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EXHIBIT 99.2f.6
EXECUTION COPY
SECOND AMENDED AND RESTATED MASTER LOAN AND SECURITY AGREEMENT
_____________________________
DATED AS OF OCTOBER 28, 1999
______________________________
ALLIED CAPITAL CORPORATION,
AS BORROWER
AND
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ MORTGAGE CAPITAL INC.
AS LENDER
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TABLE OF CONTENTS
Page
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SECTION 1. DEFINITIONS AND ACCOUNTING MATTERS.
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1.01 Certain Defined Terms. ......................................................................... 1
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1.02 Accounting Terms and Determinations. ........................................................... 10
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SECTION 2. LOANS, NOTE AND PREPAYMENTS.
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2.01 Loans. ......................................................................................... 11
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2.02 Notes. ......................................................................................... 11
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2.03 Procedure for Borrowing. ....................................................................... 11
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2.04 Limitation on Types of Loans; Illegality. ...................................................... 12
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2.05 Repayment of Loans; Interest. .................................................................. 13
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2.06 Mandatory Prepayments or Pledge. ............................................................... 13
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2.07 Indemnity. ..................................................................................... 13
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2.08 Extension of Termination Date. ................................................................. 14
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SECTION 3. PAYMENTS; COMPUTATIONS; ETC.
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3.01 Payments. ...................................................................................... 14
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3.02 Computations. .................................................................................. 14
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3.03 Requirements of Law. ........................................................................... 14
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3.04 Facility Fee; Exit Fee. ........................................................................ 15
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SECTION 4. COLLATERAL SECURITY.
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4.01 Collateral; Security Interest. ................................................................. 16
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4.02 Further Documentation.. ........................................................................ 17
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4.03 Changes in Locations, Name, etc.. .............................................................. 17
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4.04 Lender's Appointment as Attorney-in-Fact. ...................................................... 18
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4.05 Performance by Lender of Borrower's Obligations. ............................................... 19
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4.06 Proceeds.. ..................................................................................... 19
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4.07 Remedies. ...................................................................................... 19
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4.08 Limitation on Duties Regarding Preservation of Collateral. ..................................... 20
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4.09 Powers Coupled with an Interest. ............................................................... 21
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4.10 Release of Security Interest.. ................................................................. 21
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SECTION 5. CONDITIONS PRECEDENT.
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5.01 Initial Loan. .................................................................................. 21
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5.02 Initial and Subsequent Loans. .................................................................. 22
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SECTION 6. REPRESENTATIONS AND WARRANTIES.
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6.01 Existence. ..................................................................................... 23
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6.02 Financial Condition. ........................................................................... 24
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6.03 Litigation. .................................................................................... 24
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6.04 No Breach.. .................................................................................... 24
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6.05 Action. ........................................................................................ 25
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6.06 Approvals. ..................................................................................... 25
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6.07 Margin Regulations. ............................................................................ 25
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6.08 Taxes. ......................................................................................... 25
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6.09 Investment Company Act.. ....................................................................... 25
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6.10 Collateral; Collateral Security. ............................................................... 25
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6.11 Chief Executive Office. ........................................................................ 26
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6.12 Location of Books and Records.. ................................................................ 26
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6.13 Hedging. ....................................................................................... 26
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6.14 True and Complete Disclosure. .................................................................. 26
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6.15 Consolidated Shareholders' Equity. ............................................................. 27
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6.16 ERISA. ......................................................................................... 27
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6.17 Material Subsidiaries. ......................................................................... 27
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SECTION 7. COVENANTS OF THE BORROWER.
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7.01 Financial Statements. .......................................................................... 27
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7.02 Litigation. .................................................................................... 28
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7.03 Existence, etc. ................................................................................ 28
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7.04 Prohibition of Fundamental Changes. ............................................................ 29
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7.05 Borrowing Base Deficiency. ..................................................................... 29
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7.06 Notices. ....................................................................................... 29
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7.07 Hedging. ....................................................................................... 29
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7.08 Reports. ....................................................................................... 30
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7.09 Underwriting Guidelines. ....................................................................... 30
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7.10 Transactions with Affiliates. .................................................................. 30
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7.11 Limitation on Liens. ........................................................................... 30
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7.12 Limitation on Distributions. ................................................................... 30
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7.13 Consolidated Shareholders' Equity. ............................................................. 31
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7.14 Maintenance of Ratio of Total Indebtedness to Consolidated Shareholders' Equity. ............... 31
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7.15 Maintenance of Profitability. .................................................................. 31
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7.16 Servicing Tape.. ............................................................................... 31
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7.17 Interest Rate Protection Agreements. ........................................................... 31
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7.18 Required Filings. .............................................................................. 31
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7.19 No Adverse Selection. .......................................................................... 31
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7.20 Computer Systems. .............................................................................. 31
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7.21 ERISA.. ........................................................................................ 31
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7.22 Remittance of Prepayments. ..................................................................... 31
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7.23 Lender's Right to Purchase. .................................................................... 31
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7.24 Securitizations. ............................................................................... 32
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7.25 Material Subsidiaries. ......................................................................... 32
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SECTION 8. EVENTS OF DEFAULT.
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SECTION 9. REMEDIES UPON DEFAULT.
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SECTION 10. NO DUTY OF LENDER.
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SECTION 11. MISCELLANEOUS.
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11.01 Waiver. ........................................................................................ 35
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11.02 Notices. ....................................................................................... 35
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11.03 Indemnification and Expenses. .................................................................. 35
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11.04 Amendments. .................................................................................... 36
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11.05 Successors and Assigns. ........................................................................ 36
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11.06 Survival.. ..................................................................................... 36
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11.07 Captions. ...................................................................................... 37
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11.08 Counterparts. .................................................................................. 37
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11.09 Loan Agreement Constitutes Security Agreement; Governing Law. .................................. 37
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11.10 SUBMISSION TO JURISDICTION; WAIVERS. ........................................................... 37
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11.11 WAIVER OF JURY TRIAL. .......................................................................... 37
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11.12 Acknowledgments. ............................................................................... 38
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11.13 Hypothecation or Pledge of Loans. .............................................................. 38
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11.14 Servicing. ..................................................................................... 38
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11.15 Periodic Due Diligence Review. ................................................................. 39
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11.16 Set-Off. ....................................................................................... 40
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11.17 Intent. ........................................................................................ 40
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SCHEDULES
SCHEDULE 1 Representations and Warranties re: Mortgage Loans
SCHEDULE 2 Filing Jurisdictions and Offices
SCHEDULE 3 List of Material Subsidiaries
EXHIBITS
EXHIBIT A Form of Second Amended and Restated Promissory Note
EXHIBIT B Second Amended and Restated Custodial Agreement
EXHIBIT C Opinion of Counsel to Borrower
EXHIBIT D Form of Request for Borrowing
EXHIBIT E-1 Form of Borrower's Release Letter
EXHIBIT E-2 Form of Warehouse Lender's Release Letter
EXHIBIT F Underwriting Guidelines
EXHIBIT G Form of Servicer Notice
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SECOND AMENDED AND RESTATED MASTER LOAN AND SECURITY
AGREEMENT
SECOND AMENDED AND RESTATED MASTER LOAN AND SECURITY
AGREEMENT, dated as of October 28, 1999, among ALLIED CAPITAL CORPORATION, a
Maryland corporation successor by merger to Allied Capital Commercial
Corporation (the "Borrower") and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ MORTGAGE CAPITAL INC., a New
York corporation (the "Lender").
RECITALS
WHEREAS, the Borrower and the Lender entered into an Amended
and Restated Master Loan and Security Agreement, dated October 7, 1998 (the
"Existing Agreement");
WHEREAS, the Borrower has requested that the Lender from time
to time make revolving credit loans to them on a committed basis to finance
certain multifamily and commercial mortgage loans owned by the Borrower, and
the Lender is prepared to make such loans upon the terms and conditions hereof;
WHEREAS, the Lender and the Borrower desire to amend and
restate the Existing Agreement to provide terms and conditions under which the
Lender is prepared to make further revolving credit loans to the Borrower from
and after the date hereof.
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree that the Existing Agreement is amended and restated in its entirety 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):
"Affiliate" shall mean with respect to any Person, any
"affiliate" of such Person as such term is defined in the United States
Bankruptcy Code.
"Applicable Collateral Percentage" shall mean (a) with respect
to all Eligible Mortgage Loans that can be readily deposited in a Standard
Securitization Transaction, 85% to 88%, as determined by the Lender, and (b)
with respect to Other Eligible Mortgage Loans, such percentage as is acceptable
to the Lender in its sole discretion.
"Applicable Margin" shall mean (a) with respect to Eligible
Mortgage Loans other than Other Eligible Mortgage Loans, 100 basis points (1%),
and (b) with respect to Other Eligible Mortgage Loans, such margin as is
acceptable to the Lender in its sole discretion.
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"Bailee Agreement" shall mean a Bailee Agreement, among the
Borrower, the Lender and a Settlement Agent, in form and substance acceptable
to the Lender.
"Bankruptcy Code" shall mean the United States Bankruptcy Code
of 1978, as 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.
"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 on which the New York Stock Exchange, the Federal Reserve
Bank of New York or the Custodian is authorized or obligated by law or
executive order to be closed.
"Business Development Company" shall mean an investment
company that has elected to be regulated as a 'business development company'
under the 1940 Act.
"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.
"Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
"Collateral" shall have the meaning provided in Section
4.01(b) hereof.
"Collateral Value" shall mean, with respect to each Eligible
Mortgage Loan, the lesser of (a) the Applicable Collateral Percentage of the
Market Value of such Mortgage Loan, and (b) the outstanding principal balance
of such Mortgage Loan; provided, that:
(i) the Collateral Value shall be deemed to be zero with
respect to each Eligible Mortgage Loan (1) in respect of which there is a
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) in respect of which there is a delinquency in the payment of
principal and/or interest which continues for a period 30 days or more (without
regard to any applicable grace periods), (3) which is an Eligible Mortgage Loan
which remains pledged to the Lender hereunder later than 270 days after the
date on which it is first included in the Collateral (other than Outstanding
Mortgage Loans) or (4) which has been released from the possession of the
Custodian under the Custodial Agreement to the Borrower for a period in excess
of 14 days; or (5) a Table-Funded Mortgage Loan for which the Custodian has
failed to receive the original
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Mortgage Loan Documents by 10:00 a.m., New York time on the fourth Business Day
following the applicable Funding Date; and
(ii) the aggregate Collateral Value of Eligible Mortgage
Loans which are Table-Funded Mortgage Loans may not exceed $30,000,000, unless
otherwise approved by the Lender in its sole discretion.
"Consolidated Shareholders' Equity" shall mean, as of the date
of determination thereof, the total shareholders' equity of the Borrower and
its Consolidated Subsidiaries as the same would be required to appear on a
consolidated balance sheet of the Borrower and its Consolidated Subsidiaries
prepared as of such date in accordance with GAAP, including, in any case,
common stock of the Borrower (valued at cost) held in the Allied Capital
Corporation Deferred Compensation Trust and Permitted Preferred Stock of the
Borrower and its Consolidated Subsidiaries but excluding any stock, common or
preferred, not both issued and outstanding.
"Consolidated Subsidiaries" shall mean any Subsidiary which is
required to be consolidated on financial statements of the Borrower prepared
accordance with GAAP.
"Custodial Agreement" shall mean the Second Amended and
Restated Custodial Agreement, dated as of the date hereof, among the Borrower,
the Custodian and the Lender, substantially in the form of Exhibit B hereto, as
the same shall be modified and supplemented and in effect from time to time.
"Custodian" shall mean LaSalle National Bank, as custodian
under the Custodial Agreement, and its successors and permitted assigns
thereunder.
"Default" shall mean an Event of Default or an event that with
notice or lapse of time or both would become an Event of Default.
"Dollars" and "$" shall mean lawful money of the United States
of America.
"Due Diligence Review" shall mean the performance by the
Lender of any or all of the reviews permitted under Section 11.15 hereof with
respect to any or all of the Mortgage Loans, 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 Loans" shall mean (a) any Mortgage Loan
secured by a first mortgage lien on a retail, office, hotel or other commercial
property or (b) any Mortgage Loan secured by a first mortgage lien on a
five-or-more family residential property; provided, however, that, in each
case, with respect to each Mortgage Loan either (A)(i) the representations and
warranties in Section 6.10 and Part I of Schedule 1 hereof are correct in all
material respects (ii) each Mortgage Loan is underwritten in accordance with
the Borrower's Underwriting Guidelines and (iii) each Mortgage Loan is eligible
for inclusion in a Standard Securitization Transaction or (B) such Mortgage
Loan is an Other Eligible Mortgage Loan; provided that, in no event shall any
Mortgage Loan the pledge of which under this Loan Agreement constitutes a
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pledge of a security under the 1934 Act or the foreclosure upon which would
constitute the acquisition of a security under the 1934 Act or the sale of
which would constitute the sale of a security under the 1934 Act (without in
any way affecting the characterization of such Mortgage Loan under the ▇▇▇▇
▇▇▇) be considered an Eligible Mortgage Loan for purposes hereof.
"Equity Issuance" shall mean any issuance or sale by a Person
of its capital stock or other similar equity security, or any warrants, options
or similar rights to acquire, or securities convertible into or exchangeable
for, such capital stock or other similar equity security.
"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 the 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.
"Eurodollar Rate" shall mean with respect to each day during
each Interest Period pertaining to such Loan, the rate per annum equal to the
rate appearing at page 5 of the Telerate Screen, on the first day of such
Interest Period, for the one-month term corresponding to such Interest Period,
and if such rate shall not be so quoted, the rate per annum at which the Lender
is offered Dollar deposits at or about 10:00 A.M., New York City time, on the
first day of such Interest Period, by prime banks in the interbank eurodollar
market where the eurodollar and foreign currency and exchange operations in
respect of its Loans are then being conducted for delivery on the first day of
such Interest Period for the number of days comprised therein and in an amount
comparable to the amount of the Loans to be outstanding during such Interest
Period.
"Event of Default" shall have the meaning set forth in Section
8 hereof.
"Exit Fee" shall have the meaning set forth in Section
3.04(b).
"Federal Funds Rate" shall mean, for any day, the weighted
average of the rates on overnight federal funds transactions with members of
the Federal Reserve System arranged by federal funds brokers, as published on
the next succeeding Business Day by the Federal Reserve Bank of New York, or,
if such rate is not so published for any day which is a Business Day, the
average of the quotations for the day of such transactions received by the
Lender from three federal funds brokers of recognized standing selected by it.
"Funding Date" shall mean the date on which a Loan is made
hereunder.
"GAAP" shall mean generally accepted accounting principles as
in effect from time to time in the United States.
"Governmental Authority" shall mean any nation or government,
any state or other political subdivision thereof, any entity exercising
executive, legislative, judicial,
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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.
