$15,000,000
WAREHOUSE CREDIT AGREEMENT
among
IMC MORTGAGE COMPANY and
INDUSTRY MORTGAGE COMPANY, L.P.,
as Borrowers,
and
GE CAPITAL MORTGAGE SERVICES, INC., as Lender
----------------------------------
Dated as of January 30, 1997
----------------------------------
TABLE OF CONTENTS
Section Page
------- ----
Section 1. Definitions and Principles of Construction...........................................1
1.01 Defined Terms............................................................................1
1.02 Principles of Construction..............................................................12
Section 2. Amount and Terms of Credit..........................................................13
2.01 Commitment..............................................................................13
2.02 Minimum Borrowing Amount................................................................13
2.03 Pledge of Collateral....................................................................13
2.04 Request for Advance.....................................................................13
2.05 Disbursement of Funds...................................................................14
2.06 Note....................................................................................14
2.07 Interest................................................................................14
2.08 Increased Costs.........................................................................15
Section 3. Fees................................................................................15
3.01 Fees....................................................................................15
Section 4. Prepayments; Payments...............................................................15
4.01 Voluntary Prepayments...................................................................16
4.02 Mandatory...............................................................................16
4.03 Release of Collateral; Substitution.....................................................18
4.04 Sale of Collateral to Investors.........................................................18
4.05 Method and Place of Payment.............................................................19
4.06 Net Payments............................................................................19
Section 5. Conditions Precedent................................................................19
5.01 Execution of Agreement; Note............................................................19
5.02 No Default; Representations and Warranties..............................................19
5.03 Request for Advance.....................................................................20
5.04 Opinion of Counsel......................................................................20
5.05 Diligence...............................................................................20
5.06 Corporate Documents; Proceedings........................................................20
5.07 Financial Statements....................................................................20
5.08 Mandatory Prepayment....................................................................21
5.09 Warehouse Security Agreement............................................................21
5.10 No Adverse Change.......................................................................21
5.11 Insurance...............................................................................21
5.12 [Intentionally Omitted].................................................................21
5.13 Delivery of the Collateral..............................................................21
5.14 Fees....................................................................................22
5.15 No Litigation...........................................................................22
Section 6. Representations, Warranties and Agreements..........................................22
6.01 Corporate Status........................................................................22
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6.02 Corporate Power and Authority...........................................................22
6.03 No Violation............................................................................23
6.04 Governmental Approvals..................................................................23
6.05 Financial Statements; Financial Condition; Undisclosed Liabilities; etc.................23
6.06 Litigation..............................................................................23
6.07 True and Complete Disclosure............................................................23
6.08 Use of Proceeds; Margin Regulations.....................................................24
6.09 Tax Returns and Payments................................................................24
6.10 Compliance with ERISA...................................................................24
6.11 Capitalization..........................................................................24
6.12 Subsidiaries............................................................................25
6.13 Compliance with Statutes, etc...........................................................25
6.14 Investment Company Act..................................................................25
6.15 No Burdensome Agreement.................................................................25
6.16 [Intentionally Omitted].................................................................25
6.17 Security Interests......................................................................25
6.18 Registration............................................................................25
6.19 Representations Relating to the Mortgage Loans..........................................26
6.20 Insurance...............................................................................27
6.21 Title to Property.......................................................................27
Section 7. Affirmative Covenants...............................................................27
7.01 Information Covenants...................................................................27
7.02 Books, Records and Inspections..........................................................30
7.03 Maintenance of Property, Insurance......................................................30
7.04 Corporate Franchises....................................................................31
7.05 Compliance with Statutes, etc...........................................................31
7.06 ERISA...................................................................................31
7.07 Performance of Obligations..............................................................32
7.08 Mortgage Loans..........................................................................32
7.09 Payment of Taxes........................................................................32
7.10 Corporate Separateness..................................................................32
7.11 Collateral..............................................................................33
7.12 Portfolio Hedging Arrangements..........................................................33
Section 8. Negative Covenants..................................................................33
8.01 Liens...................................................................................33
8.02 Consolidation, Merger, Sale of Assets, etc..............................................33
8.03 Dividends...............................................................................34
8.04 [Intentionally Omitted].................................................................34
8.05 [Intentionally Omitted].................................................................34
8.06 Transactions with Affiliates............................................................34
8.07 Capital Expenditures....................................................................35
8.08 Maximum Consolidated Leverage Ratio.....................................................35
8.09 Minimum Consolidated Tangible Net Worth.................................................35
8.10 Minimum Servicing Portfolio.............................................................35
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8.11 Modifications of Certificate of Incorporation, By-Laws, Certain Other Agreements and
Collateral..............................................................................35
8.12 Limitation on Restrictions on Subsidiary Dividends and Other Distributions..............35
8.13 Limitation on Issuances of Capital Stock by Subsidiaries................................36
8.14 [Intentionally Omitted].................................................................36
8.15 Portfolio Aging.........................................................................36
Section 9. Events of Default...................................................................36
9.01 Payments................................................................................36
9.02 Representations, etc....................................................................36
9.03 Covenants...............................................................................36
9.04 Default Under Other Agreements..........................................................36
9.05 [Intentionally Omitted].................................................................37
9.06 Bankruptcy, etc.........................................................................37
9.07 ERISA...................................................................................37
9.08 Warehouse Security Agreement............................................................37
9.09 [Intentionally Omitted].................................................................37
9.10 [Intentionally Omitted].................................................................37
9.11 Judgments...............................................................................37
9.12 [Intentionally Omitted].................................................................37
9.13 Default Not a Condition of a 120-Day Demand.............................................38
Section 10. Miscellaneous......................................................................38
10.01 Payment of Expenses; Indemnity.........................................................38
10.02 Notices................................................................................39
10.03 Benefit of Agreement...................................................................40
10.04 No Waiver; Remedies Cumulative.........................................................40
10.05 Calculations; Computations.............................................................40
10.06 Governing Law; Submission to Jurisdiction; Venue.......................................40
10.07 No Proceedings.........................................................................41
10.08 Participation and Syndication..........................................................41
10.09 Obligation to Make Payments in Dollars.................................................41
10.10 Counterparts...........................................................................41
10.11 Effectiveness..........................................................................41
10.12 Headings Descriptive...................................................................42
10.13 Amendment or Waiver....................................................................42
10.14 Survival...............................................................................42
10.15 Waiver of Jury Trial...................................................................42
SCHEDULES
SCHEDULE 6.12 - List of Subsidiaries
SCHEDULE 7.01(s) - Credit Package Documents (List of
Documents to be Delivered With Respect
to a Pledged Mortgage Loan)
SCHEDULE 8.06 -List of Affiliated Appraisers or Title Agents
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EXHIBITS
EXHIBIT A-1 -Form of Pledge of Collateral
EXHIBIT A-2 -Form of Request for Advance
EXHIBIT B-1 -Form of Wet Advance Disbursement Instruction
EXHIBIT B-2 -Form of Borrower's Wet Advance Disbursement
Instruction
EXHIBIT C -Form of Borrowing Base Certificate
EXHIBIT D -Form of Note
EXHIBIT E -Form of Opinion of Special Counsel for the
Borrowers
EXHIBIT F-1 -Form of Officers' Certificate for IMC Mortgage
Company
EXHIBIT F-2 -Form of General Partner's Certificate for
Industry Mortgage Company, L.P.
EXHIBIT G -Form of Warehouse Security Agreement
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WAREHOUSE CREDIT AGREEMENT, dated as of January 30, 1997, among IMC
MORTGAGE COMPANY, a Florida corporation ("IMC Company"), INDUSTRY MORTGAGE
COMPANY, L.P., a Delaware limited partnership ("IMC Partnership") (IMC Company
and IMC Partnership each being referred to individually as a "Borrower" or the
"Borrower" and collectively as the "Borrowers"), and GE CAPITAL MORTGAGE
SERVICES, INC., a New Jersey corporation (the "Lender").
W I T N E S S E T H :
WHEREAS, the Borrowers originate and acquire Mortgage Loans;
WHEREAS, the Borrowers have jointly and severally requested the Lender
to provide financing for the Borrowers' mortgage lending business; and
WHEREAS, subject to and upon the terms and conditions herein set forth,
the Lender is willing to make available to the Borrowers the credit facilities
provided for herein;
NOW, THEREFORE, IT IS AGREED:
1. Definitions and Principles of Construction.
1.01 Defined Terms. As used in this Agreement, the
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"Advance" shall have the meaning provided in Section 2.01.
"Advance Account" shall mean the depository account of the Borrowers
designated by the Borrowers by written notice to the Lender.
"Affiliate" shall mean, as to any Person, any other Person (other than
an individual) directly or indirectly controlling, controlled by, or under
direct or indirect common control with, such Person; provided, however, that for
purposes of Section 8.06, an Affiliate of a Borrower shall include any Person
that directly or indirectly owns more than 5% of the Borrower and any officer or
director of the Borrower or any such Person. A Person shall be deemed to control
another Person if such Person possesses, directly or indirectly, the power to
direct or cause the direction of the management and policies of such other
Person, whether through the ownership of voting securities, by contract or
otherwise.
"Bankruptcy Code" shall mean Title 11 of the United States Code entitled
"Bankruptcy," as now or hereafter in effect, or any successor thereto.
"Borrower's Wet Advance Disbursement Instruction" shall have the meaning
provided in Section 2.05.
"Borrowing Base" shall mean, as of any date, an amount that is the sum
of the following, with respect to all Eligible Mortgage Loans and Liquid Assets
pledged to the Lender as of such date: (1) the sum for all Conforming Loans that
are Committed Mortgage Loans of the product of (x) the Mortgage Loan Aging
Percentage with respect to such Mortgage Loan and (y) 99% of the Market Value of
such Mortgage Loan, (2) the sum for all Jumbo Loans of the product of (x) the
Mortgage Loan Aging Percentage with respect to such Mortgage Loan and (y) 99% of
the Market Value of such Mortgage Loan, (3) the sum for all Mortgage Loans that
are FHA Loans, VA Loans or State Loans of the product of (x) the Mortgage Loan
Aging Percentage with respect to such Mortgage Loan and (y) 98% of the Market
Value of such Mortgage Loan, (4) the sum for all Credit A- Loans of the product
of (x) the Mortgage Loan Aging Percentage with respect to such Mortgage Loan and
(y) 99% of the Market Value of such Mortgage Loan, (5) the sum for all Credit B
Loans of the product of (x) the Mortgage Loan Aging Percentage with respect to
such Mortgage Loan and (y) 99% of the Market Value of such Mortgage Loan, (6)
the sum for all Credit C Loans of the product of (x) the Mortgage Loan Aging
Percentage with respect to such Mortgage Loan and (y) 98% of the Market Value of
such Mortgage Loan, (7) the sum for all Credit D Loans of the product of (x) the
Mortgage Loan Aging Percentage with respect to such Mortgage Loan and (y) 97% of
the Market Value of such Mortgage Loan and (8) an amount equal to the aggregate
principal amount of the Liquid Assets.
"Borrowing Base Certificate" shall have the meaning provided in Section
2.03.
"Business Day" shall mean any day except Saturday, Sunday and any day
which shall be in New York, New York, a legal holiday or a day on which banking
institutions are authorized or required by law or other government action to
close.
"Cash Equivalents" means (i) securities with maturities of sixty days or
less from the date of acquisition issued or fully guaranteed or insured by the
United States Government or any agency thereof, (ii) certificates of deposit,
eurodollar time deposits, overnight bank deposits, bankers' acceptances and
repurchase agreements of any commercial bank whose short-term obligations are
rated "A-1" by S&P and, if rated by Xxxxx'x, "P-1" by Xxxxx'x and, if rated by
Fitch, "F-1" by Fitch, having maturities of sixty days or less from the date of
acquisition, (iii) commercial paper having maturities of sixty days or less from
the date of acquisition, rated at least "A-1" by S&P or "P-1" by Xxxxx'x and, if
rated by Fitch, "F-1" by Fitch, (iv) money market funds rated at least "AAAm" or
"AAA-G" by S&P or "P-1" by Xxxxx'x and, if rated by Fitch, "AAA" by Fitch and
(v) repurchase agreements with counterparties whose short-term obligations are
rated at least "A-1" by S&P or "P-1" by Xxxxx'x and, if rated by Fitch, "F-1"
with a term of sixty days or less.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
"Collateral" shall mean all "Collateral" as defined in the Warehouse
Security Agreement.
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"Collateral Documents" shall mean, as to a Mortgage Loan which has been
or is to be pledged to the Lender as Collateral, the following documents and
instruments:
(i) The original Mortgage Note executed with respect to such
Mortgage Loan by a third party in favor of a Borrower (or
properly endorsed to a Borrower if purchased or acquired by such
Borrower) and endorsed in blank by such Borrower;
(ii) The original recorded Mortgage securing such Mortgage Note or a
copy of the original Mortgage securing such Mortgage Note,
certified by the Borrower or a title company or escrow company
reasonably satisfactory to the Lender to be a true copy of the
original instrument submitted for recording;
(iii) If the Mortgage Note was purchased by the Borrower, an original
properly recorded assignment of the related Mortgage to the
Borrower or a copy of such assignment certified by the Borrower
or a title or escrow company reasonably satisfactory to the
Lender to be a true copy of the original instrument submitted
for recording and a certified copy of each intervening
assignment of such Mortgage, if any;
(iv) An assignment of the Mortgage by the Borrower to the Lender
fully completed and in recordable form. If appropriate filing
and recording information regarding the Mortgage has not been
inserted into the assignment, the Borrowers hereby authorize the
Lender to insert such information, when available. Such
assignment shall not be filed for recordation unless the Lender
shall in good xxxxx xxxx such action necessary to further secure
any Advances, in which case the Lender may file of record any or
all such assignments. The Borrowers shall immediately reimburse
the Lender for any and all reasonable costs and expenses
incurred by the Lender in connection with such recordation;
(v) Such other documents as the Lender may reasonably require from
time to time.
"Collateral Value" shall mean, at any time, with respect to a Mortgage
Loan, the amount resulting from that part of the calculation of the Borrowing
Base at such time that relates to such Mortgage Loan.
"Combined Loan-to-Value Ratio" shall mean, as to any Mortgage Loan, the
ratio expressed as a percentage that the sum of the original principal balance
of such Mortgage Loan and the then current principal balance of any related
first priority mortgage bears to the appraised value of the related mortgaged
property at the time such Mortgage Loan was originated.
"Commercial Paper" shall mean the short-term promissory notes of General
Electric Capital Corporation.
"Commercial Paper Rate" shall mean, with respect to any calendar month,
a rate per annum determined by annualizing the aggregate interest expense of
General Electric Capital Corporation
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(determined on an accrual basis) for such calendar month in respect of
Commercial Paper outstanding during such calendar month.
"Commitment" shall mean, the obligation of the Lender to make Advances
in an aggregate principal amount outstanding at any time not to exceed
$15,000,000.
