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Exhibit 10.31
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AMENDED AND RESTATED MASTER LOAN AND SECURITY AGREEMENT
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Dated as of November 23,1998
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HANOVER CAPITAL MORTGAGE HOLDINGS, INC.
as Borrower
HANOVER CAPITAL PARTNERS, LTD.
as Borrower
and
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GREENWICH CAPITAL FINANCIAL PRODUCTS, INC.
as Lender
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TABLE OF CONTENTS
RECITALS...................................................................................................... -1-
SECTION 1 Definitions and Accounting Matters................................................. -1-
1.01 Certain Defined Terms.............................................................. -1-
1.02 Accounting Terms and Determinations................................................ -22-
SECTION 2 Advances, Note and Prepayments..................................................... -23-
2.01 Advances........................................................................... -23-
2.02 Notes.............................................................................. -23-
2.03 Procedure for Borrowing............................................................ -24-
2.04 Repayment of Advances; Interest.................................................... -25-
2.05 Limitation on Types of Advances; Illegality........................................ -26-
2.06 Determination of Borrowing Base; Mandatory Prepayments or Pledge................... -27-
2.07 Optional Prepayments............................................................... -27-
2.08 Requirements of Law................................................................ -27-
2.09 Purpose of Advances................................................................ -29-
2.10 Extension of Termination Date...................................................... -29-
2.11 Extension of Maximum Pledge Period................................................. -29-
SECTION 3 Payments; Computations; Etc.; Commitment Fee....................................... -29-
3.01 Payments........................................................................... -29-
3.02 Computations....................................................................... -29-
3.03 Commitment Fee..................................................................... -29-
3.04 Selection of Interest Period....................................................... -30-
SECTION 4 Collateral Security................................................................ -30-
4.01 Collateral; Security Interest...................................................... -30-
4.02 Further Documentation.............................................................. -33-
4.03 Changes in Locations, Name, etc.................................................... -34-
4.04 Lender's Appointment as Attorney-in-Fact........................................... -34-
4.05 Performance by Lender of Borrower's Obligations.................................... -35-
4.06 Proceeds........................................................................... -35-
4.07 Remedies........................................................................... -36-
4.08 Limitation on Duties Regarding Presentation of Collateral.......................... -37-
4.09 Powers Coupled with an Interest.................................................... -37-
4.10 Release of Security Interest....................................................... -37-
4.11 Establishment of the Collection Account............................................ -38-
SECTION 5 Conditions Precedent............................................................... -38-
5.01 Initial Advance.................................................................... -38-
5.02 Initial and Subsequent Advances.................................................... -40-
SECTION 6 Representations and Warranties..................................................... -44-
6.01 Financial Condition................................................................ -44-
6.02 No Change.......................................................................... -45-
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6.03 Corporate Existence; Compliance with Law........................................... -45-
6.04 Corporate Power; Authorization; Enforceable Obligations............................ -45-
6.05 No Legal Bar....................................................................... -45-
6.06 No Material Litigation............................................................. -46-
6.07 No Default......................................................................... -46-
6.08 Collateral; Collateral Security.................................................... -46-
6.09 Chief Executive Office............................................................. -46-
6.10 Location of Books and Records...................................................... -47-
6.11 No Burdensome Restrictions......................................................... -47-
6.12 Taxes.............................................................................. -47-
6.13 Margin Regulations................................................................. -47-
6.14 Investment Company Act; Other Regulations.......................................... -47-
6.15 Subsidiaries....................................................................... -47-
6.16 Acquisition of Mortgage Loans...................................................... -47-
6.17 No Adverse Selection............................................................... -47-
6.18 Borrowers Solvent; Fraudulent Conveyance........................................... -47-
6.19 ERISA.............................................................................. -48-
6.20 True and Complete Disclosure....................................................... -48-
6.21 True Sales......................................................................... -48-
6.22 Participation Certificates......................................................... -48-
6.23 Year 2000 Compliance............................................................... -49-
SECTION 7 Covenants of the Borrower.......................................................... -49-
7.01 Financial Statements............................................................... -49-
7.02 Existence, Etc..................................................................... -50-
7.03 Maintenance of Property; Insurance................................................. -50-
7.04 Notices............................................................................ -50-
7.05 Other Information.................................................................. -51-
7.06 Further Identification of Collateral............................................... -51-
7.07 Eligible Asset Determined to be Defective.......................................... -51-
7.08 Monthly Reporting.................................................................. -51-
7.09 Financial Condition Covenants...................................................... -52-
7.10 Borrowing Base Deficiency.......................................................... -52-
7.11 Prohibition of Fundamental Changes................................................. -52-
7.12 Limitation on Liens on Collateral.................................................. -52-
7.13 Limitation on Transactions with Affiliates......................................... -52-
7.14 Underwriting Guidelines............................................................ -53-
7.15 Limitations on Modifications, Waivers and Extensions of
Eligible Assets.................................................................... -53-
7.16 Servicing.......................................................................... -53-
7.17 Limitation on Distributions........................................................ -53-
7.18 Use of Proceeds.................................................................... -53-
7.19 Restricted Payments................................................................ -53-
7.20 Reports............................................................................ -53-
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7.21 Inspection......................................................................... -53-
7.22 Further Proceeds................................................................... -53-
7.23 Further Documentation.............................................................. -54-
7.24 Taxes.............................................................................. -54-
7.25 Lost Note Affidavits; Lost Instrument Affidavits................................... -54-
7.26 Underlying Eligible Bonds.......................................................... -54-
7.27 Year 2000 Compliance............................................................... -55-
SECTION 8 Events of Default.................................................................. -55-
SECTION 9 Remedies Upon Default.............................................................. -58-
SECTION 10 No Duty of Lender.................................................................. -59-
SECTION 11 Miscellaneous...................................................................... -59-
11.01 Waiver............................................................................. -59-
11.02 Notices............................................................................ -59-
11.03 Indemnification and Expenses....................................................... -59-
11.04 Amendments......................................................................... -60-
11.05 Successors and Assigns............................................................. -60-
11.06 Survival........................................................................... -60-
11.07 Captions........................................................................... -61-
11.08 Counterparts....................................................................... -61-
11.09 GOVERNING LAW; ETC................................................................. -61-
11.10 SUBMISSION TO JURISDICTION; WAIVERS................................................ -61-
11.11 WAIVER OF JURY TRIAL............................................................... -62-
11.12 Acknowledgments.................................................................... -62-
11.13 Hypothecation and Pledge of Collateral............................................. -62-
11.14 Assignments; Participations........................................................ -62-
11.15 Servicing.......................................................................... -63-
11.16 Periodic Due Diligence Review...................................................... -64-
11.17 Set-Off............................................................................ -65-
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SCHEDULES
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SCHEDULE 1 Representations and Warranties re: Eligible Assets
SCHEDULE 2 Filing Jurisdictions and Offices
SCHEDULE 3 Subsidiaries
SCHEDULE 4 Litigation
EXHIBITS
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EXHIBIT A Form of Promissory Note
EXHIBIT B Form of Mortgage Custodial Agreement
EXHIBIT C Form of Opinion of Counsel to Borrower
EXHIBIT D Form of Notice of Borrowing and Pledge
EXHIBIT E Underwriting Guidelines
EXHIBIT F Form of Blocked Account Agreement
EXHIBIT G Form of Mortgage Loan Tape
EXHIBIT H Form of Borrowing Base Certificate
EXHIBIT I Form of Remittance Report
EXHIBIT J Form of Instruction Letter
EXHIBIT K-1 Form of Lost Instrument Affidavit
EXHIBIT K-2 Form of Lost Note Affidavit
EXHIBIT L Form of Notice of Extension of Interest Period
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AMENDED AND RESTATED MASTER LOAN AND SECURITY AGREEMENT
AMENDED AND RESTATED MASTER LOAN AND SECURITY AGREEMENT, dated as of
November 23, 1998, among HANOVER CAPITAL MORTGAGE HOLDINGS, INC. ("Hanover
Capital Holdings"), a Maryland corporation and Hanover Capital Partners, Ltd.
