last
endorsee (the "Last Endorsee"), endorsed by the Last
Endorsee, without recourse in the following form:
"Pay to the order of _________, without recourse" and
signed in the name of the Last Endorsee by an
authorized officer;
b) The original Mortgage with evidence of recording
indicated thereon, subject to paragraph III below;
c) An original Assignment of Mortgage, in suitable form
for recordation in the jurisdiction in which the
related Mortgaged Property is located, such
assignment to be in blank and signed in the name of
the Last Endorsee by an authorized person;
d) The originals of all intervening assignments of the
Mortgage (with evidence of recording thereon) showing
a complete chain of assignments from the originator
of such Mortgage Loan to the Last Endorsee, subject
to paragraph III below;
e) Any assumption, modification (with evidence of
recording thereon), consolidation or extension
agreements;
f) The original policy of title insurance (or a
commitment for title insurance, if the policy is
being held by the title insurance company pending
recordation of the Mortgage) or attorney's opinion of
title; and
g) A Notice of Borrowing and Pledge executed by an
authorized representative of the Borrower together
with a Mortgage Loan List and such other
documentation required under the Loan Agreement.
In the event that the Lender shall reasonably request, the
Borrower shall deliver to the Custodian the following additional documents:
h) The original of the guarantee executed in connection
with the Mortgage Note (if any);
i) The original of any security agreement, chattel
mortgage or equivalent document executed in
connection with the Mortgage Loan; and
j) The certificate of primary mortgage guaranty
insurance, if any, issued with respect to such
Mortgage Loan.
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(II) In the case of Wet Loans:
A Notice of Borrowing and Pledge executed by an
authorized representative of the Borrower together
with a Mortgage Loan List and such other
documentation required under the Loan Agreement.
(III) With respect to all Mortgage Files:
From time to time, the Borrower shall forward to the
Custodian additional original documents or additional
documents evidencing any assumption, modification,
consolidation or extension of a Mortgage Loan
approved by the Borrower, in accordance with the
terms of the Loan Agreement, and upon receipt of any
such other documents, the Custodian shall hold such
other documents for the Lender hereunder.
With respect to any documents which have been
delivered or are being delivered to recording offices
for recording and have not been returned to the
Borrower in time to permit their delivery hereunder
at the time required, in lieu of delivering such
original documents, the Borrower shall deliver to the
Custodian a copy thereof certified by an authorized
representative of the Borrower as a true, correct and
complete copy of the original which has been
transmitted for recordation. The Borrower shall
deliver such original documents to the Custodian
promptly when they are received.
(IV) With respect to Mortgage Loans with Exceptions:
With respect to any Mortgage Loan, if the Custodian
has identified such Mortgage Loan as having any
Exception or if the Borrower has knowledge of any
Exception, the Borrower shall promptly and diligently
notify the Lender of any such Exception and shall
promptly and diligently attempt to cure any such
Exception.
Section 3. Mortgage Loan Data File; Exception Report; Trust Receipt.
(a) Intentionally Omitted.
(b) With respect to each Mortgage Loan, no later than 12:00 p.m.
eastern time on the Funding Date, the Borrower shall provide the Custodian and
the Lender with a copy of the related Notice of Borrowing and Pledge and
Mortgage Loan List (which shall indicate which Mortgage Loans are expected to be
Wet Loans and which are expected to be Dry Loans) via facsimile and an
electronically transmitted copy of the related Mortgage Loan Data File, with
respect to the Eligible Mortgage Loans to be pledged to the Lender on such
Funding Date.
(c) Notwithstanding and in addition to the foregoing, if the Custodian
has received the Notice of Borrowing and Pledge and a Mortgage File for each
Mortgage Loan identified on the Mortgage Loan Data File transmitted thereto
(and, in the case of Wet Loans, a Notice of Borrowing and Pledge) at the times
indicated in the preceding paragraph, the Custodian shall review the documents
required to be delivered pursuant to Sections 2(I) and 2(II) above, in the case
of Dry Loans and Wet Loans, respectively.
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The Custodian will deliver, no later than 3:00 p.m., eastern time, on the
Funding Date, to the Borrower and the Lender, via modem, a Custodian Loan Data
File and an Exception Report, which Exception Report shall reflect the
Exceptions identified by the Custodian in connection with its review of the
documents described in the prior sentence. Each Exception Report shall list all
Exceptions using such codes as listed on Annex 14, attached hereto. Each
Custodian Loan Data File and each Exception Report shall be superseded by a
subsequently issued Custodian Loan Data File and an Exception Report.
The delivery of each Custodian Loan Data File and the related
Exception Report to the Lender shall be the Custodian's representation that,
other than the Exceptions listed as part of the Exception Report: (i) all
documents in respect of such Mortgage Loan required to be delivered at such time
pursuant to Section 2 of this Custodial Agreement have been delivered and are in
the possession of the Custodian as part of the Mortgage File for such Mortgage
Loan; (ii) all such documents have been reviewed by the Custodian in accordance
with the review procedures attached hereto as Annex 4 (the "Review Procedures")
and appear on their face to be regular and to relate to such Mortgage Loan and
to satisfy the requirements set forth in Section 2 of this Custodial Agreement;
and (iii) each Mortgage Loan identified in such Custodian Loan Data File is
being held by the Custodian as bailee for the Lender and/or its designees
pursuant to this Custodial Agreement.
(d) In connection with any Custodian Loan Data File or Exception Report
delivered hereunder by the Custodian, the Custodian shall make no
representations as to and shall not be responsible to verify (A) the validity,
legality, enforceability, due authorization, recordability, sufficiency, or
genuineness of any of the documents contained in each Mortgage File or (B) the
collectability, insurability, effectiveness or suitability of any such Mortgage
Loan. Subject to the following sentence, the Borrower and the Lender hereby give
the Custodian notice that from and after the Funding Date, the Lender shall have
a security interest in each Mortgage Loan identified on a Mortgage Loan Data
File until such time that the Custodian receives written notice from the Lender
that the Lender no longer has a security interest in such Mortgage Loan. To the
extent that (i) the Custodian has not determined or (ii) the Lender has not
notified the Custodian that there is a Borrowing Base Deficiency, in the event
that the Lender does not make an Advance to the Borrower prior to 4:30 p.m.
eastern time because of deficiencies in the related Mortgage Loans, on such
Funding Date, upon written notice thereof from the Borrower, acknowledged by the
Lender, the Custodian shall hold on behalf of the Borrower or release to the
Borrower, pursuant to the Borrower's written instructions, the Mortgage Loans
identified as added on such Funding Date to the Mortgage Loan Data File
delivered by the Custodian on such Funding Date.
(e) In addition to the foregoing, no later than 4:00 p.m. eastern time
on the Funding Date, the Custodian shall deliver to the Lender by facsimile
transmission one or more Trust Receipts. The original Trust Receipt(s) shall be
delivered to Chase Manhattan 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) by
overnight delivery using a nationally recognized insured overnight delivery
service. Each Trust Receipt, Custodian Loan Data File and Exception Report
subsequently delivered by the Custodian to the Lender shall supersede and cancel
the Trust Receipt, Custodian Loan Data File and the Exception Report previously
delivered by the Custodian to the Lender hereunder, and shall replace the then
existing Custodian Loan Data File and the then existing Trust Receipt and
Exception Report.
(f) In addition to the foregoing, in the case of Wet Loans, the
delivery of the Notice of Borrowing and Pledge to the Custodian shall be deemed
to constitute a required document with respect to the related Wet Loan.
Notwithstanding the foregoing, Borrower shall deposit with the Custodian the
83
documents described in Section 2(I) for such Wet Loan as soon as possible and,
in any event, within thirty (30) days after the date the related Notice of
Borrowing and Pledge is executed by the Borrower. If there are any Material
Exceptions outstanding with respect to such Wet Loans as of the thirtieth (30th)
day after the related Funding Date, the Custodian shall immediately notify the
Lender, the Wet Loans shall be deemed to have a Collateral Value of zero and
such Mortgage Loans will be included on the Trust Receipt for zero Collateral
Value Mortgage Loans. Upon deposit of such documents with Custodian, Custodian
shall review such documents in accordance with the standards set forth in
Section 3(c), shall promptly notify Lender if such documents do not comply with
the requirements thereof and shall indicate on its records that Custodian
maintains possession of such documents for Lender hereunder. Borrower hereby
represents, warrants and covenants to Lender and Custodian that Borrower and any
person or entity acting on behalf of Borrower that has possession of any of the
documents described in Section 2(I) for such Wet Loan prior to the deposit
thereof with Custodian will hold such documents in trust for Lender.
(g) In addition to the foregoing, in the event that the Custodian
determines or the Lender gives the Custodian notice of any Mortgage Loan with a
Collateral Value of zero, the Custodian shall deliver to the Lender a separate
Trust Receipt (the "Zero Value Trust Receipt"), with a Custodian Loan Data File
listing those Mortgage Loans with a Collateral Value of zero and a separate
Exception Report attached thereto. If at any time the Custodian receives notice
from the Lender that a Mortgage Loan has been assigned a Collateral Value of
zero or such other value based upon the Lender's ability to xxxx-to-market the
Collateral, the Custodian shall promptly issue a revised Custodian Loan Data
File and new Trust Receipts and Exception Reports. Each such Trust Receipt, each
such Custodian Loan Data File and each such Exception Report delivered by the
Custodian to the Lender shall supersede and cancel the Trust Receipt, Custodian
Loan Data File and the Exception Report previously delivered by the Custodian to
the Lender hereunder, and shall replace the then existing Custodian Loan Data
File and the then existing Exception Report to be attached to such Trust
Receipt.
The Borrower shall have the right to request a return of any
Collateral identified on such Zero Value Trust Receipt. The Lender shall review
such request and notify the Custodian if such Collateral may be released to the
Borrower, and in such case, the Custodian shall issue a new Zero Value Trust
Receipt and Exception Report to reflect the Mortgage Loans to be held on behalf
of the Lender.
Section 4. Obligations of the Custodian.
(a) On each Business Day, the Custodian shall prepare and send a
Custodian Loan Data File to the Lender no later than 3:00 p.m. (eastern time).
In addition, no later than 4:00 p.m. (eastern time) on each Business Day, the
Custodian shall compute the value of the Borrowing Base and notify the Borrower
and the Lender thereof by sending a facsimile copy or electronic transmission of
a report, in the form attached hereto as Annex 15 (a "Borrowing Base
Certificate"). To prepare the Borrowing Base Certificate, the Custodian shall
determine the Collateral Value by incorporating the data on each Mortgage Loan
Data File and Banking Loan Data File delivered by the Borrower with the
information on the Servicing Data File delivered by the Borrower (which such
information shall be delivered no later than the 10th day of the month or such
other date requested by the Lender) on the date such information is received. On
a monthly basis or otherwise upon request by the Lender, the Custodian shall
forward by overnight courier to the Lender any hard copy reports delivered by
the Borrower used in connection with preparing the Borrowing Base Certificate
and shall cooperate with the Lender in connection with the Lender's review of
the Borrowing Base Certificate.
In making any determination of Collateral Value or other
calculations involving a
84
determination of the value of the Borrowing Base, the Custodian shall be
permitted to rely, without independent investigation of the correctness on:
(1) the information supplied by the Borrower to the Custodian on
each Mortgage Loan Data File and the Servicing Data File; and
(2) any information supplied by the Lender to the Custodian in
writing for assigning a Collateral Value to any Mortgage Loan
including any xxxx-to-market for specific Mortgage Loans.
In the event the Lender calculates any amounts differently from the
Custodian with respect to interest owed, the Borrowing Base or a Borrowing Base
Deficiency, the Custodian agrees to work with the Lender to resolve any such
discrepencies.
Notwithstanding any other provision of this Custodial Agreement, the
Borrower shall calculate the Borrowing Base and any Borrowing Base Deficiency
until such time that the Lender transfers to the Custodian the right to
determine the Borrowing Base and the Borrowing Base Deficiency. The Lender shall
determine the Borrowing Base in accordance with the provisions of the Loan
Agreement and shall deliver such calculations to the Borrower in the same manner
as the Custodian.
(b) The Custodian shall maintain continuous custody of all items
constituting the Mortgage Files in secure facilities in accordance with
customary standards for such custody and shall reflect in its records the
interest of the Lender therein. Each Mortgage Note (and Assignment of Mortgage)
and Wet Notice of Borrowing and Pledge shall be maintained in fireproof
facilities.
(c) With respect to the documents constituting each Mortgage File, the
Custodian shall (i) act exclusively as the bailee of, and custodian for, the
Lender, (ii) hold all documents constituting such Mortgage File received by it
for the exclusive use and benefit of the Lender, and (iii) make disposition
thereof only in accordance with the terms of this Custodial Agreement or with
written instructions furnished by the Lender pursuant to the terms of this
Custodial Agreement; provided, however, that in the event of a conflict between
the terms of this Custodial Agreement and such written instructions of the
Lender, the Lender's written instructions shall control.
(d) In the event that (i) the Lender, the Borrower or the Custodian
shall be served by a third party with any type of levy, attachment, writ or
court order with respect to any Mortgage File or any document included within a
Mortgage File or (ii) a third party shall institute any court proceeding by
which any Mortgage File or a document included within a Mortgage File shall be
required to be delivered otherwise than in accordance with the provisions of
this Custodial Agreement, the party receiving such service shall promptly
deliver or cause to be delivered to the other parties to this Custodial
Agreement copies of all court papers, orders, documents and other materials
concerning such proceedings. The Custodian shall, to the extent permitted by
law, continue to hold and maintain all the Mortgage Files that are the subject
of such proceedings pending a final, nonappealable order of a court of competent
jurisdiction permitting or directing disposition thereof. Upon final
determination of such court, the Custodian shall dispose of such Mortgage File
or any document included within such Mortgage File as directed by the Lender
which shall give a direction consistent with such determination. Expenses of the
Custodian (including reasonable attorneys' fees and related expenses) incurred
as a result of such proceedings shall be borne by the Borrower.