"Committed Mortgage Loans" shall mean all Mortgage Loans pledged to the
Lender pursuant to the terms of this Agreement and of the Warehouse Security
Agreement (i) which satisfy all of the requirements of any Purchase Commitment
or are covered by a Hedging Contract, (ii) which could be delivered under such
Purchase Commitment, and (iii) which, in respect of all Mortgage Loans of a
particular type and yield, do not in the aggregate have a principal amount in
excess of the sum of (A) the aggregate then remaining amount of all Purchase
Commitments the requirements of which are satisfied by Mortgage Loans of such
type and yield owned by the Borrowers plus (B) the aggregate amount of all
Hedging Contracts that cover Mortgage Loans of such type and yield owned by the
Borrowers.
"Conforming Loan" shall mean a Mortgage Loan (other than a VA Loan, an
FHA Loan or a State Loan) that is underwritten in conformity with FHLMC or FNMA
underwriting standards and is otherwise eligible for purchase by FNMA or FHLMC.
"Consolidated Leverage Ratio" shall mean, as to any Person, the ratio of
the Consolidated Liabilities of such Person to the Consolidated Tangible Net
Worth of such Person.
"Consolidated Liabilities" shall mean, as to any Person, the liabilities
of such Person and its Subsidiaries determined on a consolidated basis and in
accordance with generally accepted accounting principles in the United States,
applied on a consistent basis, and shall include in any event the Contingent
Obligations of such Person and its Subsidiaries.
"Consolidated Net Worth" shall mean, as to any Person, the Net Worth of
such Person and its Subsidiaries determined on a consolidated basis after
appropriate deduction for any minority interests in Subsidiaries and in
accordance with generally accepted accounting principles in the United States,
applied on a consistent basis.
"Consolidated Subsidiaries" shall mean, as to any Person, all
Subsidiaries of such Person which are or are required to be consolidated with
such Person for financial reporting purposes in accordance with generally
accepted accounting principles in the United States.
"Consolidated Tangible Net Worth" shall mean, as to any Person, (x) the
sum of, without duplication, the Consolidated Net Worth of such Person and its
Subsidiaries, as determined on a consolidated basis in accordance with generally
accepted accounting principles in the United States plus the principal amount of
any Indebtedness that is subordinated to the payment of the Obligations on such
terms as are acceptable to the Lender and that does not permit or require any
principal payment in respect thereof prior to the Expiry Date in effect from
time to time, less (y) the sum of (i) the amount of all intangible items,
including, without limitation, goodwill, franchises, licenses, patents,
trademarks, trade names, copyrights, service marks, brand names and write-ups of
assets, (ii)
4
all receivables from any officer, director or Affiliate of a Borrower, (iii) all
unpaid stock subscriptions and (iv) the Contingent Obligations of such Person as
determined by the Lender.
"Contingent Obligation" shall mean, as to any Person, any obligation of
such Person arising from an existing condition or situation that involves
uncertainty as to outcome and that will be resolved by the occurrence or
nonoccurrence of some future event, including but not limited to any obligation
of such Person guaranteeing or intended to guarantee any Indebtedness, leases,
dividends or other obligations ("primary obligations") of any other Person (the
"primary obligor") in any manner, whether directly or indirectly; provided,
however, that the term Contingent Obligation shall not include endorsements of
instruments for deposit or collection in the ordinary course of business. The
amount of any Contingent Obligation shall be deemed to be an amount equal to the
stated or determinable amount of the primary obligation in respect of which such
Contingent Obligation is made or, if not stated or determinable, the maximum
reasonably anticipated liability in respect thereof (assuming such Person is
required to perform thereunder).
"Credit A- Loan" shall mean a Mortgage Loan underwritten in accordance
with the Borrowers' standards for a credit A- loan as approved by the Lender
from time to time.
"Credit B Loan" shall mean a Mortgage Loan underwritten in accordance
with the Borrowers' standards for a credit B loan as approved by the Lender from
time to time.
"Credit C Loan" shall mean a Mortgage Loan underwritten in accordance
with the Borrowers' standards for a credit C loan as approved by the Lender from
time to time.
"Credit D Loan" shall mean a Mortgage Loan underwritten in accordance
with the Borrowers' standards for a credit D loan as approved by the Lender from
time to time.
"Credit Documents" shall mean this Agreement, the Note and the
Warehouse Security Agreement.
"Credit Package Documents" shall have the meaning provided in Section
7.01(s).
"Custodian" shall mean, with respect to any Investor, any financial
institution selected by such Investor to act as a custodian for Mortgage Loans
acquired or to be acquired by such Investor; provided that such financial
institution has been approved by the Lender and meets all applicable Investor or
other requirements to act as such custodian.
"Default" shall mean any event, act or condition which with notice or
lapse of time, or both, would constitute an Event of Default.
"Dollars" and the sign "$" shall each mean freely transferable lawful
money of the United States.
"Effective Date" shall have the meaning provided in Section 10.11.
5
"Eligible Mortgage Loan" shall mean at the time of the determination
thereof a Mortgage Loan, which at such time (i) is pledged as Collateral
pursuant to the terms of this Agreement and of the Warehouse Security Agreement;
(ii) is (x) subject to a Purchase Commitment, (y) covered by a Hedging Contract,
or (z) underwritten in accordance with standards approved by the Lender so that
such Mortgage Loan is readily salable to an Investor or is eligible for
securitization, (iii) is, without duplication, a First Mortgage Loan or a Second
Mortgage Loan; (iv) no payment due thereunder is or has been delinquent; (v) no
deficiencies exist in respect of the documentation therefor; (vi) is, without
duplication, a Conforming Loan, a Jumbo Loan, an FHA Loan, a VA Loan, a State
Loan, a Credit A- Loan, a Credit B Loan, a Credit C Loan or a Credit D Loan;
(vii) in the case of a Mortgage Loan that is not subject to a Wet Advance, has
an Origination Date that is less than 20 calendar days prior to such time;
(viii) in the case of a Mortgage Loan that is subject to a Wet Advance, has an
Origination Date that is not more than seven days prior to such time and (ix)
has a Combined Loan-to-Value Ratio of 100% or less, excluding in all such cases,
however, (1) any Mortgage Loan in respect of which a title insurance policy or
appraisal has been underwritten or issued by any entity controlled by a
mortgagor or a real estate broker involved in the transaction resulting in the
creation of such Mortgage Loan and (2) any Mortgage Loan about which any of the
representations, warranties and agreements contained in Section 6.19 is not true
and correct; provided that the interest rate on such Mortgage Loan was, as of
the date on which such interest rate was set or established, at least equal to
the then current market rate of interest for mortgage loans of the same type as
determined by the Lender.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time, and the regulations promulgated and rulings issued
thereunder.
"ERISA Affiliate" shall mean any person (as defined in Section 3(9) of
ERISA) which together with a Borrower or any of its Subsidiaries would be a
member of the same "controlled group" within the meaning of Section 414(b), (m),
(c) and (o) of the Code.
"Event of Default" shall have the meaning provided in Section 9.
"Expiry Date" shall mean the earlier of (i) January 31, 1998 as such
date may be extended upon mutual agreement among the Borrowers and the Lender
from time to time and (ii) the date that is 120 days after the date on which the
Lender shall have given the Borrowers the notice referred to in Section 9.13
hereof.
"Fees" shall mean all fees and expenses required to be paid by the
Borrowers pursuant to Section 3.01.
"FHA" shall mean the Federal Housing Administration or any successor
thereto.
"FHA Loan" shall mean a Mortgage Loan which (i) is eligible for
insurance by FHA and (ii) is so insured or is subject to a current binding and
enforceable commitment for such insurance pursuant to the provisions of the
National Housing Act, as now in effect and as may be hereafter amended from time
to time, and is otherwise eligible for inclusion in a GNMA mortgage-backed
security pool.
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"FHLMC" shall mean the Federal Home Loan Mortgage Corporation or any
successor thereto.
"First Mortgage Loan" shall mean a Mortgage Loan that is underwritten in
conformity with underwriting standards approved by the applicable Investor and
is secured by a first priority Mortgage.
"Fitch" shall mean Fitch Investors Service, L.P.
"FNMA" shall mean the Federal National Mortgage Association or any
successor thereto.
"GNMA" shall mean the Government National Mortgage Association, or any
successor thereto.
"Hedging Contract" shall mean a written contractual arrangement designed
to provide protection against fluctuations in interest rates with respect to
Mortgage Loans and commitments made to prospective Mortgage Loan obligors to
extend Mortgage Loans at specified rates of interest, in each case in accordance
with guidelines reasonably acceptable to the Lender.
"HUD" shall mean the Department of Housing and Urban Development or any
successor thereto.
"Indebtedness" shall mean, as to any Person, without duplication, (i)
all indebtedness (including principal, interest, fees and charges) of such
Person for borrowed money or for the deferred purchase price of property or
services, (ii) the face amount of all letters of credit issued for the account
of such Person and all drafts drawn thereunder, (iii) all liabilities secured by
any Lien on any property owned by such Person, whether or not such liabilities
have been assumed by such Person, (iv) the aggregate amount required in
accordance with generally accepted accounting principles to be capitalized under
leases under which such Person is the lessee and (v) all Contingent Obligations
of such Person.
"Initial Borrowing Date" shall mean the date on which the initial
incurrence of Advances occurs.
"Insolvency Event" shall mean, with respect to any Person, the
occurrence of any of the following events: (i) such Person shall become
insolvent or generally fail to pay, or admit in writing its inability to pay,
its debts as they become due, or shall voluntarily commence any proceeding or
file any petition under any bankruptcy, insolvency or similar law or seeking
dissolution, liquidation or reorganization or the appointment of a receiver,
trustee, custodian, conservator or liquidator for itself or a substantial
portion of its property, assets or business or to effect a plan or other
arrangement with its creditors, or shall file any answer admitting the
jurisdiction of the court and the material allegations of an involuntary
petition filed against it in any bankruptcy, insolvency or similar proceeding,
or shall be adjudicated bankrupt, or shall make a general assignment for the
benefit of creditors, or such Person, or a substantial part of its property,
assets or business, shall be subject to,
7
consent to or acquiesce in the appointment of a receiver, trustee, custodian,
conservator or liquidator for itself or a substantial portion of its property,
assets or business; (ii) corporate or partnership action shall be taken by such
Person for the purpose of effectuating any of the foregoing; (iii) an order for
relief shall be entered in a case under the Bankruptcy Code in which such Person
is a debtor; or (iv) involuntary proceedings or an involuntary petition shall be
commenced or filed against such Person under any bankruptcy, insolvency or
similar law or seeking the dissolution, liquidation or reorganization of such
Person or the appointment of a receiver, trustee, custodian, conservator or
liquidator for such Person or of a substantial part of the property, assets or
business of such Person, or any writ, order, judgment, warrant of attachment,
execution or similar process shall be issued or levied against a substantial
part of the property, assets or business of such Person, and such proceeding or
petition shall not be dismissed, or such execution or similar process shall not
be released, vacated or fully bonded, within sixty (60) days after commencement,
filing or levy, as the case may be.
"Investor" shall mean FHLMC, FNMA, GNMA or any financial institution,
broker, dealer, institutional investor or state agency or instrumentality
approved by the Lender.
"Jumbo Loan" shall mean a Mortgage Loan (other than a FHA Loan, a VA
Loan, or a State Loan) that is underwritten in accordance with standards
approved by the Lender that are generally comparable to the standards
established by FNMA or FHLMC in all respects other than the original principal
amount of the Mortgage Loan and that were established by an Investor (other than
FHLMC, FNMA or GNMA).
"Lender" shall have the meaning provided in the first paragraph of this
Agreement.
"Lien" shall mean any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other), preference,
priority or other security agreement of any kind or nature whatsoever
(including, without limitation, any conditional sale or other title retention
agreement, any financing or similar statement or notice filed under the UCC or
any other similar recording or notice statute, and any lease having
substantially the same effect as any of the foregoing).
"Liquid Assets" shall mean (i) certificates of deposit of any commercial
bank whose short-term obligations are rated "A-1+" by S&P, and, if rated by
Moody's, "P-1" by Moody's and, if rated by Fitch, "F-1+" by Fitch having
maturities of 60 days or less from the date of acquisition and (ii) securities
issued or fully guaranteed or insured by the United States Government or any
agency thereof having maturities of 60 days or less from the date of
acquisition.
"Margin Stock" shall have the meaning provided in Regulation U of the
Board of Governors of the Federal Reserve System.
"Market Value" shall mean as of any date at which the amount thereof is
to be determined, as to any Mortgage Loan an amount equal to the lower of (A) an
amount equal to (1) with respect to a Mortgage Loan that was funded directly by
a Borrower to the obligor thereunder, the outstanding principal amount of such
Mortgage Loan or (2) with respect to a Mortgage Loan that was purchased
8
by a Borrower, the lesser of (x) the purchase price paid by the Borrower
therefor (exclusive of any accrued interest or servicing release premium
included in such purchase price) and (y) 103% of the outstanding principal
amount of such Mortgage Loan, as applicable, (B) the amount determined by the
Lender, in its sole discretion, as the price (exclusive of any accrued interest
that would be included in such price) at which such Mortgage Loan could on the
date of such determination be sold in the secondary market to a bona fide
investor in an arm's-length transaction and (C) the price at which an Investor
has committed to purchase such Mortgage Loan.
"Master Commitment" shall mean a written master commitment or any other
written commitment, on general terms and conditions approved by the Lender, from
an Investor to purchase from a Borrower from time to time up to a specified
dollar amount of Mortgage Loans without specification of the yield or purchase
price of each such Mortgage Loan.
"Material Adverse Change" shall mean (i) a material adverse effect on
(a) the business, assets, operations, financial or other condition of Borrowers
(on a consolidated basis) or Borrowers and their Subsidiaries considered as a
whole, (b) the Borrowers' ability to pay or perform the Obligations in
accordance with the terms herein, (c) the Collateral or Lender's liens on the
Collateral or the priority of any such lien, (d) Lender's rights and remedies
under this Agreement or any Credit Documents; or (ii) the incurrence by the
Borrowers of any liability, contingent or liquidated, which has an actual or
estimated incurrence of exposure or loss, to Borrowers greater than $5,000,000.
"Moody's" shall mean Xxxxx'x Investors Service, Inc.
"Mortgage" shall mean a first or second mortgage, first or second deed
of trust, first or second deed to secure debt or other first or second security
device which is customary and serves the same function as a mortgage under the
law and practice in the jurisdiction in which the premises subject to the
mortgage are located. For all Mortgage Loans secured by premises located in
states in which it is customary to use deeds of trust or security deeds as the
security device, a deed of trust or security deed, as the case may be, shall be
used as the security device. Mortgages shall be on forms acceptable to the
applicable Investor.
"Mortgage Bankers' Reporting Form" shall mean Mortgage Bankers'
Financial Reporting Form Statement of Condition (designated as FHLMC Form 1055
and FNMA Form 1002, respectively, and any successor thereto or replacement
thereof).