("Hanover Capital Partners"), a New York corporation, (each, a "Borrower" and
collectively, the "Borrowers"), and GREENWICH CAPITAL FINANCIAL PRODUCTS, INC.,
a Delaware corporation (the "Lender").
RECITALS
Hanover Capital Holdings entered into that certain Master Loan and Security
Agreement, dated as of March 30, 1998 and amended and restated as of May 14,
1998 (the "Existing Agreement"), with the Lender to obtain financing from time
to time to provide interim funding for (i) certain Eligible Bonds (as defined
herein), (ii) certain Pledged Stock (as defined herein), (iii) certain
Participation Certificates (as defined herein), and (iii) the acquisition of
certain Mortgage Loans (as defined herein), which Mortgage Loans are to be sold
or contributed by Hanover Capital Holdings to one or more trusts or other
entities sponsored by Hanover Capital Holdings or an Affiliate (as defined
herein) thereof, or to third-parties, and which Eligible Bonds, Participation
Certificates, Pledged Stock, and Mortgage Loans secure Advances (as defined
herein) made by the Lender thereunder.
The Borrowers and the Lender desire to amend and restate the Existing
Agreement to provide terms and conditions under which the Lender is prepared to
provide funding to Hanover Capital Partners in addition to Hanover Capital
Holdings from and after the date hereof.
Accordingly, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
SECTION 1 Definitions and Accounting Matters.
1.1 Certain Defined Terms. As used herein, the following terms shall have
the following meanings (all terms defined in this Section 1.01 or in other
provisions of this Loan Agreement in the singular to have the same meanings when
used in the plural and vice versa):
"Accepted Servicing Practices" shall have the meaning assigned thereto in
Section 11.15(a) hereof.
"Advance" shall mean any Committed Advance or Uncommitted Advance, as
applicable, and collectively "Advances" shall mean the sum of all Committed
Advances and Uncommitted Advances.
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"Affiliate" means, with respect to any Person, any other Person which,
directly or indirectly, controls, is controlled by, or is under common control
with, such Person. For purposes of this definition, "control" (together with the
correlative meanings of "controlled by" and "under common control with") means
possession, directly or indirectly, of the power (a) to vote 10% or more of the
securities (on a fully diluted basis) having ordinary voting power for the
directors or managing general partners (or their equivalent) of such Person, or
(b) to direct or cause the direction of the management or policies of such
Person, whether through the ownership of voting securities, by contract, or
otherwise.
"Applicable Collateral Percentage" shall mean, with respect to all Eligible
Mortgage Loans (other than Delinquent Mortgage Loans), 97%; with respect to all
Eligible Bonds, 60%; with respect to the Pledged Stock, 60%; with respect to
Thirty-Day Delinquent Mortgage Loans, 90%; with respect to Sixty-Day Delinquent
Mortgage Loans, 85%; and with respect to Participation Certificates, 97%
multiplied by the Ownership Percentage.
"Applicable Margin" shall mean, with respect to Advances that are Tranche A
Advances, Tranche B Advances, and Tranche C Advances, respectively, the
applicable rate per annum set forth below:
Tranche A Advances..................... 0.70%
Tranche B Advances..................... 1.00%
Tranche C Advances..................... 1.25%
"Applicable Notice Documents" shall have the meaning provided in Section
2.03(a) hereof.
"Appraised Value" shall mean the value set forth in an appraisal made in
connection with the origination or acquisition of the related Mortgage Loan as
the value of the Mortgaged Property.
"Asset Documents" shall mean (i) with respect to each Eligible Mortgage
Loan, the documents comprising the related Mortgage File, (ii) with respect to
each Eligible Bond, the documents comprising the related Bond File, (iii) the
Pledged Stock and (iv) with respect to Participation Certificates, the documents
comprising the original Participation Certificate File.
"Asset File" shall mean the Bond File, the Mortgage File, or the
Participation Certificate File, as applicable.
"Bankruptcy Code" shall mean the United States Bankruptcy Code of 1978, as
amended from time to time.
"Blocked Account Agreement" shall mean an agreement between Hanover Capital
Holdings, the Collection Bank, and the Lender, substantially in the form of
Exhibit F hereto, as the
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same may be amended, supplemented or otherwise modified from time to time, in
which Hanover Capital Holdings and Collection Bank acknowledge the Lender's lien
on the Collection Account (which lien is hereby consented to by Hanover Capital
Partners), and the Borrowers hereby grant to the Lender the right to assume at
any time exclusive dominion and control over the distribution of all monies in
the account, which control may be exercised by Hanover Capital Holdings prior to
such assumption of control by the Lender.
"Bond/PC Custodial Agreement" shall mean that certain agreement between the
Lender and the Bond/PC Custodian setting forth (i) the procedures for delivery
and maintenance of the Eligible Bonds, Underlying Eligible Bonds, Pledged Stock,
Bond Files, Participation Certificates, and Participation Certificate Files, and
(ii) governing the establishment and maintenance of the Lender's "securities
account" (as defined in Section 8-501(a) of the UCC) and identifying the Bond/PC
Custodian as "securities intermediary" (as defined in Section 8-102(a)(14) of
the UCC and 31 C.F.R. Section 357.2).