"Guarantee" shall mean, as to any Person, any obligation of
such Person directly or indirectly guaranteeing any Indebtedness of any other
Person or in any manner providing for the payment of any Indebtedness of any
other Person or otherwise protecting the holder of such Indebtedness against
loss (whether by virtue of partnership arrangements, by agreement to keep-well,
to purchase assets, goods, securities or services, or to take-or-pay or
otherwise); provided that the term "Guarantee" shall not include (i)
endorsements for collection or deposit in the ordinary course of business, or
(ii) obligations to make servicing advances for delinquent taxes and insurance
or other obligations in respect of a Mortgaged Property, to the extent required
by the Lender. The amount of any Guarantee of a Person shall be deemed to be
an amount equal to the stated or determinable amount of the primary obligation
in respect of which such Guarantee is made or, if not stated or determinable,
the maximum reasonably anticipated liability in respect thereof as determined
by such Person in good faith. The terms "Guarantee" and "Guaranteed" used as
verbs shall have correlative meanings.
"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, other than the
respective Indebtedness so secured that has not 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, sale/buy-back 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;
and (i) Indebtedness of general partnerships of which such Person is a general
partner.
"Interest Period" shall mean, with respect to any Loan, (a)
initially, the period commencing on the applicable Funding Date to but
excluding the first Payment Date; and (b) thereafter, each period commencing on
a Payment Date to but excluding the next Payment Date; provided that,
notwithstanding the foregoing, (i) an Interest Period may be for a term of
fewer days as mutually agreed upon between the Borrower and the Lender and (ii)
no Interest Period may end after the Termination Date.
"Interest Rate Protection Agreement" shall mean, any interest
rate swap, cap or collar agreement or similar 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 the Borrower and reasonably acceptable to the Lender.
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"Lender" shall have the meaning provided in the heading
hereto.
"Lien" shall mean any mortgage, lien, pledge, charge, security
interest or similar encumbrance.
"Loan" shall have the meaning provided in Section 2.01(a)
hereof.
"Loan Agreement" shall mean this Second Amended and Restated
Master Loan and Security Agreement, as the same may be amended, supplemented or
otherwise modified from time to time.
"Loan Documents" shall mean, collectively, this Loan
Agreement, the Note and the Custodial Agreement.
"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 as determined in good faith by the Lender, which price 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.
"Material Adverse Effect" shall mean a material adverse effect
on (a) the Property, business, operations, financial condition or prospects of
the Borrower, (b) the status of the Borrower as a Business Development Company
or the Borrower's compliance with the 1940 Act, (c) the ability of the Borrower
to perform its obligations under any of the Loan Documents to which it is a
party, (d) the validity or enforceability of any of the Loan Documents, (e) the
rights and remedies of the Lender under any of the Loan Documents, (f) the
timely payment of the principal of or interest on the Loans or other amounts
payable in connection therewith or (g) the Collateral.
"Maximum Credit" shall mean $100,000,000.
"Material Subsidiary" shall mean, as of the date of any
determination thereof, any Subsidiary which has total assets having a value
(determined in accordance with the market valuation method pursuant to GAAP)
greater than or equal to $20,000,000.
"Mortgage" shall mean the mortgage, deed of trust or other
instrument securing a Mortgage Note, which creates a first lien on the fee in
real property securing the Mortgage Note and the assignment of rents and leases
related thereto.
"Mortgage File" shall have the meaning assigned thereto in the
Custodial Agreement.
"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 and
related Mortgage and (ii) all right, title and interest of the Borrower in and
to the Mortgaged Property covered by such Mortgage.
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"Mortgage Loan Documents" shall mean, with respect to a
Mortgage Loan, the documents comprising the Mortgage File for such Mortgage
Loan.
"Mortgage Loan Schedule" shall have the meaning assigned
thereto in the Custodial Agreement.
"Mortgage Loan Schedule and Exception Report" shall mean the
mortgage loan Schedule and exception report prepared by the Custodian pursuant
to the Custodial Agreement.
"Mortgage Loan Tape" shall mean a computer-readable magnetic
tape with respect to each Mortgage Loan, to be delivered by the Borrower to the
Lender pursuant to Section 2.03(a) hereof, containing tape fields set forth in
Annex 1 to the Custodial Agreement.
"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" shall mean the real property (including
all improvements, buildings, fixtures, building equipment and personal property
thereon and all additions, alterations and replacements made at any time with
respect to the foregoing) and all other collateral securing repayment of the
debt evidenced by a Mortgage Note.
"Mortgagor" shall mean the obligor on a Mortgage Note.
"MS & Co." shall mean ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated, a
registered broker-dealer.
"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 the Borrower or any ERISA Affiliate and that is covered
by Title IV of ERISA.
"Net Income" shall mean, for any period, the net income of the
Borrower for such period as determined in accordance with GAAP.
"Net Proceeds" shall mean, with respect to an Equity Issuance
by a Person, the aggregate amount of all cash received by such Person in
respect of such Equity Issuance net of investment banking fees, legal fees,
accountants fees, underwriting discounts and commissions and other customary
fees and expenses actually incurred by such Person in connection with such
Equity Issuance.
"1940 Act" shall mean the Investment Company Act of 1940, as
amended.
"1934 Act" shall mean the Securities and Exchange Act of 1934,
as amended.
"Note" shall have the meaning provided in Section 2.02(a)
hereof.
"Other Eligible Mortgage Loans" shall mean each Mortgage Loan
that does not satisfy the requirements of clause (b)(A) in the definition of
Eligible Mortgage Loans but that is
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otherwise expressly approved as an Eligible Mortgage Loan by the Lender in
writing in its sole discretion.
"Other Relevant Subsidiary" shall mean any Subsidiary,
individually or together with other Subsidiaries, the occurrence of any of the
events described in Section 8 hereof, with respect to which could reasonably be
expected to have a Material Adverse Effect.
"Outstanding Mortgage Loan" shall mean a Mortgage Loan pledged
to the Lender prior to the date hereof which remains pledged to the Lender on
the date hereof.
"Payment Date" shall mean (a) the first Business day of each
calendar month, commencing with the first Business Day of the month following
the month in which the first Funding Date occurs, and (b) the Termination Date.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or
any entity succeeding to any or all of its functions under ERISA.
"Person" shall mean any individual, corporation, company,
voluntary association, partnership, joint venture, limited liability company,
trust, unincorporated association or government (or any agency, instrumentality
or political subdivision thereof).
"Permitted Preferred Stock" shall mean (i) preferred stock
that is issued from time to time by a Subsidiary to the United States Small
Business Administration having an aggregate stated value not exceeding
$7,000,000 at any one time outstanding, or (ii) preferred stock that is issued
from time to time by a Subsidiary for the purpose of qualifying such Subsidiary
as a real estate investment trust under Section 856 through 860 of the Internal
Revenue Code and having an aggregate stated value not exceeding $500,000 at any
one time outstanding, provided that in any event Permitted Preferred Stock
shall not include any Voting Stock.
"Plan" shall mean an employee benefit or other plan
established or maintained by the Borrower or any ERISA Affiliate and covered by
Title IV of ERISA, other than a Multiemployer Plan.
"Prepayment" shall mean for any Mortgage Loan, any unScheduled
payment of principal due thereunder.
"Post-Default Rate" shall mean, in respect of any principal of
any Loan 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 optional or mandatory prepayment or otherwise), a
rate per annum during the period from and including the due date to but
excluding the date on which such amount is paid in full equal to 2% per annum
plus the Prime Rate.
"Prime Rate" shall mean the prime rate announced to be in
effect from time to time, as published as the average rate in The Wall Street
Journal.
"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.
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"Regulations T, U and X" shall mean Regulations T, U and X of
the Board of Governors of the Federal Reserve System (or any successor), as the
same may be modified and supplemented and in effect from time to time.
"Requirement of Law" shall mean as to any Person, the
certificate of incorporation and by- laws or other organizational or governing
documents of such Person, and any law, treaty, rule or regulation or
determination of an arbitrator or a court or other Governmental Authority, in
each case applicable to or binding upon such Person or any of its property or
to which such Person or any of its property is subject.
"Responsible Officer" shall mean, as to any Person, the chief
executive officer, managing director or treasurer, or with respect to financial
matters, the chief financial officer of such Person.
"Secured Obligations" shall have the meaning provided in
Section 4.01(c) hereof.
"Servicer" shall have the meaning provided in Section 11.14(c)
hereof.
"Servicing Agreement" shall have the meaning provided in
Section 11.14(c) hereof.
"Servicing Records" shall have the meaning provided in Section
11.14(b) hereof.
"Settlement Agent" shall mean, with respect to any Loan, the
entity approved by the Lender, in its sole good-faith discretion (which may be
a title company, escrow company or attorney in accordance with local law and
practice in the jurisdiction where the related Table-Funded Mortgage Loan is
being originated) to which the proceeds of such Loan are to be wired pursuant
to the instructions of the Lender.
"Standard Securitization Transaction" shall mean a
securitization transaction backed by Mortgage Loans underwritten or placed on
behalf of the Borrower which transaction has received an investment grade
rating from any nationally-recognized rating agency and otherwise conforms to
the current standards of institutional securitization applicable to mortgage
loans substantially similar in nature to the Mortgage Loans.
"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 Notwithstanding the foregoing, the term
"Subsidiary," when used with respect to the Borrower, shall not include any
Person if the securities or other ownership interests of such Person held by
the Borrower (directly or through one or more Subsidiaries of the Borrower)
would be required under GAAP to be accounted for on a consolidated balance
sheet of the Borrower as portfolio investments.
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"System" shall mean all hardware or software, or any system
consisting of one or more thereof, including, without limitation, any and all
enhancements, upgrades, customizations, modifications, maintenance and the like
utilized by any Person for the benefit of such Person to perform its
obligations and to administer and track, store, process, provide, and where
appropriate, insert, true and accurate dates and calculations for dates and
spans with respect to the Mortgage Loans.
"Table-Funded Mortgage Loan" shall mean a Mortgage Loan which
is pledged to the Lender simultaneously with the origination thereof by the
Borrower, which origination is financed in part or in whole with proceeds of
Loans advanced directly to a Settlement Agent and which Table-Funded Mortgage
Loan is held by the Settlement Agent pursuant to a Bailee Agreement.
"Termination Date" shall mean October 27, 2000 or such earlier
date on which this Loan Agreement shall terminate in accordance with the
provisions hereof or by operation of law provided that such Termination Date
may be extended from time to time pursuant to Section 2.08 hereof.
"Test Period" shall have the meaning provided in Section 7.15
hereof.
"Total Indebtedness" shall mean, for any period, the aggregate
Indebtedness of the Borrower and its Consolidated Subsidiaries during such
period, determined on a consolidated basis in accordance with GAAP less the
amount of any nonspecific balance sheet reserves also maintained in accordance
with GAAP.
"Underwriting Guidelines" shall mean the underwriting
guidelines attached as Exhibit F hereto.
"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.
"Voting Stock" shall mean securities of any class or classes,
the holders of which are ordinarily, in the absence of contingencies, entitled
to elect a majority of the corporate directors (or persons performing similar
functions).
"Year 2000 Compliant" shall mean the ability of a System to
continue its normal functions including and following January 1, 2000 and the
ability of such System to support its continued normal usage such that neither
the performance nor the correct functioning of such System will be affected by
the approach, and passing into, the year 2000.
1.02 Accounting Terms and Determinations. Except as
otherwise expressly provided herein, all accounting terms used herein shall be
interpreted, and all financial
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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. Loans, Note and Prepayments.
2.01 Loans.
(a) Subject to the fulfillment of the conditions
precedent set forth in Sections 5.01 and 5.02 hereof, and provided that no
Default shall have occurred and be continuing hereunder, the Lender agrees,
from time to time, on the terms and conditions of this Loan Agreement, to make
loans (individually, a "Loan" and, collectively, the "Loans") to the Borrower
in Dollars, from and including the Effective Date to and including the
Termination Date in an aggregate principal amount at any one time outstanding
up to but not exceeding the Maximum Credit 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; provided that, notwithstanding the foregoing, the Lender shall have
no obligation to make Loans to the Borrower in excess of the then current
Maximum Credit and, in the event the obligation of the Lender to make Loans to
the Borrower is terminated as permitted hereunder, the Lender shall have no
further obligation to make additional Loans hereunder.
(c) In no event shall a Loan be made when any Default or
Event of Default has occurred and is continuing.
2.02 Notes.
(a) The Loans made by the Lender shall be evidenced by a
single second amended and restated promissory note of the Borrower
substantially in the form of Exhibit A hereto (the "Note"), dated August 21,
1997, as amended and restated as of 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 Loan 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, endorsed by the Lender on the Schedule attached to
the Note or any continuation thereof; provided that the failure of the Lender
to make any such recordation or endorsement shall not affect the obligations of
the Borrower to make a payment when due of any amount owing hereunder or under
the Note in respect of the Loans.
2.03 Procedure for Borrowing.
(a) The Borrower may request a borrowing hereunder, on
any Business Day during the period from and including the Effective Date to and
including the Termination Date, by delivering to the Lender, with a copy to the
Custodian, a written request for borrowing, substantially in the form of
Exhibit D attached hereto, which request must be received by the
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Lender prior to 11:00 a.m., New York City time, one (l) Business Day prior to
the requested Funding Date. Such request for borrowing shall (i) attach a
Schedule identifying 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, (ii) specify the requested Funding Date and the requested
Loan amount, (iii) include a Mortgage Loan Tape containing information with
respect to 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, which Mortgage Loan Tape shall specify any deviations from the
Underwriting Guidelines and Schedule 1 of this Loan Agreement, and (iv) attach
an officer's certificate signed by a Responsible Officer of the Borrower as
required by Section 5.02(b) hereof.
(b) Upon the Borrower's request for a borrowing pursuant
to Section 2.03(a), the Lender shall, assuming all conditions precedent set
forth in Section 5.01 and 5.02 have been met and provided no Default shall have
occurred and be continuing, make a Loan to the Borrower on the requested
Funding Date, in the amount so requested.
(c) The requesting Borrower shall release to the
Custodian no later than 12:00 p.m., New York City time, one (1) Business Day
prior to the requested Funding Date, the Mortgage File pertaining to each
Eligible Mortgage Loan to be pledged to the Lender and included in the
Borrowing Base on such requested Funding Date, in accordance with the terms and
conditions of the Custodial Agreement.
(d) Pursuant to the Custodial Agreement, the Custodian
shall deliver to the Lender and the Borrower, no later than 11:00 a.m. on a
Funding Date, a Trust Receipt (as defined in the Custodial Agreement) in
respect of all Eligible Mortgage Loans (other than a Table-Funded Mortgage
Loan) pledged to the Lender on such Funding Date, and a Mortgage Loan Schedule
and Exception Report. Subject to Section 5 hereof, such borrowing will then be
made available to the Borrower by the Lender transferring, via wire transfer,
with respect to Loans secured by Mortgage Loans other than Table-Funded
Mortgage Loans, to the following account of the Borrower: Bank of America ABA
052-001633 Acct # ▇▇▇-▇▇▇-▇▇▇▇, and, with respect to Loans secured by
Table-Funded Mortgage Loans, to the Settlement Agent in accordance with the
Borrower's instructions.