"Mortgage Loan" shall mean a loan evidenced by a Mortgage Note and
secured by a Mortgage encumbering a completed one to four family residential
property (including, without limitation, condominium units and excluding
cooperative ownership interests).
"Mortgage Loan Aging Percentage" shall mean, as of any date, with
respect to any Eligible Mortgage Loan, (i) 100% if such Mortgage Loan has a
Pledge Date that is less than 90 days prior to such date, (ii) 50% if such
Mortgage Loan has a Pledge Date that is less than 120 days and more than 89 days
prior to such date and (iii) 0% if such Mortgage Loan has a Pledge Date that is
120 or more days prior to such date.
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"Mortgage Note" shall mean a promissory note executed by a competent
party which is secured by a Mortgage.
"Net Worth" shall mean, as to any Person, the sum of (i) its capital
stock, capital in excess of par or stated value of shares of its capital stock,
retained earnings and any other account which, in accordance with generally
accepted accounting principles in the United States, constitutes stockholder
equity less (ii) any treasury stock, any unpaid stock subscriptions and any
subordinated or other loans from stockholders, in each case to the extent
included in clause (i).
"Note" shall have the meaning provided in Section 2.06.
"Obligations" shall mean all amounts owing to the Lender pursuant to the
terms of this Agreement and any other Credit Document.
"Office" shall mean the office of the Lender located at Three Executive
Campus, Cherry Hill, New Jersey 08002 or such other address as the Lender may
specify from time to time in a written notice to the Borrowers.
"Operating Account" shall mean the operating account number 8900026723
maintained by the Lender at Bank of New York or such other account as the Lender
may specify from time to time in a written notice to the Borrowers.
"Origination Date" shall mean, with respect to any Mortgage Loan, the
date such Mortgage Loan was funded to the obligor thereon.
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
pursuant to Section 4002 of ERISA or any successor thereto.
"Person" shall mean any individual, partnership, joint venture, firm,
corporation, association, trust or other enterprise or any government or
political subdivision or any agency, department or instrumentality thereof.
"Plan" shall mean any multiemployer plan or single-employer plan as
defined in Section 4001 of ERISA, which is maintained or contributed to by (or
to which there is an obligation to contribute of), or at any time during the
five calendar years preceding the date of this Agreement was maintained or
contributed to by (or to which there is an obligation to contribute of), a
Borrower or by a Subsidiary of a Borrower or an ERISA Affiliate.
"Pledge Date" shall mean, with respect to any Mortgage Loan, the date on
which such Mortgage Loan was pledged to the Lender in accordance with the
requirements of Section 2.03 hereof.
"Purchase Commitment" shall mean a current binding and enforceable
written commitment (or contract for purchase) from an Investor to purchase from
a Borrower Mortgage Loans of a particular
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type and yield owned by the Borrower at a committed price, which commitment
shall at all times be subject to approval by the Lender as to terms and
conditions.
"Reportable Event" shall mean an event described in Section 4043(b) of
ERISA with respect to a Plan as to which the 30-day notice requirement has not
been waived by the PBGC.
"Request for Advance" shall have the meaning provided in Section 2.04.
"S&P" shall mean Standard & Poor's Corporation.
"Second Mortgage Loan" shall mean a Mortgage Loan that is underwritten
in conformity with underwriting standards approved by the applicable Investor,
has a maturity of not more than 30 years, and is secured by a second priority
Mortgage.
"Servicing Portfolio" shall mean, as to any Person, all Mortgage Loans
the servicing or subservicing rights for which are owned by such Person and with
respect to which such Person functions as the servicing institution.
"State Loan" shall mean a Mortgage Loan that is (i) underwritten in
conformity with underwriting standards that are established by a state agency or
instrumentality and approved by the Lender and (ii) subject to a Purchase
Commitment from such state agency or instrumentality.
"Subsidiary" shall mean, as to any Person, (i) any corporation more than
50% of whose stock of any class or classes having by the terms thereof ordinary
voting power to elect a majority of the directors of such corporation
(irrespective of whether or not at the time stock of any class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time owned by such Person and/or one or
more Subsidiaries of such Person and (ii) any partnership, association, joint
venture or other entity in which such Person and/or one or more Subsidiaries of
such Person has (A) more than a 50% equity interest at the time or (B) an
interest satisfying the provisions of clause (i) hereof in any general partner
of any limited partnership or joint venture.
"Taxes" shall mean all present and future income, stamp and other taxes,
levies, or costs and charges whatsoever imposed, assessed, levied or collected
on or in respect of an Advance and/or the recording, registration, notarization
or other formalization of an Advance or the execution and delivery or otherwise
with respect to the Agreement or the other Credit Documents and/or any payments
of principal, interest or other amounts made on or in respect of an Advance;
provided that Taxes shall not include taxes imposed on or measured by the
overall net income or receipts of the Lender by the United States of America or
any political subdivision or taxing authority thereof or therein.
"UCC" shall mean the Uniform Commercial Code as from time to time in
effect in New Jersey or any other relevant jurisdiction, as applicable.
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"Unfunded Current Liability" of any Plan means the amount, if any, by
which the present value of the accrued benefits under the Plan as of the close
of its most recent plan year, determined in accordance with Statement of
Financial Accounting Standards No. 35, based upon the actuarial assumptions used
by the Plan's actuary in the most recent annual valuation of the Plan, exceeds
the fair market value of the assets allocable thereto, determined in accordance
with Section 412 of the Code.
"United States" and "U.S." shall each mean the United States of America.
"VA" shall mean the Veterans Administration or any successor thereto.
"VA Loan" shall mean a Mortgage Loan which is eligible for guarantee by
VA and is either so guaranteed or is subject to a current binding and
enforceable commitment for such guarantee pursuant to the provisions of the
Servicemen's Readjustment Act, as now in effect and as may be hereafter amended
from time to time, and is otherwise eligible for inclusion in a GNMA
mortgage-backed security pool.
"Warehouse Security Agreement" shall have the meaning provided in
Section 5.09.
"Wet Advance" shall mean an Advance made by the Lender against the
pledge of Eligible Mortgage Loans with respect to which the Borrower has
delivered to the Lender a Request for Advance in accordance with Section 2.04 in
lieu of the delivery of the Collateral Documents related thereto; provided,
however, that from and after the date on which the Collateral Documents with
respect to any such Mortgage Loan are received by the Lender, such Advance shall
cease to be a Wet Advance.
"Wet Advance Disbursement Instruction" shall have the meaning provided
in Section 2.05.
"Wholly-Owned Subsidiary" shall mean, as to any Person, (i) any
corporation 100% of whose capital stock is at the time owned by such Person
and/or one or more Wholly-Owned Subsidiaries of such Person and (ii) any
partnership, association, joint venture or other entity in which such Person
and/or one or more Wholly-Owned Subsidiaries of such Person has a 100% equity
interest at such time.
1.02 Principles of Construction. (a) All references to sections,
schedules and exhibits are to sections, schedules and exhibits in or to this
Agreement unless otherwise specified. The words "hereof," "herein," "hereto" and
"hereunder" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement.
(b) All accounting terms not specifically defined herein shall be
construed in accordance with generally accepted accounting principles in
conformity with those used in the preparation of the financial statements
referred to in Section 6.05(a).
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(c) With respect to a Mortgage Loan or any other Collateral to be
pledged to the Lender or an Advance to be made by the Lender, the phrase "the
Borrower" shall, unless otherwise specified, refer to the particular Borrower
that is pledging the Collateral to the Lender or the particular Borrower to
which the Advance is to be made.
Section 2. Amount and Terms of Credit.
2.01 Commitment. Subject to and upon the terms and conditions set forth
herein, the Lender agrees, at any time and from time to time prior to the Expiry
Date (or such earlier date as the Commitment shall have been terminated pursuant
to the terms hereof), to make an advance or advances (each an "Advance" and,
collectively, the "Advances") to the Borrowers, which Advance: (i) shall be made
at any time and from time to time in accordance with the terms hereof on and
after the Effective Date and prior to the Expiry Date; (ii) shall bear interest
as provided in Section 2.07; (iii) may be prepaid and reborrowed in accordance
with the provisions hereof; and (iv) shall be made against the pledge by the
Borrowers of Eligible Mortgage Loans or Liquid Assets as Collateral for such
Advance as provided herein and in the Warehouse Security Agreement; provided,
however, that (1) the aggregate principal amount of Advances outstanding at any
time shall not exceed the lesser of (x) the Commitment and (y) the Borrowing
Base, at such time, (2) the aggregate principal amount of Advances outstanding
at any time secured by Credit A- Loans shall not exceed 100% of the Commitment,
(3) the aggregate principal amount of Advances outstanding at any time secured
by Credit B Loans shall not exceed 100% of the Commitment, (4) the aggregate
principal amount of Advances outstanding at any time secured by Credit C Loans
shall not exceed 75% of the Commitment, (5) the aggregate principal amount of
Advances outstanding at any time secured by Credit D Loans shall not exceed 10%
of the Commitment, (6) the aggregate principal amount of Wet Advances
outstanding at any time shall not exceed 30% of the Commitment, (7) the
aggregate principal amount of Advances outstanding at any time secured by Jumbo
Loans shall not exceed 75% of the Commitment and (8) no Borrower shall have
outstanding aggregate Advances at any time in an amount greater than the
aggregate Collateral Value of all Mortgage Loans pledged by such Borrower to the
Lender pursuant to the provisions of this Agreement and the Warehouse Security
Agreement.
2.02 Minimum Borrowing Amount. The principal amount of each Advance
shall not be less than $10,000 and, if greater, shall be in an integral multiple
of $1,000.
2.03 Pledge of Collateral. Whenever a Borrower desires to pledge a
Mortgage Loan to the Lender, it shall deliver to the Lender at its office a
pledge of Collateral substantially in the form of Exhibit A-1 (the "Pledge of
Collateral"). Each Pledge of Collateral: (i) shall be appropriately completed by
an authorized employee of the Borrower to describe the Collateral to be pledged;
and (ii) shall have attached thereto each of the Collateral Documents required
in the Pledge of Collateral, including, without limitation, in the case of a
Mortgage Loan with respect to which a Wet Advance is being requested in
accordance with Section 2.04, an assignment by the Borrower to the Lender of the
related Mortgage fully completed and in recordable form and, if requested by the
Lender, a Borrowing Base certificate substantially in the form of Exhibit C (a
"Borrowing Base Certificate").
2.04 Request for Advance. Whenever a Borrower desires to incur an
Advance hereunder, it shall deliver to the Lender at its Office a request for
Advance substantially in the form of Exhibit A-2
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(the "Request for Advance") not later than 12:30 p.m. (New York City time) on
the Business Day prior to the proposed date of such Advance. Each Request for
Advance: (i) shall be appropriately completed to specify the aggregate principal
amount of the Advance or Wet Advance to be made and the proposed date of such
Advance (which shall be a Business Day); and (ii) shall, in the case of a Wet
Advance, include instructions with respect to the disbursement of such Wet
Advance.
2.05 Disbursement of Funds. (a) No later than 3:00 P.M. (New York City
time) on the date specified in the Request for Advance with respect to any
Advance other than a Wet Advance, the Lender shall make available to the
Borrowers the amount of such Advance requested to be made on such date in
Dollars by wire transfer of funds to the Borrowers' Advance Account. The Lender
shall disburse the amount of each Wet Advance directly to the appropriate title
company, escrow agent or closing agent by cashier's check or wire transfer in
accordance with the instructions set forth in the related Request for Advance,
the Lender's customary practice and the requirements of applicable law.
(b) In the event that a Wet Advance is disbursed by cashier's check, the
Lender shall disburse the amount of such Wet Advance under cover of an
instruction letter substantially in the form of Exhibit B-1 (a "Wet Advance
Disbursement Instruction"). In the event that a Wet Advance is to be disbursed
by wire transfer, the Borrower shall deliver to the appropriate title company,
escrow agent or closing agent an instruction letter substantially in the form of
Exhibit B-2 (a "Borrower's Wet Advance Disbursement Instruction"). Upon the
request of the Lender, the Borrowers shall deliver to the Lender a copy of any
Borrower's Wet Advance Disbursement Instruction delivered by the Borrowers.
2.06 Note. The Borrowers' obligation to pay the principal of, and
interest on, all Advances made to either of them by the Lender shall be
evidenced by a promissory note substantially in the form of Exhibit D (the
"Note"). The Note shall (i) be executed by the Borrowers and shall be a joint
and several obligation of the Borrowers, (ii) be payable to the order of the
Lender and be dated on or prior to the Initial Borrowing Date, (iii) be in a
stated principal amount equal to the Commitment and be payable in the aggregate
principal amount of the Advances evidenced thereby, (iv) mature, with respect to
each Advance evidenced thereby, on the Expiry Date, (v) bear interest as
provided in Section 2.07, (vi) be subject to mandatory prepayment as provided in
Section 4.02 and (vii) be entitled to the benefits of this Agreement and the
other Credit Documents. The Lender will note on its internal records the amount
of each Advance made by it and each payment in respect thereof and will prior to
any transfer of the Note endorse on the reverse side thereof the outstanding
principal amount of Advances evidenced thereby. Failure to make any such
notation shall not affect the Borrowers' obligations in respect of such
Advances.
2.07 Interest. (a) The Borrowers agree to pay interest in respect of the
outstanding principal amount of the Advances from the date the proceeds thereof
are made available to the Borrowers until the maturity thereof (whether by
acceleration or otherwise) at a rate per annum equal to 2.125% in excess of the
Commercial Paper Rate in effect from time to time.
(b) Overdue principal and, to the extent permitted by law, overdue
interest, and any other overdue amount payable by the Borrowers hereunder, shall
bear interest at a rate per annum equal to 4% per annum in excess of the rate
specified in clause (a) above in effect from time to time; provided,
14
however, that no Advance shall bear interest at a rate in excess of the maximum
rate permitted by applicable law.
(c) Accrued (and theretofore unpaid) interest shall be payable in
respect of the Advances (i) monthly in arrears on the fifth Business Day of each
calendar month with respect to interest accrued during the preceding calendar
month, (ii) on any prepayment which reduces the outstanding Advances to zero,
(iii) at maturity (whether by acceleration, demand or otherwise) and (iv) after
such maturity, on demand. The Lender shall provide the Borrowers with a notice
setting forth the interest accrued with respect to each calendar month not later
than the third Business Day following the end of such calendar month.
(d) The Borrowers shall be jointly and severally liable for the
Obligations.
2.08 Increased Costs. If, due to either (a) the effectiveness or
introduction of, or any change in, or any change in the interpretation of, any
law or regulation by any court or administrative or governmental authority
charged with administration thereof or (b) compliance after the date hereof with
any guideline or request from any central bank or other governmental authority
or official (whether or not having the force of law), there shall be an increase
in the cost to the Lender of making, funding or maintaining any Advance or the
Commitment hereunder or the Lender shall be required to make a payment
calculated by reference to the principal of, or interest on, any Advance made by
it or the Commitment (other than any such increased cost, reduction in the
amount receivable, or payment required to be made resulting from the imposition
or an increase in the rate of any Taxes), then the Borrowers shall, from time to
time, upon demand by the Lender, pay additional amounts sufficient to compensate
the Lender for any such increased cost. A certificate of an officer of the
Lender as to the amount of such increased cost actually incurred by the Lender
(and the calculation thereof) submitted to the Borrowers shall be conclusive and
binding for all purposes, absent manifest error.