"Bond/PC Custodian" shall mean either (i) the Lender, (ii) Chase Manhattan
Bank or (iii) any other Person designated by the Lender, as custodian of the
Pledged Stock, Eligible Bonds, Underlying Eligible Bonds, Bond Files,
Participation Certificates, and Participation Certificate Files.
"Bond File" shall have the meaning provided in Section 5.02(g)(vii) hereof.
"Bond Summary" shall mean a written summary for each Eligible Bond and
Underlying Eligible Bond to be delivered by the Borrower to the Lender pursuant
to Section 2.03(a) hereof, which shall include the following information and
documentation: (i) the name of the issuer, (ii) the original principal amount,
(iii) the current principal amount, (iv) the applicable interest rate, (v) for
each bond which is publicly offered, the cusip, (vi) the name and class of the
bond, (vii) such other information as shall be mutually agreed upon by the
Borrower and the Lender, and (viii) with respect to each certificated bond, a
copy of the related certificate attached thereto.
"Borrower" shall have the meaning provided in the heading hereof.
"Borrowing Base" shall mean the aggregate Collateral Value of all Eligible
Assets that have been, and remain, pledged to the Lender hereunder.
"Borrowing Base Deficiency" shall have the meaning provided in Section 2.06
hereof.
"Business Day" shall mean any day other than (i) a Saturday or Sunday or
(ii) a day on which the New York Stock Exchange, the Federal Reserve Bank of New
York or the Mortgage Custodian is authorized or obligated by law or executive
order to be closed.
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"Capital Stock" shall mean any and all shares, interests, participations or
other equivalents (however designated) of capital stock of a corporation, any
and all similar ownership interests in a Person (other than a corporation) and
any and all warrants or options to purchase any of the foregoing.
"Cash Equivalents" shall mean (a) securities with maturities of 90 days or
less from the date of acquisition issued or fully guaranteed or insured by the
United States Government or any agency thereof, (b) certificates of deposit and
eurodollar time deposits with maturities of 90 days or less from the date of
acquisition and overnight bank deposits of any commercial bank having capital
and surplus in excess of $500,000,000, (c) repurchase obligations of any
commercial bank satisfying the requirements of clause (b) of this definition,
having a term of not more than seven days with respect to securities issued or
fully guaranteed or insured by the United States Government, (d) commercial
paper of a domestic issuer rated at least A-1 or the equivalent thereof by
Standard and Poor's Ratings Group ("S&P") or P-1 or the equivalent thereof by
Xxxxx'x Investors Service, Inc. ("Moody's") and in either case maturing within
90 days after the day of acquisition, (e) securities with maturities of 90 days
or less from the date of acquisition issued or fully guaranteed by any state,
commonwealth or territory of the United States, by any political subdivision or
taxing authority of any such state, commonwealth or territory or by any foreign
government, the securities of which state, commonwealth, territory, political
subdivision, taxing authority or foreign government (as the case may be) are
rated at least A by S&P or A by Moody's, (f) securities with maturities of 90
days or less from the date of acquisition backed by standby letters of credit
issued by any commercial bank satisfying the requirements of clause (b) of this
definition or (g) shares of money market mutual or similar funds which invest
exclusively in assets satisfying the requirements of clauses (a) through (f) of
this definition.
"Certificate Registrar" shall mean the Person who carries on its books and
records the identity of the holder of a Participation Certificate.
"Change of Control" shall mean either (i) any one of the following three
individuals leaves the employ of Hanover Capital Holdings: Xxxx Xxxxxxxx, Xxxx
Xxxxxxx, or Xxxxx Xxxxxxx, or (ii) there occurs a change of "control" of either
Borrower as such term is defined in the Securities Exchange Act of 1934, as
amended.
"Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time.
"Collateral" shall have the meaning provided in Section 4.01(b) hereof.
"Collateral Value" shall mean, (a) with respect to each Eligible Mortgage
Loan or Eligible Bond, the Applicable Collateral Percentage of the lesser of (i)
the Market Value of such Eligible Mortgage Loan or Eligible Bond and (ii) the
Purchase Price Percentage of such Eligible Mortgage Loan or Eligible Bond
multiplied by the outstanding principal balance of such Eligible Mortgage Loan
or Eligible Bond; and (b) with respect to each Participation Certificate, the
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Applicable Collateral Percentage of the lesser of (i) the Market Value of the
Underlying Mortgage Loans subject to such Participation Certificate, and (ii)
the Purchase Price Percentage of such Participation Certificate multiplied by
the outstanding principal balance of the Underlying Mortgage Loans subject to
such Participation Certificate, and (c) with respect to the Pledged Stock, the
Applicable Collateral Percentage of the Market Value of the Underlying Eligible
Bond(s) owned by the related Eligible Entity; provided that the following
additional limitations on Collateral Value shall apply:
(1) subject to (vi)(A) below, the aggregate Collateral Value of all
Thirty-Day Delinquent Mortgage Loans may not at any one time exceed the
lesser of (x) $10,000,000 or (y) 5% of the aggregate outstanding principal
balance of all Advances;
(2) subject to (vi)(A) below, the aggregate Collateral Value of all
Sixty-Day Delinquent Mortgage Loans may not at any one time exceed the
lesser of (x) $6,000,000 or (y) 3% of the aggregate outstanding principal
balance of all Advances;
(3) the aggregate Collateral Value for all Document Deficient Assets
shall not at any time exceed the lesser of (x) $20,000,000 or (y) 10% of
the aggregate outstanding principal balance of all Advances; provided,
however, that in no event shall Type I Document Deficient Assets and Type
III Document Deficient Assets (taking into account Underlying Mortgage
Loans subject to Participation Certificates), taken in the aggregate, at
any time exceed the lesser of (1) $2,000,000 or (2) 1% of the aggregate
outstanding principal balance of all Advances; and
(4) the Collateral Value shall be zero for each Eligible Asset, for
each Underlying Mortgage Loan securing such Eligible Asset, or for each
Underlying Eligible Bond owned by an Eligible Entity with respect to which
the Pledged Stock has been pledged to the Lender hereunder, as applicable:
(1) which is an Eligible Mortgage Loan or an Underlying Mortgage
Loan, other than Thirty-Day Delinquent Mortgage Loans subject to
subsection (i) above, which is thirty (30) days or more delinquent in
respect of any Scheduled Payment as of the date of determination;
(2) which is an Eligible Mortgage Loan or an Underlying Mortgage
Loan which is thirty (30) days or more delinquent in respect of the