2.04 Limitation on Types of Loans; Illegality. Anything
herein to the contrary notwithstanding, if, on or prior to the determination of
any Eurodollar 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 "Eurodollar 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 Loans as provided herein; or
(b) the Lender determines, which determination shall be
conclusive, that the relevant rate of interest referred to in the definition of
"Eurodollar Rate" in Section 1.01 hereof upon the basis of which the rate of
interest for Loans is to be determined is not likely adequately to cover the
cost to the Lender of making or maintaining Loans; or
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(c) it becomes unlawful for the Lender to honor its
obligation to make or maintain Loans hereunder using a Eurodollar Rate;
then the Lender shall give the Borrower prompt notice thereof
and, so long as such condition remains in effect, the Lender shall be under no
obligation to make additional Loans (provided that the Borrower and the Lender
will use their best efforts to mutually agree upon an interest rate for future
Loans, and upon such agreement, the Lender shall be obligated to make such
additional Loans hereunder bearing such interest rate), and the Borrower shall
at Borrower's option, either prepay all such Loans as may be outstanding,
without penalty or premium, or pay interest on such Loans at a rate per annum
equal to the Federal Funds Rate plus 1.5%.
2.05 Repayment of Loans; Interest.
(a) The Borrower hereby promises to repay in full on the
Termination Date the then aggregate outstanding principal amount of the Loans.
Prepayments on one or more of the Mortgage Loans may occur at any time and from
time to time without penalty or premium.
(b) The Borrower hereby promises to pay to the Lender
interest on the unpaid principal amount of each Loan for the period from and
including the date of such Loan to but excluding the date such Loan shall be
paid in full, at a rate per annum equal to the Eurodollar Rate plus the
Applicable Margin. Notwithstanding the foregoing, the Borrower hereby promises
to pay to the Lender interest at the applicable Post-Default Rate on any
principal of any Loan and on any other amount payable by the Borrower hereunder
or under the Note that shall not be paid in full when due (whether at stated
maturity, by acceleration or by mandatory prepayment or otherwise) for the
period from and including the due date thereof to but excluding the date the
same is paid in full. Accrued interest on each Loan shall be payable on each
Payment Date, except that interest payable at the Post-Default Rate shall
accrue daily and shall be payable upon such accrual. Promptly after the
determination of any interest rate provided for herein or any change therein,
the Lender shall give notice thereof to the Borrower.
(c) It is understood and agreed that, unless and until a
Default shall have occurred and be continuing, the Borrower shall be entitled
to the proceeds of the Mortgage Loans, including interest and principal
payments thereunder and proceeds from the sale thereof, pledged to the Lender
hereunder.
2.06 Mandatory Prepayments or Pledge.
If at any time the aggregate outstanding principal amount of
Loans exceeds the Borrowing Base (a "Borrowing Base Deficiency"), as determined
by the Lender and notified to the Borrower on any Business Day, the Borrower
shall no later than one (1) Business Day after receipt of such notice, either
prepay the Loans 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 Loans does not exceed the
Borrowing Base.
2.07 Indemnity. If the Borrower makes a prepayment of the
Loans on any day which is not a Payment Date, the Borrower shall indemnify the
Lender and hold the Lender
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harmless from any actual loss or expense which the Lender may sustain or incur
arising from the reemployment of funds obtained by the Lender to maintain the
Loans hereunder or from fees payable to terminate the deposits from which such
funds were obtained. This Section 2.07 shall survive termination of this
Agreement and payment of the Note.
2.08 Extension of Termination Date. At the request of the
Borrower made at least thirty (30) days, but in no event earlier than ninety
(90) days, prior to the then current Termination Date, the Lender may in its
sole discretion extend the Termination Date for a period to be determined by
Lender in its sole discretion by giving written notice of such extension to the
Borrower no later than twenty (20) days, but in no event earlier than thirty
(30) days, prior to the then current Termination Date. Any failure by the
Lender to deliver such notice of extension shall be deemed to be the Lender's
determination not to extend the then current Termination Date.
Section 3. Payments; Computations; Etc.
3.01 Payments.
(a) Except to the extent otherwise provided herein, all
payments of principal, interest and other amounts to be made by the 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: Account No. ▇▇▇▇▇▇▇▇,
for the account of MSMCI, Citibank, N.A., ABA No. ▇▇▇▇▇▇▇▇▇, Attn: Whole Loan
Operations not later than 1:00 p.m., New York City time, on the date on which
such payment shall become due (and each such payment made after such time on
such due date shall 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.
(b) Except to the extent otherwise expressly provided
herein, if the due date of any payment under this Loan Agreement or the Note
would otherwise fall on a day that is not a Business Day, such date shall be
extended to the next succeeding Business Day, and interest shall be payable for
any principal so extended for the period of such extension.
3.02 Computations. Interest on the Loans shall be
computed on the basis of a 360-day year for the actual days elapsed (including
the first day but excluding the last day) occurring in the period for which
payable.
3.03 Requirements of Law.
(a) If any Requirement of Law enacted and in effect after
the date of this Agreement (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:
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(i) shall subject the Lender to any tax of any kind
whatsoever with respect to this Loan Agreement, the Note or any Loan
made by it (excluding net income taxes) or change the basis of
taxation of payments to the Lender in respect thereof;
(ii) shall impose, modify or hold applicable any reserve,
special deposit, compulsory Loan or similar requirement against assets
held by, deposits or other liabilities in or for the account of,
advances, Loans 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 Eurodollar Rate
hereunder;
(iii) shall impose on the Lender any other condition;
and the result of any of the foregoing is to increase the cost to the Lender,
by an amount which the Lender deems to be material, of making, continuing or
maintaining any Loan or to reduce any amount due or owing 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.
(b) If the Lender shall have determined that the adoption
of or any change in any Requirement of Law (other than with respect to any
amendment made to the Lender's certificate of incorporation and by-laws or
other organizational or governing documents) regarding capital adequacy or in
the interpretation or application thereof or compliance by the Lender or any
corporation controlling the Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any Governmental
Authority made subsequent to the date hereof shall have the effect of reducing
the rate of return on the Lender's or such corporation's capital as a
consequence of its obligations hereunder to a level below that which the Lender
or such corporation could have achieved but for such adoption, change or
compliance (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 compensate the Lender for such
reduction.
(c) If the Lender becomes entitled to claim any
additional amounts pursuant to this Section, it shall promptly notify the
Borrower of the event by reason of which it has become so entitled. A
certificate as to any additional amounts payable pursuant to this Section
submitted by the Lender to the Borrower shall be conclusive in the absence of
manifest error.
3.04 Facility Fee; Exit Fee.
(a) The Borrower agrees to pay to the Lender on or prior
to the Effective Date a facility fee equal to 12.5 basis points (0.125%) per
annum of the Maximum Credit, such payment to be made in Dollars, in immediately
available funds, without deduction, set-off or counterclaim, to the Lender at
the account set forth in Section 3.01(a) hereof. In the event that the Lender
fails to make a Loan to the Borrower due solely to any of the circumstances set
forth in Section 5.02(i)(i), (ii) or (iii) or 5.02(j) hereof, then, upon
request of the Borrower, the Lender shall refund to the Borrower that portion
of the facility fee paid pursuant to this Section 3.04(a), pro-rated over the
number of days (notwithstanding any extension of the Termination Date
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pursuant to Section 2.08 hereof such amount shall be calculated based upon the
original term of this Loan Agreement) during which the Lender fails to make
Loans requested by the Borrower solely because of the circumstances set forth
in Section 5.02(i)(i), (ii) or (iii) or 5.02(j) hereof.
(b) The Borrower agrees to pay to the Lender an exit fee
equal to 0.5% of the Disposition Amount upon Disposition of such Mortgage
Loans, as of the date on which any such pledged Mortgage Loans are no longer
pledged to the Lender hereunder (the "Exit Fee"), each such payment to be made
in Dollars, in immediately available funds, without deduction, set-off or
counterclaim, to the Lender at the account set forth in Section 3.01(a) hereof.
Without limiting the generality of the foregoing, any Exit Fee for any
Disposition shall accrue and be payable as a condition to release by the Lender
of its Lien on the applicable Mortgage Loans that are subject to such
Disposition. For purposes of this Section, a "Disposition" shall mean any of
the following: (i) the sale or securitization of Mortgage Loans pledged to the
Lender hereunder; (ii) termination of this Loan Agreement for any reason
whatsoever (provided that, in the event the Lender shall fail to extend the
Termination Date pursuant to a request by the Borrower pursuant to Section 2.08
hereof, or in the event the Borrower shall terminate this Loan Agreement
because of the Lender's failure to make a loan pursuant to Section 5.02(i)(i),
(ii) or (iii) or Section 5.02(j), any Exit Fee which would otherwise be due
solely as a result of the occurrence of the Termination Date hereunder (and
absent any Event of Default hereunder) shall be deemed waived by the Lender);
or (iii) the release of any or all of the Mortgage Loans from the Lien of the
Lender hereunder. For purposes of this Section, the "Disposition Amount" shall
equal: (y) with respect to a Disposition pursuant to clauses (i) and (ii)
above, the outstanding principal balance of the Loan secured by Mortgage Loans
pledged to the Lender hereunder, and (z) with respect to a Disposition pursuant
to clause (iii) above, the Collateral Value attributable to the Mortgage Loans
so released.
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 terms of the Custodial Agreement and shall deliver to the
Lender Trust Receipts (as defined in the Custodial Agreement) each to the
effect that it has reviewed such Mortgage Loan Documents in the manner and to
the extent required by the Custodial Agreement and identifying any deficiencies
in such Mortgage Loan Documents as so reviewed.
(b) All of the Borrower's right, title and interest in,
to and under each of the following items of property, whether now owned or
hereafter acquired, now existing or hereafter created and wherever located, is
hereinafter referred to as the "Collateral":
(i) all Mortgage Loans;
(ii) all Mortgage Loan Documents, including without
limitation all promissory notes, and all Servicing Records (as defined
in Section 11.14(b) below), servicing agreements and any other
collateral pledged or otherwise relating to such Mortgage Loans,
together with all files, documents, instruments, surveys,
certificates,
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correspondence, appraisals, 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 Loan and all claims and payments
thereunder;
(iv) all other insurance policies and insurance proceeds
relating to any Mortgage Loan or the related Mortgaged Property;
(v) all Interest Rate Protection Agreements between the
Borrower and the Lender or any Affiliate of the Lender, relating to or
constituting any and all of the foregoing;
(vi) all collateral, however defined, under any other
agreement between the Borrower or any of its Affiliates on the one
hand and the Lender or any of its Affiliates on the other hand;
(vii) all "general intangibles" as defined in the Uniform
Commercial Code relating to or constituting any and all of the
foregoing; and
(viii) any and all replacements, substitutions,
distributions on or proceeds of any and all of the foregoing.
(c) The Borrower hereby assigns, pledges and grants a
security interest in all of its right, title and interest in, to and under the
Collateral to the Lender to secure the repayment of principal of and interest
on all Loans and all other amounts owing to the Lender hereunder, under the
Note and under the other Loan Documents (collectively, the "Secured
Obligations"). The Borrower agrees to ▇▇▇▇ its computer records and tapes to
evidence the interests granted to the Lender hereunder.
4.02 Further Documentation. At any time and from time to
time, upon the written request of the Lender, and at the sole expense of the
Borrower, the Borrower will promptly and duly execute and deliver, or will
promptly cause to be executed and delivered, such further instruments and
documents and take such further action as the Lender may reasonably request for
the purpose of obtaining or preserving the full benefits of this Loan Agreement
and of the rights and powers herein granted, including, without limitation, the
filing of any financing or continuation statements under the Uniform Commercial
Code in effect in any jurisdiction with respect to the Liens created hereby.
The Borrower also hereby authorizes the Lender to file any such financing or
continuation 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 (a) change the location of its chief executive office/chief place of
business from that specified in Section 6 hereof or (b) change its name,
identity or corporate structure (or the equivalent) or change the location
where it maintains its records with respect to the Collateral unless it shall
have given the
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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
necessary by the Lender to continue its perfected status in the Collateral with
the same or better priority.
4.04 Lender's Appointment as Attorney-in-Fact.
(a) The Borrower hereby irrevocably constitutes and
appoints the Lender and any officer or agent thereof, with full power of
substitution, as its true and lawful attorney-in-fact with full irrevocable
power and authority in the place and stead of the Borrower and in the name of
the Borrower or in its own name, from time to time during the continuance of a
Default in the Lender's discretion, for the purpose of carrying out the terms
of this Loan Agreement, to take any and all appropriate action and to execute
any and all documents and instruments which may be necessary or desirable to
accomplish the purposes of this Loan Agreement, and, without limiting the
generality of the foregoing, the Borrower hereby gives the Lender the power and
right, on behalf of the Borrower, without assent by, but with notice to, the
Borrower, if an Event of Default shall have occurred and be continuing, to do
the following:
(i) in the name of the Borrower or its own name, or
otherwise, to take possession of and endorse and collect any checks,
drafts, notes, acceptances or other instruments for the payment of
moneys due under any mortgage insurance or with respect to any other
Collateral and to file any claim or to take any other action or
proceeding in any court of law or equity or otherwise deemed
appropriate by the Lender for the purpose of collecting any and all
such moneys due under any such mortgage insurance or with respect to
any other Collateral whenever payable;
(ii) to pay or discharge taxes and Liens levied or placed
on or threatened against the Collateral; and
(iii) (A) to direct any party liable for any payment under
any Collateral to make payment of any and all moneys due or to become
due thereunder directly to the Lender or as the Lender shall direct;
(B) to ask or demand for, collect, receive payment of and receipt for,
any and all moneys, claims and other amounts due or to become due at
any time in respect of or arising out of any Collateral; (C) to sign
and endorse any invoices, assignments, verifications, notices and
other documents in connection with any of the Collateral; (D) to
commence and prosecute any suits, actions or proceedings at law or in
equity in any court of competent jurisdiction to collect the
Collateral or any portion 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, and from time to time, all acts and
things which the Lender deems necessary to protect, preserve or
realize upon the Collateral and
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the Lender's Liens thereon and to effect the intent of this Loan
Agreement, all as fully and effectively as the Borrower might do.
The Borrower hereby ratifies all that said attorneys shall lawfully do or cause
to be done by virtue hereof. This power of attorney is a power coupled with an
interest and shall be irrevocable.
(b) The Borrower also authorizes the Lender, at any time
and from time to time, to execute, in connection with any sale provided for in
Section 4.07 hereof, any endorsements, assignments or other instruments of
conveyance or transfer with respect to the Collateral.
(c) The powers conferred on the Lender are solely to
protect the Lender's interests in the Collateral and shall not impose any duty
upon the Lender to exercise any such powers. The Lender shall be accountable
only for amounts that it actually receives as a result of the exercise of such
powers, and neither the Lender nor any of its officers, directors, or employees
shall be responsible to the Borrower for any act or failure to act hereunder,
except for its own gross negligence or willful misconduct.