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(e) The Lender hereby acknowledges that the Custodian shall not be
responsible for the validity and perfection of the Lender's security interest
in the Collateral hereunder, other than the Custodian's obligation to take
possession of Collateral as set forth in Section 2 hereof.
Section 5. Release of Collateral.
(a) From time to time until the Custodian is otherwise notified by the
Lender, which notice shall be given by the Lender only following the occurrence
of an Event of Default, the Custodian is hereby authorized upon receipt of
written request of the Borrower to release Mortgage Files relating to Mortgage
Loans in the possession of the Custodian to the Borrower, or its designee, for
the purpose of servicing or correcting documentary deficiencies relating thereto
against a request for release of Mortgage Files and receipt (a "Request for
Release and Receipt") executed by the Borrower and the Lender (in its
discretion) in the form of Annex 5-A hereto (the Custodian shall keep track of
the release of such Mortgage Files by completing the collateral shipped report
in the form of Annex 5-A-1, attached to Annex 5-A, if applicable. The Custodian
may release to the Borrower, or its designee, Mortgage Files pertaining to no
more than twenty (20) Mortgage Loans at the time being held by the Custodian on
behalf of the Lender, and for any such release the Custodian shall promptly
notify the Lender that it has released such Mortgage Files to the Borrower or
its designee. In the event the Borrower, or its designee, requests more than
twenty (20) Mortgage Loans to be released by the Custodian to the Borrower, or
its designee, the Custodian shall notify the Lender before releasing the
additional requested Mortgage Files. Any such additional Mortgage Files
requested to be released by the Borrower, or its designee, may be released only
upon written authorization of the Lender. If the Lender, in its discretion,
requires Lender's execution of a Request for Release and Receipt, the Lender
hereby agrees to respond to a Request for Release and Receipt, via facsimile, no
later than one (1) Business Day after the Lender's receipt thereof. The Borrower
or its designee shall return to the Custodian each Mortgage File previously
released by the Custodian as stated on Annex 5-A. The Borrower hereby further
represents and warrants to the Lender that any such request by the Borrower for
release of Collateral shall be solely for the purposes set forth in the Request
for Release and Receipt and that the Borrower has requested such release in
compliance with all terms and conditions of such release set forth in the Loan
Agreement.
(b) (i) From time to time until otherwise notified by the Lender, which
notice shall be given by the Lender only following the occurrence of an Event of
Default, the Custodian is hereby authorized upon receipt of written request of
the Borrower at least one (1) Business Day prior to the date of the anticipated
sale, to release Mortgage Files in the possession of the Custodian to a
third-party purchaser (subject to the written consent of the Lender if such
third party purchaser is not an Approved Purchaser) for the purpose of resale
thereof against a Request for Release executed by the Borrower and the Lender
(in its discretion) in the form of Annex 5-B hereto. On such Request for
Release, the Borrower shall indicate the Mortgage Loans to be sold, the
approximate amount of sale proceeds anticipated to be received, the date of such
anticipated sale, the name and address of the third-party purchaser, whether the
shipment is made pursuant to the sale of the Mortgage Loans to a third party or
pursuant to the formation of a mortgage pool supporting a mortgage-backed
security (an "MBS") and the preferred method and date of delivery.
(ii) Any transmittal of Mortgage Files for Mortgage Loans in the
possession of the Custodian in connection with the sale thereof to a third-party
purchaser will be under cover of a transmittal letter substantially in the form
attached hereto as Annex 11 duly completed by the Custodian and executed by the
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Custodian. Any transmittal of Mortgage Files for Mortgage Loans in the
possession of the Custodian in connection with the shipment to a custodian or
trustee in connection with the formation of a mortgage pool supporting a MBS
will be under cover of a transmittal letter substantially in the form attached
hereto as Annex 12. Promptly upon the remittance by such third-party purchaser,
custodian or trustee, as applicable of the full amount set forth in such
transmittal letter as the "Payoff Amount", the Lender shall notify the Custodian
thereof. The Custodian on the first Business Day of each week shall send to the
Lender, by electronic media acceptable to the Lender, a report detailing all
Mortgage Files released to the Borrower, or its designee, or any Approved
Purchaser or other third party purchaser hereunder.
(c) Any Payoff Amount sent by a third-party purchaser of Mortgage Loans
in connection with Section 5(b)(ii) above shall be sent to an account to be
established by the Borrower for the benefit of the Lender. In connection
therewith, the Lender shall deliver to the Borrower a copy of the Blocked
Account Agreement attached hereto as Annex 18.
(d) From time to time until the Custodian is otherwise notified by the
Lender, and with the prior written consent of the Lender, the Borrower may
substitute for one or more Eligible Mortgage Loans constituting the Collateral
one or more substitute Eligible Mortgage Loans having aggregate Collateral Value
equal to or greater than the Collateral Value of the Mortgage Loans being
substituted for, or obtain the release of one or more Mortgage Loans
constituting Collateral hereunder; provided that, after giving effect to such
substitution or release, the Secured Obligations then outstanding shall not
exceed the Borrowing Base, which determination shall be made solely by the
Lender in accordance with the Loan Agreement. In connection with any such
requested substitution or release, the Borrower will provide notice to the
Custodian and the Lender no later than 12:00 p.m., eastern time, on the date of
such request, specifying the Mortgage Loans to be substituted for or released
and the substitute Mortgage Loans to be pledged hereunder in substitution
therefor, if any, and shall deliver with such notice a Custodial Identification
Certificate and a revised Mortgage Loan Data File indicating any substitute
Mortgage Loans. If the Custodian and Lender have received notice in accordance
with the preceding sentence, the Custodian will effect the requested
substitution or release no later than 4:00 p.m., eastern time, one Business Day
following the day on which such request was made after the Custodian has
certified to the Lender on such Business Day that the matters set forth in
Section 3(c) hereof with respect to any substitute Mortgage Loans are true and
correct. Each such substitution or release shall be deemed to be a
representation and warranty by the Borrower that any substitute Mortgage Loans
are Eligible Mortgage Loans and that after giving effect to such substitution or
release, the Secured Obligations then outstanding shall not exceed the Borrowing
Base.
(e) So long as no Event of Default has occurred and is continuing and
to the extent notice has been provided to the Custodian, the Custodian and the
Lender shall take such steps as they may reasonably be directed from time to
time by the Borrower in writing, which the Borrower deems necessary and
appropriate, to transfer promptly and deliver to the Borrower any Mortgage File
in the possession of the Custodian relating to any Mortgage Loan previously
included in the Borrowing Base but which the Borrower, with the written consent
of the Lender, has notified the Custodian has ceased to be included in the
Borrowing Base, or any Mortgage Loan in respect of which the Borrower has paid
the applicable Advance Balance in full. The Lender agrees to reply promptly to
any such request for transfer and delivery, and if any such request is received
by 12:00 p.m., eastern time, the Lender agrees to reply on the Business Day such
request is received.
Section 6. Fees and Expenses of Custodian.
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The Custodian shall charge such fees for its services under this
Custodial Agreement as are set forth in a separate agreement between the
Custodian and the Borrower, the payment of which fees, together with the
Custodian's expenses in connection herewith, shall be solely the obligation of
the Borrower.
Section 7. Removal or Resignation of Custodian.
(a) The Custodian may at any time resign and terminate its obligations
under this Custodial Agreement upon at least 60 days' prior written notice to
the Borrower and the Lender. Promptly after receipt of notice of the Custodian's
resignation, the Borrower shall appoint, by written instrument, a successor
custodian, subject to written approval by the Lender (which approval shall not
be unreasonably withheld). One original counterpart of such instrument of
appointment shall be delivered to each of the Lender, the Borrower, the
Custodian and the successor custodian.
(b) The Lender, with the consent of the Borrower, upon at least 60
days' prior written notice to the Custodian, may remove and discharge the
Custodian (or any successor custodian thereafter appointed) from the performance
of its obligations under this Custodial Agreement. Promptly after the giving of
notice of removal of the Custodian, the Lender shall appoint, by written
instrument, a successor custodian, which appointment shall be reasonably
acceptable to the Borrower. One original counterpart of such instrument of
appointment shall be delivered to each of the Lender, the Borrower, the
Custodian and the successor custodian.
(c) In the event of any such resignation or removal, the Custodian
shall promptly upon the simultaneous surrender of any outstanding Trust Receipts
held by Lender, transfer to the successor custodian, as directed in writing, all
the Mortgage Files being administered under this Custodial Agreement and, if the
endorsements on the Mortgage Notes and the Assignments of Mortgage have been
completed in the name of the Custodian, assign the Mortgages and endorse without
recourse the Mortgage Notes to the successor Custodian or as otherwise directed
by the Lender. The cost of the shipment of Mortgage Files arising out of the
resignation of the Custodian shall be at the expense of the Custodian; and any
cost of shipment arising out of the removal of the Custodian shall be at the
expense of the Lender. The Borrower shall be responsible for the fees and
expenses of the successor custodian.
Section 8. Examination of Mortgage Files.
Upon reasonable prior written notice to the Custodian (which shall be
two Business Days or such shorter period of time agreed to by the Custodian and
the Lender) and at the Lender's expense, the Lender and each of its respective
agents, accountants, attorneys and auditors will be permitted during normal
business hours to examine the Mortgage Files, documents, records and other
papers in the possession of or under the control of the Custodian relating to
any or all of the Mortgage Loans.
Section 9. Insurance of Custodian.
At its own expense, the Custodian shall maintain at all times during
the existence of this Custodial Agreement and keep in full force and effect
fidelity insurance, theft of documents insurance, forgery insurance and errors
and omissions insurance. All such insurance shall be in amounts, with standard
coverage and subject to deductibles, all as is customary for insurance typically
maintained by banks which act as custodian of collateral substantially similar
to the Collateral and who also act in a collateral agent capacity. Upon request,
the Lender shall be entitled to receive a certificate of the respective insurer
that
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such insurance is in full force and effect.
Section 10. Representations and Warranties.
The Custodian represents and warrants to the Lender that:
(i) the Custodian has the power and authority and the legal right to
execute and deliver, and to perform its obligations under, this Custodial
Agreement, and has taken all necessary corporate action to authorize its
execution, delivery and performance of this Custodial Agreement;
(ii) no consent or authorization of, filing with, or other act by or
in respect of, any arbitrator or Governmental Authority and no consent of any
other Person (including, without limitation, any stockholder or creditor of the
Custodian) is required in connection with the execution, delivery, performance,
validity or enforceability of this Custodial Agreement;
(iii) this Custodial Agreement has been duly executed and delivered on
behalf of the Custodian and constitutes a legal, valid and binding obligation of
the Custodian enforceable in accordance with its terms, except as enforceability
may be limited by bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting the enforcement of creditors' rights generally and by general
principles of equity (whether enforcement is sought in a proceeding in equity or
at law); and
(iv) the Custodian is not an Affiliate of the Borrower.
Section 11. Statements.
Upon the request of the Lender or the Borrower, the Custodian shall
provide the Lender or the Borrower, as applicable, with a list of all the
Mortgage Loans for which the Custodian holds a Mortgage File pursuant to this
Custodial Agreement. Such list shall be in the form of a Custodian Loan Data
File and an Exception Report.
Section 12. No Adverse Interest of Custodian.
By execution of this Custodial Agreement, the Custodian represents and
warrants that it currently holds, and during the existence of this Custodial
Agreement shall hold, no adverse interest, by way of security or otherwise, in
any Mortgage Loan, and hereby waives and releases any such interest which it may
have in any Mortgage Loan as of the date hereof. The Mortgage Loans shall not be
subject to any security interest, lien or right to set-off by Custodian or any
third party claiming through Custodian, and Custodian shall not pledge,
encumber, hypothecate, transfer, dispose of, or otherwise grant any third party
interest in, the Mortgage Loans.
Section 13. Indemnification of Custodian.
The Borrower agrees to reimburse, indemnify and hold the Custodian and
its directors, officers, agents and employees harmless against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, or out-of-pocket expenses, including reasonable attorney's fees, that may
be imposed on, incurred from this Custodial Agreement or any action taken or not
taken by it or them hereunder unless such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, or out-of-pocket expenses
were imposed on, incurred by and against the Custodian because of the breach
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by the Custodian of its obligations hereunder. The foregoing indemnification
shall survive any resignation or removal of the Custodian or the termination or
assignment of this Custodial Agreement for a period of two years from the date
of termination of this Custodial Agreement.
In the event that the Custodian fails to produce a Mortgage Note,
Assignment of Mortgage or any other document related to a Mortgage Loan that was
in its possession pursuant to Section 2 within two (2) Business Days after
written request therefor by the Lender or the Borrower in accordance with the
terms and conditions of this Custodial Agreement; (a "Custodial Delivery
Failure"), and provided that (i) Custodian previously delivered to the Lender a
Trust Receipt, Custodian Loan Data File and an Exception Report which did not
list such document as an Exception on the related Funding Date; (ii) such
document is not outstanding pursuant to a Request for Release and Receipt in the
form annexed hereto as Annex 5-A; and (iii) such document was held by the
Custodian on behalf of the Borrower or Lender, as applicable, then the Custodian
shall (a) with respect to any missing Mortgage Note, promptly deliver to the
Lender or Borrower upon request, a Lost Note Affidavit in the form of Annex 9
hereto and (b) with respect to any missing document related to such Mortgage
Loan, including but not limited to a missing Mortgage Note, indemnify the
Borrower or Lender in accordance with the succeeding paragraph of this Section
13. Notwithstanding the foregoing, in the event that the Custodian fails to
produce a Mortgage Note with respect to a Mortgage Loan requested pursuant to
Section 5(b) hereof, the Custodian shall then promptly (but no later than one
Business Day following such request) provide the Lender or Borrower, as
applicable, with a Lost Note Affidavit. In the event that such original Mortgage
Note is subsequently found and delivered to the Lender or Borrower, as
applicable, such party shall return the Lost Note Affidavit to the Custodian.