Section 3. Fees
3.01 Fees. (a) The Borrowers shall pay the Lender an administration fee
(the "Administration Fee") with respect to each calendar month during the term
of this Agreement in an amount equal to the sum of $ 25.00 for each Mortgage
Loan pledged as Collateral for the first time during such calendar month. The
Administration Fee with respect to each calendar month will be due and payable
on the fifth Business Day following the end of such calendar month. In addition,
the Borrowers shall pay all administrative costs of the Lender in connection
with the making of an Advance and the handling of Collateral, including but not
limited to, the costs of overnight and express delivery, cashier's checks and
wire transfers. Such payment shall be accomplished through direct cash payment,
due and payable at the time the monthly Administration Fee is due and payable.
(b) The Lender shall provide the Borrowers with a notice setting forth
the Administration Fee accrued and the administrative costs incurred with
respect to each calendar month not later than the third Business Day following
the end of such calendar month.
Section 4. Prepayments; Payments.
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4.01 Voluntary Prepayments. The Borrowers shall have the right to prepay
the Advances, without premium or penalty, in whole or in part from time to time
on the following terms and conditions: (i) the Borrowers shall give the Lender
at its Office notice of their intent to prepay not later than 2:00 p.m. (New
York City time) at least one Business Day prior to the date of such prepayment,
and (ii) the amount of such prepayment shall be at least $100,000 and, if
greater, in an integral multiple of $1,000.
4.02 Mandatory Prepayments. Except as set forth in Section 4.03(b), a
prepayment of Advances shall be required, without notice or demand of any
kind to the Borrowers, as follows:
(a) if on any date the aggregate principal amount of Advances
outstanding (after giving effect to all other repayments thereof on such
date) exceeds the lesser of (x) the Commitment or (y) the Borrowing
Base, as then in effect, the Borrowers shall immediately prepay the
principal of Advances in an aggregate amount equal to such excess;
(b) if on any date the aggregate principal amount outstanding of
Advances secured by Mortgage Loans exceeds 100% of the Commitment, the
Borrowers shall immediately prepay the principal of Advances secured by
Mortgage Loans in an aggregate amount equal to such excess;
(c) if on any date the aggregate principal amount outstanding of
Advances secured by Credit A- Loans exceeds 100% of the Commitment, the
Borrowers shall immediately prepay the principal of Advances secured by
Credit A- Loans in an aggregate amount equal to such excess;
(d) if on any date the aggregate principal amount outstanding of
Advances secured by Credit B Loans exceeds 100% of the Commitment, the
Borrowers shall immediately prepay the principal of advances secured by
Credit B Loans in an aggregate amount equal to such excess;
(e) if on any date the aggregate principal amount outstanding of
Advances secured by Credit C Loans exceeds 75% of the Commitment, the
Borrowers shall immediately prepay the principal of advances secured by
Credit C Loans in an aggregate amount equal to such excess;
(f) if on any date the aggregate principal amount outstanding of
Advances secured by Credit D Loans exceeds 10% of the Commitment, the
Borrowers shall immediately prepay the principal of advances secured by
Credit D Loans in an aggregate amount equal to such excess;
(g) if on any date the aggregate principal amount outstanding of
Advances secured by Jumbo Loans exceeds 75% of the Commitment, the
Borrowers shall immediately prepay the principal of Advances secured by
Jumbo Loans in an aggregate amount equal to such excess;
16
(h) if on any date the aggregate principal amount outstanding of Wet
Advances exceeds 30% of the Commitment, the Borrowers shall immediately
prepay the principal of Wet Advances in an aggregate amount equal to
such excess;
(i) if the Lender shall have notified the Borrowers or a Borrower
otherwise becomes aware that any Mortgage Loan originally included as an
Eligible Mortgage Loan no longer constitutes an Eligible Mortgage Loan
pursuant to the terms and standards set forth herein and in the
Warehouse Security Agreement, the Borrowers shall immediately prepay the
principal of Advances in an aggregate amount equal to the Collateral
Value of such Mortgage Loan;
(j) if a Mortgage Loan in respect of which an Advance has been made
hereunder is sold, the Borrowers shall on the date of settlement for
such sale prepay the principal of Advances in an aggregate amount equal
to the Collateral Value of such Mortgage Loan;
(k) if 45 calendar days shall have elapsed from the date a Mortgage Loan
is sent from the Lender to an Investor or the Custodian for an Investor
as provided in Section 4.04 and in the Warehouse Security Agreement and
such Mortgage Loan has neither been redelivered to the Lender nor
purchased pursuant to the letter of transmittal delivered therewith, the
form of which shall be that customarily used by the Lender, the
Borrowers shall immediately prepay the principal of Advances in an
aggregate amount equal to the Collateral Value of such Mortgage Loan;
(l) if 10 calendar days shall have elapsed from the date on which a
Borrower is requested by the Lender to obtain a corrected or completed
copy of any document in connection with any Mortgage Loan and the same
shall not have been delivered to the Lender with the appropriate
completion or correction, the Borrowers shall immediately prepay the
principal of Advances in an aggregate amount equal to the Collateral
Value of such Mortgage Loan;
(m) [Intentionally omitted]
(n) if (1) there shall be a default in the payment of principal or
interest by the obligor under a Mortgage Loan in respect of which an
Advance has been made hereunder and such default shall be continuing for
30 days or more, (2) an Insolvency Event shall occur in respect of an
obligor on any Mortgage Loan in respect of which an Advance has been
made hereunder or (3) foreclosure or similar proceedings shall be
commenced in respect of the premises which secure any Mortgage Loan in
respect of which an Advance has been made hereunder, the Borrowers shall
immediately prepay the principal of Advances in an aggregate amount
equal to the Collateral Value of such Mortgage Loan;
(o) [Intentionally omitted]
(p) if the Mortgage Loan to be funded with the proceeds of any Wet
Advance is not funded on the date of such Wet Advance, the Borrowers
shall immediately prepay the full principal amount of such Wet Advance;
and
17
(q) if the Collateral Documents in respect of any Mortgage Loan securing
a Wet Advance are not delivered to the Lender within seven days
following the date on which such Wet Advance was made, the Borrowers
shall immediately prepay the full principal amount of such Wet Advance.
4.03 Release of Collateral; Substitution. (a) So long as no Default or
Event of Default has occurred and is continuing or would result therefrom, upon
the Borrowers' request therefor accompanied by a prepayment by the Borrowers of
Advances in an amount sufficient to cause the amount of Advances outstanding to
be less than or equal to the Borrowing Base (calculated without reference to any
Collateral which the Borrowers request be released from the Lien granted
pursuant to the Warehouse Security Agreement) and a deposit by the Borrowers of
such amount as the Lender shall designate as a reserve for application to any
fees, accrued interest or breakage costs payable with respect to the calendar
month in which such prepayment occurs, the Lender shall, within one Business Day
after the later of the receipt of such request or such prepayment and deposit,
release from the Lien granted pursuant to the Warehouse Security Agreement and
deliver to the Borrowers in accordance with the terms of the Warehouse Security
Agreement (i) the Collateral corresponding to such Mortgage Loan(s) and (ii) the
Collateral Documents pertaining thereto.
(b) So long as no Default or Event of Default has occurred and is
continuing in lieu of any required pre-payment of principal pursuant to Section
4.02, the Borrowers may, subject to the terms and conditions hereof and the
prior consent of the Lender, substitute and pledge additional Eligible Mortgage
Loans having an aggregate Collateral Value in an amount such that immediately
after giving effect to such substitution or addition, such prepayment is no
longer required.
4.04 Sale of Collateral to Investors. (a) The Lender shall arrange, in
accordance with the provisions of the Warehouse Security Agreement, for the
delivery of Mortgage Loans pledged to the Lender to an Investor (or such
Investor's Custodian) pursuant to a Purchase Commitment for examination and
purchase thereof by such Investor; provided, however, that prior thereto the
Lender shall have received from the Borrowers one Business Days' prior written
notice describing the Mortgage Loan(s) to be delivered and the shipping or
wiring instructions therefor, such notice executed by an authorized employee of
the Borrowers and identifying the Investor and the price which such Investor has
agreed to pay for such Collateral.
(b) The Borrowers shall make a deposit in immediately available funds
into the Operating Account, by 4:00 p.m. on the Business Day on which the
release of the Lender's security interest in such Mortgage Loan is scheduled to
occur pursuant to the purchase by an Investor under a Purchase Commitment, in an
amount equal to the amount by which the aggregate amount of advances outstanding
exceeds the Borrowing Base (calculated without reference to such Mortgage Loan).
(c) Each delivery of Collateral pursuant to this Section 4.04 shall be
accompanied by a bailee letter in accordance with the requirements of the
Warehouse Security Agreement. All payments in respect of such Collateral so
purchased shall not be deemed received by the Lender until such funds constitute
"immediately available" funds in the Operating Account. For purposes hereof,
confirmation of receipt of wired funds shall constitute "immediately available"
funds.
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(d) The Borrowers shall deliver to the Lender, on or prior to 10:30 a.m.
on the Business Day following receipt by the Lender of payment from an Investor
for Mortgage Loans purchased, written notice designating the Mortgage Loans to
which such payment applies. An amount equal to the funds transferred to the
Lender in respect of Mortgage Loans purchased by an Investor (whether such funds
were transferred by the Borrowers pursuant to Section 4.04(b) or by the Investor
pursuant to Section 4.04(c)), shall be applied by the Lender as a prepayment of
Advances. So long as no Default or Event of Default has occurred and is
continuing, any amounts received by the Lender from the sale of any Mortgage
Loan that are in excess of the Collateral Value of such Mortgage Loan shall be
paid to the Borrowers at the Advance Account, net of any amounts reserved by the
Lender and retained in the Operating Account for application to any fees,
accrued interest or breakage costs payable with respect to the calendar month in
which such sale occurs.
4.05 Method and Place of Payment. Except as otherwise specifically
provided herein, all payments under this Agreement and the Note shall be made to
the Lender not later than 2:00 p.m. (New York City time) on the date when due
and shall be made in Dollars in immediately available funds for deposit to the
Operating Account. Any payment received after 2:00 p.m. (New York City time) on
any Business Day shall be treated as being received on the next succeeding
Business Day. Whenever any payment to be made hereunder or under the Note shall
be stated to be due on a day which is not a Business Day, the due date thereof
shall be extended to the next succeeding Business Day and, with respect to
payments of principal, interest, fees and penalties shall be payable at the rate
otherwise applicable. The Borrowers hereby authorize the Lender to deduct from
each Advance to be made hereunder, all amounts due and owing to the Lender
including interest, penalties, fees or mandatory prepayments.
4.06 Net Payments. All payments made by the Borrowers hereunder will be
made without setoff, counter-claim or other defense.
Section 5. Conditions Precedent.
The obligation of the Lender to make each Advance to the Borrowers
hereunder is subject, at the time of the making of each such Advance (except as
hereinafter indicated), to the satisfaction of the following conditions:
5.01 Execution of Agreement; Note. On or prior to the Initial Borrowing
Date, (i) the Effective Date shall have occurred and (ii) there shall have been
delivered to the Lender the Note executed by the Borrowers in the amount,
maturity and as otherwise provided herein.
5.02 No Default; Representations and Warranties. At the time of the
making of each Advance and also after giving effect thereto (i) there shall
exist no Default or Event of Default, and (ii) all representations and
warranties contained herein and in the other Credit Documents shall be true and
correct in all material respects with the same effect as though such
representations and warranties had been made on and as of the date of such
Advance.
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5.03 Request for Advance. Prior to the making of each Advance, the
Lender shall have received a Request for Advance with respect thereto meeting
the requirements of Section 2.04.
5.04 Opinion of Counsel. On the Initial Borrowing Date, the Lender shall
have received from outside counsel for the Borrowers (who shall be reasonably
satisfactory to the Lender) an opinion addressed to the Lender and dated the
Initial Borrowing Date covering the matters set forth in Exhibit E and such
other matters incident to the transactions contemplated herein as the Lender may
reasonably request.
5.05 Diligence. On or prior to the Initial Borrowing Date, the Lender
shall have satisfactorily completed its due diligence review of the Borrowers'
operations, business, financial condition and underwriting and origination of
Mortgage Loans.
5.06 Corporate or Partnership Documents; Proceedings. (a) On the Initial
Borrowing Date, the Lender shall have received a certificate of each Borrower,
dated the Initial Borrowing Date, signed by the President or any Vice President
of the Borrower or by the general partner of the Borrower, and attested to by
the Secretary or any Assistant Secretary of the Borrower or by the Secretary or
any Assistant Secretary of the general partner of the Borrower, substantially in
the forms of Exhibit F-1 and Exhibit F-2 and with appropriate insertions,
together with copies of the Certificate of Incorporation and By-Laws or
Certificate of Limited Partnership and Agreement of Limited Partnership of each
Borrower, the resolutions of the Borrowers referred to in such certificates and
a good-standing certificate from the Secretary of State of the jurisdiction of
incorporation or formation of each Borrower.
(b) All corporate or partnership proceedings and all legal proceedings
and all instruments and agreements in connection with the transactions
contemplated in this Agreement and the other Credit Documents shall be
reasonably satisfactory in form and substance to the Lender, and the Lender
shall have received all information and copies of all documents and papers,
including records of corporate or partnership proceedings and governmental
approvals, if any, which the Lender reasonably may have requested in connection
therewith, such documents and papers where appropriate to be certified by proper
corporate or partnership or governmental authorities.
5.07 Financial Statements. On or prior to the Initial Borrowing Date,
the Lender shall have received (i) the consolidated balance sheets of the
Borrowers and their Consolidated Subsidiaries for each of the two fiscal years
most recently ended and the related statements of income and retained earnings
and statements of cash flows of the Borrowers and their Consolidated
Subsidiaries for such two fiscal years, in each case certified by an independent
certified public accountant of recognized national standing reasonably
acceptable to the Lender and prepared in accordance with generally accepted
accounting principles in the United States consistently applied, together with
"management letters" prepared by such accountants for such period and (ii)
copies of any uniform single audit reports in respect of the Borrowers, any
audits or financial reports in respect of the Borrowers completed or requested
by HUD, GNMA, FNMA, FHLMC or any other governmental agency or Investor and any
Mortgage Bankers' Reporting Forms prepared by the Borrowers, in each case during
the two years preceding the date hereof.
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5.08 Mandatory Prepayment. After giving effect to the proposed Advance,
no prepayment would be required pursuant to Section 4.02.