4.05 Performance by Lender of Borrower's Obligations. If
the Borrower fails to perform or comply with any of its agreements contained in
the Loan Documents, concurrently with providing notice to the Borrower, the
Lender may itself perform or comply, or otherwise cause performance or
compliance, with such agreement, the expenses of the Lender incurred in
connection with such performance or compliance, together with interest thereon
at a rate per annum equal to the Post-Default Rate, shall be payable, subject to
Section 11.18 hereof, 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
(whether from the Borrower or otherwise) may, in the sole discretion of the
Lender, be held by the Lender as collateral security for, and/or then or at any
time thereafter may be applied by the Lender against, the Secured Obligations
(whether matured or unmatured), such application to be in such order as the
Lender shall elect. Any balance of such proceeds remaining after the Secured
Obligations shall have been paid in full and this Loan Agreement shall have
been terminated shall be 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, at its option, enter into one or more Interest Rate
Protection Agreements covering all or a portion of the Mortgage Loans pledged
to the Lender hereunder, and the Borrower shall be responsible for all damages,
judgments, costs and expenses of any kind which may be
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imposed on, incurred by or asserted against the Lender relating to or arising
out of such Interest Rate Protection Agreements including without limitation
any losses resulting from such Interest Rate Protection Agreements. If an
Event of Default shall occur and be continuing, the Lender may exercise, in
addition to all other rights and remedies granted to it in this Loan Agreement
and in any other instrument or agreement securing, evidencing or relating to
the Secured Obligations, all rights and remedies of a secured party under the
Uniform Commercial Code. Without limiting the generality of the foregoing, the
Lender without demand of performance or other demand, presentment, protest,
advertisement or notice of any kind (except any notice required by law referred
to below) to or upon the Borrower or any other Person (each and all of which
demands, presentments, protests, advertisements and notices are hereby waived),
may in such circumstances forthwith collect, receive, appropriate and realize
upon the Collateral, or any part thereof, and/or may forthwith sell, lease,
assign, give option or options to purchase, or otherwise dispose of and deliver
the Collateral or any part thereof (or contract to do any of the foregoing), in
one or more parcels or as an entirety at public or private sale or sales, at
any exchange, broker's board or office of the Lender or elsewhere upon such
terms and conditions as it may deem advisable and at such prices as it may deem
best, for cash or on credit or for future delivery without assumption of any
credit risk. The Lender shall have the right upon any such public sale or
sales, and, to the extent permitted by law, upon any such private sale or
sales, to purchase the whole or any part of the Collateral so sold, free of any
right or equity of redemption in the Borrower, which right or equity is hereby
waived or released. The Borrower further agrees, at the Lender's request, to
assemble the Collateral and make it available to the Lender at places which the
Lender shall reasonably select, whether at the Borrower's premises or
elsewhere. The Lender shall apply the net proceeds of any such collection,
recovery, receipt, appropriation, realization or sale, after deducting all
reasonable costs and expenses incurred therein or incidental to the care or
safekeeping of any of the Collateral or in any way relating to the Collateral
or the rights of the Lender hereunder, including without limitation reasonable
attorneys' fees and disbursements, to the payment in whole or in part of the
Secured Obligations, in such order as the Lender may elect, and only after such
application and after the payment by the Lender of any other amount required or
permitted by any provision of law, including without limitation Section
9-504(1)(c) of the Uniform Commercial Code, need the Lender account for the
surplus, if any, to the Borrower. To the extent permitted by applicable law,
the Borrower waives all claims, damages and demands it may acquire against the
Lender arising out of the exercise by the Lender of any of its rights
hereunder, other than those claims, damages and demands arising from the gross
negligence or willful misconduct of the Lender. If any notice of a proposed
sale or other disposition of Collateral shall be required by law, such notice
shall be deemed reasonable and proper if given at least 10 days before such
sale or other disposition. The Borrower shall remain liable for any deficiency
(plus accrued interest thereon as contemplated pursuant to Section 2.05(b)
hereof) if the proceeds of any sale or other disposition of the Collateral are
insufficient to pay the Secured Obligations and the fees and disbursements of
any attorneys 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
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under any obligation to sell or otherwise dispose of any Collateral upon the
request of the Borrower or otherwise.
4.09 Powers Coupled with an Interest. All authorizations
and agencies herein contained with respect to the Collateral are irrevocable
and powers coupled with an interest.
4.10 Release of Security Interest. Upon termination of
this Loan Agreement and repayment to the Lender of all Secured Obligations and
the performance of all obligations under the Loan Documents the Lender shall
release its security interest in any remaining Collateral.
Section 5. Conditions Precedent.
5.01 Initial Loan. The obligation of the Lender to make
its initial Loan hereunder is subject to the satisfaction, immediately prior to
or concurrently with the making of such Loan, of the condition precedent that
the Lender shall have received all of the following, each of which shall be
reasonably satisfactory to the Lender and its counsel in form and substance:
(a) Loan Documents.
(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 taken such other action as the
Lender shall have requested in order to perfect the security interests
created pursuant to the Loan Agreement;
(b) Organizational Documents. A good standing
certificate and certified copies of the charter and by-laws (or equivalent
documents) of the Borrower and of all corporate or other authority 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);
(c) Legal Opinion. A legal opinion of outside counsel to
the Borrower, substantially in the form attached hereto as Exhibit C;
(d) Trust Receipt and Mortgage Loan Schedule and
Exception Report. A Trust Receipt, substantially in the form of Annex 2 of the
Custodial Agreement and Mortgage Loan Schedule and Exception Report, dated the
Effective Date, from the Custodian, duly completed, with a Mortgage Loan
Schedule and Exception Report attached thereto;
(e) Servicing Agreement(s). Any Servicing Agreement,
certified as a true, correct and complete copy of the original, with the letter
of the applicable Servicer consenting to termination of such Servicing
Agreement upon the occurrence of an Event of Default attached; and
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(f) Other Documents. Such other documents as the Lender
may reasonably request.
5.02 Initial and Subsequent Loans. The making of each
Loan to the Borrower (including the initial Loan) on any Business Day is
subject to the satisfaction of the following further conditions precedent, both
immediately prior to the making of such Loan and also after giving effect
thereto and to the intended use thereof:
(a) no Default or Event of Default shall have occurred
and be continuing;
(b) both immediately prior to the making of such Loan 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
elsewhere in each of the Loan Documents, shall be true, correct and complete on
and as of the date of the making of such Loan 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). The Lender shall have received an
officer's certificate signed by a Responsible Officer of the Borrower
certifying as to the truth, accuracy and completeness 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 and that such
borrowing does not violate restrictions imposed upon the Borrower as a Business
Development Company or otherwise.
(c) the aggregate outstanding principal amount of the
Loans shall not exceed the Borrowing Base;
(d) subject to the Lender's right to perform one or more
Due Diligence Reviews pursuant to Section 11.15 hereof, the Lender shall have
completed its Due Diligence Review of the Mortgage Loan Documents for each Loan
and such other documents, records, agreements, instruments, mortgaged
properties or information relating to such Loans as the Lender in its sole
discretion deems appropriate to review and such review shall be satisfactory to
the Lender in its sole discretion;
(e) the Lender shall have received from the Custodian a
Mortgage Loan Schedule with exceptions as are acceptable to the Lender in its
sole discretion in respect of Eligible Mortgage Loans to be pledged hereunder
on such Business Day;
(f) Bailee Agreement. A Bailee Agreement in respect of
Table-Funded Mortgage Loans to be pledged to hereunder on such Business Day,
duly executed by the parties thereto;
(g) the Lender shall have received from the Borrower a
Warehouse Lender's Release Letter substantially in the form of Exhibit E-2
hereto (or such other form acceptable to the Lender) or a Seller's Release
Letter substantially in the form of Exhibit E-1 hereto (or such other form
acceptable to the Lender) covering each Mortgage Loan to be pledged to the
Lender;
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(h) the Consolidated Shareholders' Equity is not equal to
or less than $475,000,000;
(i) none of the following shall have occurred and/or be
continuing:
(i) an event or events shall have occurred resulting in
the effective absence of a "repo market" or comparable "lending
market" for financing debt obligations secured by mortgage loans or
securities (or reasonably expected to be) or an event or events shall
have occurred resulting in the Lender not being able to finance any
Mortgage Loans through the "repo market" or "lending market" with
traditional counterparties at rates which would have been reasonable
prior to the occurrence of such event or events;
(ii) an event or events shall have occurred resulting in
the effective absence of a "securities market" for securities backed
by mortgage loans (or reasonably expected to be) or an event or events
shall have occurred resulting in the Lender not being able to sell
securities backed by mortgage loans at prices which would have been
reasonable prior to such event or events; or
(iii) there shall have occurred a material adverse change
in the financial condition of the Lender which effects (or can
reasonably be expected to effect) materially and adversely the ability
of the Lender to fund its obligations under this Loan Agreement;
(iv) there shall have occurred any action, suit,
arbitration, investigation (including, without limitation, any of the
foregoing which are pending or threatened) or other legal or
arbitrable proceeding affecting the Borrower or affecting any of the
Property of any of them 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 its Property, business or financial
condition or prospects or, (ii) makes a claim or claims in an
aggregate amount greater than $5,000,000.00, (ii) which, individually
or in the aggregate, if adversely determined, could be reasonably
likely to have a Material Adverse Effect, or (iii) which requires
filing with the Securities and Exchange Commission in accordance with
the 1934 Act or any rules thereunder.
(j) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ & Co.'s corporate bond
rating as calculated by S&P or ▇▇▇▇▇'▇ has not been lowered or downgraded to a
rating below A- as indicated by S&P or below A3 as indicated by ▇▇▇▇▇'▇.
Each request for a borrowing by the Borrower hereunder shall constitute a
certification by the Borrower that all the conditions set forth in this Section
5 (other than Sections 5.02(d), 5.02(i)(i), (ii) and (iii) and 5.02(j)) have
been satisfied (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
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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 Property, business
or financial condition or prospects; and (c) is qualified to do business and is
in good standing in all other jurisdictions in which the nature of the business
conducted by it makes such qualification necessary, except where failure so to
qualify would not be reasonably likely (either individually or in the
aggregate) to have a Material Adverse Effect.
6.02 Financial Condition. The Borrower has heretofore
furnished to the Lender a copy of (a) the consolidated balance sheets of the
Borrower and its consolidated Subsidiaries for the first two quarterly fiscal
periods of the fiscal year of the Borrower ended December 31, 1999 and the
related consolidated statements of operations and changes in net assets and of
cash flows for the Borrower and its consolidated Subsidiaries for such
quarterly fiscal periods, setting forth in each case in comparative form the
figures for the previous year, (b) the consolidated balance sheets of the
Borrower and its consolidated Subsidiaries for the 1998 fiscal year and the
related consolidated statements of operations and changes in net assets and of
cash flows for the Borrower and its consolidated Subsidiaries for such fiscal
year, setting forth in each case in comparative form the figures for the
previous year, with the opinion thereon of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP. All such
financial statements are complete and correct and fairly present, in all
material respects, the consolidated financial condition of the Borrower and its
consolidated Subsidiaries and the consolidated results of its operations as at
such dates and for such fiscal periods, all in accordance with GAAP applied on
a consistent basis. Since June 30, 1999, there has been no material adverse
change in the consolidated business, operations or financial condition of the
Borrower from that set forth in said financial statements.
6.03 Litigation. There are no actions, suits,
arbitrations, investigations (including, without limitation, any of the
foregoing which are pending or threatened) or other legal or arbitrable
proceedings affecting the Borrower or any of its Subsidiaries or affecting any
of the Property of any of them before any Governmental Authority that (i)
questions or challenges the validity or enforceability of any of the Loan
Documents or performance by the Borrower of its obligations thereunder, (ii) 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 its Property, business or financial condition or prospects, (iii)
makes a claim or claims in an aggregate amount greater than $5,000,000.00, (iv)
which, individually or in the aggregate, if adversely determined, could be
reasonably likely to have a Material Adverse Effect, or (v) which requires
filing with the Securities and Exchange Commission in accordance with the 1934
Act or any rules thereunder.
6.04 No Breach. Neither (a) the execution and delivery of
the Loan Documents nor (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, including the Investment Company Act of 1940, or
any Servicing Agreement or other material agreement or instrument to which the
Borrower is a party or by which the Borrower or any of its Property is bound or
to which it is subject, or constitute a default under any such material
agreement or instrument or result in the creation or imposition of
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any Lien (except for the Liens created pursuant to this Loan Agreement) upon
any Property of the Borrower pursuant to the terms of any such agreement or
instrument.
6.05 Action. The Borrower has all necessary corporate or
other power, authority and legal right to execute, deliver and perform its
obligations under each of the Loan Documents; the execution, delivery and
performance by the Borrower of each of the Loan Documents have been duly
authorized by all necessary corporate or other action on its part; and each
Loan Document has been duly and validly executed and delivered by the Borrower
and constitutes a legal, valid and binding obligation of the Borrower,
enforceable against the Borrower in accordance with its terms subject to
bankruptcy laws and other similar laws of general application affecting rights
of creditors and subject to the rules of equity including those respecting the
availability of specific performance.
6.06 Approvals. No authorizations, approvals or consents
of, and no filings or registrations with, any Governmental Authority or any
securities exchange are necessary for the execution, delivery or performance by
the Borrower of the Loan Documents or for the legality, validity or
enforceability thereof, except for filings and recordings in respect of the
Liens created pursuant to this Loan Agreement.
6.07 Margin Regulations. Neither the making of any Loan
hereunder, nor the use of the proceeds thereof, will violate or be inconsistent
with the provisions of Regulations T, U or X.
6.08 Taxes. The Borrower and each of its Subsidiaries has
filed all Federal income tax returns and all other material tax returns or
necessary extensions that are required to be filed by any of 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 as 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. The Borrower has elected to
be regulated as a Business Development Company under the 1940 Act. The
execution, delivery and performance by the Borrower of this Agreement and the
other Loan Documents and each borrowing by the Borrower hereunder do not and
will not violate or conflict with, or require any consent of any Governmental
Authority under, the 1940 Act.
6.10 Collateral; Collateral Security.
(a) The Borrower has not assigned, pledged, nor otherwise
conveyed or encumbered any Mortgage Loan or other Collateral to any other
Person, and immediately prior to the pledge of such Mortgage Loan or any other
Collateral to the Lender, the Borrower was the sole owner of such Mortgage Loan
or such other Collateral 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. No Mortgage Loan
pledged to the Lender hereunder was acquired (by purchase or otherwise) by the
Borrower from an Affiliate of
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the Borrower, or such other acquisition approved in writing by the Lender at
the Lender's sole discretion.
(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 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.
6.11 Chief Executive Office. The Borrower's chief
executive office on the Effective Date, and during the four months immediately
preceding the Effective Date, the Borrower's chief executive office, is, and
has been, located at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇.
On the Effective Date, the Borrower's jurisdiction of organization is the State
of Maryland.
6.12 Location of Books and Records. The location where
the Borrower keeps its books and records, including all computer tapes and
records relating to the Collateral is its chief executive office.