The Custodian agrees to indemnify and hold the Lender and Borrower, and
their respective designees harmless against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs, or
out-of-pocket expenses, including reasonable attorney's fees, that may be
imposed on, incurred by, relating to or arising out of a Custodial Delivery
Failure, the failure to properly prepare or deliver the Borrowing Base
Certificate or any material errors or miscalculations contained therein or the
Custodian's negligence, lack of good faith or misconduct or any breach of the
conditions, representations or warranties contained herein. The foregoing
indemnification shall survive any termination or assignment of this Custodial
Agreement for a period of two years from the date of termination of this
Custodial Agreement.
Section 14. Reliance of Custodian.
The Custodian may conclusively rely, as to the truth of the statements
and the correctness of the opinions expressed therein, upon any request,
instruction, certificate, opinion or other document furnished to the Custodian,
reasonably believed by the Custodian to be genuine and to have been signed or
presented by the proper party or parties and conforming to the requirements of
this Custodial Agreement; but in the case of any Mortgage Loan Document or other
request, instruction, document or certificate which by any provision hereof is
specifically required to be furnished to the Custodian, the Custodian shall be
under a duty to examine the same in accordance with the requirements of this
Custodial Agreement.
Section 15. Term of Custodial Agreement.
Promptly after written notice from the Lender of the termination of the
Loan Agreement and payment in full of all amounts owing to the Lender thereunder
and under the Note, the Custodian shall deliver all documents remaining in the
Mortgage Files to the Borrower, and this Custodial Agreement shall
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thereupon terminate.
Section 16. Notices.
All demands, notices and communications hereunder shall be in writing
and shall be deemed to have been duly given when received by the recipient party
at the address shown on its signature page hereto, or at such other addresses as
may hereafter be furnished to each of the other parties by like notice. Any such
demand, notice or communication hereunder shall be deemed to have been received
on the date delivered to or received at the premises of the addressee. Any
demand, notice or communication hereunder shall be (i) sent by telecopy, (ii)
delivered in person, or (iii) transmitted by a recognized private (overnight)
courier service. The Custodian's office is located at the address set forth on
its signature page hereto, and the Custodian shall notify the Lender and the
Borrower if such address should change.
Section 17. Governing Law.
This Custodial Agreement shall be construed in accordance with the laws
of the State of New York, and the obligations, rights, and remedies of the
parties hereunder shall be determined in accordance with such laws without
regard to the conflict of laws doctrine applied in such state.
Section 18. Authorized Representatives.
Each individual designated as an authorized representative of the
Lender or its successors or assigns, the Borrower and the Custodian,
respectively (an "Authorized Representative"), is authorized to give and receive
notices, requests and instructions and to deliver certificates and documents in
connection with this Custodial Agreement on behalf of the Lender, the Borrower
and the Custodian, as the case may be, and the specimen signature for each such
Authorized Representative, initially authorized hereunder, is set forth on
Annexes 6, 7 and 8 hereof, respectively. From time to time, the Lender, the
Borrower and the Custodian or their respective successors or permitted assigns
may, by delivering to the others a revised annex, change the information
previously given pursuant to this Section 18, but each of the parties hereto
shall be entitled to rely conclusively on the then current annex until receipt
of a superseding annex.
Section 19. Amendment
This Custodial Agreement may be amended from time to time by written
agreement signed by the Borrower, the Lender and the Custodian.
Section 20. Cumulative Rights.
The rights, powers and remedies of the Custodian, the Lender and the
Borrower under this Custodial Agreement shall be in addition to all rights,
powers and remedies given to the Custodian, the Lender and the Borrower by
virtue of any statute or rule of law, the Loan Agreement or any other agreement,
all of which rights, powers and remedies shall be cumulative and may be
exercised successively or concurrently without impairing the Lender's security
interest in the Collateral.
Section 21. Binding Upon Successors.
All rights of the Custodian, the Lender and the Borrower under this
Custodial Agreement shall inure to the benefit of the Custodian, the Lender and
the Borrower and their successors and permitted
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assigns, and all obligations of the Custodian, the Lender and the Borrower shall
bind its successors and assigns.
Section 22. Entire Agreement; Severability.
This Custodial Agreement and the other Loan Documents contain the
entire agreement with respect to the Collateral among the Custodian, the Lender
and the Borrower. If any of the provisions of this Custodial Agreement shall be
held invalid or unenforceable, this Custodial Agreement shall be construed as if
not containing such provisions, and the rights and obligations of the parties
hereto shall be construed and enforced accordingly.
Section 23. Execution In Counterparts.
This Custodial Agreement may be executed in counterparts, each of which
when so executed shall be deemed to be an original and all of which when taken
together shall constitute one and the same agreement.
Section 24. Tax Reports.
The Custodian shall not be responsible for the preparation or filing of
any reports or returns relating to federal, state or local income taxes with
respect to this Custodial Agreement, other than in respect of the Custodian's
compensation or for reimbursement of expenses.
Section 25. Pledging of the Mortgage Loans by the Lender.
In connection with a pledge of the Mortgage Loans or Trust Receipt
Interest, as applicable, as collateral for an obligation of the Lender, the
Lender at its own expense may pledge its interest in the Mortgage Files covered
held by the Custodian for the benefit of the Lender from time to time (provided
that such use of the Mortgage Loans or Trust Receipt Interest, as applicable,
(i) shall be subject to the Borrower's rights to redeem the Collateral upon
final satisfaction of all of its Secured Obligations under the Loan Agreement
and (ii) will not impair the Lender's or Borrower's ability to perform its
obligations under the Loan Agreement or hereunder) by delivering, at the
Lender's option, written notice to the Custodian in the form of Annex 10 hereto
stating that the Lender has pledged its interest in the identified Mortgage
Loans and Mortgage Files, and the identity of the party to whom the Mortgage
Loans or Trust Receipt Interest, as applicable, have been pledged (such party,
the "Pledgee"). Upon receipt of such notice from the Lender, the Custodian shall
xxxx its records to reflect the pledge of the Mortgage Loans or Trust Receipt
Interest, as applicable, by the Lender to the Pledgee. The Custodian's records
shall reflect the pledge of the Mortgage Loans or Trust Receipt Interest, as
applicable, by the Lender to the Pledgee until such time as the Custodian
receives written instructions from the Lender that the Mortgage Loans or Trust
Receipt Interest, as applicable, are no longer pledged by the Lender to the
Pledgee, at which time the Custodian shall change its records to reflect the
release of the pledge of the Mortgage Loans or Trust Receipt Interest, as
applicable, and that the Custodian is holding the Mortgage Loans or Trust
Receipt Interest, as applicable, as custodian for, and for the benefit of, the
Lender.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, this Custodial Agreement was duly executed by the
parties hereto as of the day and year first above written.
SOURCE ONE MORTGAGE SERVICES
CORPORATION
By /s/ Xxxxxx X. Xxxxxxxx
-------------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Vice President
Address for Notices:
00000 Xxxxxxxxxx Xxxx
Xxxxxxxxxx Xxxxx, Xxxxxxxx 00000-0000
Attention: Chief Financial Officer
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
With a copy to:
Attention: Vice President/Treasury
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
NATIONAL CITY BANK OF KENTUCKY
By /s/ Xxxxx Xxxxxx
-------------------------------------------
Name: Xxxxx Xxxxxx
Title: Senior Vice President
Address for Notices:
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx Xxxxxx, Senior Vice President
Telecopier No.:
---------------------------
Telephone No.:
---------------------------
93
GREENWICH CAPITAL FINANCIAL
PRODUCTS, INC.
By /s/ Xxxx Xxxxxxxx
--------------------------------------------
Name: Xxxx Xxxxxxxx
Title: Vice President
Address for Notices:
000 Xxxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxxx Xxxxxxxxxx
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
18
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Annex 1
to Custodial Agreement
REQUIRED FIELDS FOR MORTGAGE LOAN DATA FILE
For each Mortgage Loan, the Borrower shall provide
the following information electronically to Custodian
and Lender:
(i) the type of Mortgage Loan;
(ii) Borrower's Mortgage Loan identifying number;
(iii) Mortgagor's name;
(iv) street address of the Mortgaged Property
including the state and zip code;
(v) original months to maturity;
(vi) original date of the Mortgage;
(vii) the original principal amount of the Mortgage
Loan;
(viii) whether the Mortgage Loan is a first lien or a
second lien;
(ix) the Mortgage Interest Rate; and
(x) such other information mutually agreed upon by
Borrower and Lender.
1
95
Annex 2
to Custodial Agreement
[WET LOAN][DRY LOAN][ZERO VALUE] TRUST RECEIPT
Greenwich Capital Financial Products, Inc.
000 Xxxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Attn: _________________
____________, 199_
Re: Custodial Agreement, dated as of May __, 1998 (the "Custodial
Agreement"), among Source One Mortgage Services Corporation,
as Borrower, National City Bank of Kentucky, as Custodian,
and Greenwich Capital Financial Products, Inc., as Lender.
Ladies and Gentlemen:
In accordance with the provisions of Section 3(e) [and 3(g)] of the
above-referenced Custodial Agreement (capitalized terms not otherwise defined
herein having the meanings ascribed to them in the Custodial Agreement, or if
not defined in the Custodial Agreement, then in that certain Master Loan and
Security Agreement dated as of May ___, 1998, between the Borrower and the
Lender (the "Security Agreement")), the undersigned, as the Custodian, hereby
certifies as to each Mortgage Loan described in the attached Custodian Loan Data
File all matters (subject to the Exceptions listed in the Exception Report
attached herewith) set forth in Section 3(c) of the Custodial Agreement, subject
to the limitation set forth in Section 3(d) of the Custodial Agreement.
The delivery of this Trust Receipt evidences that (i) the Custodian
has reviewed all documents required to be delivered in respect of each Mortgage
Loan listed herein pursuant to Section 2 of the Custodial Agreement, and such
documents other than the Exceptions listed herein are in the possession
of the Custodian as part of the Mortgage File for such Mortgage Loan, (ii) the
Custodian is holding each Mortgage Loan identified on the Custodian Loan Data
File attached hereto, pursuant to the Custodial Agreement, as the bailee of and
custodian for the Lender and (iii) such documents have been reviewed by the
Custodian and appear on their face to be regular and to relate to such Mortgage
Loan and satisfy the requirements set forth in Section 3(c) of the Custodial
Agreement and the Review Procedures.
The Custodian makes no representations as to, and shall not be
responsible to verify, (i) the validity, legality, enforceability, due
authorization, recordability, sufficiency, or genuineness of any of the
documents contained in each Mortgage File or (ii) the collectability,
insurability, effectiveness or suitability of any such Mortgage Loan.
1
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On each date the Custodian delivers to the holder of this Trust
Receipt (to the extent a prior Trust Receipt is outstanding) a new Trust
Receipt, Custodian Loan Data File and Exception Report, it shall supersede and
cancel the Trust Receipt, Mortgage Loan Data File and Exception Report
previously delivered by the Custodian to the Lender hereunder, and shall
replace the then existing Trust Receipt, Custodian Loan Data File and the then
existing Exception Report. Notwithstanding anything to the contrary set forth
herein, in the event that the Custodian Loan Data File or the Exception Report
attached to this Trust Receipt is different from the most recently delivered
Custodian Loan Data File or the most recently delivered Exception Report, then
the most recently delivered Trust Recept, Custodian Loan Data File or the most
recently delivered Exception Report, as applicable, shall control and be
binding upon the parties hereto.
NATIONAL CITY BANK OF KENTUCKY
By:
--------------------------
Name:
Title:
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97
Annex 3
to Custodial Agreement
Intentionally Omitted
1
98
Annex 4
to Custodial Agreement
REVIEW PROCEDURES
This Annex sets forth the Custodian's review procedures for each item listed
below delivered by the Seller pursuant to the Custodial Agreement (the
"Agreement") to which this Annex is attached. Capitalized terms used herein and
not defined herein shall have the meanings ascribed to them in the Agreement.
In the case of Dry Loans:
1. The Mortgage Note and the Mortgage each appear to bear an original
signature or signatures purporting to be the signature or signatures of the
Person or Persons named as the maker and Mortgagor or grantor, or in the case
of copies of the Mortgage permitted under Section 2 (I)(c) of the Agreement,
that such copies bear a reproduction of such signature.
2. The amount of the Mortgage Note is the same as the amount specified on
the related Mortgage.
3. The original mortgagee is the same as the payee on the Mortgage Note.
4. The Mortgage contains a legal description other than address, city and
state.
5. The notary section (acknowledgment) is present and attached to the
related Mortgage and is signed.
6. Neither the original Mortgage Note, nor the copy of the Mortgage
delivered pursuant to the Agreement, nor the original Assignment of Mortgage
contain any notations on their face.
7. The Mortgage Note is endorsed in blank by the named holder or payee
thereof.