first Scheduled Payment;
(3) which is an Eligible Mortgage Loan or an Underlying Mortgage
Loan, other than Sixty-Day Delinquent Mortgage Loans subject to
subsection (ii) above, which is sixty (60) days or more delinquent in
respect of any Scheduled Payment;
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(4) in respect of which the Maximum Pledge Period has passed;
(5) which is an Eligible Mortgage Loan and which has been
released from the possession of the Mortgage Custodian under Section
5(a) of the Mortgage Custodial Agreement to any Person other than the
Lender or its bailee for a period in excess of ten (10) days (or if
such tenth day is not a Business Day, the next succeeding Business
Day);
(6) which is an Eligible Mortgage Loan and which has been
released from the possession of the Mortgage Custodian under Section
5(b) of the Mortgage Custodial Agreement under any Transmittal Letter
in excess of the time period stated in such Transmittal Letter for
release;
(7) which is an Eligible Mortgage Loan or Underlying Mortgage
Loan and in respect of which (1) the related Mortgaged Property is the
subject of a foreclosure proceeding;
(8) which is an Eligible Mortgage Loan or Underlying Mortgage
Loan and as to which (i) the related Mortgage Note or the related
Mortgage is not genuine or is not the legal, valid, binding and
enforceable obligation of the maker thereof, subject to no right of
rescission, set-off, counterclaim or defense, or (ii) such Mortgage,
is not a valid, subsisting, enforceable and perfected first lien on
the Mortgaged Property;
(9) which the Lender determines, in its reasonable discretion, is
not eligible for sale in the secondary market or for securitization
without unreasonable credit enhancement;
(10) which has a Material Exception with respect thereto;
(11) which is an Eligible Mortgage Loan or Underlying Mortgage
Loan and in respect of which the related Mortgagor is the subject of a
bankruptcy proceeding;
(12) which is an Eligible Mortgage Loan or Underlying Mortgage
Loan which is ninety (90) days or more delinquent in respect of any
Scheduled Payment;
(13) which is a Type II Document Deficient Asset for which the
Mortgage Custodian or the Bond/PC Custodian, as applicable, has failed
to receive, pursuant to Section 2(I)(e) of the Mortgage Custodial
Agreement, (a) with respect to intervening assignments, either (i) the
related intervening
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assignment within 120 days from the date such Mortgage Loan was
pledged to the Lender or (ii) proof that the last intervening
assignment was recorded, which such proof shall be in the form of (A)
the original title policy or a copy of the same certified by the
Borrower as a true, correct, and complete copy thereof or (B) a
certified copy of the last intervening assignment with evidence of
recording indicated thereon; or, (b) with respect to the title policy,
either (i) the original title policy or a copy of the same certified
by the Borrower as a true, correct and complete copy thereof within
120 days from the date such Mortgage Loan was pledged to the Lender,
or (ii) any other evidence of such title policy acceptable to the
Lender in its sole discretion, including, without limitation, any
preliminary title report, binder, or commitment to provide such title
policy;
(14) which is an Eligible Bond and in respect to which there is a
breach of any of the representations or warranties in Schedule 1
hereto; and
(15) which is a Type III Document Deficient Asset for which the
Bond/PC Custodian has failed to receive, an original Participation
Certificate within 21 days from the date such Participation
Certificate was pledged to the Lender.
"Collection Account" shall mean the segregated account established at
the direction of the Borrowers, and maintained in the name of the
Lender and subject to a security interest in favor of the Lender into
which all Collections received by the Master Servicer, a Subservicer,
or a Trustee shall be remitted by such Master Servicer, Subservicer or
Trustee. Hanover Capital Holdings shall have the right to direct that
withdrawals from such account be made until such time as Lender, in
its sole discretion, provides notice to the Collection Bank
terminating such right of Hanover Capital Holdings.
"Collection Bank" shall mean Fleet Bank.
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"Collections" shall mean, collectively, (i) with respect to Mortgage
Loans which are Assets, all collections and proceeds on or in respect
of the Mortgage Loans which are Assets, excluding collections required
to be paid to the Subservicer or a mortgagor on the Mortgage Loans
which are Assets, (ii) with respect to Eligible Bonds which are
Assets, Underlying Eligible Bonds which are Assets and Participation
Certificates which are Assets, all cash dividends or distributions or
any monies distributed on account of such Eligible Bonds which are
Assets, Underlying Eligible Bonds which are Assets or Participation
Certificates which are Assets, as applicable.
"Commitment Fee" shall have the meaning assigned thereto in Section
3.03 hereof.
"Committed Advance" shall have the meaning assigned thereto in Section
2.01(a) hereof.
"Commonly Controlled Entity" shall mean an entity, whether or not
incorporated, which is under common control with the Borrower within
the meaning of Section 4001 of ERISA or is part of a group which
includes the Borrower and which is treated as a single employer under
Section 414 of the Code.
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"Contractual Obligation" shall mean as to any Person, any provision of
any agreement, instrument or other undertaking to which such Person is
a party or by which it or any of its property is bound or any
provision of any security issued by such Person.
"Default" shall mean an Event of Default or an event that with notice
or lapse of time or both would become an Event of Default.
"Delinquent Mortgage Loan" shall mean either a Thirty-Day Delinquent
Mortgage Loan or a Sixty-Day Delinquent Mortgage Loan; provided that
in no event shall a Mortgage Loan or Underlying Mortgage Loan that is
ninety (90) days or more delinquent have a Collateral Value in excess
of zero.
"Document Deficient Assets" shall be the collective reference to Type
I Document Deficient Assets, Type II Document Deficient Mortgage Loans
and Type III Document Deficient Mortgage Loans.
"Dollars" and "$" shall mean lawful money of the United States of
America.
"Due Diligence Package" shall mean with respect to each Mortgage Loan
or Underlying Mortgage Loan to be pledged to the Lender hereunder (a) all
materials in the possession or under the control of the Borrower, which
materials shall include, without limitation, (i) the Borrower's analysis of
the seller and the Subservicer, (ii) the results of the Borrower's
underwriting and due diligence review of all documents related to such
Mortgage Loan or Underlying Mortgage Loan, and (b) any certificates,
remittance reports, Servicing Agreements, and purchase agreements governing
such Mortgage Loans or Underlying Mortgage Loan.