6.13 Hedging. The Borrower shall enter into Interest Rate
Protection Agreements pursuant to the Borrower's variable rate debt having terms
with respect to protection against fluctuations in interest rates pursuant to
the Borrower's policies and procedures reasonably acceptable to the Lender.
6.14 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 a Responsible Officer of the
Borrower, after due inquiry, that could reasonably be expected to have a
Material Adverse Effect that has not been disclosed herein, in the other Loan
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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.
6.15 Consolidated Shareholders' Equity. On the Effective
Date, the Consolidated Shareholders' Equity is not less than $542,000,000.
6.16 ERISA. The Borrower has not established nor
contributed to a Plan or Multiemployer Plan.
6.17 Material Subsidiaries. As of the Effective Date, the
Material Subsidiaries of the Borrower are listed on Schedule 3 hereto.
Section 7. Covenants of the Borrower. The Borrower covenants
and agrees with the Lender that, so long as any Loan is outstanding and until
payment in full of all Secured Obligations:
7.01 Financial Statements. The Borrower shall deliver to
the Lender:
(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 unaudited consolidated balance sheets of the
Borrower and its consolidated Subsidiaries as at the end of such period and the
related unaudited consolidated statements of operations and changes in net
assets 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 consolidated 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 120 days
after the end of each fiscal year of the Borrower, the consolidated balance
sheets of the Borrower as at the end of such fiscal year and the related
consolidated statements of operations and changes in net assets and of cash
flows for the Borrower 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 as at the end of, and for, such fiscal year in
accordance with GAAP;
(c) from time to time such other information regarding
the financial condition, operations, or business of the Borrower as the Lender
may reasonably request; and
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
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satisfied every 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 10 days after service of process on any of the following, give to
the Lender notice of all litigation, actions, suits, arbitrations,
investigations (including, without limitation, any of the foregoing which are
pending or threatened) or other legal or arbitrable proceedings affecting the
Borrower or any of its Subsidiaries or affecting any of the Property of any of
them before any Governmental Authority that (i) questions or challenges the
validity or enforceability of any of the Loan Documents or performance by the
Borrower of its obligations thereunder, (ii) 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 its Property,
business or financial condition or prospects, (iii) which makes a claim or
claims in an aggregate amount greater than $5,000,000.00, (iv) which,
individually or in the aggregate, if adversely determined, could be reasonably
likely to have a Material Adverse Effect, or (v) which requires filing with the
Securities and Exchange Commission in accordance with the 1934 Act and any
rules thereunder.
7.03 Existence, etc. The Borrower will:
(a) preserve and maintain its legal existence and all of
its material rights, privileges, licenses and franchises including the
Borrower's election to be regulated as a Business Development Company,
(provided that nothing in this Section 7.03(a) shall prohibit any transaction
expressly permitted under Section 7.04 hereof);
(b) comply with the requirements of all applicable laws,
rules, regulations and orders of Governmental Authorities (including, without
limitation, all environmental laws) if failure to comply with such requirements
would be reasonably likely (either individually or in the aggregate) to have a
material adverse effect on its Property, business or financial condition, or
prospects;
(c) keep adequate records and books of account, in which
complete entries will be made in accordance with GAAP consistently applied;
(d) not move its chief executive office from the address
referred to in Section 6.11 or change its jurisdiction of organization from the
jurisdiction referred to in Section 6.11 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; and
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(f) permit representatives of the Lender, during normal
business hours and upon reasonable advance notice, to examine, copy and make
extracts from its books and records, to inspect any of its Properties, and to
discuss its business and affairs with its officers, all to the extent
reasonably requested by the Lender.
7.04 Prohibition of Fundamental Changes. The Borrower
shall not enter into any transaction of merger or consolidation or
amalgamation, or liquidate, wind up or dissolve itself (or suffer any
liquidation, winding up or dissolution) or sell all or substantially all of its
assets; provided, that the Borrower may merge or consolidate with (a) any
wholly owned subsidiary of the Borrower, or (b) any other Person if the
Borrower is the surviving corporation; and provided further, that if after
giving effect thereto, no Default would exist hereunder.
7.05 Borrowing Base Deficiency. If at any time there
exists a Borrowing Base Deficiency the Borrower shall cure same in accordance
with Section 2.06 hereof.
7.06 Notices. The Borrower shall give notice to the Lender:
(a) promptly upon receipt of notice or knowledge of the
occurrence of any Default or Event of Default;
(b) with respect to any Mortgage Loan pledged to the
Lender hereunder, within one Business Day of receipt of any principal
prepayment other than Scheduled payments (in full or partial) of such pledged
Mortgage Loan;
(c) with respect to any Mortgage Loan pledged to the
Lender hereunder, immediately upon receipt of notice or knowledge that the
underlying Mortgaged Property has been damaged by waste, fire, earthquake or
earth movement, windstorm, flood, tornado or other casualty, or otherwise
damaged so as to affect adversely the Collateral Value of such pledged Mortgage
Loan; and
(d) promptly upon receipt of notice or knowledge of (i)
any default related to any Collateral, (ii) any Lien or security interest
(other than security interests created hereby or by the other Loan Documents)
on, or claim asserted against, any of the Collateral or (iii) any event or
change in circumstances which could reasonably be expected to have a material
adverse effect on the Property, business or financial condition or prospects of
the Borrower.
(e) promptly upon receipt of notice or knowledge that The
Borrower may not be in compliance with the requirements of the 1940 Act for a
Business Development Company.
Each notice pursuant to this Section shall be accompanied by a statement of a
Responsible Officer of the Borrower setting forth details of the occurrence
referred to therein and stating what action the Borrower has taken or proposes
to take with respect thereto.
7.07 Hedging. The Borrower shall at all times maintain
Interest Rate Protection Agreements, pursuant to the Borrower's variable rate
debt having terms with respect to protection against fluctuations in interest
rates pursuant to the Borrower's policies and procedures reasonably acceptable
to the Lender. The Borrower shall deliver to the Lender
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quarterly (unless requested more frequently by the Lender) a written summary of
the notional amount of all outstanding Interest Rate Protection Agreements.
7.08 Reports. The Borrower shall provide the Lender with
a quarterly report, which report shall include, among other items, a summary of
the Borrower's delinquency and loss experience with respect to mortgage loans
held by the Borrower, plus any such additional reports as the Lender may
reasonably request with respect to the Borrower's or any Servicer's servicing
portfolio or pending originations of mortgage loans. The Borrower shall
provide the Lender with information, promptly upon the Borrower's receipt, with
respect to each Mortgaged Property related to each Mortgage Loan pledged to the
Lender hereunder, including without limitation, the operating statements, rent
roll (if applicable and which may be provided on a quarterly basis if not
available on a monthly basis) and occupancy status of such Mortgaged Property
and property level information.
7.09 Underwriting Guidelines. Without the prior written
consent of the Lender, the Borrower shall not amend materially nor otherwise
modify materially the Underwriting Guidelines. Notwithstanding the preceding
sentence, in the event that the Borrower makes any amendment or modification to
its Underwriting Guidelines, the Borrower shall promptly deliver to the Lender
a complete copy of the amended or modified Underwriting Guidelines.
7.10 Transactions with Affiliates. The Borrower will not
enter into any transaction, including without limitation any purchase, sale,
lease or exchange of property or the rendering of any service, with any
Affiliate unless such transaction is (a) otherwise permitted under this Loan
Agreement, (b) in the ordinary course of the Borrower's business and (c) upon
fair and reasonable terms no less favorable to the Borrower than it would
obtain in a comparable arm's length transaction with a Person which is not an
Affiliate, or make a payment that is not otherwise permitted by this Section
7.10 to any Affiliate. In no event shall the Borrower pledge to the Lender
hereunder any Mortgage Loan acquired by the Borrower from an Affiliate of the
Borrower other than an acquisition approved in writing by the Lender at the
Lender's sole discretion.
7.11 Limitation on Liens. 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.
7.12 Limitation on Distributions. After the occurrence
and during the continuation of any Event of Default under Section 8(a), (b),
(f), (g) or (h), or clause (i) or (ii) of (k) hereof, 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 equity or partnership interest of the Borrower, whether now
or hereafter outstanding, or make any other distribution in respect of any of
the foregoing or to any shareholder or equity owner of the Borrower in its
capacity as such, either directly or indirectly, whether in cash or property or
in obligations of the Borrower or any of its consolidated Subsidiaries.
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7.13 Consolidated Shareholders' Equity. The Borrower
shall not permit the Consolidated Shareholders' Equity to be less than (i)
$425,000,000 plus (ii) 75% of the Net Proceeds of all Equity Issuances effected
by the Borrower or any of its Subsidiaries at any time subsequent to the date
hereof (excluding the Net Proceeds of any Equity Issuance by a Subsidiary to
Subsidiaries or to the Borrower).
7.14 Maintenance of Ratio of Total Indebtedness to
Consolidated Shareholders' Equity. The Borrower shall not permit the ratio of
Total Indebtedness with respect to recourse obligations to Consolidated
Shareholders' Equity at any time to be greater than 3:1.
7.15 Maintenance of Profitability. The Borrower shall
not permit, for any period of two consecutive fiscal quarters (each such
period, a "Test Period"), Net Income for such Test Period, before income taxes
for such Test Period and distributions made during such Test Period, to be less
than $1.00.
7.16 Servicing Tape. The Borrower shall provide to the
Lender on the twelfth (12th) Business Day of each month a computer readable
file containing servicing information, including without limitation those
fields specified by the Lender from time to time, on a loan-by-loan basis and
in the aggregate, with respect to the Mortgage Loans serviced hereunder by the
Borrower or any Servicer.
7.17 Interest Rate Protection Agreements. The Borrower
shall not pledge, hypothecate, encumber or permit any Lien to exist on any
Interest Rate Protection Agreement, except with respect to those Interest Rate
Protection Agreements between the Borrower and the Lender or any Affiliate of
the Lender.
7.18 Required Filings. The Borrower shall promptly
provide the Lender with copies of all documents which the Borrower or any
Subsidiary of the Borrower is required to file with the Securities and Exchange
Commission in accordance with the 1934 Act or any rules thereunder.
7.19 No Adverse Selection. The Borrower has not selected
the Collateral in a manner so as to adversely affect the Lender's interests.
7.20 Computer Systems. The Borrower shall take all action
necessary to assure that its System shall reasonably be expected to be Year
2000 Compliant.
7.21 ERISA. The Borrower shall not establish nor
contribute to a Plan or Multiemployer Plan.
7.22 Remittance of Prepayments. The Borrower shall
remit, with sufficient detail to enable the Lender to appropriately identify
the Mortgage Loan to which any amount remitted applies, to the Lender on each
Thursday (or the next Business Day if such Thursday is not a Business Day) all
Prepayments that the Borrower has received during the previous week.
7.23 Lender's Right to Purchase. Prior to any whole loan
sale of any Mortgage Loan to a bona-fide third party purchaser, the Borrower
shall first provide the Lender with the opportunity to submit a bid on said
Mortgage Loans.
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7.24 Securitizations. The Borrower agrees that MS&Co.
shall retain the exclusive option to act as sole lead underwriter or sole lead
placement agent in connection with the consummation of the next securitization
of any Mortgage Loans by the Borrower or any of the Borrower's Subsidiaries
following the Effective Date.
7.25 Material Subsidiaries. The Borrower shall
immediately notify the Lender upon any present of future Subsidiary of the
Borrower becoming a Material Subsidiary by delivering a revised Schedule 3
hereto.
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 Loan when due (whether at stated maturity, upon
acceleration or at mandatory or optional 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 five Business Days; or
(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 hereof or
thereof shall prove to have been false or misleading in any material respect as
of the time made or furnished other than the representations and warranties set
forth in Schedule 1, which shall be considered solely for the purpose of
determining the Collateral Value of the Mortgage Loans; unless (i) the Borrower
shall have made any such representations and warranties with knowledge that
they were materially false or misleading at the time made, or (ii) any such
representations and warranties have been determined by the Lender in its sole
discretion to be materially false or misleading on a regular basis); or
(d) the Borrower shall fail to comply with the
requirements of Section 7.03(a), Section 7.04, Section 7.05, Section 7.06, or
any of Sections 7.09 through 7.22 or Section 7.25 hereof; or the Borrower shall
otherwise fail to comply with the requirements of Section 7.03 hereof and such
default shall continue unremedied for a period of five Business Days; or the
Borrower shall fail to observe or perform any other covenant or 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 seven Business
Days; or
(e) a final judgment or judgments for the payment of
money in excess of $20,000,000 in the aggregate shall be rendered against the
Borrower or any of its Subsidiaries by one or more courts, administrative
tribunals or other bodies having jurisdiction and the same shall not be
satisfied, discharged (or provision shall not be made for such discharge) or
bonded, or a stay of execution thereof shall not be procured, within 60 days
from the date of entry thereof, and the Borrower or any such Subsidiary shall
not, within said period of 60 days, or such longer period during which
execution of the same shall have been stayed or bonded, appeal therefrom and
cause the execution thereof to be stayed during such appeal; or
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(f) 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 Material Subsidiaries or
any of its Other Relevant Subsidiaries shall (i) apply for or consent to the
appointment of, or the taking of possession by, a receiver, custodian, trustee,
examiner or liquidator or the like of itself or of all or a substantial part of
its property, (ii) make a general assignment for the benefit of its creditors,
(iii) commence a voluntary case under the Bankruptcy Code, (iv) file a petition
seeking to take advantage of any other law relating to bankruptcy, insolvency,
reorganization, liquidation, dissolution, arrangement or winding-up, or
composition or readjustment of debts, (v) fail to controvert in a timely and
appropriate manner, or acquiesce in writing to, any petition filed against it
in an involuntary case under the Bankruptcy Code or (vi) take any corporate or
other action for the purpose of effecting any of the foregoing; or
(h) a proceeding or case shall be commenced, without the
application or consent of the Borrower or any of its Material Subsidiaries or
any of its Other Relevant Subsidiaries, in any court of competent jurisdiction,
seeking (i) its reorganization, liquidation, dissolution, arrangement or
winding-up, or the composition or readjustment of its debts, (ii) the
appointment of, or the taking of possession by, a receiver, custodian, trustee,
examiner, liquidator or the like of the Borrower or any such Material
Subsidiary or Other Relevant Subsidiary or of all or any substantial part of
its property, or (iii) similar relief in respect of the Borrower or any such
Material Subsidiary or Other Relevant Subsidiary under any law relating to
bankruptcy, insolvency, reorganization, liquidation, dissolution, arrangement
or winding-up, or composition or adjustment of debts, and such proceeding or
case shall continue undismissed, or an order, judgment or decree approving or
ordering any of the foregoing shall be entered and continue unstayed and in
effect, for a period of 60 or more days; or an order for relief against the
Borrower or any such Material Subsidiary or Other Relevant 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 be terminated or cease to be in full force and effect, or
the enforceability thereof shall be contested by the Borrower;
(j) the Borrower shall grant, or suffer to exist, any
Lien on any Collateral except the Liens contemplated hereby; or the Liens
contemplated hereby shall cease to be first priority perfected Liens on the
Collateral in favor of the Lender or shall be Liens in favor of any Person
other than the Lender;
(k) (i) the Borrower or any of the Borrower's
Subsidiaries shall fail to pay when due and payable the principal of, or
interest on, any Indebtedness (other than the Loans) having an aggregate
outstanding principal amount of $5,000,000 or more, (ii) the maturity of any
Indebtedness (other than the Loans) of the Borrower or any of the Borrower's
Subsidiaries having an aggregate outstanding principal amount of $5,000,000 or
more shall have (x) been accelerated in accordance with the provisions of any
indenture, contract or instrument evidencing, providing for the creation of or
otherwise concerning such Indebtedness or (y) been required to be prepaid prior
to the stated maturity thereof; or (iii) any other event shall have occurred
and be continuing with respect to any Indebtedness (other than the Loans) of
the
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Borrower or any of the Borrower's Subsidiaries having an aggregate outstanding
principal amount of $5,000,000 or more which, with or without the passage of
time, the giving of notice, or otherwise, would permit any holder or holders of
such Indebtedness, any trustee or agent acting on behalf of such holder or
holders or any other Person, to accelerate the maturity of any such
Indebtedness or require any such Indebtedness to be prepaid prior to its stated
maturity; or
(l) any materially adverse change in the Property,
business, financial condition or prospects of the Borrower or any of the
Borrower's Material Subsidiaries or Other Related Subsidiaries shall occur, in
each case as determined by the Lender in its sole discretion, or any other
condition shall exist which, in the Lender's sole discretion, constitutes a
material impairment of the Borrower's ability to perform its obligations under
this Loan Agreement, the Note or any other Loan Document; or
(m) the discovery by the Lender of a condition or event
which existed at or prior to the execution hereof and which the Lender, in its
sole discretion, determines materially and adversely affects; (i) the condition
(financial or otherwise) of the Borrower, any of its Affiliates; or (ii) the
ability of either the Borrower or the Lender to fulfill its respective
obligations under this Loan Agreement.