8. Each original Assignment of Mortgage and any intervening assignment of
mortgage, if applicable, appears to bear the original signature of the named
mortgagee or beneficiary including any subsequent assignors (and any other
necessary party), as applicable, or in the case of copies permitted under
Section 2 (III) of the Agreement, that such copies appear to bear a reproduction
of such signature or signatures and such copies have been certified by an
officer as true, complete and correct copies of the originals, and the
intervening assignments of mortgage evidence a complete chain of assignment and
transfer of the related Mortgage from the originating Person to the borrower.
9. The date of each intervening assignment is on or after the date of the
related Mortgage and/or the immediately preceding assignment, as the case may
be.
10. The notary section (acknowledgment) is present and attached to each
intervening
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99
assignment and is signed.
11. Based upon a review of the Mortgage Note, items (iii), (iv), (v), (vi),
(vii) and (ix) of Annex 1 as set forth in the Mortgage Loan Tape delivered by
the Borrower to the Custodian are correct.
In the case of Wet Loans:
1. To the extent of any items listed in Sections 2(I)(a)-(f) are
available, the procedures set forth with respect to Dry Loans.
2. To the extent the items listed in Sections 2(I)(a)-(f) are not
available, the original Notice of Borrowing and Pledge has been received and
matches the facsimile copy previously delivered.
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100
Annex 5-A
to Custodial Agreement
REQUEST FOR RELEASE AND RECEIPT
Date: __________, 19__
The undersigned, SOURCE ONE MORTGAGE SERVICES CORPORATION (the
"Borrower"), acknowledges receipt from NATIONAL CITY BANK OF KENTUCKY acting as
bailee of, and custodian for, (in such capacity, the "Custodian") the exclusive
benefit of GREENWICH CAPITAL FINANCIAL PRODUCTS, INC. (the "Lender")
(capitalized terms not otherwise defined herein are defined in that certain
Custodial Agreement, dated as of [___________] (the "Custodial Agreement") or if
not defined in the Custodial Agreement, then in that certain Master Loan and
Security Agreement dated as of [ ], between the Borrower and the Lender (the
"Security Agreement")), of the following described documentation for the
identified Mortgage Loan, possession of which is entrusted to the Borrower
solely for the purpose referenced below:
Mortgagor Name Loan Number Note Amount Mtg. Loan Document
Reason for Requesting File (check one)
_____ 1. Mortgage Loan Paid in Full.
_____ 2. Correction of Document Deficiencies
_____ 3. Mortgage Required for Servicing.
_____ 4. Other [Describe].
If item 2, 3 or 4 is checked, it is hereby acknowledged that a
security interest pursuant to the Uniform Commercial Code in the Collateral
hereinabove described and in the proceeds of said Collateral has been granted
to the Lender pursuant to the Loan Agreement.
If item 2, 3 or 4 is checked, in consideration of the aforesaid
delivery by the Custodian, the Borrower hereby agrees to hold said Collateral
in trust for the Lender as provided under and in accordance with all provisions
of the Custodial Agreement and to return said Collateral to the Custodian no
later than the close of business on the fifteenth day following the date hereof
or, if such day is not a Business Day, on the immediately succeeding Business
Day or (b) for item 3, promptly upon completion of servicing requirement in
accordance with Accepted Servicing Practices.
SOURCE ONE MORTGAGE SERVICES
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101
CORPORATION
By:___________________________
Name:
Title:
Acknowledged and Consented to:
GREENWICH CAPITAL FINANCIAL PRODUCTS, INC.
By: _______________________________
Name:
Title:
Date:_______________________________
Documents returned to Custodian:
NATIONAL CITY BANK OF KENTUCKY
By: _______________________________
Name:
Title:
Date:_______________________________
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102
CUSTODIAN SHALL USE THE FOLLOWING REPORTS TO TRACK THE MORTGAGE LOANS RELEASED
PURSUANT TO ANNEX
5-A:
(5-A-1) COLLATERAL SHIPPED, NOT PAID AS OF _________
(Insert)
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103
Annex 5-B
to Custodial Agreement
REQUEST FOR RELEASE
Date: __________, 19__
The undersigned, SOURCE ONE MORTGAGE SERVICES CORPORATION (the
"Borrower"), requests release from NATIONAL CITY BANK OF KENTUCKY acting as
agent, bailee and custodian (in such capacity "Custodian") for the exclusive
benefit of the Lender (as that term and other capitalized terms not otherwise
defined herein are defined in that certain Master Loan and Security Agreement
(the "Security Agreement"), dated as of May, 1998, between the Borrower and
Greenwich Capital Financial Products, Inc., as Lender, of the following
described documentation for the identified Mortgage Loans, possession of which
shall be delivered to ____________________ (the "Approved Purchaser") in
connection with the sale thereof. The anticipated closing date for such sale is
______________ and the anticipated purchase proceeds [MBS] shall equal:
$__________________.
Mortgagor Name Loan Number Note Amount Loan Document
-------------- ----------- ----------- -------------
Delivered
---------
Please send the referenced documentation to:
[NAME OF APPROVED PURCHASER]
[ADDRESS]
[TELEPHONE]
[ATTENTION:]
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104
Please deliver documents to the Approved Purchaser via __________________,
accompanied by a transmittal letter in the form of Annex [11][12].
SOURCE ONE MORTGAGE SERVICES
CORPORATION
By:_________________________
Name:
Title:
Acknowledged and Consented to:
GREENWICH CAPITAL FINANCIAL PRODUCTS, INC.
By: _______________________________
Name:
Title:
Date:_______________________________
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105
Annex 6
to Custodial Agreement
AUTHORIZED REPRESENTATIVES OF LENDER
Name Specimen Signature
Xxxxxx Xxxxxxxxxx /s/ Xxxxxx Xxxxxxxxxx
------------------------- -------------------------
Xxxxx Xxxxx /s/ Xxxxx Xxxxx
------------------------- -------------------------
Xxxxxxxx X'Xxxxxx /s/ Xxxxxxxx X'Xxxxxx
------------------------- -------------------------
Xxxx Xxxxxxxx /s/ Xxxx Xxxxxxxx
------------------------- -------------------------
Xxxxxx Xxxx /s/ Xxxxxx Xxxx
------------------------- -------------------------
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106
Annex 7
to Custodial Agreement
AUTHORIZED REPRESENTATIVES OF BORROWER
Name Specimen Signature
X. XXXXXXXX /s/ X. XxXxxxxx
------------------------- -------------------------
M. RINNA /s/ M. Rinna
------------------------- -------------------------
X. XXXXXXXXXX /s/ X. Xxxxxxxxxx
------------------------- -------------------------
XXXXX XXXXX /s/ Xxxxx Xxxxx
------------------------- -------------------------
X. XXXXX /s/ X. Xxxxx
------------------------- -------------------------
X. XXXXXXX /s/ X. Xxxxxxx
------------------------- -------------------------
J. CHILDRESS /s/ J. Childress
------------------------- -------------------------
XXXXXX XXXXX /s/ Xxxxxx Xxxxx
------------------------- -------------------------
XXXXXX XXXXXXXX /s/ Xxxxxx Xxxxxxxx
------------------------- -------------------------
X. XXXXX /s/ X. Xxxxx
------------------------- -------------------------
X. XXXX /s/ X. Xxxx
------------------------- -------------------------
X. XXXXXXX /s/ X. Xxxxxxx
------------------------- -------------------------
X. XXXXXXXXXX /s/ X. Xxxxxxxxxx
------------------------- -------------------------
XXXXX XXXXXXXX /s/ X. Xxxxxxxx
------------------------- -------------------------
X. XXXXXXXXXX /s/ X. Xxxxxxxxxx
------------------------- -------------------------
X. XXXXXX /s/ X. Xxxxxx
------------------------- -------------------------
X. XxxXxxxxx /s/ X. XxxXxxxxx
------------------------- -------------------------
X. Xxxxx /s/ X. Xxxxx
------------------------- -------------------------
X. Xxxxxx /s/ X. Xxxxxx
------------------------- -------------------------
X. Xxxxxxxx /s/ X. Xxxxxxxx
------------------------- -------------------------
X. Xxxxxx /s/ X. Xxxxxx
------------------------- -------------------------
X. Xxxxxxxx /s/ X. Xxxxxxxx
------------------------- -------------------------
X. Xxxxxx /s/ X. Xxxxxx
------------------------- -------------------------
X. Xxxxxxx /s/ X. Xxxxxxx
------------------------- -------------------------
X. Xxxxxxxx /s/ X. Xxxxxxxx
------------------------- -------------------------
Xxxx Xxxxxxx /s/ Xxxx Xxxxxxx
------------------------- -------------------------
X. Xxxxxxxxx /s/ X. Xxxxxxxxx
------------------------- -------------------------
X. Xxxx /s/ X. Xxxx
------------------------- -------------------------
Xxxxxxx X. Xxxxxxxxx /s/ Xxxxxxx X. Xxxxxxxxx
------------------------- -------------------------
X. Xxxxx /s/ X. Xxxxx
------------------------- -------------------------
X. Xxxxxx /s/ X. Xxxxxx
------------------------- -------------------------
Xxxxxxx X. Xxxxxxx /s/ Xxxxxxx X. Xxxxxxx
------------------------- -------------------------
X. Xxxxxxx /s/ X. Xxxxxxx
------------------------- -------------------------
X. Xxxxx /s/ X. Xxxxx
------------------------- -------------------------
X. Xxxxxx /s/ X. Xxxxxx
------------------------- -------------------------
X. Xxxxxx /s/ X. Xxxxxx
------------------------- -------------------------
X. Xxxxxx /s/ X. Xxxxxx
------------------------- -------------------------
X. Xxxxxx /s/ X. Xxxxxx
------------------------- -------------------------
X. Xxxxxxx /s/ X. Xxxxxxx
------------------------- -------------------------
Xxxxxxxx X. Xxxxxx /s/ Xxxxxxxx X. Xxxxxx
------------------------- -------------------------
1
107
Annex 8
to Custodial Agreement
AUTHORIZED REPRESENTATIVES OF CUSTODIAN
Name Specimen Signature
Xxxxx Xxxxxx /s/ Xxxxx Xxxxxx
------------------------- -------------------------
Xxxxxx Xxxxxx /s/ Xxxxxx Xxxxxx
------------------------- -------------------------
Xxx Xxxxxxxx /s/ Xxx Xxxxxxxx
------------------------- -------------------------
Xxxx Xxxxxx /s/ Xxxx Xxxxxx
------------------------- -------------------------
------------------------- -------------------------
2
108
Annex 9
to Custodial Agreement
FORM OF LOST NOTE AFFIDAVIT
I, as ___________________________ (title) (hereinafter called
"Deponent") of _______________________ (the "Custodian"), am authorized to make
this Lost Note Affidavit (this "Affidavit") on behalf of the Custodian. In
connection with the administration of the Mortgage Loans held by the Custodian
on behalf of Greenwich Capital Financial Products, Inc. (the "Lender"), Deponent
being duly sworn, deposes and says that:
1. Custodian's address is:
[CUSTODIAN'S Address]
2. Custodian previously delivered to the Lender a Custodian Loan Tape
and an Exception Report with respect to that certain Mortgage Note made by ___
in an original principal balance of $___, secured by a Mortgage on a property
located at____, which did not indicate such Mortgage Note is missing;
3. Such Mortgage Note was assigned or sold to the Lender by __________
pursuant to the terms and provisions of a Master Loan and Security Agreement
dated and effective as of [___________________];
4. Such Mortgage Note is not outstanding pursuant to a Request for
Release of Documents;
5. Aforesaid Mortgage Note (hereinafter called the "Original") has
been lost;
6. Deponent has made or has caused to be made diligent search for the
Original and has been unable to find or recover same;
7. The Custodian was the Custodian of the Original at the time of
loss; and
8. Deponent agrees that, if said Original should ever come into
Custodian's possession, custody or power, Custodian will immediately and without
consideration surrender the Original to the Lender.
9. Attached hereto is a true and correct copy of (i) the Mortgage
Note, endorsed in blank by the Mortgagee, as provided by Source One Mortgage
Services Corporation or its designee and (ii) the Mortgage which secures the
Mortgage Note, which Mortgage is recorded at ___________________
10. Deponent hereby agrees that the Custodian (a) shall indemnify and
hold harmless the Lender, its successors, and assigns, against any loss,
liability or damage, including reasonable attorney's fees, resulting from the
unavailability of any Originals, including but not limited to any loss,
liability or damage arising from (i) any false statement contained in this
Affidavit, (ii) any claim of any
3
109
party that it has already purchased a mortgage loan evidenced by the Originals
or any interest in such mortgage loan, (iii) any claim of any borrower with
respect to the existence of terms of a Mortgage Loan evidenced by the Originals,
(iv) the issuance of new instrument in lieu thereof and (v) any claim whether or
not based upon or arising from honoring or refusing to honor the Original when
presented by anyone (items (i) through (iv) above are hereinafter referred to as
the "Losses").
11. This Affidavit is intended to be relied on by the Lender, its
successors, and assigns and Greenwich Capital Financial Products, Inc.
represents and warrants that it has the authority to perform its obligations
under this Affidavit.
EXECUTED THIS ____ day of _______, 199_,
on behalf of the Custodian by:
____________________________________________
Signature
_____________________________________________
Typed Name
On this _________ day of _______________________, 199_, before me
appeared ____________________________________________, to me personally know,
who being duly sworn did say that she/he is the ______________________________
of ______________________, and that said Lost Note Affidavit was signed and
sealed on behalf of such corporation and said _____________________________
acknowledged this instrument to be the free act and deed of said corporation.
______________________________________
Notary Public in and for the
State of ____________________________.
My Commission expires: _______________.