5.09 Warehouse Security Agreement. The Borrowers shall have duly
authorized, executed and delivered a Warehouse Security Agreement substantially
in the form of Exhibit G (as modified, supplemented or amended from time to
time, the "Warehouse Security Agreement") covering all of the Borrowers' present
and future Collateral, together with:
(a) acknowledgment copies of proper financing statements (Form UCC-1)
duly filed under the UCC of each jurisdiction as may be necessary or, in
the opinion of the Lender, desirable to perfect the security interests
purported to be created by the Warehouse Security Agreement;
(b) certified copies of "Requests for Information or Copies" (Form
UCC-11), or equivalent reports, listing the financing statements
referred to in clause (a) above and all other effective financing
statements that name any Borrower as debtor and that are filed in the
jurisdictions referred to in said clause (a), together with copies of
such other financing statements (none of which shall cover the
Collateral, except to the extent evidencing Liens permitted pursuant to
Section 8.01);
(c) evidence of the completion of all other recordings and filings of,
or with respect to, the Warehouse Security Agreement as may be necessary
or, in the opinion of the Lender, desirable to perfect the security
interests purported to be created by the Warehouse Security Agreement;
and
(d) evidence that all other actions necessary or, in the opinion of the
Lender, desirable to perfect and protect the security interests created
by the Warehouse Security Agreement have been taken.
5.10 No Adverse Change. Since June 30, 1996, there shall have occurred
no Material Adverse Change.
5.11 Insurance. On or prior to the Initial Borrowing Date, the Lender
shall have received from the Borrowers, a copy of a fidelity bond and policy of
insurance containing errors and omissions coverage and such other insurance as
the Lender shall reasonably require, each of which policies, where applicable,
shall be in such form, with such companies and in such amounts as are in
accordance with the Lender's requirements.
5.12 [Intentionally Omitted]
5.13 Delivery of the Collateral. Prior to the making of an Advance, the
Lender shall have received (a) if such Advance is to be made in respect of
Mortgage Loans and is not to be a Wet Advance, the Collateral Documents relating
to the Mortgage Loans pledged to secure such Advance; or (b) if such Advance is
to be a Wet Advance, a duly executed assignment by the Borrower to the Lender of
the related Mortgage fully completed and in recordable form, a copy of the
Purchase
21
Commitment or the Master Commitment, if applicable, and satisfactory
confirmation that the Collateral Documents relating thereto are to be delivered
to an escrow agent, closing agent or title company acceptable to the Lender with
instructions that such Collateral Documents are to be delivered directly to the
Lender.
5.14 Fees. Prior to the making of an Advance, the Borrowers shall have
paid all Fees then due and payable to the Lender.
5.15 No Litigation. There shall be no judgment, order, injunction or
other restraint which shall prohibit or impose, and no litigation pending or
threatened against or affecting the Borrowers or any of their Subsidiaries
which, in the opinion of the Lender, would prohibit or result in the imposition
of materially adverse conditions upon, the financing contemplated hereby, or
otherwise have a material adverse effect on the business, operations, properties
or assets, or on the condition, financial or otherwise, of the Borrowers or any
of their Subsidiaries.
The acceptance of the benefits of each Advance shall constitute a
representation and warranty by the Borrowers to the Lender that all the
conditions specified in Sections 5.02, 5.08, 5.10 and 5.15 exist as of that
time. All of the Note, certificates, legal opinions and other documents and
papers referred to in this Section 5, unless otherwise specified, shall be
delivered to the Lender at the Office and shall be reasonably satisfactory in
form and substance to the Lender.
Section 6. Representations, Warranties and Agreements.
In order to induce the Lender to enter into this Agreement and to make
the Advances, each Borrower makes the following representations, warranties and
agreements as of the Effective Date, all of which shall survive the execution
and delivery of this Agreement and the Note and the making of the Advances (with
the execution and delivery of this Agreement and the making of each Advance
thereafter being deemed to constitute a representation and warranty that the
matters as specified in this Section 6 are true and correct in all respects on
and as of the date hereof and as of the date of such Advance, unless stated to
relate to a specific earlier date):
6.01 Corporate and Partnership Status. Each of the Borrower and its
Subsidiaries (i) is a duly organized and validly existing entity in good
standing under the laws of the jurisdiction of its incorporation or formation,
(ii) has the power and authority to own its property and assets and to
transact the business in which it is engaged and (iii) is duly qualified as a
foreign corporation or foreign limited partnership and in good standing in
each jurisdiction where the ownership, leasing or operation of property or
the conduct of its business requires such qualification.
6.02 Corporate or Partnership Power and Authority. The Borrower has the
corporate or partnership power to execute, deliver and perform the terms and
provisions of each of the Credit Documents and has taken all necessary
corporate or partnership action to authorize the execution, delivery and
performance by it of each of such Credit Documents. The Borrower has duly
executed and delivered each of the Credit Documents, and each of such Credit
Documents constitutes its legal, valid and binding obligation enforceable in
accordance with its terms.
22
6.03 No Violation. Neither the execution, delivery or performance by the
Borrower of the Credit Documents, nor compliance by it with the terms and
provisions thereof, (i) will contravene any provision of any law, statute, rule
or regulation or any order, writ, injunction or decree of any court or
governmental instrumentality, (ii) will conflict or be inconsistent with or
result in any breach of any of the material terms, covenants, conditions or
provisions of, or constitute a default under, or result in the creation or
imposition of (or the obligation to create or impose) any Lien other than a Lien
permitted pursuant to Section 8.01 upon any of the property or assets of the
Borrower pursuant to the terms of any indenture, mortgage, deed of trust, credit
agreement, loan agreement or any other agreement, contract or instrument to
which the Borrower is a party or by which it or any of its property or assets is
bound or to which it may be subject or (iii) will violate any provision of the
certificate of incorporation or by-laws (or certificate of limited partnership
or agreement of limited partnership) of the Borrower.
6.04 Governmental Approvals. No order, consent, approval, license,
authorization or validation of, or filing, recording or registration with
(except as have been obtained or made prior to the Effective Date), or exemption
by, any governmental or public body or authority, or any subdivision thereof, is
required to authorize, or is required in connection with, (i) the execution,
delivery and performance of any Credit Document or (ii) the legality, validity,
binding effect or enforceability of any such Credit Document.
6.05 Financial Statements; Financial Condition; Undisclosed Liabilities;
etc. (a) The consolidated balance sheet of the Borrowers and their Consolidated
Subsidiaries and the related consolidated statements of income and retained
earnings and statements of cash flows of the Borrowers and their Consolidated
Subsidiaries furnished to the Lender in accordance with Section 5.07 hereof
present fairly the consolidated financial condition of the Borrowers and their
Consolidated Subsidiaries at the dates of such balance sheets and the
consolidated results of the operations of the Borrowers and their Consolidated
Subsidiaries for the fiscal periods covered by such statements of income and
retained earnings and statements of cash flow. All such financial statements
have been prepared in accordance with generally accepted accounting principles
and practices in the United States consistently applied. Since June 30, 1996
there has not been any Material Adverse Change.
(b) Except as fully reflected on the financial statements referred to in
Section 6.05(a), there will be as of the Effective Date no liabilities or
obligations with respect to the Borrowers or any of their Subsidiaries of any
nature whatsoever (whether absolute, accrued, contingent or otherwise and
whether or not due) which, either individually or in the aggregate, would be
material to the Borrowers or to the Borrowers and their Subsidiaries taken as a
whole.
6.06 Litigation. There are no actions, suits or proceedings pending or
threatened (i) with respect to any Credit Document or (ii) that could materially
and adversely affect the business, operations, property, assets, condition
(financial or otherwise) or prospects of the Borrower.
6.07 True and Complete Disclosure. All factual information (taken as a
whole) heretofore or contemporaneously furnished by or on behalf of the Borrower
in writing to the Lender (including, without limitation, all information
contained in the Credit Documents) for purposes of or in
23
connection with this Agreement, the Warehouse Security Agreement or any
transaction contemplated herein or therein is, and all other such factual
information (taken as a whole) hereafter furnished by or on behalf of the
Borrower in writing to the Lender will be, true and accurate in all material
respects on the date as of which such information is dated or certified and not
incomplete by omitting to state any fact necessary to make such information
(taken as a whole) not misleading in any material respect at such time in light
of the circumstances under which such information was provided.
6.08 Use of Proceeds; Margin Regulations. All proceeds of each Advance
will be used by the Borrower for the financing of the Borrower's mortgage
lending business; provided that no part of the proceeds of any Advance will be
used by the Borrower to purchase or carry any Margin Stock or to extend credit
to others for the purpose of purchasing or carrying any Margin Stock. Neither
the making of any Advance nor the use of the proceeds thereof will violate or be
inconsistent with the provisions of Regulation G, T, U or X of the Board of
Governors of the Federal Reserve System.
6.09 Tax Returns and Payments. The Borrower and each of its Subsidiaries
has filed all tax returns required to be filed by it and has paid all income
taxes payable by it which have become due pursuant to such tax returns and all
other taxes and assessments payable by it which have become due, other than
those not yet delinquent and except for those contested in good faith and for
which adequate reserves have been established. The Borrower and each of its
Subsidiaries has paid, or has provided adequate reserves (in the good faith
judgment of the management of the Borrower or such Subsidiary, as the case may
be) for the payment of, all federal, state and foreign income taxes applicable
for all prior fiscal years and for the current fiscal year to the date hereof.
6.10 Compliance with ERISA. Each Plan is in substantial compliance with
ERISA and the Code; no Reportable Event has occurred with respect to a Plan; no
Plan is insolvent or in reorganization, no Plan has an Unfunded Current
Liability, and no Plan has an accumulated or waived funding deficiency or
permitted decreases in its funding standard account within the meaning of
Section 412 of the Code; neither the Borrower nor any ERISA Affiliate of the
Borrower has incurred any material liability to or on account of a Plan pursuant
to Section 409, 502(i), 502(1), 515, 4062, 4063, 4064, 4069, 4201 or 4204 of
ERISA or Section 4971 or 4975 of the Code or expects to incur any liability
under any of the foregoing sections on account of the termination of,
participation in or contributions to any such Plan; no proceedings have been
instituted to terminate any Plan; no condition exists which presents a material
risk to the Borrower or any ERISA Affiliate of incurring a liability to or on
account of a Plan pursuant to the foregoing provisions of ERISA and the Code; no
Lien imposed under the Code or ERISA on the assets of the Borrower exists or is
likely to arise on account of any Plan; and the Borrower may terminate
contributions to any other employee benefit plans maintained by it without
incurring any material liability to any Person interested therein.
6.11 Capitalization. On the Effective Date, the authorized capital stock
of IMC Company consists of (a) 50,000,000 shares of common stock, $.01 par value
per share, of which 9,834,833 shares are issued and outstanding, and (b)
10,000,000 shares of preferred stock, $.01 par value per share, of which 0
shares are issued and outstanding. All such outstanding shares have been duly
and validly issued, are fully paid and non-assessable. The Borrower does not
have outstanding any securities convertible into or exchangeable for its capital
stock or outstanding any rights to subscribe for or to purchase, or any options
for the purchase of, or any agreements providing for the issuance
24
(contingent or otherwise) of, or any calls, commitments or claims of any
character relating to, its capital stock other than as disclosed in the
consolidated financial statements.
6.12 Subsidiaries. Set forth on Schedule 6.12 is an accurate and
complete list of all Subsidiaries of each Borrower and the percentage ownership
by the Borrower in each such Subsidiary on the Effective Date, together with a
brief description of the business of each such Subsidiary.
6.13 Compliance with Statutes, etc. The Borrower and each of its
Subsidiaries is in compliance with all applicable statutes, regulations and
orders of, and all applicable restrictions imposed by, all governmental bodies,
domestic or foreign, in respect of the conduct of its business and the ownership
of its property, except such noncompliances as would not (i) in the aggregate,
have a material adverse effect on the business, operations, property, assets,
condition (financial or otherwise) or prospects of the Borrower and (ii) affect
in any respect the validity or enforceability of any Credit Document or the
Lender's rights in the Collateral.
6.14 Investment Company Act. Neither the Borrower nor any Subsidiary of
the Borrower is an "investment acompany" within the meaning of the Investment
Company Act of 1940, as amended.
6.15 No Burdensome Agreement. Neither of the Borrower nor any Subsidiary
is a party to any indenture, loan or credit agreement or any lease or other
agreement or instrument or subject to any charter or corporate or partnership
restriction which by its terms would have a material adverse effect on the
business, condition (financial or otherwise), operations or properties of the
Borrower or such Subsidiary or on the ability of the Borrower to carry out its
obligations under the Note or the other Credit Documents to which it is a party.
6.16 [Intentionally Omitted].
6.17 Security Interests. The Warehouse Security Agreement creates, as
security for the Obligations, valid and enforceable security interests in and
Liens on all of the Collateral in favor of the Lender which are perfected and
superior and prior to the rights of all third Persons and subject to no other
Liens (other than Liens permitted pursuant to Section 8.01). The Borrowers have,
or will have at the time of pledge thereof, good and marketable title to all of
the Collateral, free and clear of all Liens except those described in the
preceding sentence.
6.18 Registration. The Borrower currently is, and will be at all times
at which any Advance is outstanding hereunder, licensed, registered, approved,
qualified or otherwise authorized in good standing to the extent required under
applicable law, as a mortgage banker, mortgage broker, real estate broker,
servicer of mortgage loans or otherwise in each jurisdiction in which the
conduct of its business requires such licensing, registration, approval,
qualification or other authorization, including, without limitation, as a
licensed mortgage banker in each state in which it originates Mortgage Loans.
All appraisers providing services in connection with the origination of Mortgage
Loans by the Borrower have all licenses, registrations, approvals and
qualifications required by all applicable laws or regulations.