Section 9. Remedies Upon Default.
(a) An Event of Default shall be deemed to be continuing
unless expressly waived by the Lender in writing. Upon the occurrence of one
or more Events of Default hereunder, the Lender's obligation to make additional
Loans to the Borrower shall automatically terminate without further action by
any Person. Upon the occurrence of one or more Events of Default other than
those referred to in Section 8(g) or (h), the Lender may immediately declare
the principal amount of the Loans then outstanding under the Note to be
immediately due and payable, together with all interest thereon and fees and
expenses accruing under this Loan Agreement. Upon the occurrence of an Event
of Default referred to in Sections 8(g) or (h), such amounts shall immediately
and automatically become due and payable without any further action by any
Person. Upon such declaration or such automatic acceleration, the balance then
outstanding on the Note shall become immediately due and payable, without
presentment, demand, protest or other formalities of any kind, all of which are
hereby expressly waived by the Borrower.
(b) Upon the occurrence of one or more Events of Default,
the Lender shall have the right to obtain physical possession of the Servicing
Records and all other files of the Borrower relating to the Collateral and all
documents relating to the Collateral which are then or may thereafter come in
to the possession of the Borrower or any third party acting for the Borrower
and the Borrower shall deliver to the Lender such assignments as the Lender
shall request. The Lender shall be entitled to specific performance of all
agreements of the Borrower contained in this Loan Agreement.
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Section 10. No Duty of Lender. The powers conferred on the
Lender hereunder are solely to protect the Lender's interests in the Collateral
and shall not impose any duty upon it to exercise any such powers. The Lender
shall be accountable only for amounts that it actually receives as a result of
the exercise of such powers, and neither it nor any of its officers, directors,
employees or agents shall be responsible to the Borrower for any act or failure
to act hereunder, except for its or its own gross negligence or willful
misconduct.
Section 11. Miscellaneous.
11.01 Waiver. No failure on the part of the Lender to
exercise and no delay in exercising, and no course of dealing with respect to,
any right, power or privilege under any Loan Document shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, power or
privilege under any Loan Document preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The remedies
provided herein are cumulative and not exclusive of any remedies provided by
law.
11.02 Notices. Except as otherwise expressly permitted by
this Loan Agreement, all notices, requests and other communications provided
for herein and under the Custodial Agreement (including without limitation any
modifications of, or waivers, requests or consents under, this Loan Agreement)
shall be given or made in writing (including without limitation by telex or
telecopy) delivered to the intended recipient at the "Address for Notices"
specified below its name on the signature pages hereof or thereof); or, as to
any party, at such other address as shall be designated by such party in a
written notice to each other party provided, that a copy of all notices given
under Section 7.01 shall simultaneously be delivered to Credit Department,
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, 1221 Avenue of the ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇; Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇. Except as otherwise provided in
this Loan Agreement and except for notices given under Section 2 (which shall
be effective only on receipt), all such communications shall be deemed to have
been duly given when transmitted by telex or telecopy or personally delivered
or, in the case of a mailed notice, upon receipt, in each case given or
addressed as aforesaid.
11.03 Indemnification and Expenses.
(a) The Borrower agrees to hold the Lender, and its
Affiliates and their officers, directors, employees, agents and advisors (each
an "Indemnified Party") harmless from and indemnify any Indemnified Party
against all liabilities, losses, damages, judgments, costs and expenses of any
kind which may be imposed on, incurred by or asserted against such Indemnified
Party (collectively, the "Costs") relating to or arising out of this Loan
Agreement, the Note, any other Loan Document or any transaction contemplated
hereby or thereby, or any amendment, supplement or modification of, or any
waiver or consent under or in respect of, this Loan Agreement, the Note, any
other Loan Document or any transaction contemplated hereby or thereby, that, in
each case, results from anything other than any Indemnified Party's gross
negligence or willful misconduct. Without limiting the generality of the
foregoing, the Borrower agrees to hold any Indemnified Party harmless from and
indemnify such Indemnified Party against all Costs with respect to (i)
Table-Funded Mortgage Loans relating to or arising out of any breach, violation
or alleged breach or violation of any consumer credit laws, including without
limitation the Truth in Lending Act and/or the Real Estate Settlement
Procedures Act
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and (ii) all Mortgage Loans relating to or arising out of any violation or
alleged violation of any environmental law, rule or regulation that, in each
case, results from anything other than such Indemnified Party's gross
negligence or willful misconduct. In any suit, proceeding or action brought by
an Indemnified Party in connection with any Mortgage Loan for any sum owing
thereunder, or to enforce any provisions of any Mortgage Loan, the Borrower
will save, indemnify and hold such Indemnified Party harmless from and against
all expense, loss or damage suffered by reason of any defense, set-off,
counterclaim, recoupment or reduction or liability whatsoever of the account
debtor or obligor thereunder, arising out of a breach by the Borrower of any
obligation thereunder or arising out of any other agreement, indebtedness or
liability at any time owing to or in favor of such account debtor or obligor or
its successors from the Borrower. The Borrower also agrees to reimburse an
Indemnified Party as and when billed by such Indemnified Party for all such
Indemnified Party's costs and expenses incurred in connection with the
enforcement or the preservation of such Indemnified Party's rights under this
Loan Agreement, the Note, any other Loan Document or any transaction
contemplated hereby or thereby, including without limitation the reasonable
fees and disbursements of its counsel. The Borrower hereby acknowledges that,
notwithstanding the fact that the Note is secured by the Collateral, the
obligation of the Borrower under the Note is a recourse obligation of the
Borrower.
(b) The Borrower agrees to pay as and when billed by the
Lender all of the out-of-pocket costs and expenses incurred by the Lender in
connection with the development, preparation and execution of, and any
amendment, supplement or modification to, this Loan Agreement, the Note, any
other Loan Document or any other documents prepared in connection herewith or
therewith. The Borrower agrees to pay as and when billed by the Lender all of
the out-of-pocket costs and expenses incurred in connection with the
consummation and administration of the transactions contemplated hereby and
thereby including without limitation all the reasonable fees, disbursements and
expenses of counsel to the Lender, not to exceed $25,000, which amount shall be
deducted from the first Loan disbursement.
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 and any provision of this Loan Agreement may be waived by the Lender.
11.05 Successors and Assigns. This Loan Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns.
11.06 Survival. The obligations of the Borrower under
Sections 3.03, 3.04 and 11.03 hereof shall survive the repayment of the Loans
and the termination of this Loan Agreement. In addition, each representation
and warranty made or deemed to be made by a request for a borrowing, herein or
pursuant hereto shall survive the making of such representation and warranty,
and the Lender shall not be deemed to have waived, by reason of making any
Loan, any Default that may arise because any such representation or warranty
shall have proved to be false or misleading, notwithstanding that the Lender
may have had notice or knowledge or reason to believe that such representation
or warranty was false or misleading at the time such Loan was made.
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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, and shall constitute a security agreement
within the meaning of the Uniform Commercial Code.
11.10 SUBMISSION TO JURISDICTION; WAIVERS. LENDER AND THE
BORROWER HEREBY IRREVOCABLY AND UNCONDITIONALLY:
(a) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL
ACTION OR PROCEEDING RELATING TO THIS LOAN AGREEMENT, THE NOTE AND THE OTHER
LOAN DOCUMENTS, OR FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN RESPECT
THEREOF, TO THE NON-EXCLUSIVE GENERAL JURISDICTION OF THE COURTS OF THE STATE
OF NEW YORK, THE FEDERAL COURTS OF THE UNITED STATES OF AMERICA FOR THE
SOUTHERN DISTRICT OF NEW YORK, AND APPELLATE COURTS FROM ANY THEREOF;
(b) CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE
BROUGHT IN SUCH COURTS AND, TO THE EXTENT PERMITTED BY LAW, WAIVES ANY
OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR
PROCEEDING IN ANY SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN
AN INCONVENIENT COURT AND AGREES NOT TO PLEAD OR CLAIM THE SAME;
(c) AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR
PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED
MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID, TO ITS
ADDRESS SET FORTH UNDER ITS SIGNATURE BELOW OR AT SUCH OTHER ADDRESS OF WHICH
THE LENDER SHALL HAVE BEEN NOTIFIED; AND
(d) AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO
EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT
THE RIGHT TO ▇▇▇ IN ANY OTHER JURISDICTION.
11.11 WAIVER OF JURY TRIAL. EACH OF THE BORROWER AND THE
LENDER HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF
OR RELATING TO THIS LOAN
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AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY.
11.12 Acknowledgments. The Borrower hereby acknowledges
that:
(a) it has been advised by counsel in the negotiation,
execution and delivery of this Loan Agreement, the Note and the other Loan
Documents;
(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 between the Lender and the
Borrower.
11.13 Hypothecation or Pledge of Loans. The Lender shall
have free and unrestricted use of all Collateral and nothing in this Loan
Agreement shall preclude the Lender from engaging in repurchase transactions
with the Collateral or otherwise pledging, repledging, transferring,
hypothecating, or rehypothecating the Collateral. Nothing contained in this
Loan Agreement shall obligate the Lender to segregate any Collateral delivered
to the Lender by the Borrower, however the Lender shall be obligated to deliver
the Collateral back to the Borrower in accordance with, and subject to, the
provisions of this Loan Agreement.
11.14 Servicing.
(a) The Borrower covenants to maintain or cause the
servicing of the Mortgage Loans to be maintained in conformity with accepted
and prudent servicing practices in the industry for the same type of mortgage
loans as the Mortgage Loans and in a manner at least equal in quality to the
servicing the Borrower provides for mortgage loans which it owns. 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, (ii) the date on which all the
Secured Obligations have been paid in full or (iii) the transfer of servicing
approved by the Borrower.
(b) If the Mortgage Loans are serviced by the Borrower,
(i) the Borrower agrees that the Lender is the collateral assignee of 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 Mortgage Loans (the "Servicing
Records"), and (ii) the Borrower grants the Lender a security interest in all
servicing fees and rights relating to the Mortgage Loans and all Servicing
Records to secure the obligation of the Borrower or its designee to service in
conformity with this Section and any other obligation of the Borrower to the
Lender. The Borrower covenants to safeguard such Servicing Records and to
deliver them promptly to the Lender or its designee (including the Custodian)
at the Lender's request.
(c) If the Mortgage Loans are serviced by a third party
servicer (the "Servicer"), the Borrower (i) shall provide a copy of the
servicing agreement to the Lender, which shall be in form and substance
acceptable to the Lender (the "Servicing Agreement"); (ii) shall provide a
Servicer Notice to the Servicer substantially in the form of Exhibit G hereto,
and
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(ii) hereby irrevocably assigns to the Lender and the Lender's successors and
assigns all right, title, interest of the Borrower in, to and under, and the
benefits of, any Servicing Agreement with respect to the Mortgage Loans. Any
successor to the Servicer shall be approved in writing by the Lender prior to
such successor's assumption of servicing obligations with respect to the
Mortgage Loans.
(d) If the servicer of the Mortgage Loans is the Borrower
or the Servicer is an Affiliate of the Borrower, the Borrower shall provide to
the Lender a letter from the Borrower or the Servicer, as the case may be, to
the effect that upon the occurrence of an Event of Default the Lender may
terminate any Servicing Agreement and transfer servicing to its designee, at no
cost or expense to the Lender, it being agreed that the Borrower will pay any
and all fees required to terminate the Servicing Agreement and to effectuate
the transfer of servicing to the designee of the Lender.
(e) After the Funding Date, until the pledge of any
Mortgage Loan is relinquished by the Custodian, the Borrower will have no right
to modify or alter the terms of such Mortgage Loan and the Borrower will have
no obligation or right to repossess such Mortgage Loan or substitute another
Mortgage Loan, except as provided in the Custodial Agreement.
(f) In the event the Borrower or its Affiliate is
servicing the Mortgage Loans, the Borrower shall permit the Lender to inspect
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.
(g) The Borrower shall ensure that the Servicer shall
take all action necessary to assure that the Servicer's System shall reasonably
be expected to be Year 2000 Compliant.
11.15 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 five Business Days prior notice, unless a Default shall have
occurred, in which case no notice shall be required) to the Borrower, the
Lender or its authorized representatives will be permitted during normal
business hours to examine, inspect, and make copies and 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, on a reasonable basis, 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 may make Loans to the
Borrower based solely upon the information provided by the Borrower to the
Lender in the Mortgage Loan Tape 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 Loan, including without limitation
ordering new credit reports and new appraisals on the related Mortgaged
Properties and otherwise re-generating the
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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. The Borrower further agrees that if a
Default shall have occurred, the Borrower shall reimburse the Lender for any
and all out-of-pocket costs and expenses incurred by the Lender in connection
with the Lender's activities pursuant to this Section 11.15 performed following
such Default.
11.16 Set-Off. In addition to any rights and remedies of
the Lender provided by this Loan Agreement and by law, the Lender shall have
the right, without prior notice to the Borrower, any such notice being
expressly waived by the Borrower to the extent permitted by applicable law,
upon any amount becoming due and payable by the Borrower hereunder (whether at
the stated maturity, by acceleration or otherwise) to set-off and appropriate
and apply against such amount any and all 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
after any such set-off and application made by the Lender; provided that the
failure to give such notice shall not affect the validity of such set-off and
application.