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"Due Diligence Review" shall mean the performance by the Lender of any
or all of the reviews permitted under Section 11.16 hereof with
respect to any or all of the Eligible Assets of the Borrower or
related parties, as desired by the Lender from time to time.
"Effective Date" shall mean the date upon which the conditions
precedent set forth in Section 5.01 shall have been satisfied.
"Eligible Assets" shall mean Eligible Mortgage Loans, Eligible Bonds,
Pledged Stock, and Participation Certificates (or the Underlying
Mortgage Loans related thereto) as to which the representations and
warranties set forth on Schedule 1 hereof are true and correct.
"Eligible Bond" shall mean either an Investment Grade Bond or a
Non-Investment Grade Bond for which (i) the Borrower or one of its
Affiliates was the issuer or was the depositor into a trust which was
the issuer, (ii) the Borrower is the current owner and (iii) Greenwich
Capital Markets, Inc. was the underwriter or placement agent.
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"Eligible Entity" shall mean a corporation which is wholly and
directly owned by the Borrower and which (i) is a Special Purpose
Entity and (ii) owns one or more Underlying Eligible Bonds.
"Eligible Mortgage Loan" shall mean either a Prime Mortgage Loan or a
Scratch and Dent Mortgage Loan which was acquired by the Borrower and
which conforms to the Borrower's Underwriting Guidelines.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time.
"ERISA Affiliate" shall mean any corporation or trade or business that
is a member of any group of organizations (i) described in Section
414(b) or (c) of the Code of which the Borrower is a member and (ii)
solely for purposes of potential liability under Section 302(c)(11) of
ERISA and Section 412(c)(11) of the Code and the lien created under
Section 302(f) of ERISA and Section 412(n) of the Code, described in
Section 414(m) or (o) of the Code of which the Borrower is a member.
"Event of Default" shall have the meaning provided in Section 8
hereof.
"Exception" shall have the meaning assigned thereto in the Mortgage
Custodial Agreement.
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"Exception Report" shall mean the exception report prepared by the
Mortgage Custodian pursuant to the Mortgage Custodial Agreement.
"Federal Funds Rate" shall mean, for any day, the weighted average of
the rates on overnight federal funds transactions with members of the
Federal Reserve System arranged by federal funds brokers, as published
on the next succeeding Business Day by the Federal Reserve Bank of New
York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations for the day of such
transactions received by the Lender from three federal funds brokers
of recognized standing selected by it.
"FHLMC" shall mean the Federal Home Loan Mortgage Corporation or any
successor thereto.
"FNMA" shall mean the Federal National Mortgage Association or any
successor thereto.
"Funding Date" shall mean the date on which an Advance is made
hereunder.
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18
"GAAP" shall mean generally accepted accounting principles as in
effect from time to time in the United States of America.
"Governing Agreements" shall mean the agreement or agreements which
govern the issuance and the payment of the Eligible Bonds, Underlying
Eligible Bonds or Participation Certificates, as applicable.
"Governmental Authority" shall mean any nation or government, any
state or other political subdivision thereof, any entity exercising
executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government and any court or arbitrator
having jurisdiction over the Borrower, any of its Subsidiaries or any
of their properties.
"Guarantee Obligation" as to any Person (the "guaranteeing person"),
shall mean any obligation of (a) the guaranteeing person or (b)
another Person (including, without limitation, any bank under any
letter of credit) with respect to which the guaranteeing person has
issued a reimbursement, counterindemnity or similar obligation, in
either case guaranteeing or in effect guaranteeing any Indebtedness,
leases, dividends or other obligations (the "primary obligations") of
any other third Person (the "primary obligor") in any manner, whether
directly or indirectly, including, without limitation, any obligation
of such guaranteeing person, whether or not contingent, (i) to
purchase any such primary obligation or any property constituting
direct or
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19
indirect security therefor, (ii) to advance or supply funds (1) for
the purchase or payment of any such primary obligation or (2) to
maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency of the primary
obligor, (iii) to purchase property, securities or services primarily
for the purpose of assuring the owner of any such primary obligation
of the ability of the primary obligor to make payment of such primary
obligation or (iv) otherwise to assure or hold harmless the owner of
any such primary obligation against loss in respect thereof; provided,
however, that the term Guarantee Obligation shall not include
endorsements of instruments for deposit or collection in the ordinary
course of business. The terms "Guarantee" and "Guaranteed" used as a
verb shall have a correlative meaning. The amount of any Guarantee
Obligation of any guaranteeing person shall be deemed to be the lower
of (a) an amount equal to the stated or determinable amount of the
primary obligation in respect of which such Guarantee Obligation is
made and (b) the maximum amount for which such guaranteeing person may
be liable pursuant to the terms of the instrument embodying such
Guarantee Obligation, unless such primary obligation and the maximum
amount for which such guaranteeing person may be liable are not stated
or determinable, in which case the amount of such Guarantee Obligation
shall be such guaranteeing person's maximum reasonably anticipated
liability in respect thereof as determined by the Borrower in good
faith.
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"Hedging Agreement" shall mean, with respect to any or all of the
Eligible Assets, any interest rate swap, cap or collar agreement or
similar arrangements providing for protection against fluctuations in
interest rates or other market risks commonly hedged or the exchange
of nominal interest obligations, either generally or under specific
contingencies, entered into by a Borrower and reasonably acceptable to
the Lender.
"HUD" shall mean the Department of Housing and Urban Development, or
any federal agency or official thereof which may from time to time
succeed to the functions thereof.
"Indebtedness" shall mean, of any Person at any date, without
duplication, (a) all indebtedness of such Person for borrowed money
(whether by loan or the issuance and sale of debt securities) or for
the deferred purchase price of property or services (other than
current trade liabilities incurred in the ordinary course of business
and payable in accordance with customary practices), (b) any other
indebtedness of such Person which is evidenced by a note, bond,
debenture or similar instrument, (c) all obligations of such Person
under financing leases, (d) all obligations of such Person in respect
of letters of credit, acceptances or similar instruments issued or
created for the account of such Person and (e) all liabilities secured
by any Lien on any property owned by such Person even though such
Person has not assumed or otherwise become liable for the payment
thereof.
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"Indemnified Party" shall have the meaning provided in Section 11.03
hereof.
"Instruction Letter" shall mean a letter agreement from the related
Borrower to each Trustee, Certificate Registrar and/or Subservicer, as
applicable, substantially in the form of Exhibit J attached hereto, in
which such Persons acknowledge the Lender's security interest in the
Eligible Assets, and agrees to remit Collections either directly into
the Collection Account or in any other way the Lender may so direct
from time to time, which Instruction Letter may be delivered by Lender
to such Trustee, Certificate Registrar and/or Subservicer in its sole
discretion.