4
110
Annex 10
to Custodial Agreement
NOTICE OF PLEDGE
To: [Custodian]
From: ____________________________
Date: ____________________________
You are hereby notified that as of [date] the undersigned has pledged
all of its right, title and interest in and to the Mortgage Loans identified in
the schedule attached hereto to [Pledgee's name and address]. You are hereby
instructed to hold such Mortgage Loans pursuant to the terms of the
Custodial Agreement, dated as of May, 1998 (the "Custodial Agreement"), among
[Borrower] (the "Borrower"), [Custodian} (the "Custodian") and Greenwich
Capital Financial Products, Inc. (the "Lender"), for the sole and exclusive
benefit of [name of Pledgee] subject to the terms of the Custodial Agreement by
which [name of Pledgee] hereby agrees to be bound.
When you have received written instructions from the Lender that the
Mortgage Loans are no longer pledged by the Lender to the Pledgee, you shall
change your records to reflect the release of the pledge of the Mortgage Loans
and that you are holding the Mortgage Loans as custodian for, and for the
benefit of, the Lender.
GREENWICH CAPITAL FINANCIAL PRODUCTS, INC.
By:________________________
Name:
Title:
Date:
[NAME OF PLEDGEE]
By:_______________________
Name:
Title:
Date:
1
111
Annex 11
to Custodial Agreement
TRANSMITTAL LETTER
[Custodian Letterhead]
[Approved Purchaser]
____________________
____________________
Re: ______________________________
Ladies and Gentlemen:
Attached please find those Mortgage Loans listed separately on the
attached schedule, which Mortgage Loans are owned by Source One Mortgage
Services Corporation (the "Borrower") and are being delivered to you for
purchase.
Capitalized terms used herein and not otherwise defined shall have the meanings
set forth in that certain Custodial Agreement dated as of [_____________], by
and among National City Bank of Kentucky (the "Custodian"), the Borrower, and
Greenwich Capital Financial Products, Inc., as lender (the "Lender"), and if not
defined in the Custodial Agreement, then in that certain Master Loan and
Security Agreement (the "Security Agreement"), dated as of [_____________],
between the Borrower and the Lender.
The Mortgage Loans comprise a portion of the "Collateral." Each of the Mortgage
Loans is subject to a security interest in favor of the Lender, which security
interest shall be automatically released upon PAYMENT TO THE LENDER OF ITS
ADVANCE RELATED TO such Mortgage Loans (the "Payoff Amount") by wire transfer to
the following account controlled by the Lender:
WIRE INSTRUCTIONS TO ACCOUNT:
[to be provided by the Lender]
Pending the purchase of each Mortgage Loan and until the Payoff Amount
is received, the aforesaid security interest therein will remain in full force
and effect, and you shall hold possession of such Collateral and the
documentation evidencing same as custodian, agent and bailee for and on behalf
of the Lender. In the event that any Mortgage Loan is unacceptable for purchase,
return the rejected item directly to the Custodian at its address set forth
below. In no event shall any Mortgage Loan be returned to, or sales proceeds
remitted to, the Borrower, other than sale proceeds in excess of the Payoff
Amount. The Mortgage Loan must be so returned or Payoff Amount remitted in full
no later than twenty (20) days from the date hereof. If you are unable to comply
with the above instructions, please so advise the undersigned Custodian
immediately.
1
112
NOTE: BY ACCEPTING THE MORTGAGE LOANS DELIVERED TO YOU WITH THIS
LETTER, YOU CONSENT TO BE THE CUSTODIAN, AGENT AND BAILEE FOR THE LENDER ON THE
TERMS DESCRIBED IN THIS LETTER. THE CUSTODIAN REQUESTS THAT YOU ACKNOWLEDGE
RECEIPT OF THE ENCLOSED MORTGAGE LOANS AND THIS LETTER BY SIGNING AND RETURNING
THE ENCLOSED COPY OF THIS LETTER TO THE CUSTODIAN; HOWEVER, YOUR FAILURE TO DO
SO DOES NOT NULLIFY SUCH CONSENT.
Very truly yours,
NATIONAL CITY BANK OF KENTUCKY
as Custodian
By:____________________________
Name:
Title:
Address: ______________________
______________________
RECEIPT ACKNOWLEDGED:
[APPROVED PURCHASER]
By________________________
Name:
Title:
Date: ________________
2
113
Annex 12
to Custodial Agreement
TRANSMITTAL LETTER
[Custodian Letterhead]
[Custodian/Trustee/Agency]
___________________________
___________________________
Re: Shipment of Mortgage Loans for Pool Formation
Ladies and Gentlemen:
Attached please find those Mortgage Loans listed separately on the
attached schedule, which are owned by Source One Mortgage Services Corporation
(the "Borrower") and are being delivered to you, as custodian/trustee, for
certification in connection with the formation of a mortgage pool supporting
the issuance of a mortgage-backed security (the "MBS") described as follows:
__________________________________.
Capitalized terms used herein and not otherwise defined shall have the meanings
set forth in that certain Custodial Agreement dated as of [_____________], by
and among National City Bank of Kentucky (the "Custodian"), the Borrower, and
Greenwich Capital Financial Products, Inc., as lender (the "Lender"), and if not
defined in the Custodial Agreement, then in that certain Master Loan and
Security Agreement (the "Security Agreement"), dated as of [_____________],
between the Borrower and the Lender.
The Mortgage Loans comprise a portion of the "Collateral." Each of the Mortgage
Loans is subject to a security interest in favor of the Lender, which security
interest shall be automatically released upon PAYMENT TO THE LENDER OF ITS
ADVANCE RELATED TO such Mortgage Loans (the "Payoff Amount") by wire transfer to
the following account controlled by the Lender:
WIRE INSTRUCTIONS TO ACCOUNT:
[to be provided by the Lender]
Pending issuance of the MBS, the aforesaid security interest therein
will remain in full force and effect, and you shall hold possession of such
Collateral and the documentation evidencing same as custodian, agent and bailee
for and on behalf of the Lender. In the event that any Mortgage Loan is
unacceptable for purchase, return the rejected item directly to the Custodian
at its address set forth below. In no event shall any Mortgage Loan be returned
to, or securitization proceeds remitted to, the Borrower, other than
securitization proceeds in excess of the Payoff Amount. The Mortgage Loan must
be so returned or securitization proceeds remitted in full no later than
[forty-five (45)] days from the date hereof.
1
114
If you are unable to comply with the above instructions, please so advise the
undersigned Custodian immediately.
NOTE: BY ACCEPTING THE MORTGAGE LOANS DELIVERED TO YOU WITH THIS
LETTER, YOU CONSENT TO BE THE CUSTODIAN, AGENT AND BAILEE FOR THE LENDER ON THE
TERMS DESCRIBED IN THIS LETTER. THE CUSTODIAN REQUESTS THAT YOU ACKNOWLEDGE
RECEIPT OF THE ENCLOSED MORTGAGE LOANS AND THIS LETTER BY SIGNING AND RETURNING
THE ENCLOSED COPY OF THIS LETTER TO THE CUSTODIAN; HOWEVER, YOUR FAILURE TO DO
SO DOES NOT NULLIFY SUCH CONSENT.
Very truly yours,
NATIONAL CITY BANK OF KENTUCKY
as Custodian
By:__________________________
Name:
Title:
Address: ___________________
___________________
RECEIPT ACKNOWLEDGED:
[CUSTODIAN/TRUSTEE]
By________________________
Name:
Title:
Date: ________________
2
115
Annex 13
to Custodial Agreement
INTENTIONALLY OMITTED
116
Annex 14
to Custodial Agreement
DOCUMENT EXCEPTION CODES
A01 - Borrower's name(s) missing or incorrect
A02 - Correction not initialed
A03 - Name affidavit missing or incorrect
A04 - Endorsement missing or incorrect
A05 - Closing city is missing
A06 - Lender's name is missing or incorrect
A07 - Date of month is missing or incorrect
X00 - X&X is missing or incorrect
A09 - Interest rate is missing or incorrect
A10 - First payment is missing or incorrect
A11 - Maturity date is missing or incorrect
A12 - Allonge/Rider to Note is missing or incorrect
A13 - POA is missing or incorrect
A14 - Assignment from SOMSC to blank is missing or incorrect
A15 - Assignment from TMA to blank is missing or incorrect
A16 - Interim assignment is missing or incorrect
A17 - Copy of mortgage is missing or incorrect
A18 - Rider/Modification Agreement is missing or incorrect
A19 - Cover Letter is missing or incorrect
A20 - Title Policy is missing or incorrect
Document Exceptions that are classified as Material Exceptions will be coded on
the Custodial Loan Data File as a Borrowing Base Override or BBO.
Material Exceptions:
- Note is missing
- Note amount is missing or does not agree
- Endorsements missing or do not agree
- Lender's name missing
- Property address missing or does not agree
- Riders missing or do not agree
- Mortgage is missing (certified copy)
- Mortgage amount is missing or does not agree
- Assignments missing or do not agree
- POA is missing
Material Exceptions if on Note:
- Date is missing
- Correction(s) not initiated by Mortgagor(s)
Material Exceptions if Significant Difference:
- Signatures differ (less) from typed name(s)
- Mortgage name(s) differ(s) from schedule
- Legal descriptions missing or do not agree (with Mortgage/Deed of Trust
and Title Policy)
Material Exception if on Title Policy
- Amount of insurance is missing or is less than mortgage amount
117
Annex 15
to Custodial Agreement
FORM OF BORROWING BASE CERTIFICATE
[Please See Exhibit H of the Master Loan
and Security Agreement]
118
Annex 16
to Custodial Agreement
APPROVED PURCHASERS
1. ASSOCIATES HOME EQUITY SERVICES
0000 Xxxxxxxxx Xxxx Xxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Attn: Xxxxxx Xxxxx
(000)000-0000
2. CONTIMORTGAGE
0 Xxxxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Attn: Xxxxxxxx Xxxxxx
(000)000-0000
3. DELTA FUNDING CORPORATION
0000 Xxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxx, XX 00000
Attn: Xxxx Xxxxxxx or Xxxxx Xxxxxxxx
(000)000-0000
4. FIRST PLUS FINANCIAL, INC.
Attn: Correspondent/Wholesale Underwriting Department
0000 Xxxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Attn: Xxxxx Xxxxxxx
(000)000-0000
5. HOUSEHOLD FINANCIAL SERVICES, INC.
0000 Xxxxxxx Xxxx
Xxxxxxxx, XX 00000
Attn: Xxxxx Xxxxx
(000)000-0000
6. IMC MORTGAGE COMPANY
0000 X. Xxxxxx Xxxxxx
Xxxxx, XX 00000
Attn: Xxxx Xxxxxxxxx
(000)000-0000
7. RESIDENTIAL FUNDING CORPORATION
0000 Xxxxxxxxxx Xxxx Xxxx.
Xxxxx 000
Xxxxxxxxxxx, XX 00000
Attn: Xxxxx Xxxxxxxx
(000)000-0000
119
Annex 17
to Custodial Agreement
MORTGAGE LOAN EXCEPTION REPORT
COLLATERAL
COLLATERAL NOTE OPEN EXCEPTION
ID NAME DATE DATE DATE DAYS EXCEPTIONS
---------- ---- ---- ----- ---- --------- ----------
BANK: PROXY - CUSTOMER: TEST - TEST COMPANY, INC.
LINE: CT - SUBLIMIT: MMS - WAREHOUSE LINE
3127455 LEES 03/16/98 03/18/98 10/22/97 148 OTHER
MISSING NAME AFFIDAVIT
SUBLIMIT (WHS) # LOANS: 1 EXCEPTIONS: 1 AVG. EXCEPTIONS/LOAN: 1
LINE (CF): # LOANS: 1 EXCEPTIONS: 1 AVG. EXCEPTIONS/LOAN: 1
CUSTOMER (TEST): # LOANS: 1 EXCEPTIONS 1 AVG. EXCEPTIONS/LOAN: 1
120
Annex 18
to Custodial Agreement
FORM OF BLOCKED ACCOUNT AGREEMENT
_______________, 199_
____________________________________
____________________________________
____________________________________
Re: Account Established by Source One Mortgage Services Corporation
("Borrower") in trust for Greenwich Capital Financial Products,
Inc. ("Lender"), pursuant to that certain Custodial Agreement (as
amended, supplemented or otherwise modified from time to time, the
"Custodial Agreement"), dated as of April __, 1998, between the
Borrower and Greenwich ("Borrower")
Ladies and Gentlemen:
We refer to (a) the demand deposit account established by the Borrower
in trust for the Lender pursuant to the Custodial Agreement, at [BANK], [CITY],
[STATE], Account No. [ACCOUNT #], ABA# [ABA #], which account is maintained in
accordance with the Custodial Agreement (the "Blocked Account") and all moneys,
instruments, wire transfers, checks, items or property deposited, whether now or
hereinafter, therein (collectively, "Items") (b) all indebtedness and other
obligations now or hereafter arising which are owed to, and all rights of
Borrower in connection with, arising from, or as part of the Blocked Account and
the Items deposited therein (and (c) the products and proceeds thereof, the
foregoing, collectively "Account").
Borrower hereby acknowledges that it has granted, and does hereby
grant, to Lender an assignment of, a security interest in, and a pledge of the
Account (the foregoing, a "Security Interest") to secure the repayment of and
interest on all Advances (as defined in the Custodial Agreement) and all other
amounts owing to the Lender by Borrower.
Certain third parties will, from time to time, remit funds into the
Blocked Account in accordance with the Custodial Agreement in connection with
the sale of certain mortgage loan (the "Mortgage Loans") by the Borrower. The
Lender has established a secured loan arrangement with the Borrower. By
execution of this letter, you acknowledge that Borrower has granted a Security
Interest in all of Borrower's right, title and interest in and to the Blocked
Account and any funds from time to time on deposit therein, that such funds are
received in trust for the benefit of the Lender and are for application against
Borrower's liabilities to Lender.