11.17 Intent. The parties recognize that each Loan is a
"securities contract" as that term is defined in Section 741 of Title 11 of the
United States Code, as amended.
[SIGNATURE PAGE FOLLOWS]
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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
ALLIED CAPITAL CORPORATION
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Executive Vice President,
Treasurer
Address for Notices:
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No: (▇▇▇) ▇▇▇-▇▇▇▇
LENDER
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ MORTGAGE CAPITAL INC.
By /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
-----------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice President
Address for Notices:
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Telecopier No.: ▇▇▇-▇▇▇-▇▇▇▇
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
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SCHEDULE 1
REPRESENTATIONS AND WARRANTIES RE: MORTGAGE LOANS
Part I. Eligible Mortgage Loans
As to each Eligible Mortgage Loan included in the Borrowing
Base on a Funding Date (and the related Mortgage, Mortgage Note, Assignment of
Mortgage and Mortgaged Property), the 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 (certain defined terms used herein
and not otherwise defined in the Loan Agreement appearing in Part III to this
Schedule 1, except as otherwise set forth on an Officer's Certificate (as
defined in the Custodial Agreement) delivered on or prior to Funding Date or
otherwise disclosed in writing to the Lender.
(a) Mortgage Loans as Described. The information set
forth in the Mortgage Loan Schedule with respect to the Mortgage Loan is
complete, true and correct in all material respects.
(b) No Outstanding Charges. There are no material
defaults in complying with the terms of the Mortgage securing the Mortgage Loan,
and to the best of the Borrower's knowledge, all taxes, governmental
assessments, required insurance premiums, water, sewer and municipal charges,
leasehold payments or ground rents which previously became due and owing have
been paid. Neither the Borrower nor to the best of the Borrower's knowledge, 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 earlier, to the day which precedes by one month the
Due Date of the first installment of principal and interest thereunder.
(c) 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, 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, 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 (to the extent such terms affect the information on the Mortgage
Loan Schedule).
(d) No Defenses. To the best of the Borrower's knowledge,
the Mortgage Loan is not subject to any right of rescission, set-off,
counterclaim or defense, including without limitation the defense of usury, nor
will the operation of any of the terms of the Mortgage Note or the
Schedule 1, Page 1
47
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. The Borrower has no knowledge nor has it received any notice that any
Mortgagor in respect of the Mortgage Loan is a debtor in any state or federal
bankruptcy or insolvency proceeding.
(e) 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 customary 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 earthquake and
other 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, or (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. 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 lesser
of (1) the full insurable value of the Mortgaged Property, and (2) 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 30
days' prior written notice to the mortgagee. No such notice has been received by
the Borrower. All premiums 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. To the best of the Borrower's
knowledge, 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 to the best of the Borrower's knowledge, the Mortgagor has not 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.
The Mortgagor maintains (A) rental continuation coverage sufficient to protect
against loss for a period of up to 12 months, under a policy issued by a
Qualified Insurer and (B) ordinance or law coverage if applicable under the
terms and conditions of the Underwriting Guidelines.
(f) Compliance with Applicable Laws. With respect to
Mortgage Loans originated by the Borrower, and to the best of the Borrower's
knowledge with respect to Mortgage Loans acquired by the Borrower, (i) any and
all requirements of any federal, state or
Schedule 1, Page 2
48
local law including, without limitation, usury, or disclosure laws applicable
to the Mortgage Loan have been complied with, and (ii) 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 demand, evidence of compliance with all such
requirements.
(g) 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.
(h) Location and Type of Mortgaged Property. The Mortgaged
Property is located in an Acceptable State as identified in the Mortgage Loan
Schedule and consists of real property upon which is located one or more
commercial or multifamily structures; provided, however, that any commercial or
multifamily property shall conform with the Underwriting Guidelines. The
Mortgaged Property is being used for the purpose set forth in the Mortgagor's
loan application, unless otherwise notified by the Mortgagor.
(i) Valid First Lien. The Mortgage is a valid, subsisting,
enforceable and perfected first lien 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 due and payable; (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 (b) which do not
materially and adversely affect the Appraised Value of the Mortgaged Property
set forth in such appraisal; and (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. 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 first
lien and first priority security interest on the property described therein and
the Borrower has full right to pledge and assign the same to the Lender. The
Mortgaged Property was not, as of the date of origination of the Mortgage Loan,
subject to a mortgage, deed of trust, deed to secure debt or other security
instrument creating a lien subordinate to the lien of the Mortgage.
(j) 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 subject to bankruptcy laws and other similar laws
of general application affecting rights of creditors and subject to the
Schedule 1, Page 3
49
application of the rules of equity, including those respecting the availability
of specific performance.
(k) Full Disbursement of Proceeds. The Mortgage Loan has
been closed and the proceeds of the Mortgage Loan have been fully disbursed and
there is no further requirement for future advances thereunder, and either (i)
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 or
(ii) an escrow of funds for the completion of any on-site or off-site
improvements has been established in an amount sufficient to make all repairs
required by the Qualified Originator to the Mortgaged Property. 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. To the best of the
Borrower's knowledge, 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.
(l) Ownership. The Borrower is the sole owner and holder
of the Mortgage Loan. 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.
(m) Doing Business. To the best of the Borrower's
knowledge, 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.
(n) Loan-to-Value Ratio and Debt Service Ratio. The
Loan-to-Value Ratio for the Mortgage Loan is not greater than that set forth in
the Underwriting Guidelines. The Debt Service Ratio for the Mortgage Loan is not
less than that set forth in the Underwriting Guidelines.
(o) 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 and each such title insurance policy is issued by a title
insurer qualified to do business in the jurisdiction where the Mortgaged
Property is located, insuring the
Schedule 1, Page 4
50
Borrower, its successors and assigns, as to the first priority lien of the
Mortgage in the original principal amount of the Mortgage Loan, subject only to
the exceptions contained in clauses (1), (2) and (3) of paragraph (i) of this
Schedule 1. 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
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. The title policy has been marked
to delete the intervening lien exception and all premiums for such policy,
including any premiums for endorsements and special endorsements, have been
paid.
(p) No Defaults. To the best of the Borrower's knowledge,
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,
to the best of the Borrower's knowledge, 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.
(q) No Mechanics' Liens. To the best of the Borrower's
knowledge, there are 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.
(r) Location of Improvements; No Encroachments. To the
best of the Borrower's knowledge, 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 or the
Lender's title insurance policy referenced in (o) above affirmatively insures
such encroachments. To the best of the Borrower's knowledge, no improvement
located on or being part of the Mortgaged Property is in violation of any
applicable zoning and building law, ordinance or regulation.
(s) Origination; Payment Terms. Principal payments on the
Mortgage Loan commenced no more than 60 days after funds were disbursed in
connection with the Mortgage Loan. The Mortgage Note is payable monthly with
interest calculated and payable in arrears, sufficient to amortize the Mortgage
Loan fully by the stated maturity date, or otherwise providing for a balloon
payment in accordance with the Underwriting Guidelines over an original term of
not more than 30 years from commencement of amortization.
(t) 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
Schedule 1, Page 5
51
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 power of sale or judicial foreclosure. The Mortgage or the laws of the
applicable state in which the Mortgaged Property is located provides for the
appointment of a receiver for rents in the event of an institution of
foreclosure proceedings, or allows the Mortgagee to enter into possession to
collect rents to the extent permitted by applicable law.
(u) Conformance with Underwriting Guidelines. The Mortgage
Loan was underwritten in accordance with the Underwriting Guidelines.
(v) Occupancy of the Mortgaged Property. To the best of
the Borrower's knowledge, as of the Funding Date the Mortgaged Property is
lawfully occupied under applicable law. To the best of the Borrower's knowledge,
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. To the best of the Borrower's knowledge, the
Borrower has not received 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.
(w) 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.
(x) Delivery of Mortgage Documents. 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
complete, true and accurate Mortgage File in compliance with the Custodial
Agreement, except for such documents the originals of which have been delivered
to the Custodian.
(y) Transfer of Mortgage Loans. 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.
(z) 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.
Schedule 1, Page 6
52
(aa) Mortgaged Property Undamaged. To the best of the
Borrower's knowledge, the Mortgaged Property is undamaged by waste, fire,
earthquake or earth movement, windstorm, flood, tornado or other casualty so as
to affect materially and adversely the value of the Mortgaged Property as
security for the Mortgage Loan or the use for which the premises were intended
and each Mortgaged Property is in good repair. To the best of the Borrower's
knowledge, there have not been any condemnation proceedings commenced with
respect to the Mortgaged Property and the Borrower has no knowledge of any such
proceedings.
(bb) Collection Practices; Escrow Deposits. The
origination and collection practices used by the originator, each servicer of
the Mortgage Loan 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 material respects legal.
With respect to escrow deposits and Escrow Payments, 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.
(cc) Other Insurance Policies. To the best of the
Borrower's knowledge, 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 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.
(dd) Appraisal. The Mortgage File contains an appraisal of
the related Mortgaged Property signed (to the best of the Borrower's knowledge,
prior to the date a commitment to fund such Mortgage Loan becomes binding) by a
qualified appraiser, duly appointed by the Borrower, 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.
(ee) Capitalization of Interest. The Mortgage Note does
not by its terms provide for the capitalization or forbearance of interest;
provided that the Mortgage Note may have been restructured, and at the time of
such restructuring, outstanding interest may have been capitalized.
(ff) 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.
Schedule 1, Page 7
53
(gg) Proceeds of Mortgage Loan. Except as expressly
previously disclosed to the Lender, the proceeds of the Mortgage Loan have not
been and shall not be used to satisfy, in whole or in part, any debt owed or
owing by the Mortgagor to the Borrower or any Affiliate or correspondent of the
Borrower except in each case, fees and expenses incurred in the origination of
the Mortgage Loan.
(hh) Withdrawn Mortgage Loans. If the Mortgage Loan has
been released to the Borrower pursuant to a Request for Release and Receipt as
permitted under Section 5 of the Custodial Agreement, then, the promissory note
relating to the Mortgage Loan was returned to the Custodian within 10 days of
release (or if such tenth day is not a Business Day, the next succeeding
Business Day).
(ii) No Exception. The Custodian has not noted any material
exceptions on an Exception Report (as defined in the Custodial Agreement) with
respect to the Mortgage Loan which would materially adversely affect the
Mortgage Loan or the Lender's security interest, granted by the Borrower, in the
Mortgage Loan.
(jj) Qualified Originator. The Mortgage Loan has been
originated by, and, if applicable, purchased by the Borrower from, a Qualified
Originator.
(kk) Title Survey; Improvements. To the best of the
Borrower's knowledge, the Mortgage File includes a title survey, certified to
the Borrower or the Qualified Originator, its successors and assigns, and the
title insurance company, in accordance with most recent minimum standards for
title surveys as determined by the American Land Title Association, with the
signature and seal of a licensed engineer or surveyor affixed thereto.
(ll) Inspection. The Borrower or the Qualified Originator
or its agents, has inspected or has caused to be inspected each related
Mortgaged Property in connection with the origination thereof no earlier than
six months prior to the related Funding Date.
(mm) Access Routes. To the best of the Borrower's
knowledge, at the time of origination, the Mortgaged Property was (i) contiguous
to a physically open, dedicated all-weather public street, (ii) had all
necessary permits and approvals for ingress and egress, (iii) was adequately
serviced by public or private water, public or private sewer systems and
utilities, and (iv) was on a separate tax parcel, separate and apart from any
other property owned by the Mortgagor or any other Person.
(nn) Mortgagor is Landlord under Leases. Each Mortgagor is
the owner and holder of the landlord's interest under any lease for use and
occupancy of all or any portion of the related Mortgaged Property. Neither the
Borrower nor, to the best of the Borrower's knowledge, the Mortgagor, has made
any assignments of the landlord's interest in any such lease or any portion of
the rents, additional rents, charges, issues or profits due and payable or to
become due and payable under any such lease (other than an assignment in favor
of the Borrower or in favor of the Lender) which assignments are presently
outstanding. The assignment of leases and/or rents and any security agreement,
chattel mortgage or equivalent document related to and delivered in connection
with the Mortgage Loan establishes and creates a valid and enforceable first
lien or first priority security interest on the leases affecting the Mortgaged
Schedule 1, Page 8
54
Property except as enforceability may be limited by bankruptcy or other laws
affecting creditor's rights generally or by the application of the rules of
equity.
(oo) Mortgaged Property Leased to Tenants. To the best of
the Borrower's knowledge as to each Mortgage Loan secured by Mortgaged Property
which is leased to tenants: (i) the Mortgaged Property is not subject to any
leases other than the leases described in the rent roll contained in the
Servicing File (hereinafter referred to as the "Leases"), and such rent roll is
accurate and complete in all material respects, including description of the
rent and term. (ii) no Person has any possessory interest in the Mortgaged
Property or right to occupy the same except under and pursuant to the provisions
of the Leases and except those possessory interests set forth in clauses (2) and
(3) of paragraph (i) of this Schedule 1, Part I, (iii) each Lease of all or any
portion of the Mortgaged Property is subordinate to the Mortgage, unless
otherwise approved by the Borrower; (iv) with respect to any Lease having the
benefit of a non-disturbance or similar recognition agreement, there are no
circumstances or conditions with respect to the Mortgage, the Mortgaged
Property, and Mortgagor, any tenant (alone or considered with other tenants) of
the Mortgaged Property, or the Mortgagor's or any tenant's credit standing that
would cause prudent mortgage lenders making loans similar to the Mortgage Loan
in the area in which the Mortgaged Property is located to refuse to grant such
non-disturbance or similar recognition agreement; are no recorded assignments of
the Leases or of any portion of the rents, additional rents, charges, issues or
profits due and payable or to become due and payable thereunder (hereinafter
collectively referred to as the "Rents") to anyone other than the Mortgagor or a
mortgagee which are now outstanding; (v) no Leases contain any option to
purchase, any right of first refusal to lease or purchase, any express right to
terminate the Lease or vacate the premises prior to expiration of the lease
term, or any express right to ▇▇▇▇▇ or defer rent or any other similar
provisions which materially adversely affect the Mortgaged Property or which
might materially, adversely affect the rights of any holder of the Mortgage
Loan; (vi) of the Leases are in full force and effect and have not been modified
or amended other than by documents contained in the Servicing File, and the
Servicing File contains true and complete copies of the Leases; (vii) The
Mortgagor has certified that all rents due and payable under the Leases have
been paid in full and no such rents have been paid more than one month in
advance of the Due Date; and (viii) the Mortgagor has certified that neither the
Mortgagor (landlord) nor any tenant under the Leases is in default under any of
the terms, covenants or provisions of the Leases and the Borrower knows of no
event which, but for the passage of time or the giving of notice or both, would
constitute an event of default under any of the Leases.