"Interest Period" shall mean, with respect to any Advance, (i)
initially, the period commencing on the Funding Date with respect to
such Advance and ending on the calendar day prior to the Payment Date
following one month, two months, three months, or six months
thereafter (the "Reset Date"), as the Borrower may select as provided
in Section 3.04 hereof, and (ii) thereafter, each period commencing on
the Payment Date and ending on the applicable Reset Date.
Notwithstanding the foregoing, no Interest Period may end after the
Termination Date.
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"Investment Company Act" shall mean the Investment Company Act of
1940, as amended.
"Investment Grade" shall mean a credit rating of BBB- or better, as
determined by Standard & Poor's Ratings Group ("S&P"), or a credit
rating of Baa2 or better, as determined by Xxxxx'x Investors Service,
Inc. ("Xxxxx'x).
"Investment Grade Bond" shall mean a certificated or uncertificated
subordinate bond with an Investment Grade credit rating as of any date
of determination; provided, that, in the event such bond is downgraded
to below an Investment Grade credit rating, such bond will be treated
as a Non-Investment Grade Bond hereunder and shall be included in
calculating whether the Non-Investment Grade Bond Sublimit has been
exceeded.
"Lender" shall have the meaning provided in the heading hereof.
"LIBOR" shall mean for any Advance, with respect to each day during
each Interest Period pertaining to such Advance, the rate per annum
equal to the rate appearing on Bloomberg on the first day of such
Interest Period, for the one-month, three-month, or six-month term, as
applicable, corresponding to such Interest Period, or if such rate
shall not be so quoted then the applicable rate appearing at page 3750
of the Telerate Screen on the first day of such Interest
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23
Period, or if neither such rate shall be so quoted, the rate per annum
at which the Lender is offered Dollar deposits at or about 11:00 a.m.,
New York City time, on such date by prime banks in the interbank
eurodollar market where the eurodollar and foreign currency exchange
operations in respect of its Advances are then being conducted for
delivery on the first day of such Interest Period for the number of
days comprised therein, and in an amount comparable to the amount of
the Advances to be outstanding on such day.
"Lien" shall mean any mortgage, lien, pledge, charge, security
interest or similar encumbrance.
"Loan Agreement" shall mean this Amended and Restated Master Loan and
Security Agreement, as the same may be amended, supplemented or
otherwise modified from time to time.
"Loan Documents" shall mean, collectively, this Loan Agreement, the
Note, the Mortgage Custodial Agreement, the Bond/PC Custodial
Agreement, the Blocked Account Agreement, and the Instruction Letters.
"Loan-to-Value Ratio" or "LTV" shall mean with respect to any Mortgage
Loan, the ratio of (a) the Par Amount of the Mortgage Loan as of the
date of origination (unless otherwise indicated) to (b) the Appraised
Value of the
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Mortgaged Property or if the Mortgage Loan was made in connection with
the purchase of the related Mortgaged Property, the lesser of the
Appraised Value and the sales price of such property.
"Lost Instrument Affidavit" shall mean an affidavit, substantially in
the form of Exhibit K-1 or otherwise acceptable to the Lender in its
sole discretion, executed by the Borrower or other Person acceptable
to the Lender in its sole discretion, which Lost Instrument Affidavit
shall (i) attach a copy of the original Participation Certificate
certified by the Borrower as a true, complete, and correct copy
thereof, (ii) indemnify the Lender, and (iii) remain effective for all
successors and assigns of the Borrower and the Lender.
"Lost Note Affidavit" shall mean an affidavit, substantially in the
form of Exhibit K-2 or otherwise acceptable to the Lender in its sole
discretion, executed by the related Borrower or other Person
acceptable to the Lender in its sole discretion, which states that the
Mortgage Custodian is not in possession of the original Mortgage Note,
which Lost Note Affidavit shall (i) attach a copy of the original
Mortgage Note certified by the related Borrower as a true, complete,
and correct copy thereof, (ii) indemnify the Lender, and (iii) remain
effective for all successors and assigns of the related Borrower and
the Lender.
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"Market Value" shall mean, with respect to (i) any Eligible Asset
other than Pledged Stock, the price at which such Eligible Asset could
be sold to a third-party, as determined by the Lender in its sole
discretion (exercised in good faith), taking into account customary
factors, including, but not limited to: (a) the historical experience
for collateral with similar characteristics to the Eligible Asset,
such as prepayment speeds, expected default rates and loss severity;
(b) market factors; (c) the creditworthiness of the issuer thereof, if
applicable, and (d) appropriate discount rates and with respect to
(ii) Pledged Stock, the aggregate price at which all Underlying
Eligible Bonds owned by the related Eligible Entity could be sold to a
third-party, as determined by the Lender in its sole discretion
(exercised in good faith), taking into account customary factors,
including, but not limited to: (a) the historical experience for
collateral with similar characteristics to the Underlying Eligible
Bonds, such as prepayment speeds, expected default rates and loss
severity; (b) market factors; (c) the creditworthiness of the issuer
thereof, if applicable, and (d) appropriate discount rates; provided
that the Market Value shall be zero (y) with respect to any Underlying
Eligible Bond for which there is a breach of any of the
representations or warranties in Schedule 1 hereto or (z) with respect
to the aggregate Market Value of Eligible Bonds or Underlying Eligible
Bonds in excess of the Non-Investment Grade Bond Sublimit; and
provided, further, that in all events such Market Value for any
Eligible Asset may be determined
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26
to be zero in the Lender's sole discretion. The Lender's determination
of Market Value shall be final and binding on the parties.
"Master Servicer" shall mean Hanover Capital Mortgage Holdings, Inc.
"Material Adverse Effect" shall mean a material adverse effect on (a)
the business, assets, property, business, condition (financial or
otherwise) or prospects of a Borrower, (b) the ability of a Borrower
to perform its obligations under any of the Loan Documents to which it
is a party, (c) the validity or enforceability of any of the Loan
Documents, (d) the rights and remedies of the Lender under any of the
Loan Documents, (e) the timely payment of the principal of or interest
on the Advances or other amounts payable in connection therewith or
(f) the Collateral.