25
6.19 Representations Relating to the Mortgage Loans. (a) At all times
during which a Mortgage Loan is pledged as Collateral for Advances hereunder,
such Mortgage Loan will (i) be an FHA Loan, a VA Loan, a Conforming Loan, a
Jumbo Loan, a State Loan, a Credit A- Loan, a Credit B Loan, a Credit C Loan or
a Credit D Loan; (ii) be an Eligible Mortgage Loan and be free of any default
and the Borrowers will have had no notice of any event which has occurred which
may, with the passage of time or the giving of notice, or both, become a
default; (iii) comply with the terms of this Agreement and with the relevant
Purchase Commitment and/or Master Commitment, if any; (iv) be a legal, valid and
binding obligation of the mortgagor and the mortgagee thereunder enforceable in
accordance with its terms and subject to no offset, defense or counterclaim,
obligating such mortgagor to make the payments specified therein, and each FHA
Loan and each VA Loan will be fully eligible for, and the Borrower will have
complied with all applicable requirements of law, rule or regulation in respect
of, FHA insurance or VA guaranty, respectively; (v) be underwritten in
accordance with standards approved by the Lender so that such Mortgage Loan is
(x) readily salable to an Investor or (y) eligible for securitization; (vi) be
owned by the Borrower and be subject to no Lien or claim whatsoever, either
legal or equitable, other than that granted to the Lender; (vii) be fully
disbursed, the final disbursement to the mortgagor in connection therewith
having been made no more than 90 days prior to the date of pledge if such
disbursement was made by the Borrower (unless such Mortgage Loan is delivered as
Collateral securing the initial Advance made to the Borrowers hereunder); (viii)
not be modified (except as to correction of clerical or scrivener errors),
amended, superseded or otherwise subject to any other agreement or contract of
any kind with the relevant mortgagor under such Mortgage Loan except to the
extent such amendment, modification or other agreement or contract has been
disclosed in writing to the Lender by the Borrowers at the time of the pledge
and does not affect the salability of such Mortgage Loan pursuant to any
applicable Master Commitment or Purchase Commitment; (ix) be a valid first or
second lien on the mortgaged premises subject thereto; (x) if required by the
Investor, have a title insurance policy or binder, in ALTA form satisfactory to
the Lender insuring the priority of the Borrower's first or second lien therein
subject only to (1) the lien of the related first mortgage, if any, (2) the lien
of current real property taxes and assessments, (3) covenants, conditions and
restrictions, rights of way, easements and other matters of public record as of
the date of recording of the related mortgage or deed of trust, such exceptions
appearing of record being acceptable to mortgage lending institutions generally
in the area wherein the property subject thereto is located and (4) 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
related mortgage or deed of trust and (xi) not have been selected for pledge
hereunder utilizing procedures, other than those necessary to comply with the
representations and warranties set forth herein, which are adverse to the
interests of the Lender.
(b) At the time of the pledge of each Mortgage Loan, the Borrower will
have received with respect to each such Mortgage Loan (i) evidence of a hazard
insurance policy with a standard mortgagee clause in a form satisfactory to the
Lender and with extended coverage in an amount which is at least equal to the
maximum insurable value of the improvements securing such Mortgage Loan from
time to time or the principal balance owing on such Mortgage Loan, whichever is
less and (ii) a policy, or other satisfactory evidence, of flood insurance or
satisfactory documentation to demonstrate that the mortgaged premises are not
located in a special flood hazard area. Such documentation will be retained in
the Borrower's files relating to such Mortgage Loan.
26
(c) With respect to each Mortgage Loan pledged to the Lender, the
Borrower has fully complied with, and will fully comply with, or the original
mortgagee thereof has fully complied with and will fully comply with, (A) all
applicable state and federal laws, including but not limited to (i) the Real
Estate Settlement Procedures Act of 1974, (ii) the Equal Credit Opportunity Act,
(iii) the Federal Truth in Lending Act and Regulation Z of the Board of
Governors of the Federal Reserve System, (iv) any laws requiring persons
providing appraisals of property values to be properly licensed, and (v) all
other usury, disclosure, consumer credit protection or truth-in-lending laws
which may apply, and in each such case with all regulations promulgated in
connection therewith as the same may be from time to time amended and will
maintain sufficient documentary evidence in its file to substantiate such
compliance (including, without limitation, delivery of all necessary disclosure
statements) and (B) all of the terms and provisions of such Mortgage Loan and of
any contractual escrow arrangements applicable thereto.
(d) The Borrower has complied with and is not in violation of, and will
comply with and will not be in violation of, any law or regulation relating to
any Mortgage Loan pledged hereunder.
6.20 Insurance. The Borrower has blanket fidelity bond coverage and
errors and omissions, mortgage impairment or mortgage interest insurance
coverage in such form, with such companies and in such amounts as are in
accordance with all applicable standards and requirements.
6.21 Title to Property. The Borrower has good and marketable title to
all of its property, the value of which is included in the financial statements
delivered pursuant hereto, subject to no Liens, encumbrances or claims other
than those disclosed on such financial statements.
Section 7. Affirmative Covenants.
Each Borrower covenants and agrees that as of the Effective Date, and
thereafter for so long as this Agreement is in effect and until the Commitment
has terminated, the Note is no longer outstanding and the Advances, together
with interest, Fees and all other Obligations, are paid in full:
7.01 Information Covenants. The Borrower will furnish to the Lender
(unless otherwise indicated):
(a) Quarterly Financial Statements. Within 45 days after the close of
each quarterly accounting period of the Borrower, the consolidated
statements of financial condition of the Borrowers and their
Consolidated Subsidiaries as at the end of such period, and the related
consolidated statements of income and retained earnings and statements
of cash flows for such period and for the elapsed portion of the fiscal
year ended with the last day of such period, setting forth comparative
figures for the related periods in the prior fiscal year, all of which
shall be in form and substance satisfactory to the Lender and certified
as to fairness of presentation by the Chief Financial Officer or VP
Finance of IMC Company, subject to normal year-end audit adjustments and
accompanied by a certificate from such financial officer to the effect
that no Default or Event of Default has occurred and is continuing.
27
(b) Annual Financial Statements. Within 90 days after the close of each
fiscal year of the Borrower, the consolidated statements of financial
condition of the Borrowers and their Consolidated Subsidiaries as at the
end of such fiscal year, and the related consolidated and consolidating
statements of income and retained earnings and statements of cash flows
for such fiscal year, in form and substance satisfactory to the Lender
and setting forth comparative figures for the preceding fiscal year and
certified, in the case of the consolidated financial statements, by
independent certified public accountants reasonably acceptable to the
Lender, together with a report of such accounting firm stating that its
regular audit of the financial statements of the Borrowers was conducted
in accordance with generally accepted auditing standards.
(c) Management Letters. Promptly, and in no event later than five days,
after receipt by the Borrowers thereof, a copy of any "management
letter" received by the Borrowers from its certified public accountants.
(d) Officer's Certificates. At the time of the delivery of the financial
statements provided for in Section 7.01(a) and (b), a certificate of the
Chief Financial Officer or VP Finance of IMC Company to the effect that,
to the best of his knowledge, no Default or Event of Default has
occurred and is continuing or, if any Default or Event of Default has
occurred and is continuing, specifying the nature and extent thereof and
any actions taken or proposed to be taken to cure any such Default or
Event of Default, which certificate shall set forth the calculations
required to establish whether the Borrowers were in compliance with the
provisions of Sections 8.08 and 8.09, at the end of such quarter or
fiscal year, as the case may be.
(e) Notice of Default. Promptly (and in no event later than five (5)
Business Days following the occurrence thereof), notice of (i) the
occurrence of any event which constitutes a Default or Event of Default,
detailing the nature of such Default or Event of Default and any actions
taken or proposed to be taken to cure such Default or Event of Default,
(ii) the commencement of any action, suit or proceeding against the
Borrower or any of its Subsidiaries before any court, arbitrator or
governmental department, commission, board, bureau, agency or
instrumentality which (A) could result in liability or loss of
$5,000,000 or more, in excess of any applicable insurance coverage to
the Borrower or such Subsidiary, as the case may be, or (B) would
otherwise materially adversely affect the management or the condition or
operations (financial or otherwise) of the Borrower or any of its
Subsidiaries, (iii) any change in any executive or financial officer of
the Borrower, (iv) any threatened loss of any authorization,
qualification, license or permit issued by any governmental or
regulatory authority to the Borrower or any of its Subsidiaries the loss
of which could have a material adverse effect upon the financial
condition or business of the Borrower or any of its Subsidiaries.
(f) Reports Relating to Collateral. In respect of the Collateral,
bi-weekly or more frequently as the Lender may, from time to time,
request, a position valuation report from the Borrowers, in a form
satisfactory to the Lender.
28
(g) Borrowing Base Certificate. Weekly, or more frequently as the Lender
may from time to time request in its sole discretion, a Borrowing Base
Certificate, properly completed and certified by an authorized officer
of the Borrowers.
(h) Monthly Servicing Reports. Within 10 days after the close of each
calendar month, a consolidated report of the Borrowers (A) detailing, as
to all Mortgage Loans pledged to the Lender, (1) the loan numbers for
such Mortgage Loans, (2) the original terms of such Mortgage Loans and
whether such Mortgage Loans bear interest at a fixed rate or an
adjustable rate, (3) the weighted average interest rate and the weighted
average net servicing fee with respect to such Mortgage Loans, and (4)
which of such Mortgage Loans (a) are current and in good standing, (b)
are more than 30, 60 or 90 days past due, respectively, (c) are the
subject of pending litigation, bankruptcy or foreclosure proceedings,
and (d) have been converted (through foreclosure or other proceedings in
lieu thereof) by the Borrower into real estate owned by the Borrower and
(B) providing a summary, for all Mortgage Loans the servicing rights to
which are owned by the Borrower, regardless of whether such Mortgage
Loans are pledged to the Lender, of (1) the entities that own such
Mortgage Loans, (2) the original terms of such Mortgage Loans and
whether such Mortgage Loans bear interest at a fixed rate or an
adjustable rate, (3) the weighted average interest rate and the weighted
average net servicing fee with respect to such Mortgage Loans, (4)
whether any such Mortgage Loans were sold by the Borrower with recourse
and the nature of such recourse, (5) which of such Mortgage Loans (a)
are current and in good standing, (b) are more than 30, 60 or 90 days
past due, respectively, (c) are the subject of pending litigation,
bankruptcy or foreclosure proceedings, and (d) have been converted
(through foreclosure or other proceedings in lieu thereof) by the
Borrower into real estate owned by the Borrower, and (6) any reserves
established by the Borrower for losses in respect of delinquent Mortgage
Loans or real estate owned by the Borrower.
(i) [Intentionally Omitted]
(j) Other Reports and Filings. Promptly, and in any event within 10 days
following the filing thereof, copies of all financial information, proxy
materials and other information and reports, if any, which the Borrower
shall file with the Securities and Exchange Commission or any
governmental agencies substituted therefor.
(k) [Intentionally Omitted]
(l) [Intentionally Omitted]
(m) [Intentionally Omitted]
(n) [Intentionally Omitted]
(o) [Intentionally Omitted]
29
(p) Commitment Default. Notice within 2 Business Days of any default
under, or of the termination, invalidation or cancellation of, any
Purchase Commitment or Master Commitment relating to any Mortgage Loan
constituting Collateral.
(q) Collateral Servicing Report. Within five (5) Business Days after the
end of each calendar quarter, a report detailing the identities of the
entities other than the Borrower, if any, servicing any Mortgage Loans
pledged as Collateral hereunder.
(r) Other Information. Promptly, and in any event within five (5)
Business Days after the Borrower's receipt or filing thereof, (i) copies
of any notices or information given to or received from the holders of
any Indebtedness of the Borrower relating to any actual or alleged
default, demand for payment or acceleration of payment, or from the PBGC
or the United States Department of Labor in connection with any matter
arising with respect to ERISA, and (ii) such other information or
documents (financial or otherwise) as the Lender may reasonably request.
(s) Credit Package Documents. Promptly upon the written request by the
Lender, to the extent available, and in any event within 40 days
following the pledge of a Mortgage Loan as Collateral pursuant to the
terms of this Agreement and the Warehouse Security Agreement, each of
the documents listed in Schedule 7.01(s) (collectively, the "Credit
Package Documents"), as applicable.
7.02 Books, Records and Inspections. The Borrower will, and will cause
each of its Subsidiaries to, keep proper books of record and account in which
full, true and correct entries in conformity with generally accepted accounting
principles in the United States and all requirements of law shall be made of all
dealings and transactions in relation to its business and activities. The
Borrower will, and will cause each of its Subsidiaries to, permit officers and
designated representatives of the Lender to visit and inspect any of the
properties of the Borrower or such Subsidiary, and to examine the books of
record and account of the Borrower or such Subsidiary and discuss the affairs,
finances and accounts of the Borrower or such Subsidiary with, and be advised as
to the same by, its and their officers, employees and independent accountants,
all at such reasonable times and intervals and to such extent as the Lender may
request. Any such inspection and/or examination may include an audit by the
Lender of the servicing of the Collateral and the Borrower's Servicing Portfolio
and such procedures as the Lender deems appropriate to confirm the reporting of
Mortgage Loan balances.
7.03 Maintenance of Property, Insurance. The Borrower will, and will
cause each of its Subsidiaries to, (i) keep all property necessary for the
operation of its business in good working order and condition, (ii) except as
otherwise provided in clause (iii) below, maintain with financially sound and
reputable insurance companies insurance (including such insurance as the Lender
shall require) in at least such amounts and against at least such risks as are
customarily insured against by companies in the same or similar business, (iii)
maintain fidelity bond coverage and errors and omissions, mortgage impairment or
mortgagee interest insurance coverage in accordance with standards and
requirements satisfactory to the applicable Investor and the Lender and (iv)
furnish to the Lender, upon written request, full information as to the
insurance carried. The provisions of this Section 7.03
30
shall be deemed to be supplemental to, but not duplicative of, the provisions of
any of the security documents that require the maintenance of insurance.
7.04 Corporate or Partnership Franchises. The Borrower will, and will
cause each of its Subsidiaries to, do or cause to be done, all things necessary
to preserve and keep in full force and effect its existence and its material
rights, franchises, qualifications, licenses, permits and patents; provided,
however, that nothing in this Section 7.04 shall prevent the withdrawal by the
Borrower or any of its Subsidiaries of its qualification as a foreign
corporation or foreign limited partnership in any jurisdiction where such
withdrawal could not have a material adverse effect on the business,
operations, property, assets, condition (financial or otherwise) or prospects of
the Borrower or such Subsidiary.
7.05 Compliance with Statutes, etc. The Borrower will, and will cause
each of its Subsidiaries and each appraiser, correspondent, broker or other
service provider that participates with the Borrower in the origination or
servicing of Mortgage Loans to, comply with all applicable statutes, regulations
and orders of, and all applicable restrictions imposed by, all governmental
bodies, domestic or foreign, in respect of the conduct of its business and the
ownership of its property (including applicable statutes, regulations, orders
and restrictions relating to (1) licensing or registration (as described in
Section 6.18 hereof) and (2) environmental standards and controls), except such
noncompliances as could not (i) adversely affect in any manner the legality,
validity or enforceability of any Mortgage Loan, Hedging Contract or Purchase
Commitment or (ii) in the aggregate, have a material adverse effect on the
business, operations, property, assets, condition (financial or otherwise) or
prospects of the Borrower or the Borrower and its Subsidiaries taken as a whole.