By your execution of this letter, you agree: (a) that the Blocked
Account and all funds from time to time hereafter in the Blocked Account are the
property held in trust for the benefit of, and subject to a security interest in
favor of, the Lender; (b) you will not exercise any right of set-off,
recoupment, banker's lien or any similar right in connection with such funds;
and (c) you
121
will not permit withdrawals or transfers of funds from this account or other
utilization of this Blocked Account by any person or entity other than the
Lender unless otherwise instructed by the Lender.
All bank statements in respect to the Blocked Account shall be sent to
the Borrower with copies to:
Greenwich Capital Financial Products, Inc.
000 Xxxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxx Xxxxxxxx
The Borrower hereby consents to your execution, delivery and
performance of this letter. This letter, and the terms and conditions hereof may
not be modified or amended unless Lender consents thereto and shall not be
binding on Bank unless Bank also consents thereto.
Bank acknowledges that the Blocked Account is not evidenced by a
certificate of deposit or other certificate or instrument.
Kindly acknowledge your agreement with the terms of this agreement by
signing the enclosed copy of this letter and returning it to the undersigned.
Very truly yours,
GREENWICH CAPITAL FINANCIAL
PRODUCTS, INC.
By:______________________________________
Title:___________________________________
SOURCE ONE MORTGAGE SERVICES CORPORATION
By:________________________________________
Title:_____________________________________
COMERICA BANK
Agreed and acknowledged: By:____________________________________________________
Title:_________________________________________________
-2-
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EXHIBIT C
[FORM OF OPINION OF COUNSEL TO THE BORROWER]
[MILLER, CANFIELD, PADDOCK AND STONE, P.L.C. LETTERHEAD]
May ______, 1998
TO: Greenwich Capital Financial Products, Inc.
Re: Master Loan and Security Agreement
Ladies and Gentlemen:
We have acted as counsel to Source One Mortgage Services Corporation, a
Delaware corporation (the "Company"), in connection with the negotiation
execution and delivery of* (1) that certain Master Loan and Security Agreement
(the "Credit Agreement"), dated as of _______, 1998, by and between the Lender
(with the term "Lender" and capitalized terms not otherwise defined herein used
with the same meanings as in the Credit Agreement) and the Company, and (2) the
other Credit Documents executed by the Company in connection with the Credit
Agreement. This opinion is being furnished to the Lender pursuant to the
provisions of Section 5.01(d) of the Credit Agreement
In connection With our representation, we have examined originals or,
copies, certified or otherwise identified to our satisfaction being true and
correct copies, of the following:
(1) the Credit Agreement;
(2) the Custodial Agreement;
(3) the Notes;
(4) a certain UCC-1, in the form attached hereto as Exhibit A (the "UCC
Statement"; and
(5) such other documents as we have deemed appropriate.
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Greenwich Capital Financial Products, Inc.
May 4, 1998
Page 2
The documents referred to in (1) through (3) above are hereinafter collectively
referred to as the "Credit Documents".
In connection with our representation we have also examined such
records, certificates and other documents as we have deemed relevant for
purposes of this opinion. As to questions of fact material, to such opinions,
we have relied upon: (1) certificates of public officials, officers and
representatives of the Company, including without limitation that certain
certificate attached hereto as EXHIBIT B (the "Certificate), (2) searches of
public records and other documents, and (3) representations, as to factual
matters, made by the Company in response to our inquiries and in the credit
Documents. We have (without any investigation or independent confirmation)
relied upon, and assumed the accuracy of, such representations and such
certificates, corporate records, searches and other documents with respect to
factual matters. In addition, in rendering the opinions expressed below, we
have made such investigations of law as we have deemed appropriate for the
purposes of this letter.
Whenever the phrase "to our knowledge" is used herein, it means to
the actual knowledge of the core group of attorneys without investigation
(except to the extent that we have made inquiry of the company as set forth in
the Certificate). The "Core group of attorneys' means those attorneys at
Miller, Canfield, Paddock & Stone, P.L.C. on the date hereof who have given
substantive attention to the negotiation and closing of the Credit Documents the
preparation of this opinion letter, or to the negotiation and closing of other
loan agreements and related documents of the Company.
In rendering the opinions expressed below, we have also assumed, with
your permission and without independent verification, that:
1. the signatures of persons signing all documents in connection with
which our opinions herein are rendered are genuine and (other than officers or
agents of the Company) authorized;
2. all documents submitted to us as originals or duplicate originals
are authentic;
3. all documents submitted to us as copies, whether certified or not,
conform to authentic original documents;
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Greenwich Capital Financial Products, Inc,
May 4, 1998
Page 3
4. all parties (other than the Company) to the documents reviewed by us
are duly organized validly existing and in good standing under the laws of all
jurisdictions where they are conducting their businesses or otherwise required
to be so qualified, and have full power and authority to execute, deliver and
perform under such documents and all such documents have been duly authorized by
all necessary corporate or other action on the part of such parties, have been
duly executed by such parties and have been duly delivered by such parties;
5. the Credit Documents constitute the valid and binding obligation of
each party thereto (other than the Company); and
6. the UCC Statement will be filed and recorded, with the appropriate
fee being paid, with the Uniform Code Unit of the Secretary of state of the
state of Michigan ("UCC office") substantially contemporaneously with the
execution of the Credit Documents.
Based upon the foregoing and subject to the further assumptions
limitations and qualifications hereinafter set forth, it is our opinion that:
1. The Company is a corporation duly incorporated, validly existing, in
good standing and authorized to exercise its corporate powers, rights and
privileges under the laws of the State of Delaware and is qualified to do
business and is in good standing in the State of Michigan and, to our knowledge
based solely upon inquiry of the Company, in all jurisdictions of the United
States of America in which the conduct of its business makes such qualifications
necessary and where the failure to be so qualified would have material adverse
effect upon Its business, operations or financial condition and has all
requisite corporate power and authority, to conduct its business, to own its
properties and to execute and deliver, and to perform all of its obligations
under, the Credit Documents.
2. The Company has full power and authority and the legal right to
make, deliver and perform the Credit Documents and has taken all necessary
action to authorize the execution, delivery and performance of the Credit
Documents. Except for such consents as are expressly contemplated in the Credit
Documents to be obtained by the Company, no consent or authorization of, filing
with or other act by or in respect of any governmental authority or, to our
knowledge, any other Person is required to be made or obtained by the Company in
connection with the borrowings under the Credit
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Greenwich Capital Financial Products, Inc,
May 4, 1998
Page 4
Documents, or with the execution, delivery, performance validity or
enforceability of the Credit Documents other than such consents as may be
required from counterparties to any assignments of options, future contracts or
other interest rate protection products. The Credit Documents delivered the date
hereof have been duly executed and delivered on behalf of the Company and
constitute the legal, valid and binding obligations of the Company, enforceable
against the Company in accordance with their terms.
3. The execution, delivery and performance by the Company of the Credit
Documents, the borrowing thereunder and the use of the proceeds thereof do not
and will not (a) violate any existing provision of any law, rule, regulation
(including, without limitation, Regulation U or X of the Board of Governors of
the Federal Reserve System), order, writ, judgment, injunction, decree,
determination or award currently in effect having applicability to the Company
or any of the Company's subsidiaries (as defined in the Certificate) or of the
charter or by-laws of the Company or of any of the Company's Subsidiaries, (b)
subject to the obligation to obtain the waivers and/or consents described in
paragraph 2 above, to our knowledge, result in a breach of or constitute a
default under any indenture or loan or credit agreement or any other agreement,
indenture or loan or credit agreement or any other agreement, lease or
instrument to which the Company or any of its subsidiaries is a party or by
which the Company or any of its subsidiaries or any of their respective
properties may be bound or affected, or (c) to our knowledge, result in, or
require, the creation or imposition of any mortgage, deed of trust, assignment,
pledge, lien, security interest or other charge or encumbrance of any nature
upon or with respect to any of the respective properties of the Company or any
of the Company's Subsidiaries (other than that arising under the Credit
Documents with respect to the Collateral); and, to our knowledge neither the
Company nor any of the Company's Subsidiaries is in violation of, or default
under, any such law, rule, regulation, order, writ, judgment, injunction,
decree, determination or award or any such indenture, agreement, lease or
instrument that would have a material adverse effect upon the business,
operations or financial condition of the Company or any of the Company's
Subsidiaries.
4. To our knowledge, the Company and each of the Company's Subsidiaries
is in compliance with the requirements of all applicable laws, rules,
regulations and orders of any governmental authority, non-compliance with which
would, singly or in the aggregate, have a material. adverse effect upon the
business,
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Greenwich Capital Financial Products, Inc.
May 4, 1998
Page 5
operations or financial condition of the Company or any of the Company's
subsidiaries.
5. It the Company is an "investment company" or a company "controlled"
by an "investment company" within the meaning of the Investment Company Act of
1940, as amended, or an "investment adviser", within the meaning of the
Investment Advisers' Act of 1940, as amended, then the appropriate registration
has been made or there is an applicable exemption from such registration.
6. We exempt from the opinion set forth in this Section actions, suits,
and proceedings identified on Schedule A to the Certificate. To our knowledge
there are no actions. suits or proceedings pending or, to our knowledge,
threatened against or affecting the Company or any of its Subsidiaries or any of
their respective properties before any court, arbitrator or governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign (including, without limitation, the SEC or any regulatory commission of
any jurisdiction), which if determined adversely to the Company or any
Subsidiary, as the case may be, would be reasonably likely to, singly or in the
aggregate, have a material adverse effect on the financial condition, or on the
respective properties or operations, of the Company and its subsidiaries or the
transactions contemplated by the Credit Documents. For purposes hereof, it shall
be understood that in the ordinary course of the mortgage banking and real
estate financing business, the Company and its Subsidiaries are subject to
market conduct examinations by governmental regulators and other agencies and
accordingly, the term "proceeding" as used above shall not include such market
conduct examinations being conducted in the ordinary course of the mortgage
banking and real estate financing business of the Company and its Subsidiaries.
For purposes of the opinions set forth in this Section 6, we have not included
actions, suits, or proceedings, whether pending or threatened, in connection
with which the loss contingencies coming within the scope of clause (a) of
Paragraph 5 of the ABA Policy Statement either amounted to $100,000 or less or
involved lessor amounts that do not exceed $100,000 in the aggregate. "ABA
Policy Statement" means the American Bar Association Statement of Policy
Regarding Lawyers' Responses to Auditors' Requests for Information (December,
1975) (together with the accompanying commentary which is an integral part
thereof).
7. The following opinions set forth in this paragraph are subject to
the condition that the relevant Mortgage Loan and Mortgage Note must be
described and identified in a Notice of
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May 4, 1998
Page 6
Borrowing and Pledge (as defined in the Collateral Agreement) delivered to the
Custodian pursuant to the Custodial Agreement. The provisions of the Credit
Documents are sufficient to create in favor of the Lender a security interest in
all right, title, and interest of the Company in the UCC Collateral (as
hereinafter defined). "UCC Collateral" shall mean the Collateral in which a
security interest may be and is created under Article 9 ("Article 9") of the
Uniform Commercial Code as adopted in the State of Michigan, MCL 440.9103 et seq
("UCC"), but said term UCC Collateral shall not include, notwithstanding the
foregoing, (A) any Collateral not located within the State of Michigan when the
last event occurs on which is based the assertion that the security interest is
perfected or unperfected, (B) any Collateral constituting goods covered by a
certificate of title, (C) any Collateral constituting Accounts (as defined in
Article 9) which result from the sale of minerals or the like at the wellhead or
minehead, (D) any Collateral constituting a security (as defined in MCL
440.8102), (E) any Collateral constituting equipment used in farming operations,
or farm products, or accounts or general intangibles or accounts arising from or
relating to the sale of farm products by a xxxxxx, or consumer goods, (F) any
Collateral constituting timber to be cut or which is a mineral or the like, or
any Collateral constituting a fixture, (G) the Mortgage File (as defined in the
Custodial Agreement) other than the Mortgage Notes, (H) any Collateral which
constitutes goods (as defined in MCL 440.9105), and (I) any Collateral which
constitutes Collateral solely because of section (ix) of the definition of the
Collateral (other than proceeds as set forth therein) unless the items set forth
in said section (ix) are set forth by type or description in the UCC Statement.
Upon the filing of the UCC Financing Statement with UCC Office (and
assuming that the Custodian has at or before the relevant time of determination
received the Notice of Borrowing and Pledge and such Notice of Borrowing and
Pledge identifies and describes the mortgage loan and Mortgage Note being
pledged to the Lender), and, in the case of the Mortgage Notes only, the Final
Conditions (as hereinafter defined) have occurred which pertain thereto and
during such time as the Custodian holds the Mortgage Notes as bailee for the
Lender pursuant to the Custodial Agreement, the Lender will have a valid and
duly first perfected security interest in the UCC Collateral. For purposes of
the opinion set forth in the immediately preceding sentence, we have assumed
that the UCC Collateral is not covered by a Financing Statement (as hereinafter
defined) disclosed in the Search (as hereinafter defined) except to the extent
that such UCC
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Greenwich Capital Financial Products, Inc.