"Material Exception" shall mean, (a) (i) with respect to any Mortgage
Loan, any Exception listed on the Exception Report consisting of the
absence from the Mortgage File, or deficiency in respect of, any of
the Mortgage Loan Documents set forth in Section 2(I)(a), 2(I)(c),
2(I)(d), 2(I)(e), or 2(I)(g) (other than with respect to Document
Deficient Assets), or (ii) for which the information set forth in
Section I of Annex 1 to the Mortgage Custodial Agreement is
incomplete, (b) with respect to any Eligible Bond or Underlying
Eligible Bond, any deviation from the document requirements set forth
in
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27
Section 5.02(g) hereof, and (c) with respect to any Participation
Certificate, any deviation from the document requirements set forth in
Section 5.02(f) or the absence from the Participation Certificate File
of any document or information required therein.
"Maximum Committed Amount" shall mean $100,000,000.
"Maximum Credit" shall mean the sum of the Maximum Committed Amount
and the Maximum Uncommitted Amount, which on the date hereof shall
equal $200,000,000.
"Maximum Uncommitted Amount"shall mean $100,000,000, or such greater
amount agreed to in writing by Lender from time to time.
"Maximum Pledge Period" shall mean the first 180 days that an Eligible
Asset has been pledged to the Lender hereunder or with respect to an
Underlying Eligible Bond, the first 180 days that both (a) such
Underlying Eligible Bond has been owned by an Eligible Entity and (b)
the related Pledged Stock of such Eligible Entity has been pledged to
the Lender hereunder, or such other period as determined in accordance
with Section 2.11 hereof.
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"Mortgage" shall mean the mortgage, deed of trust or other instrument
securing a Mortgage Note, which creates a first lien on the fee simple
in real property securing the Mortgage Note.
"Mortgage Custodial Agreement" shall mean the Mortgage Custodial
Agreement, dated as of the date hereof, among the Borrowers, the
Mortgage Custodian and the Lender, substantially in the form of
Exhibit B hereto, as the same shall be modified and supplemented and
in effect from time to time.
"Mortgage Custodian" shall mean First Chicago National Processing
Corporation, as custodian pursuant to the Mortgage Custodial Agreement
for all Mortgage Loans pledged hereunder, and its successors and
permitted assigns thereunder.
"Mortgage File" shall have the meaning assigned thereto in the
Mortgage Custodial Agreement.
"Mortgage Interest Rate" means the annual rate of interest borne on a
Mortgage Note, which shall be adjusted from time to time with respect
to adjustable rate Mortgage Loans.
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"Mortgage Loan" shall mean a Prime Mortgage Loan or Scratch and Dent
Mortgage Loan which the Mortgage Custodian has been instructed to hold
for the Lender pursuant to the Mortgage Custodial Agreement, and which
mortgage loan includes, without limitation (i) a Mortgage Note and
related Mortgage and (ii) all right, title and interest of the
Borrower in and to the Mortgaged Property covered by such Mortgage.
"Mortgage Loan Schedule" shall mean a schedule of Eligible Mortgage
Loans containing the following information with respect to each
Eligible Mortgage Loan to be delivered by the Borrower to the Lender
pursuant to Section 2.03(a) or 7.08 hereof, as applicable: (i) the
applicable Borrower's Mortgage Loan number; (ii) the Mortgagor's name
and the street address; (iii) the current principal balance as of the
date specified therein (which date shall be no earlier than forty-five
(45) days prior to the date such Mortgage Loan Schedule is required to
be delivered to the Lender or such other date mutually agreed upon by
the Borrower and Lender), (iv) the original principal balance as of
the date of origination; (v) the LTV as of the date of origination of
the related Mortgage Loan; (vi) the LTV of the related Mortgage Loan
as of the date of acquisition by the applicable Borrower; (vii) the
paid through date; (viii) the mortgage interest rate; (ix) the final
maturity date under the Mortgage Note; (x) the Scheduled Payment; (xi)
the name of the Subservicer; (xii) delinquency status (reported as
current, 30-59, 60-89, 90+, etc.), (xiii) the current FICO score for
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such Mortgage Loan, (xiv) the Purchase Price Percentage, (xv) whether
such Mortgage Loan is subject to graduated payments, (xvi) whether it
is a fixed or adjustable rate Mortgage Loan, (xvii) with respect to
adjustable rate Mortgage Loans, the interest rate adjustment date,
(xviii) with respect to adjustable rate Mortgage Loans, the interest
rate margin, (xix) a code indicating whether the Mortgage Loan is a
Prime Mortgage Loan or a Scratch and Dent Mortgage Loan, and (xx) such
other information as shall be mutually agreed upon by the Borrower and
Lender.
"Mortgage Loan Tape" shall mean the computer-readable magnetic tape
required to be delivered by the Borrower to the Lender pursuant to
Section 2.03(a) hereof (the format of which shall be substantially in
the form of Exhibit G attached hereto) which contains the information,
with respect to each Mortgage Loan, required to be contained in the
Mortgage Loan Schedule.
"Mortgage Note" shall mean the original executed promissory note or
other evidence of the indebtedness of a mortgagor/borrower with
respect to a Mortgage Loan.
"Mortgaged Property" shall mean the real property (including all
improvements, buildings, fixtures, building equipment and personal
property thereon and all additions, alterations and replacements made
at any time
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31
with respect to the foregoing) and all other collateral securing
repayment of the debt evidenced by a Mortgage Note.
"Mortgagor" shall mean the obligor on a Mortgage Note.
"Multiemployer Plan" shall mean a Plan which is a multiemployer plan
as defined in Section 4001(a)(3) of ERISA.
"Net Worth" shall mean, with respect to any Person, the excess of
total assets of such Person, over total liabilities of such Person,
determined in accordance with GAAP.
"Non-Investment Grade Bond" shall mean a certificated or
uncertificated subordinate bond which is either unrated or has a
credit rating below Investment Grade as of the date of the pledge of
such bond to the Lender hereunder or at any date thereafter.
"Non-Investment Grade Bond Sublimit" shall mean $15,000,000.
"Note" shall mean the promissory note provided for by Section 2.02(a)
hereof for Advances and any promissory note delivered in substitution
or exchange
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32
therefor, in each case as the same shall be modified and supplemented
and in effect from time to time.
"Notice of Borrowing and Pledge" shall have the meaning provided in
Section 2.03(a) hereof.
"Ownership Percentage" shall mean the undivided ownership interest of
the holder of each Participation Certificate in each Underlying
Mortgage Loan subject to such Participation Certificate as evidenced
by the related Participation Certificate.
"Par Amount" shall mean, in respect of a Mortgage Loan at any time,
the outstanding principal balance of such Mortgage Loan at such time.
"Participants" shall have the meaning set forth in Section 11.14(b)
hereof.