7.06 ERISA. As soon as possible and, in any event, within 10 days after
the Borrower or any of its Subsidiaries or ERISA Affiliates knows or has reason
to know any of the following, the Borrower will deliver to the Lender a
certificate of the Chief Financial Officer or VP Finance of the Borrower setting
forth details as to such occurrence and such action, if any, which the Borrower,
such Subsidiary or such ERISA Affiliate is required or proposes to take,
together with any notices required or proposed to be given to or filed with or
by the Borrower, such Subsidiary, such ERISA Affiliate, the PBGC, a Plan
participant or the Plan administrator with respect thereto: that a Reportable
Event has occurred; that an accumulated funding deficiency has been incurred or
an application may be or has been made to the Secretary of the Treasury for a
waiver or modification of the minimum funding standard (including any required
installment payments) or an extension of any amortization period under Section
412 of the Code with respect to a Plan; that a Plan has been or may be
terminated, reorganized, partitioned or declared insolvent under Title IV of
ERISA; that a Plan has an Unfunded Current Liability giving rise to a Lien under
ERISA; that proceedings may be or have been instituted to terminate a Plan; that
a proceeding has been instituted pursuant to Section 515 of ERISA to collect a
delinquent contribution to a Plan; or that the Borrower, any of its Subsidiaries
or ERISA Affiliates will or may incur any liability (including any contingent or
secondary liability) to or on account of the termination of or withdrawal from a
Plan under Section 4062, 4063, 4064, 4069, 4201 or 4204 of ERISA or with respect
to a Plan under Section 4971 or 4975 of the Code or Section 409, 502(i) or
502(1) of ERISA. The Borrower will deliver to the Lender a complete copy of the
annual report (Form 5500) of each Plan required to be filed with the Internal
31
Revenue Service. In addition to any certificates or notices delivered to the
Lender pursuant to the first sentence hereof, copies of annual reports and any
other notices received by the Borrower or any of its Subsidiaries required to be
delivered to the Lender hereunder shall be delivered to the Lender no later than
10 days after the later of the date such report or notice has been filed with
the Internal Revenue Service or the PBGC, given to Plan participants or received
by the Borrower or such Subsidiary.
7.07 Performance of Obligations. The Borrower will, and will cause each
of its Subsidiaries to, perform all of its obligations under the terms of each
mortgage, indenture, security agreement and other debt instrument by which it is
bound, except such non-performances as could not in the aggregate, have a
material adverse effect on the business, operations, property, assets, condition
(financial or otherwise) or prospects of the Borrower or of the Borrower and its
Subsidiaries taken as a whole.
7.08 Mortgage Loans. (a) The Borrower will not modify or waive any term
of any pledged Mortgage Loan or release any security or obligor, if as a result
thereof such Mortgage Loan would become, nor cause, through any activity or
inactivity, a Mortgage Loan to become ineligible for FHA insurance or VA
guarantee, if applicable, or for purchase in accordance with any applicable
Master Commitment or Purchase Commitment. The Borrower will notify the Lender of
(i) any payment default in respect of any pledged Collateral which has continued
for 30 days, 60 days, or 90 days respectively, (ii) the occurrence of an
Insolvency Event in respect of an obligor on any Mortgage Loan pledged as
Collateral, (iii) the commencement of foreclosure or similar proceedings in
respect of the premises which secure any Mortgage Loan pledged as Collateral and
(iv) any other material default in any other term of any pledged Collateral,
such notice to be delivered not later than three (3) Business Days following the
occurrence thereof in the case of an event specified in clauses (i) or (iii) and
promptly upon the Borrower's receiving notice or otherwise becoming aware
thereof in the case of an event specified in clauses (ii) or (iv).
(b) All Eligible Mortgage Loans will comply in all respects with all
applicable requirements for purchase under any applicable Purchase Commitment.
All Mortgage Loans will be serviced and administered in accordance with all
requirements of any Investor that has issued a Purchase Commitment or a Master
Commitment applicable thereto.
7.09 Payment of Taxes. The Borrower will pay and discharge all taxes,
assessments and governmental charges or liens imposed upon the Borrower or upon
the Borrower's income or profits, or upon any properties belonging to the
Borrower, prior to the date on which any penalties attach thereto, and all
lawful claims which, if unpaid, might become a Lien upon any such property.
7.10 Corporate or Partnership Separateness. The Borrower will, and will
cause each of its Subsidiaries to, take such actions as are necessary to keep
its operations and the operations of each of its Subsidiaries separate and
apart from each of the other's, including, without limitation, insuring that all
customary formalities regarding the corporate or partnership existence of the
Borrower and each such Subsidiary, including holding regular meetings and
maintenance of its current minute books, are followed. Such actions will not
preclude the Borrower from merging or consolidating any of its Subsidiaries
in its normal course of business.
32
l7.11 Collateral. The Borrower will (a) warrant and defend the right,
title and interest of the Lender in and to the Collateral against the claims and
demands of all persons whomsoever; (b) service, or cause to be serviced, all
Mortgage Loans in accordance with the requirements of the issuers of Master
Commitments and Purchase Commitments covering the same and all applicable FHA
and VA requirements (including without limitation taking all actions necessary
to enforce the obligations of the obligors under such Mortgage Loans); (c) hold
all escrow funds collected in respect of Mortgage Loans in trust, without
commingling the same with non-custodial funds, and apply the same for the
purposes for which such funds were collected; (d) comply in all respects with
the terms and conditions of all Master Commitments and Purchase Commitments, and
all extensions, renewals and modifications or substitutions thereof or thereto,
and deliver or cause to be delivered to the applicable Investor the Mortgage
Loans to be sold under each Purchase Commitment not later than three (3)
Business Days prior to the expiration thereof; and (e) maintain, and, upon
request, shall make available to the Lender the originals, or copies in any case
where the original has been delivered to the Lender or to an Investor, of its
Mortgage Notes, Mortgages, Purchase Commitments, Hedging Contracts, Master
Commitments, and all related Mortgage Loan documents and instruments, and all
files, surveys, certificates, correspondence, appraisals, computer programs,
tapes, discs, cards, accounting records and other information and data relating
to the Collateral.
7.12 Portfolio Hedging Arrangements. The Borrower will enter into and
maintain from time to time Hedging Contracts with respect to Mortgage Loans held
by it and commitments made by it to prospective Mortgage Loan obligors to extend
Mortgage Loans at specified rates of interest.
Section 8. Negative Covenants.
Each Borrower covenants and agrees that as of the Effective Date, and
thereafter for so long as this Agreement is in effect and until the Commitment
has terminated, the Note is no longer outstanding and the Advances, together
with interest, Fees and all other Obligations, are paid in full, without the
prior written consent of the Lender:
8.01 Liens. The Borrower will not, and will not permit any of its
Subsidiaries to, create, incur, assume or suffer to exist any Lien upon or with
respect to any Collateral; provided that the provisions of this Section 8.01
shall not prevent the creation, incurrence, assumption or existence of:
(a) Liens for taxes not yet due, or Liens for taxes being contested in
good faith and by appropriate proceedings for which adequate reserves
have been established;
(b) Liens created pursuant to the Warehouse Security Agreement; and
(c) Liens in favor of FNMA, GNMA or FHLMC on the right of the Borrower
to service Mortgage Loans sold to such agencies.
8.02 Liquidation, Dissolution. The Borrower will not wind up, liquidate
or dissolve its affairs without the prior approval of the Lender.
33
8.03 Dividends. (a) Upon the occurrence and during the continuance of
any Default or Event of Default (determined after giving effect to any proposed
action of the Borrower), the Borrower will not declare or pay any dividends, or
return any capital, to its stockholders or partners or authorize or make any
other distribution, payment or delivery of property or cash to its stockholders
or partners as such, or redeem, retire, purchase or otherwise acquire, directly
or indirectly, for a consideration, any shares of any class of its capital stock
or partnership interests now or hereafter outstanding (or any options or
warrants issued by the Borrower with respect to its capital stock or partnership
interests), or set aside any funds for any of the foregoing purposes, or permit
any of its Subsidiaries to purchase or otherwise acquire for a consideration any
shares of any class of the capital stock or partnership interests of the
Borrower now or hereafter outstanding (or any options or warrants issued by the
Borrower with respect to its capital stock or partnership interests).
(b) Upon the occurrence and during the continuance of any Default or
Event of Default (determined after giving effect to any proposed action of the
Borrower), the Borrower will not permit any of its Subsidiaries to declare or
pay any dividends, or return any capital, to its stockholders or authorize or
make any other distribution, payment or delivery of property or cash to its
stockholders as such, or redeem, retire, purchase or otherwise acquire, directly
or indirectly, for a consideration, any shares of any class of its capital stock
now or hereafter outstanding (or any options or warrants issued by such
Subsidiary with respect to its capital stock), or set aside any funds for any of
the foregoing purposes, or permit any of its Subsidiaries to purchase or
otherwise acquire for a consideration any shares of any class of the capital
stock of such Subsidiary now or hereafter outstanding (or any options or
warrants issued by such Subsidiary with respect to its capital stock), except
that any Subsidiary may pay dividends to the Borrower or to any Wholly-Owned
Subsidiary of the Borrower.
(c) IMC Company will not at any time declare or pay any dividends, or
return any capital, to its stockholders or authorize or make any other
distribution, payment or delivery of property or cash to its stockholders as
such, or redeem, retire, purchase or otherwise acquire, directly or indirectly,
for a consideration, any shares of any class of its capital stock now or
hereafter outstanding (or any options or warrants issued by IMC Company with
respect to its capital stock), or set aside any funds for any of the foregoing
purposes, or permit any of its Subsidiaries to purchase or otherwise acquire for
a consideration any shares of any class of the capital stock of IMC Company now
or hereafter outstanding (or any options or warrants issued by IMC Company with
respect to its capital stock), or pay any special distributions or bonuses not
in the ordinary course of business to any officer or employee that owns capital
stock of IMC Company, if after giving effect thereto the Consolidated Tangible
Net Worth of IMC Company would be less than the amount required by Section 8.09
hereof.
8.04 [Intentionally Omitted]
8.05 [Intentionally Omitted]
8.06 Transactions with Affiliates. The Borrower will not, and will not
permit any of its Subsidiaries to, enter into any transaction or series of
related transactions, whether or not in the ordinary course of business, with
any Affiliate of the Borrower, other than on terms and conditions
34
substantially as favorable to the Borrower or such Subsidiary as would be
obtainable by the Borrower or such Subsidiary at the time in a comparable
arm's-length transaction with a Person other than an Affiliate; provided,
however, that the Borrower will not, and will not permit any of its Subsidiaries
to:
(a) use, furnish, or rely upon an insurance policy (including but not
limited to title insurance and hazard insurance) underwritten by or
issued by any Affiliate of the Borrower (other than any such Affiliate
listed on Schedule 8.06 hereof);
(b) use, furnish, or rely upon an appraisal issued by any Affiliate or
by any Person controlled by any Affiliate of the Borrower (other than
any such Affiliate or Person listed on Schedule 8.06 hereof) except with
respect to FHA Loans, VA Loans or State Loans; or
(c) pledge any Mortgage Loan to the Lender under which the Borrower or
any Affiliate thereof is a mortgagor or guarantor for such Mortgage
Loan.
8.07 Capital Expenditures. The Borrower will not, and will not permit
any of its Subsidiaries to, without the prior written approval of the Lender,
make any expenditure for fixed or capital assets (including, without limitation,
expenditures for maintenance and repairs which should be capitalized in
accordance with generally accepted accounting principles and including
capitalized lease obligations) other than such expenditures made in the ordinary
course of such Person's business in an amount not in excess of $5,000,000;
provided, however, that the Lender shall not unreasonably withhold its approval
of a capital expenditure by the Borrower for the purpose of purchasing an office
building to be utilized as corporate office space.
8.08 Maximum Consolidated Leverage Ratio. IMC Company will not permit
its Consolidated Leverage Ratio at any time during any fiscal year to be greater
than 20 to 1.
8.09 Minimum Consolidated Tangible Net Worth. IMC Company will not
permit its Consolidated Tangible Net Worth at any time during any fiscal year to
be less than $50,000,000.
8.10 Minimum Servicing Portfolio. The Borrower will not permit the
aggregate amount of its Servicing Portfolio at any time to be less than $0.
8.11 Modifications of Certain Agreements and Collateral. The Borrower
will not, without the prior written consent of the Lender, amend, modify or
waive any of the terms of, or settle or compromise any claim with respect to,
any Collateral or any Collateral Document.
8.12 Limitation on Restrictions on Subsidiary Dividends and Other
Distributions. The Borrower will not, and will not permit any of its
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction on the ability of any
such Subsidiary to (a) pay dividends or make any other distributions on its
capital stock or any other interest or participation in its profits owned by the
Borrower or any Subsidiary of the Borrower, or pay any Indebtedness owed to the
Borrower or any Subsidiary of the Borrower, (b) make loans or advances to the
Borrower or (c) transfer any of its properties or assets to the Borrower, except
for such encumbrances or restrictions existing under or by reasons of (i)
applicable law, (ii) this
35
Agreement and (iii) customary provisions restricting subletting or assignment of
any lease governing a leasehold interest of the Borrower or any Subsidiary of
the Borrower.
8.13 Limitation on Issuances of Capital Stock by Subsidiaries. The
Borrower will not permit any of its Subsidiaries to issue any capital stock
(including by way of sales of treasury stock) or any options or warrants to
purchase, or securities convertible into, capital stock, except for (i)
transfers and replacements of then outstanding shares of capital stock and (ii)
stock splits, stock dividends and similar issuances which do not decrease the
percentage ownership of the Borrower or any of its Subsidiaries in any class of
the capital stock of such Subsidiary.
8.14 [Intentionally Omitted]
8.15 Portfolio Aging. The Borrower will not at any time permit (x) the
aggregate principal amount of the Mortgage Loans then pledged as Collateral that
have an Origination Date that is more than 180 days prior to such time, to
exceed (y) 10% of the aggregate principal amount of all Mortgage Loans that are
pledged as Collateral at such time.
Section 9. Events of Default.