May 4, 1998
Page 7
Collateral has been released from such Financing Statement by an amendment
thereof pursuant to another Financing Statement or by a release thereof
pursuant to another Financing Statement. "Financing Statements" shall mean the
documents constituting the Search, copies of which are attached hereto as
Exhibit C. For purposes of rendering the opinions set forth in this Section
7, we have assumed that the Mortgage Notes will be located within the State of
Michigan when the last event occurs on which is based the assertion that the
security interest in the Mortgage Notes is perfected or not perfected. We draw
to your attention that the Collateral Agent is not located within the State of
Michigan, the foregoing assumption is not contemplated to be true, and that
MCL 440.9103 provides that the effect of perfection or nonperfection of a
security interest in collateral, including instruments, are governed by the
laws of the jurisdiction where the collateral is when the last event occurs on
which is based the assertion that the security interest is perfected or
unperfected. Furthermore, in rendering the foregoing opinion, we have
assumed (A) that the Company has rights in the Collateral and (B) that value
has been given. "Final Conditions" shall mean, as to each Mortgage Note, that
(A) such Mortgage Note has been delivered to the Collateral Agent in accordance
with the Custodial Agreement and (B) the Custodian has received the Notice of
Borrowing and Pledge (as defined in the Custodial Agreement) and such Notice of
Borrowing and Pledge identifies the Mortgage Note as being pledged to the
Lender.
Furthermore, for purposes of rendering the opinions set forth in this
Section 7, we have assumed that there are no financing statements which have
been presented for filing with the UCC Office, which have been accepted for
filing by the UCC Office, or which are otherwise on file therewith naming the
Company as a debtor other than those set forth on the uniform commercial code
search ("Search") a copy of which is attached hereto as Exhibit C and that no
financing statements naming the Company as debtor will be presented to the UCC
Office for filing, be accepted for filing with the UCC Office, or otherwise
become of record with the UCC Office, prior to the time at which the UCC
Financing Statement is presented for filing with the UCC Office with the appro-
priate filing fee therefor. We are furthermore assuming that (A) the Mortgage
Notes are not covered by a negotiable document (as said term is used in MCL
440.9305), (B) the Custodian is not holding the Mortgage Notes as bailee on
behalf of any other person or entity other than the Lender or on its own behalf
(whether as agent for another person or entity or for itself) at the time said
Custodian receives possession thereof pursuant to the
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May 4, 1998
Page 8
Custodian Agreement and not received, prior to said Custodian receiving the
relevant Notice of Borrowing and Pledge and the relevant Mortgage Notes, from
any other person or entity notification of another person's or entity's security
interest in the Mortgage Notes, (C) the chief executive office of the Company
shall remain within the State of Michigan, and (D) that the Custodian will not
be directly or indirectly controlled by the Borrower or any of its affiliates.
Our opinions as expressed herein are subject to the following further
qualifications, limitations, and assumptions:
I. Our opinions as to the enforceability of the credit Documents are
subject to (a) the effect of bankruptcy insolvency, reorganization,
receivership, arrangement, moratorium or other similar laws from time to time in
effect affecting or relating to the rights of the parties, (b) the general
principles of equity (regardless of whether such enforceability is considered in
a proceeding at equity or at law), (c) the doctrines of good faith and
commercial reasonableness under the Uniform Commercial Code as in effect in the
applicable jurisdiction, (d) applicable laws which may affect the remedies,
covenants and provisions provided therein, particularly where a court having
competent personal and subject matter jurisdiction finds that such remedies,
covenants or provisions were at the time made, or are in application,
unconscionable as a matter of law or public policy, which laws do not in our
opinion make the remedies, covenants and provisions provided therein inadequate
for the practical realization of the benefits intended to be provided
thereby, (e) the enforceability of purported waivers of claims, rights and
defenses, and (f) with respect to any choice of law provisions contained in the
Credit Documents, we note that enforceability is subject to the existence of
sufficient contacts of the instant transaction with the state whose law is
chosen as the governing law.
II. No opinion is expressed herein with regard to the availability of
the remedies of specific performance and injunctive and other forms of equitable
relief, or the availability of attorneys' fees.
III. No opinion is expressed herein as to the validity, binding effect
or enforceability of any provision in the credit Documents that purports (1) to
permit the Agent, any Lender, or any other Person to sell or otherwise dispose
of any collateral, or enforce any other remedy under the Credit Documents
(including
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May 4, 1998
Page 9
without limitation any self-help or taking possession remedy), except in
compliance with the Uniform Commercial Code, and other applicable state and
local laws, (2) to impose on the Agent, any Lender, or any other Person
standards for the care of collateral in the possession of the Agent, any Lender
or any other Person other than as provided in MCL 440.9207, or (3) to limit
the ability of the Company or any other Person to transfer voluntarily or
involuntarily (by way of sale, creation of a security interest, attachment,
levy, garnishment or other judicial process) its right, title or interest in or
to any collateral subject thereto, as contemplated by MCL 440.9311; provided,
however, that in our opinion there exist in the Credit Documents or pursuant to
applicable law legally adequate remedies for the realization of the principal
benefits and security intended to be provided by the Credit Documents;
IV. No opinion is given hereof, as to matters of title, priority or,
except as to matters addressed in section with respect to any real or
personal property or any security interests granted under the Credit Documents.
For purposes of the opinions provided herein, we have, with your consent,
assumed that the Company has rights in the Collateral.
V. No opinion is expressed herein with regard to the effect of not
filing or recording assignments of each pledged Mortgage Loan and the effect
thereof upon the perfection of the security interests arising with regard to
Mortgage Notes.
VI. We have assumed for purposes hereof that with respect to the
Credit Documents and opinions herein with regard to perfection of security
interests in the Collateral, laws of other jurisdictions, except the United
States, which may apply to such agreement, are identical in all respects to the
laws of the State of Michigan.
VII. The opinions expressed in Section 7 above with respect to your
security interest in the Collateral are qualified in that we express no opinion
as to any of the following:
(a) The existence of perfected liens, encumbrances, security
interests or other claims, if any, on the UCC Collateral or the
Collateral created by the Borrower's predecessors in title;
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Greenwich Capital Financial Products, Inc.
May 4, 1998
Page 10
(b) The validity, perfection or priority of your security
interest in proceeds (as defined in Section 9-306 of Article 9) ten
days after receipt thereof by the debtor unless: (1) the proceeds are
collateral in which a security interest may be perfected by filing in
the office or offices where the UCC Statement has been filed, and, if
the proceeds are acquired with cash proceeds, the description of
collateral in the UCC Statement indicates the types of property
constituting the proceeds, or (2) the proceeds are identifiable cash
proceeds and UCC Financing Statement covers the original collateral
from which the proceeds arise, or (3) the security interest in the
proceeds is perfected before the expiration of the ten-day period.
(c) The effect of such security interest as against the rights
of a trustee (or debtor in possession) in bankruptcy in proceeds in the
event of insolvency proceedings instituted by or against the Company
where such security interest in proceeds is not one of those described
in MCLA 440.9306(4);
(d) A transfer of an interest or claim in or under any policy
of insurance, except where such interest or claim constitutes proceeds
of other UCC Property or Collateral as provided in MCLA 440.9306 and
MCLA 440.9312;
(e) The effect of such security interest as against liens for
unpaid present or future ad valorem personal property taxes, special
assessments, charges of municipally-owned utilities and workers'
compensation liabilities of a self-insured employer;
(f) The validity, perfection or priority of any security
interest subject to any statute of the United States to the extent that
such statute governs the rights of parties to and third parties affected
by transactions in particular types of property, as provided in MCL
440.9104(a);
(g) A right represented by a judgment (other than a judgment
taken on a right to payment which was UCC property or Collateral);
(h) A transfer in whole or in part of any claim arising out of
tort;
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May 4, 1998
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(i) If a debtor so changes its name, identity or corporate
structure so that the UCC Statement becomes seriously misleading, the
perfection of your security interest in collateral acquired by such
debtor more than four months after the debtor notifies you in writing of
the change, unless a new appropriate financing statement is filed before
the expiration of that time;
(j) The perfection of such security interest in money or
instruments (other than the Mortgage Notes or instruments which
constitute part of chattel paper) unless the Lender or the Custodian
pursuant to the Custodial Agreement has taken possession thereof;
(k) The perfection of such security interest as to any property
subject to:
(1) A statute or treaty of the United States which provides
for a national or international registration or certificate of
title or which specifies a place of filing different from that
specified in Article 9 of the UCC, as provided in MCLA 440.
9302(3)(a);
(2) The statutes of the State of Michigan pertaining to
certificates of title and registration for motor vehicles,
water craft and mobile homes;
(3) A certificate of title statute of another jurisdiction
under the law of which indication of a security interest on the
certificate is required as a condition of perfection;
(1) As to the priority of your security interest as against
conflicting interests of those parties which would take priority in
accordance with Michigan law as follows:
(1) Any person who satisfies the requirements for
special priority under MCL 440.9310 afforded to persons
furnishing services or materials with respect to goods and
granted a lien upon goods in its possession by statute or
rule of law for such materials or services, including, without
limitation, liens in the nature of warehouseman's liens,
artisan's liens, landlord's liens or mechanic's liens, unless
such lien is statutory and the statute expressly provides
otherwise;
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May 4, 1998
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(2) A secured party having a security interest in
goods in possession of the issuer of a negotiable document
covering such goods, to the extent that such secured party is a
holder of such negotiable document to whom such document has
been duly negotiated or has a perfected security interest in
such document, as provided in MCL 440.9304(2) and MCL 440.9309;
(3) A secured party having a non-possessory security
interest in instruments or negotiable documents to the extent
that such security interest has attached during the 21-day
period prior to the date you file the Financing Statement and
such secured party has given new value under a written security
agreement, as provided in MCL 440.9304(4)
(4) A secured party having a perfected security
interest in an instrument, a negotiable document or goods in
possession of a bailee (other than one who has issued a
negotiable document therefor) who gives possession of such
collateral to the debtor in one of the situations contemplated
by MCL 440.9304(5) during the 21-day period described in that
Section;
(5) A lien creditor (as defined in the UCC), except to
the extent that your security interest secures advances made
before the person becomes a lien creditor or within 45 days
thereafter or made without knowledge of the lien or pursuant to
a commitment entered into without knowledge of the lien;
(6) A secured party having a purchase money security
interest in collateral other than inventory if such purchase
money security interest is perfected at the time the Borrower
receives possession of the collateral or within 20 days
thereafter;
(7) A secured party having a security interest in
letters of credit, advices of credit, instruments (other than
the Mortgage Notes), money, negotiable documents or chattel
paper, having possession thereof (either directly or, other
than for goods covered by a negotiable document, through a
bailee) prior to filing of the UCC Statement, but only so long
as such secured party continues to maintain such possession
(either directly or, other than for goods covered by a
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Greenwich Capital Financial Products, Inc.
May 4, 1998
Page 13
negotiable document, through a bailee) or otherwise continues
the perfection of its security interest as provided in MCL
440.9305;
(8) Any person having a lien on personal property
relating to the removal or cleaning up of hazardous or toxic
waste or other measures to alleviate conditions detrimental to
the environment under the laws of the State of Michigan or the
United States;
(9) Any person to whom accounts included in the
UCC Collateral or the Collateral were assigned prior to the
date of filing the UCC Statement if such assignment did not,
alone or in conjunction with other assignments to the same
assignee, transfer a significant part of the outstanding
accounts of the assignor within the meaning of MCL
440.9302(l)(e);
(10) A filed federal tax lien in circumstances other
than those in which your security interest securing a given
advance is entitled to priority under Section 6323(c) of the
Internal Revenue Code of 1986, as amended; or
(11) A filed State of Michigan tax lien to the extent
that your security interest secures an advance made on or after
the earlier of (a) the 46th day after the filing of the State
of Michigan tax lien or (b) the date you acquire actual
knowledge that the State of Michigan tax lien has been filed.
VIII. We express no opinion with respect to: (4) the enforceability of
provisions in the Credit Documents relating to delay or omission of enforcement
of rights or remedies, if any; (b) the enforceability of any provisions in the
Credit Documents which purport to waive rights or benefits which, under
applicable law, cannot be waived; or (c) the right of any person or entity to
institute or maintain any action in any court or upon matters respecting
the jurisdiction of any court.
IX. We express no opinion with respect to the enforceability of any
provisions of the Credit Documents with respect to late charges, indemnities,
forfeitures liquidated damages, indemnities, compounding of interest, interest
on interest, limitation on damages, or prepayment premiums or penalties, if any,
and we
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Greenwich Capital Financial Products, Inc.
May 4, 1998
Page 14
express no opinion as to whether any of the fees or commissions provided for in
the Credit Documents or related documents may be regarded as interest for
purposes of applying Michigan's usury and other laws regulating the payment
or charging of interest or whether such fees or commissions are reasonable. We
furthermore express no opinion as to the enforceability of interest if the rate
of interest is greater than 25% simple interest per annum based on a calendar
year.
X. Our opinions are subject to generally applicable rules of law which:
(a) limit the availability of a remedy under certain circumstances where another
remedy has been elected; (b) may, where less than all of a contract may be
unenforceable, limit the enforceability of the balance of the contract to
circumstances in which the unenforceable portion is not an essential part of the
agreed exchange; (a) may permit a party who has materially failed to render or
offer performance required by the contract to cure that failure unless
permitting a cure would unreasonably hinder the aggrieved party from making
substitute arrangements for performance, or it was important in the
circumstances to the agrieved party that performance occur by the date stated in
the contract; or (d) limit the enforceability of provisions releasing,
exculpating, or exempting a party from, or requiring indemnification of a party
for, liability for its own action or inaction (to the extent the action or
inaction involves negligence, willful misconduct unlawful conduct, or breach of
its contractual obligations to the other party) or liabilities under federal or
state securities laws.