(pp) Organization. If not an individual, to the best of
the Borrower's knowledge, the Mortgagor has been duly organized and is validly
existing and in good standing under the laws of the jurisdiction of its
formation. To the best of the Borrower's knowledge based on the Mortgagor's
representations and warranties, the Mortgagor has requisite power and authority
to (i) own its properties, (ii) transact the business in which it is now
engaged, (iii) execute and deliver the Mortgage Note, the Mortgage and the other
Mortgage and the other Mortgage Loan Documents and (iv) consummate the
transactions contemplated hereby and thereby. To the best of the Borrower's
knowledge based on the Mortgagor's representations and warranties, the Mortgagor
is duly qualified to do business and is in good standing in the jurisdiction
where it is required to be so qualified in connection with the ownership,
maintenance, management and operation of the Mortgaged Property. The Mortgagor
has represented, warranted and covenanted that it shall (1) own no assets, and
will not engage in any
Schedule 1, Page 9
55
business, other than ownership, operation and management of its respective
Mortgaged Property except as Scheduled and identified to the Lender (2) not
enter into any contract or agreement with any affiliate except upon terms and
conditions that are intrinsically fair and substantially similar to those that
would be available on an arms-length basis with persons other than such
affiliate; (3) not incur any indebtedness or obligation, secured or unsecured,
direct or indirect, absolute or contingent (including guaranteeing any
obligation), other than pursuant to the Mortgage Loan Document and other known
liens or other trade payables; (4) not make any loans or advances to any third
party, and shall not acquire obligations or securities of its affiliates; (5)
pay its debts and liabilities (including, as applicable, shared personnel and
overhead expenses) only from its own assets; (6) comply with the provisions of
its organizational documents; (7) do all things necessary to observe
organizational formalities and to preserve its existence, and will not amend,
modify or otherwise change its organizational documents, or suffer same to be
amended, modified or otherwise changed, without the prior written consent of
the Lender; (8) maintain all of its books, records, financial statements and
bank accounts separate from those of its Affiliates; (9) be, and at all times
will hold itself out to the public as, a legal entity separate and distinct
from any other entity (including any affiliate), shall correct any known
misunderstanding regarding its status as a separate entity, shall conduct
business in its own name, shall not identify itself or any of its affiliates as
a division or part of the other and shall maintain and utilize separate
stationery, invoices and checks; (10) maintain adequate capital for the normal
obligations reasonably foreseeable in a business of its size and character and
in light of its contemplated business operations; (11) not engage in or suffer
any change of ownership, dissolution, winding up, liquidation, consolidation or
merger in whole or in part; (12) not commingle its funds or other assets with
those of any affiliate or any other Person; (13) maintain its assets in such a
manner that it will not be costly or difficult to segregate, ascertain or
identify its individual assets from those of any affiliate or any other person;
and (14) not and will not hold itself out to be responsible for the debts or
obligations of any other Person.
(qq) Mortgagor Properly Licensed and in Compliance With
Terms of Mortgage Loan Documents. To the best of the Borrower's knowledge based
on the Mortgagor's representations and warranties, (i) the Mortgagor was at the
time of origination in possession of all licenses, permits and other
authorizations necessary and required by applicable law for the conduct of its
business; (ii) all such licenses, permits and authorizations are valid and in
full force and effect and (iii) all material conditions on the Mortgagor's part
to be fulfilled under the terms of any lease of the Mortgaged Property have been
satisfied.
(rr) No Conflicts. To the best of the Borrower's knowledge
based on the Mortgagor's representations and warranties, (i) the execution,
delivery and performance of the Mortgage Note, the Mortgage, and the other
Mortgage Loan Documents by the Mortgagor do not conflict with or constitute a
default under, or result in the creation or imposition of any lien (other than
pursuant to the Mortgage Loan Documents) mortgage, deed of trust, loan
agreement, partnership agreement, or other agreement or instrument to which the
Mortgagor is a party or to which the Mortgaged Property is subject, nor will
such action result in any violation of the provisions of any statute or any
jurisdiction over the Mortgagor or the Mortgaged Property, and (ii) any
qualification of or with any Governmental Authority required for the execution,
deliver, and performance by the Mortgagor of the Mortgage Note, the Mortgage, or
the other Mortgage Loan Documents has been obtained as is in full force and
effect.
Schedule 1, Page 10
56
(ss) Litigation. To the best of the Borrower's knowledge
based on the Mortgagor's representations and warranties, there are no actions,
suits, or proceedings at law or in equity by or before any Governmental
Authority now pending or threatened against or affecting the Mortgagor or the
Mortgaged Property, which actions, suits or proceedings, if determined against
the Mortgagor or the Mortgaged Property, might materially adversely affect the
condition (financial or otherwise) or business of the Mortgagor or the condition
or ownership of the Mortgaged Property.
(tt) No Violation of Environmental Laws. To the best of the
Borrower's knowledge, there is no pending action or proceeding directly
involving the Mortgaged Property in which compliance with any environmental law,
rule or regulation is an issue; and to the best of the Borrower's knowledge,
nothing further remains to be done to satisfy in full all requirements of each
such law, rule or regulation constituting a prerequisite to use and enjoyment of
said property.
(uu) Agreements. To the best of the Borrower's knowledge
based on the Mortgagor's representations and warranties, the Mortgagor is not a
party to any agreement or instrument or subject to any restriction which might
adversely affect the Mortgagor. To the best of the Borrower's knowledge based on
the Mortgagor's representations and warranties, the Mortgagor is not in default
in any material respect in the performance, observance, or fulfillment of any of
the obligations, covenants or conditions contained in any agreement or
instrument to which it is a party or by which the Mortgagor or the Mortgaged
Property is bound.
(vv) No Bankruptcy Filing. To the best of the Borrower's
knowledge based on the Mortgagor's representations and warranties, the Mortgagor
is not contemplating either the filing of a petition by it under any state or
federal bankruptcy or insolvency laws or the liquidation of all or a major
portion of the Mortgagor's assets or the Mortgaged Property.
(ww) Full and Accurate Disclosure. To the best of the
Borrower's knowledge based on the Mortgagor's representations and warranties, no
statement of fact made by the Mortgagor in the Mortgage Loan Documents contains
any untrue statement of a material fact or omits to state any material fact
necessary to make statements contained herein or therein not misleading.
(xx) No Plan Assets. To the best of the Borrower's
knowledge based on the Mortgagor's representations and warranties, the Mortgagor
is not an "employee benefit plan," as defined in Sections 3 (3) of ERISA,
subject to Title I of ERISA, and none of the assets of the Mortgagor constitutes
or will constitute "plan assets" of one or more such plans within the meaning of
29 C.F.R. Section 2510.3-101.
(yy) Compliance. To the best of the Borrower's knowledge,
the Mortgagor and the Mortgaged Property and the use thereof comply in all
material respects with all applicable legal requirements, including, without
limitation, parking requirements. To the best of the Borrower's knowledge based
on the Mortgagor's representations and warranties, the Mortgagor is not in
default or violation of any order, writ, injunction, decree or demand of any
Governmental Authority, the violation of which might materially adversely affect
the condition (financial or otherwise) or business of the Mortgagor.
Schedule 1, Page 11
57
(zz) Contracts. To the best of the Borrower's knowledge
based on the Mortgagor's representations and warranties, there are no material
contracts (other than management contracts) affecting the Mortgaged Property
that are not terminable on one month's notice or less without cause and without
penalty or premium.
(aaa) Financial Information. To the best of the Borrower's
knowledge, based upon the Mortgagor's representations and warranties, all
financial data, including, without limitation the statements of cash flow and
income and operating expense, that have been delivered to the Qualified
Originator (i) are true, complete, and correct in all material respects, and
(ii) accurately represent the financial condition of the Mortgaged Property and
the persons covered thereby as of the date of such reports.
(bbb) Not a Foreign Person. To the best of the Borrower's
knowledge based upon the Mortgagor's representations and warranties, the
Mortgagor is not a "foreign person" within the meaning of Section 1445(f)(3) of
the Code.
(ccc) Separate Lots. To the best of the Borrower's knowledge
based on the Mortgagor's representations and warranties, the Mortgaged Property
is not assessed jointly with any other real property constituting a separate tax
lot or with any other real property constituting a separate tax lot or with any
personal property not constituting part of such Mortgaged Property such that the
lien of any taxes which may be levied against such personal property shall be
assessed or levied or charged as a lien on the Mortgaged Property.
(ddd) Assessments. To the best of the Borrower's knowledge
based upon the Mortgagor's representations and warranties, there are no pending
or proposed special or other assessments for public improvements or otherwise
affecting the Mortgaged Property, nor to the best of the Borrower's knowledge
based upon the Mortgagor's representations and warranties are there any
contemplated improvements to the Mortgaged Property that may result in such
special or other assessments.
(eee) Mortgage Submitted for Recordation. The Mortgage
either has been or will promptly be submitted for recordation in the appropriate
governmental recording office of the jurisdiction where the Mortgaged Property
is located.
(fff) The Ground Lease. To the best of the Borrower's
knowledge based upon the Mortgagor's representations and warranties 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 unmodified and not
supplemented by any writing or otherwise (other than as disclosed in the
Servicing File) and is in full force and effect; (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
Schedule 1, Page 12
58
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.
(ggg) Table-Funded Mortgage Loans. With respect to each
Mortgage Loan that is a Table-Funded Mortgage Loan, the Settlement Agent has
entered into a Bailee Agreement agreeing to hold the related Mortgage Loan
Documents as agent and bailee for the Lender and to promptly forward such
Mortgage Loan Documents to the Custodian for receipt by the fourth (4th)
Business Day following the applicable Funding Date.
Schedule 1, Page 13
59
Part II. Eligible Commercial Mortgage Loans that are Secured by Hotels
As to each Eligible Commercial Mortgage Loan secured by a
Hotel included in the Borrowing Base on a Funding Date (and the related
Mortgage, Mortgage Note, Assignment of Mortgage and Mortgaged Property), the
Borrower shall be deemed to make the following representations and warranties
to the Lender as of such date (certain defined terms used herein and not
otherwise defined in the Agreement appearing in Part III to this Schedule 1,
except as otherwise set forth on an Officer's Certificate (as defined in the
Custodial Agreement) delivered on or prior to Funding Date or otherwise
disclosed in writing to the Lender.
(a) To the best of the Borrower's knowledge, the
Franchise Agreement, if any, is in full force and effect and there is no
default, breach or violation existing thereunder by any party thereto and no
event (other than payments due but not yet delinquent) which, with the passage
of time or with notice and the expiration of any grace or cure period would
constitute a default, breach or violation by any party thereunder;
(b) To the best of the Borrower's knowledge, the
Management Agreement, if any, is in full force and effect and there is no
default, breach or violation existing thereunder by any party thereto and no
event (other than payments due but not yet delinquent) which, with the passage
of time or with notice and the expiration of any grace or cure period would
constitute a default, breach or violation by any party thereunder;
(c) To the best of the Borrower's knowledge, the
Mortgagor owns/and or possesses, and holds free from burdensome restrictions or
known conflicts with the rights of others, all material licenses,
registrations, permits, certificates, authorizations and approvals necessary
for the operation of the Mortgaged Property as a Hotel; and
(d) Neither the execution and delivery of the Mortgage
Loan Documents, the Mortgagor's performance thereunder, the recordation of the
Mortgage, will materially and adversely affect (x) the Mortgagor's rights under
either the Franchise Agreement, if any, or the Management Agreement, if any, or
(y) the licenses, registration, permits, certificates, authorizations and
approvals necessary for the operation of the Hotel; provided, however, in the
case of clause (y) the Borrower's knowledge is limited to the Borrower's actual
knowledge based on (1) a review of such items and (2) reliance on an opinion of
counsel from the Mortgagor's counsel.
Schedule 1, Page 14
60
Part III. Defined Terms
In addition to terms defined elsewhere in the Loan Agreement,
the following terms shall have the following meanings when used in this
Schedule 1:
"Acceptable State" shall mean any state for which approval has
not been revoked by the Lender in its sole discretion, any such notice of
revocation to be given no later than 10 Business Days prior to its intended
effective date.
"Accepted Servicing Practices" shall mean, with respect to any
Mortgage Loan, those 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.
"ALTA" means the American Land Title Association.
"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 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.
"Best's" means Best's Key Rating Guide, as the same shall be
amended from time to time.
"Cut-off Date" means the first day of the month in which the
related Funding Date occurs.
"Debt Service Ratio" means as of any date of determination and
for any period, the applicable "Debt Service Coverage" ratio determined in
accordance with, and defined in, the Underwriting Guidelines.
"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.
"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.
"▇▇▇▇▇▇▇ Mac" means ▇▇▇▇▇▇▇ Mac, or any successor thereto.
"▇▇▇▇▇▇ ▇▇▇" means ▇▇▇▇▇▇ Mae, or any successor thereto.
Schedule 1, Page 15
61
"Gross Margin" means with respect to each adjustable rate
Mortgage Loan, the fixed percentage amount set forth in the related Mortgage
Note.
"Ground Lease" means a lease for all or any portion of the
real property comprising the Mortgaged Property, the lessee's interest in which
is held by the Mortgagor of the related Mortgage Loan.
"Ground Lessee" shall mean the ground lessee under a Ground
Lease.
"Hotel" shall mean a real estate development owned by the
Mortgagor or for which the Mortgagor is a Ground Lessee, which constitutes a
full operational hotel or motel, including all land, amenities and
improvements, with individual rooms principally for short-term rental to
tenants occupying same, as more particularly described in the Underwriting
Guidelines.
"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.
"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.
"Loan-to-Value Ratio" or "LTV" means with respect to any
Mortgage Loan, the ratio of the original outstanding principal amount of the
Mortgage Loan to the lesser of (a) the Appraised Value of the Mortgaged
Property at origination or (b) if the Mortgaged Property was purchased within
12 months of the origination of the Mortgage Loan, the purchase price of the
Mortgaged Property.
"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 Interest Rate" means the annual rate of interest
borne on a Mortgage Note, which shall be adjusted from time to time with
respect to adjustable rate Mortgage Loans.
"Mortgage Interest Rate Cap" means with respect to an
adjustable rate Mortgage Loan, the limit on each Mortgage Interest Rate
adjustment as set forth in the related Mortgage Note.
"Mortgagee" means the Borrower or any subsequent holder of a
Mortgage Loan.
"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.
Schedule 1, Page 16
62
"PMI Policy" or "Primary Insurance Policy" means a policy of
primary mortgage guaranty insurance issued by a Qualified Insurer.
"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 ▇▇▇▇▇▇ ▇▇▇ and ▇▇▇▇▇▇▇ Mac and whose claims paying ability is rated
in the two highest rating categories by any of the rating agencies with respect
to primary mortgage insurance and in the two highest rating categories by
Best's with respect to hazard and flood insurance.
"Qualified Originator" means an originator of Mortgage Loans
reasonably acceptable to the Lender.
"Servicing File" means with respect to each Mortgage Loan, the
file retained by the Borrower consisting of originals of all 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.
Schedule 1, Page 17