Upon the occurrence of any of the following specified events (each an
"Event of Default"):
9.01 Payments. The Borrowers shall (i) default in the payment when due
of any principal of any Advance or (ii) default, and such default shall continue
unremedied for 3 or more days, in the payment when due of any interest on any
Advance or any Fees or any other amount owing hereunder or under any Credit
Document; or
9.02 Representations, etc. Any representation, warranty or statement
made or deemed made by a Borrower herein or in any other Credit Document or in
any certificate delivered pursuant hereto or thereto shall prove to be untrue in
any material respect on the date as of which made or deemed made; or
9.03 Covenants. A Borrower shall (i) default in the due performance or
observance by it of any term, covenant or agreement contained in Sections
7.01(e), 7.04, 7.05, 7.06, 7.07, 7.08 or 8 or (ii) default in the due
performance or observance by it of any term, covenant or agreement contained in
this Agreement (other than those referred to in Sections 9.01 and 9.02 and
clause (i) of this Section 9.03) and such default shall continue unremedied for
a period of 15 days; or
9.04 Default Under Other Agreements. The Borrowers or any of their
Subsidiaries shall (i) default in any payment of any Indebtedness in an
aggregate amount exceeding $5,000,000 pursuant to which the Borrowers are
obligated in any manner (other than the Obligations) beyond the period of grace
(not to exceed 30 days), if any, provided in the instrument or agreement under
which such Indebtedness was created and such default shall be declared by the
obligee or (ii) default in the observance or performance of any agreement or
condition relating to any Indebtedness, in an aggregate amount exceeding
$5,000,000 (other than the Obligations), or contained in any instrument or
agreement evidencing, securing or relating thereto, or any other event shall
occur or condition
36
exist, the effect of which default or other event or condition is to cause, such
Indebtedness to become due prior to its stated maturity; or
9.05 [Intentionally Omitted]
9.06 Bankruptcy, etc. An Insolvency Event shall occur with respect to a
Borrower or any of its Subsidiaries; or
9.07 ERISA. Any Plan shall fail to satisfy the minimum funding standard
required for any plan year or part thereof or a waiver of such standard or
extension of any amortization period is sought or granted under Section 412 of
the Code, any Plan is, shall have been or is likely to be terminated or the
subject of termination proceeding under ERISA, any Plan shall have an Unfunded
Current Liability, or a Borrower or any of its Subsidiaries or ERISA Affiliates
has incurred or is likely to incur a liability to or on account of a Plan under
Section 409, 501(i), 501(1), 515, 4062, 4063, 4064, 4069, 4201 or 4204 of ERISA
or Section 4971 or 4975 of the Code, and there shall result from any such event
or events the imposition of a Lien upon the assets of a Borrower or any of its
Subsidiaries, the granting of a security interest, or a liability or a material
risk of incurring a liability to the PBGC or a Plan or a trustee appointed under
ERISA or a penalty under Section 4971 of the Code, which lien, security
interest, liability or penalty, singly or in the aggregate exceeds $1,000,000;
or
9.08 Warehouse Security Agreement. The Warehouse Security Agreement or
any provision thereof shall cease to be in full force and effect, or shall cease
to give the Lender the Liens, rights, powers and privileges purported to be
created thereby, or a Borrower shall default in the due performance or
observance of any term, covenant or agreement on its part to be performed or
observed pursuant to the Warehouse Security Agreement; or
9.09 [Intentionally Omitted]
9.10 [Intentionally Omitted]
9.11 Judgments. One or more judgments or decrees shall be entered
against the Borrower or any of its Subsidiaries involving in the aggregate for
the Borrower and its Subsidiaries a liability (not paid or fully covered by
insurance) of $5,000,000 or more, and all such judgments or decrees shall not
have been vacated, discharged or stayed or bonded pending appeal within 30 days
after the entry thereof; or
9.12 [Intentionally Omitted]
then, and in any such event, and at any time thereafter, if any Event of Default
shall then be continuing, the Lender may, by written notice to the Borrowers,
take any or all of the following actions, without prejudice to the rights of the
Lender or the holder of the Note to enforce its claims against the Borrowers
(provided, that, if an Event of Default specified in Section 9.06 shall occur
with respect to a Borrower, the result which would occur upon the giving of
written notice by the Lender to the Borrower as specified in clauses (i) and
(ii) below shall occur automatically without the
37
giving of any such notice): (i) declare the Commitment terminated, whereupon the
Commitment of the Lender shall forthwith terminate immediately and any Fees
shall forthwith become due and payable without any other notice of any kind; and
(ii) declare the principal of and any accrued interest in respect of all
Advances and all Obligations to be, whereupon the same shall become, forthwith
due and payable without presentment, demand, protest or other notice of any
kind, all of which are hereby waived by the Borrowers.
9.13 Default Not a Condition of a 120-Day Demand. Notwithstanding any of
the other terms of this Agreement, including, without limitation, the preceding
provisions of this Section 9, the Lender shall have the right to demand payment
of the outstanding Advances at any time, upon 120 days' prior written notice to
the Borrowers, whether or not any Default or Event of Default exists or the
Expiry Date has occurred.
Section 10. Miscellaneous.
10.01 Payment of Expenses; Indemnity. (a) Whether or not the
transactions contemplated hereby are consummated, the Borrowers agree to pay on
demand all reasonable costs and expenses in connection with the preparation,
execution, delivery, modification, amendment, administration and monitoring of
the Credit Documents and the other documents to be delivered thereunder
(including the costs in respect of the perfection and maintenance of the
security interests created by the Credit Documents and conducting due diligence
with respect to the Borrowers and their business) including, without limitation,
the fees and out-of-pocket expenses of counsel for the Lender, and of local
counsel who may be retained by the Lender, with respect thereto and with respect
to advising the Lender as to its rights and remedies under the Credit Documents,
and including all reasonable costs and expenses in connection with the servicing
and liquidation of the Collateral. The Borrowers further agree to pay on demand
all costs and expenses, if any (including, without limitation, reasonable
counsel fees and expenses), in connection with the enforcement (whether through
negotiations, workout, legal proceedings or otherwise) of the Credit Documents
and the other documents to be delivered thereunder, including, without
limitation, reasonable counsel fees and expenses in connection with the
enforcement of rights under this Section 10.01(a).
(b) Without limiting any other rights which the Lender, or any Affiliate
thereof, as well as their respective directors, officers, employees and agents
(each, an "Indemnified Party") may have hereunder or under applicable law, the
Borrowers hereby agree to indemnify each Indemnified Party from and against any
and all claims, losses, damages, expenses and liabilities (including reasonable
attorneys' fees) (all of the foregoing being collectively referred to as
"Indemnified Amounts") arising out of, relating to or resulting from this
Agreement, any other Credit Document, any Mortgage Loan or other Collateral or
the use of any proceeds of Advances, excluding, however, Indemnified Amounts to
the extent resulting from gross negligence or willful misconduct (as determined
by a final judgment of a court of competent jurisdiction) on the part of such
Indemnified Party or any Affiliate of such Indemnified Party which directly or
indirectly controls, is controlled by or is under common control with such
Indemnified Party or is a director or officer of such Indemnified Party or of an
Affiliate of such Indemnified Party. Without limiting or being limited by the
foregoing, the Borrowers shall pay on demand to each Indemnified Party any and
all amounts necessary to indemnify such Indemnified Party from and against any
and all Indemnified Amounts relating to or resulting from:
38
(i) the making of an Advance secured by a pledge of a
Mortgage Loan which is not at the date of the creation of such
security interest an Eligible Mortgage Loan or which thereafter
ceases to be an Eligible Mortgage Loan;
(ii) reliance on any representation or warranty or
statement made or deemed made by a Borrower (or any of its
officers) under or in connection with any Credit Document which
shall have been incorrect when made;
(iii) the failure by a Borrower to comply with any
applicable law, rule or regulation with respect to any
Collateral, or the nonconformity of any Collateral with any such
applicable law, rule or regulation;
(iv) the failure to vest in the Lender under the Warehouse
Security Agreement a valid first priority security interest in
the Mortgage Loans and the other Collateral, except as otherwise
permitted by this Agreement;
(v) the failure to have filed, or any delay in filing,
financing statements or other similar instruments or documents
under the UCC of any applicable jurisdiction or other applicable
laws with respect to any Collateral, whether at the time of any
Advance or at any subsequent time;
(vi) any investigation, litigation or proceeding related
to this Agreement or any other Credit Document or the use of
proceeds of Advances or in respect of any Mortgage Loan or other
Collateral;
(vii) the loss, misplacement or destruction of any
cashier's check issued by the Lender in respect of any Advance
after receipt of such check by the closing agent, escrow agent,
title company, attorney or any other authorized party identified
in the Request for Advance relating to such Advance, it being
understood and agreed that, notwithstanding the indemnity under
this Section 10.01(b)(vii) or any such loss, misplacement or
destruction, the funds represented by any such lost, misplaced or
destroyed cashier's check shall constitute an Advance hereunder;
(viii) the making of any wire transfer to an incorrect
account or in an incorrect amount in accordance with instructions
received from a Borrower, it being understood and agreed that,
notwithstanding the indemnity under this Section 10.01(b)(viii),
the funds represented by any such wire shall constitute an
Advance hereunder.
10.02 Notices. Except as otherwise expressly provided herein, all
notices and other communications provided for hereunder shall be in writing
(including telegraphic, telex, telecopier or cable communication) and mailed,
telegraphed, telexed, telecopied, cabled or delivered: if to a Borrower or the
Lender, at its address specified opposite its signature below, or at such other
address as shall be designated by such party in a written notice to the other
party hereto. All such notices and communications shall, when mailed,
telegraphed, telecopied or sent by overnight courier, be effective
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when deposited in the mails, delivered to the telegraph company or overnight
courier, as the case may be, or sent by telecopier, except that notices and
communications given to the Lender pursuant to Section 2 and Section 4 shall not
be effective until received by the Lender.
10.03 Benefit of Agreement. This Agreement shall be binding upon and
inure to the benefit of and be enforceable by the respective successors and
assigns of the parties hereto; provided, however, that no Borrower may assign or
transfer any of its rights or obligations hereunder without the prior written
consent of the Lender. The Lender may at any time assign any of its rights and
obligations hereunder or under the Note.
10.04 No Waiver; Remedies Cumulative. No failure or delay on the part of
the Lender or the holder of the Note in exercising any right, power or privilege
hereunder or under any other Credit Document and no course of dealing between
the Borrowers and the Lender or the holder of the Note shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, power or
privilege hereunder or under any other Credit Document preclude any other or
further exercise thereof or the exercise of any other right, power or privilege
hereunder or thereunder. The rights, powers and remedies herein or in any other
Credit Document expressly provided are cumulative and not exclusive of any
rights, powers or remedies which the Lender or the holder of the Note would
otherwise have. No notice to or demand on the Borrowers in any case shall
entitle the Borrowers to any other or further notice or demand in similar or
other circumstances or constitute a waiver of the rights of the Lender or the
holder of the Note to any other or further action in any circumstances without
notice or demand.
10.05 Calculations; Computations. (a) The financial statements to be
furnished to the Lender pursuant hereto shall be made and prepared in accordance
with generally accepted accounting principles in the United States consistently
applied throughout the periods involved (except as set forth in the notes
thereto or as otherwise disclosed in writing by the Borrowers to the Lender);
provided that, except as otherwise specifically provided herein, all
computations determining compliance with Section 8 shall utilize accounting
principles and policies in conformity with those used to prepare the historical
financial statements referred to in Section 6.05(a).
(b) All computations of interest and the Fees hereunder shall be made on
the basis of a year of 360 days for the actual number of days occurring in the
period for which such interest or fees are payable.
10.06 Governing Law; Submission to Jurisdiction; Venue. (a) This
Agreement and the other Credit Documents and the rights and obligations of the
parties hereunder and thereunder shall be construed in accordance with and be
governed by the law of the State of New York without regard to principles of
conflicts of laws. Any legal action or proceeding against the Borrowers with
respect to this Agreement or any other Credit Document may be brought in the
courts of the State of New Jersey located in Camden County or in the United
States Federal courts located in Camden County, and, by execution and delivery
of this Agreement, each Borrower hereby irrevocably accepts for itself and in
respect of its property, generally and unconditionally, the jurisdiction of the
aforesaid courts.
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(b) Each Borrower hereby irrevocably waives any objection which it may
now or hereafter have to the laying of venue of any of the aforesaid actions or
proceedings arising out of or in connection with this Agreement or any other
Credit Document brought in the courts referred to in clause (a) above and hereby
further irrevocably waives and agrees not to plead or claim in any such court
that any such action or proceeding brought in any such court has been brought in
an inconvenient forum.
10.07 No Proceedings. Each Borrower hereby covenants and agrees that,
prior to the date which is one year and one day after the payment in full of all
outstanding indebtedness hereunder, it will not institute against, or join any
other Person in instituting against the Lender, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceeding or other similar proceeding
under the laws of the United States or any state of the United States.
10.08 Participation and Syndication. Notwithstanding any other provision
of this Agreement, the Lender may at any time and from time to time enter into
participation agreements or syndication agreements with one or more
participating financial institutions whereby the Lender will allocate certain
percentages of the Commitment to them. Each Borrower acknowledges that, for the
convenience of all parties, this Agreement is being entered into with the Lender
only and that its obligations under this Agreement are undertaken for the
benefit of, and as an inducement to, any such financial institution as well as
the Lender. Each Borrower agrees to cooperate with the Lender and any such
participating financial institution in effectuating such a participation or
syndication and shall, upon the request of the Lender, execute a replacement
note or notes and such other documents or instruments as may be reasonably
necessary to evidence the debtor-creditor relationship between the Borrower and
such participating financial institution. Each Borrower hereby grants to each
participating financial institution, to the extent of its participation in the
Commitment, the right to set off deposit accounts maintained by the Borrower
with such financial institution. The Borrowers shall pay all costs and expenses
(including, without limitation, reasonable counsel fees and expenses incurred by
the Lender and the participating financial institutions) in connection with
effectuating such a participation or syndication.
10.09 Obligation to Make Payments in Dollars. All payments of the
principal and interest on the Note and any other amounts due hereunder or under
any other Credit Document shall be made in Dollars.
10.10 Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. A set of counterparts
executed by all the parties hereto shall be lodged with the Borrowers and the
Lender.
10.11 Effectiveness. This Agreement shall become effective on the date
(the "Effective Date") on which the Borrowers and the Lender shall have signed a
copy hereof (whether the same or different copies) and shall have delivered the
same to the Lender at its Office.
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10.12 Headings Descriptive. The headings of the several sections and
subsections of this Agreement are inserted for convenience only and shall not in
any way affect the meaning or construction of any provision of this Agreement.
10.13 Amendment or Waiver. Neither this Agreement nor any other Credit
Document nor any terms hereof or thereof may be changed, waived, discharged or
terminated unless such change, waiver, discharge or termination is in writing
signed by the Lender.
10.14 Survival. All indemnities set forth herein including, without
limitation, in Sections 2.08, 4.06 and 10.01 shall survive the execution and
delivery of this Agreement and the Note and the making and repayment of the
Advances.
10.15 Waiver of Jury Trial. THE LENDER AND EACH BORROWER EACH HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES THE RIGHT EACH OF THEM MAY HAVE
TO A TRIAL BY JURY OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT, THE NOTE AND
ANY AGREEMENT CONTEMPLATED TO BE EXECUTED IN CONJUNCTION HEREWITH, OR ANY COURSE
OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS
OF ANY PARTY RELATING HERETO OR THERETO. THIS PROVISION IS A MATERIAL INDUCEMENT
FOR THE LENDER TO ENTER INTO THIS AGREEMENT.
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IN WITNESS WHEREOF, the parties hereto have caused their duly authorized
officers to execute and deliver this Agreement as of the date first above
written.
Address: IMC MORTGAGE COMPANY
0000 Xxxxxxxxx Xxxx Xxxxx, Xxxxx 000
Xxxxx, XX 00000
Facsimile No.: (000) 000-0000 By________________________
Title:
Address: INDUSTRY MORTGAGE COMPANY, L.P.
0000 Xxxxxxxxx Xxxx Xxxxx, Xxxxx 000
Xxxxx, XX 00000 By: INDUSTRY MORTGAGE CORPORATION,
Facsimile No.: (000) 000-0000 GENERAL PARTNER
By________________________
Title:
Three Executive Campus GE CAPITAL MORTGAGE SERVICES, INC.
Xxxxxx Xxxx, Xxx Xxxxxx 00000
Attn.: Xxxxx X. Xxxxx
Facsimile No.: 000-000-0000 By________________________
Title:
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