We are members of the Bar of the State of Michigan and do not purport
to be an expert in, or to express any opinion concerning the laws of any
jurisdiction other than the laws of the State of Michigan, the General
Corporation Law of the State of Delaware and the federal law of the United
States.
This opinion is limited to matters stated herein, and no opinion is
implied or may be inferred beyond the matters expressly stated. This opinion is
as of the date hereof, and we undertake no, and hereby disclaim any
obligation to advise you or any other person of a change in any matter set
forth herein. This opinion is provided to the Lender and the Collateral Agent
in connection with the Credit Agreement and is neither to be relied upon nor
distributed to any other party, except to such banks as may become parties to
the Credit Agreement from time to time in accordance with the provisions of
such agreement, without our prior written consent.
136
MILLER, CANFIELD, PADDOCK AND STONE, P.L.C.
Greenwich Capital Financial Products, Inc.
May 4, 1998
Page 15
We do not express any opinion, either implicitly or otherwise, on any
issues not expressly addressed above, and no other or additional opinion is
implied nor should be inferred from any statement herein.
Very truly yours,
Miller, Canfield, Paddock and Stone, P.L.C.
137
EXHIBIT D
FORM OF NOTICE OF BORROWING AND PLEDGE
[insert date]
Greenwich Capital Financial Products, Inc.
000 Xxxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Attention: __________________________
Notice of Borrowing and Pledge No.: __________________________
Ladies/ Gentlemen:
Reference is made to the Master Loan and Security Agreement, dated as
of _______________, 199_ (the "Loan Agreement"; capitalized terms used but not
otherwise defined herein shall have the meaning given them in the Loan
Agreement), between Source One Mortgage Services Corporation (the "Borrower")
and Greenwich Capital Financial Products, Inc. (the "Lender").
In accordance with Section 2.03(a) of the Loan Agreement, the
undersigned Borrower hereby requests that you, the Lender, make Advances to us
of approximately $_______ in connection with our delivery of Mortgage Loans on
___________________ [insert requested Funding Date], in connection with which
we shall pledge to you as Collateral the Mortgage Loans (along with all
previous pledges defined as Eligible Mortgage Loans for such date) set forth on
the Mortgage Loan Schedule attached hereto.
The Borrower hereby certifies, as of such Funding Date, that:
(a) no Default or Event of Default has occurred and is continuing on
the date hereof nor will occur after giving effect to such Advance as a
result of such Advance;
(b) each of the representations and warranties made by the Borrower in
or pursuant to the Loan Documents is true and correct in all material
respects on and as of such date (in the case of the representations and
warranties in respect of Mortgage Loans, solely with respect to Mortgage
Loans being included the Borrowing Base on the Funding Date) as if made on
and as of the date hereof (or, if any such representation or warranty is
expressly stated to have been made as of a specific date, as of such
specific date);
(c) the Borrower is in compliance with all governmental licenses and
138
authorizations and is qualified to do business and is in good standing
in all required jurisdictions; and
(d) the Borrower has satisfied all conditions precedent in Section 5.02
of the Loan Agreement and all other requirements of the Loan Agreement.
The undersigned duly authorized officer of Borrower further represents
and warrants that (1) the documents constituting the Custodial File (as defined
in the Custodial Agreement) with respect to the Mortgage Loans that are the
subject of the Advance requested herein and more specifically identified on the
mortgage loan schedule or computer readable magnetic tape delivered to both the
Lender and the Custodian in connection herewith (the "Receipted Mortgage Loans")
[WITH RESPECT TO DRY LOANS: have been or are hereby submitted] [WITH RESPECT TO
WET LOANS: shall be delivered, within thirty (30) days of the date of the
execution of this Notice of Borrowing and Pledge,] to Custodian and such
Required Documents are to be held by the Custodian subject to Lender's first
priority security interest thereon, (2) all other documents related to such
Receipted Mortgage Loans (including, but not limited to, mortgages, insurance
policies, loan applications and appraisals) have been or will be created and
held by Borrower in trust for Lender, (3) all documents related to such
Receipted Mortgage Loans withdrawn from Custodian shall be held in trust by
Borrower for Lender, and Borrower will not attempt to pledge, hypothecate or
otherwise transfer such Receipted Mortgage Loans to any other party until the
Advance to which such Receipted Mortgage Loans are related has been paid in full
by Borrower and (4) Borrower has granted a first priority perfected security
interest in and lien on the Receipted Mortgage Loans.
Borrower hereby represents and warrants that (x) the Receipted Mortgage
Loans have an unpaid principal balance as of the date hereof of $_________ and
(y) the number of Receipted Mortgage Loans is _________.
Very truly yours,
SOURCE ONE MORTGAGE
SERVICES CORPORATION
By:_________________________
Name:
Title:
139
SCHEDULE I
TO NOTICE OF BORROWING AND PLEDGE
MORTGAGE LOANS PROPOSED TO BE PLEDGED
TO LENDER ON FUNDING DATE]
[attach Mortgage Loan Schedule]
140
EXHIBIT E
UNDERWRITING GUIDELINES
[AVAILABLE UPON REQUEST]
Guidelines include:
- Source One Mortgage Services Corporation Subprime
Underwriting Guidelines in effect as of May 1, 1998
- RFC Guidelines dated February, 1998
- First Plus Financial Guidelines dated as of January 1, 1998
141
EXHIBIT F
REQUIRED FIELDS FOR BANKING LOAN DATA FILE
The Borrower shall provide the following information electronically
within 10 days of funding for each Mortgage Loan:
(i) outstanding principal balance;
(ii) Appraised Value;
(iii) purchase price;
(iv) occupancy type (owner occupied/second/vacation/
investment property);
(v) property type (single family, 2-8 family, PUD,
condominium, other);
(vi) purpose of Mortgage Loan;
(vii) interest paid to date;
(viii) underwriting risk category (A, B, C, D);
(ix) documentation (full, alternative, other);
(x) Mortgagor Profile (back-end debt ratio, monthly
income, co-borrower flag); and
(xi) FICO score.
and in the case of Wet Loans:
(i) date monthly payment due;
(ii) amount of monthly payment; and
(iii) first or second lien.
142
EXHIBIT F-1
REQUIRED FIELDS FOR SERVICING LOAN DATA FILE
The Borrower shall provide the following information electronically for each
Dry Loan:
(i) outstanding principal balance;
(ii) interest paid to date; and
(iii) delinquent Mortgage Loan data (foreclosure,
bankruptcy).
and in the case of Wet Loans:
(i) date monthly payment due.
143
EXHIBIT G
REQUIRED FIELDS FOR MORTGAGE LOAN DATA FILE
For each Mortgage Loan, the Borrower shall provide the following
information electronically to Custodian and Lender:
(i) the type of Mortgage Loan;
(ii) Borrower's Mortgage Loan identifying number;
(iii) Mortgagor's name;
(iv) street address of the Mortgaged Property including
the state and zip code;
(v) original months to maturity;
(vi) original date of the Mortgage;
(xvii) the original principal amount of the Mortgage Loan;
(xviii) whether the Mortgage Loan is a first lien or
a second lien;
(ix) the Mortgage Interest Rate; and
(x) such other information mutually agreed upon by
Borrower and Lender.
144
EXHIBIT H
FORM OF BORROWING BASE CERTIFICATE
[TO BE PROVIDED BY LENDER]
145
EXHIBIT I
FORM OF CONFIDENTIALITY AGREEMENT
In connection with your consideration of a possible or actual acquisition
of a participating interest (the "Transaction") in an advance, note or
commitment of Greenwich Capital Financial Products, Inc. ("Greenwich") pursuant
to a Master Loan Security Agreement between Greenwich and Source One Mortgage
Services Corporation ("Source One") dated _______________________, 1998, you
have requested the right to review certain non-public information regarding
Source One that is in the possession of Greenwich. In consideration of, and as
a condition to, furnishing you with such information and any other information
(whether communicated in writing or communicated orally) delivered to you by
Greenwich or its affiliates, directors, officers, employees, advisors, agents
or "controlling persons" (within the meaning of the Securities Exchange
Act of 1934, as amended (the "1934 Act")) (such affiliates and other persons
being herein referred to collectively as Greenwich "Representatives") in
connection with the consideration of a Transaction (such information being
herein referred to as "Evaluation Material"), Greenwich hereby requests your
agreement as follows:
1. The Evaluation Material will be used solely for the purpose
of evaluating a possible Transaction with Greenwich involving you or
your affiliates, and unless and until you have completed such
Transaction pursuant to a definitive agreement between you or any
such affiliate and Greenwich, such Evaluation Material will be kept
strictly confidential by you and your affiliates, directors,
officers, employees, advisors, agents or controlling persons (such
affiliates and other persons being herein referred to collectively
as "your Representatives"), except that the Evaluation Material or
portions thereof may be disclosed to those of your Representatives
who need to know such information for the purpose of evaluating a
possible Transaction with Greenwich (it being understood that prior
to such disclosure your Representatives will be informed of the
confidential nature of the Evaluation Material and shall agree to be
bound by this Agreement). You agree to be responsible for any
breach of this Agreement by your Representatives.
2. The term "Evaluation Material" does not include any
information which (i) at the time of disclosure or thereafter is
generally known by the public (other than as a result of its
disclosure by you or your Representatives) or (ii) was or becomes
available to you on a nonconfidential basis from a person not
otherwise bound by a confidential agreement with Greenwich or its
Representatives or is not otherwise prohibited from transmitting the
information to you. As used in this Agreement, the term "person"
shall be broadly interpreted to include, without limitation, any
corporation, company, joint venture, partnership or individual.
3. In the event that you receive a request to disclose all or
any part of the information contained in the Evaluation Material
under the terms of a valid and effective subpoena or order issued by
a court of competent jurisdiction, you agree to (i) immediately
notify Greenwich and Source One of the existence, terms and
circumstances surrounding such a
146
request, (ii) consult with Source One on the advisability of
taking legally available steps to resist or narrow such request,
and (iii) if disclosure of such information is required, exercise
your best efforts to obtain an order or other reliable assurance
that confidential treatment will be accorded to such information.
4. Unless otherwise required by law in the opinion of your
counsel, neither you nor your Representative will, without our prior
written consent, disclose to any person the fact that the Evaluation
Material has been made available to you.
5. You agree not to initiate or maintain contact (except for
those contacts made in the ordinary course of business) with any
officer, director or employee of Source One regarding the business,
operations, prospects or finances of Source One or the employment of
such officer, director or employee, except with the express written
permission of Source One.
6. You understand and acknowledge that Source One is not making
any representation or warranty, express or implied, as to the
accuracy or completeness of the Evaluation Material or any other
information provided to you by Greenwich. Source One, its
respective affiliates or Representatives, nor any of its respective
officers, directors, employees, agents or controlling persons
(within the meaning of the 0000 Xxx) shall have any liability to you
or any other person (including, without limitation, any of your
Representatives) resulting from your use of the Evaluation Material.
7. You agree that neither Greenwich or Source One has not
granted you any license, copyright, or similar right with respect to
any of the Evaluation Material or any other information provided to
you by Greenwich.
8. If you determine that you do not wish to proceed with the
Transaction, you will promptly deliver to Greenwich all of the
Evaluation Material, including all copies and reproductions thereof
in your possession or in the possession of any of your
Representatives.
9. Without prejudice to the rights and remedies otherwise
available to Source One, Source One shall be entitled to equitable
relief by way of injunction if you or any of your Representatives
breach or threaten to breach any of the provisions of this
Agreement. You agree to waive, and to cause your Representatives to
waive, any requirement for the securing or posting of any bond in
connection with such remedy.
10. The validity and interpretation of this Agreement shall be
governed by, and construed and enforced in accordance with, the laws
of the State of New York applicable to agreements made and to be
fully performed therein (excluding the conflicts of law rules). You
submit to the jurisdiction of any court of the State of New York or
the United States District Court for the Southern District of the
State of New York for the
147
purpose of any suit, action, or other proceeding arising out of
this Agreement.
11. The benefits of this Agreement shall inure to the respective
successors and assigns of the parties hereto, and the obligations
and liabilities assumed in this Agreement by the parties hereto
shall be binding upon the respective successors and assigns.
12. If it is found in a final judgment by a court of competent
jurisdiction (not subject to further appeal) that any term or
provision hereof is invalid or unenforceable, (i) the remaining
terms and provision hereof shall be unimpaired and shall remain in
full force and effect and (ii) the invalid or unenforceable
provision or term shall be replaced by a term or provision that
is valid and enforceable and that comes closest to expressing the
intention of such invalid or unenforceable term or provision.
13. This 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 and may be
modified or waived only by a separate letter executed by Source One
and you expressly so modifying or waiving such Agreement.
14. For the convenience of the parties, any number of counterparts of
this Agreement may be executed by the parties hereto. Each
such counterpart shall be, and shall be deemed to be, an original
instrument, but all such counterparts taken together shall
constitute one and the same Agreement.
Kindly execute and return one copy of this letter which will constitute
our Agreement with respect to the subject matter of this letter.
By: ___________________________
Greenwich Capital Financial
Products, Inc.
Confirmed and agreed to
this _________ day of
_________________, 199__.
By: _____________________
Name:
Title:
148
EXHIBIT J
BANK CREDIT AGREEMENT
[Filed as an 8-K on November 17, 1997 - Third Amended and Restated Revolving
Credit Agreement dated as of July 25, 1997 by and among Source One Mortgage
Services Corporation, The Mortgage Authority, Inc. and Central Pacific Mortgage
Company (subsidiaries of Source One Mortgage Services Corporation), The First
National Bank of Chicago (in its capacity as administrative agent for the
lenders) and National City Bank, Kentucky, as collateral agent]