"Participation Certificate" shall mean a certificate, delivered to the
Lender or its designee on each Funding Date in a form suitable for
registration in the name of the Lender, representing a Borrower's
Ownership Percentage in certain Eligible Mortgage Loans, which
Eligible Mortgage Loans are held by the Participation Custodian for
the benefit of the holder of such Participation Certificate.
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"Participation Certificate File" shall mean, with respect to each
Participation Certificate pledged to the Lender hereunder: (i) the
original certificate or a Lost Instrument Affidavit in lieu thereof,
subject to the sublimit in clauses (iv) and (v)(O) of the definition
of Collateral Value and Section 7.25 hereof, (ii) the related
Governing Agreements, (iii) the related Instruction Letter, (iv) an
assignment executed by the registered holder in such Participation
Certificate in blank for the benefit of an assignee and acceptable to
the Lender in form and substance and sufficient to transfer the
Participation Certificates pursuant to the Governing Agreements, (v)
the name of the Certificate Registrar (if any) with contact
information and (vi) any other documents which the Lender may request
"Participation Certificate Schedule" shall mean a schedule of
information related to each Participation Certificate and the related
Underlying Mortgage Loan required to be delivered by the Borrower to
the Lender pursuant to Section 2.03(a) hereof, which schedule shall
contain the following information: (a) with respect to each
Participation Certificate, (i) the name of the issuer, and (ii) the
Ownership Percentage and, (b) with respect to each Underlying Mortgage
Loan, (i) the applicable Borrower's Mortgage Loan number; (ii) the
Underlying Mortgagor's name and the street address; (iii) the current
principal balance as of the date specified therein; (iv) the original
balance as of the date specified therein; (v) the LTV as of the date
of the origination of the related
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Underlying Mortgage Loan; (vi) the paid-through date; (vii) the
mortgage interest rate; (viii) the final maturity date under the
Underlying Mortgage Note; (ix) the Scheduled Payment; (x) the name of
the servicer; (xi) the delinquency status (reported as current, 30-59,
60-89, 90+, etc.); (xii) the Purchase Price Percentage; (xiii) whether
it is a fixed or adjustable rate Underlying Mortgage Loan;; (xiv) with
respect to any adjustable rate Underlying Mortgage Loans, the interest
rate adjustment date; (xv) with respect to any adjustable rate
Underlying Mortgage Loan, the interest rate margin; and (xvi) such
other information as shall be mutually agreed upon by the Borrower and
Lender.
"Participation Certificate Tape" shall mean the computer-readable
magnetic tape required to be delivered by the Borrower to the Lender
pursuant to Section 2.03(a) hereof (the format of which shall be
substantially in the form of the Mortgage Loan Tape with the addition
of a field to set forth the related Borrower's Ownership Percentage)
which contains the information, with respect to each Participation
Certificate, required to be contained in the Participation Certificate
Schedule.
"Participation Custodian" shall mean the custodian holding the
Underlying Mortgage Loan and all documents related thereto for the
holders of the related Participation Certificate.
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35
"Participation Servicer" shall mean the servicer of an Underlying
Mortgage Loan subject to a Participation Certificate.
"Payment Date" shall mean the eighth day of each calendar month, or if
such day is not a Business Day, the next succeeding Business Day.
"Payoff" shall mean, with respect to any Mortgage Loan, repayment by
the applicable Mortgagor of all outstanding principal thereunder
together with all interest accrued thereon to the date of such
repayment and any penalty or premium thereon.
"Payoff Proceeds" shall mean, with respect to any Mortgage Loan, all
funds received from the applicable Mortgagor in connection with a
Payoff.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
"Permitted Exceptions" shall mean the exceptions to lien priority
including but not limited to: (i) the lien of current real property
taxes and assessments not yet due and payable; (ii) covenants,
conditions and restrictions, rights of way, easements and other
matters of the public record as of the date of recording acceptable to
mortgage lending institutions generally and specifically referred
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36
to in the lender's title insurance policy delivered to the originator
of the Mortgage Loan and (A) referred to or to otherwise considered in
the appraisal (if any) made for the originator of the Mortgage Loan or
(B) which do not adversely affect the appraised value of the Mortgaged
Property set forth in such appraisal; and (iii) other matters to which
like properties are commonly subject which do not materially interfere
with the benefits of the security intended to be provided by the
Mortgage or the use, enjoyment, value or marketability of the related
Mortgaged Property.
"Person" shall mean any individual, corporation, company, voluntary
association, partnership, joint venture, limited liability company,
trust, unincorporated association, government (or any agency,
instrumentality or political subdivision thereof) or any other entity
of whatever nature.
"Plan" shall mean at a particular time, any employee benefit plan
which is covered by ERISA and in respect of which a Borrower or a
Commonly Controlled Entity is (or, if such plan were terminated at
such time, would under Section 4069 of ERISA be deemed to be) an
"employer" as defined in Section 3(5) of ERISA.
"Pledged Stock" shall mean all of the shares of Capital Stock of an
Eligible Entity, together with all stock certificates, options or
rights of any nature
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37
whatsoever which may be issued or granted by such Eligible Entity to
the related Borrower while this Loan Agreement is in effect.
"Pledged Stock Summary" shall mean a summary of information related to
the Pledged Stock required to be delivered by the related Borrower to
the Lender pursuant to Section 2.03(a) hereof, which schedule shall
contain the following information with respect to each Pledged Stock
certificate, (i) the name of the Eligible Entity and state of
formation/authorization, (ii) the class of stock, (iii) the
certificate number and (iv) the number of shares.
"Post-Default Rate" shall mean, in respect of any principal of any
Advance or any other amount under this Loan Agreement, the Note or any
other Loan Document that is not paid when due to the Lender (whether
at stated maturity, by acceleration, by optional or mandatory
prepayment or otherwise), a rate per annum during the period from and
including the due date to but excluding the date on which such amount
is paid in full equal to 2% per annum plus (a) the interest rate
otherwise applicable to such Advance or other amount, or (b) if no
interest rate is otherwise applicable, then LIBOR.
"Prime Mortgage Loan" shall mean an "A" Credit Mortgage Loan (as
defined in the Underwriting Guidelines) secured by a first mortgage
lien on a one to
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38
four family residential property as to which the representations and
warranties set forth on Schedule 1 hereof are true and correct.
"Property" shall mean any right or interest in or to property of any
kind whatsoever, whether real, personal or mixed and whether tangible
or intangible.
"Purchase Price Percentage" shall mean, with respect to any Eligible
Asset or Eligible Bond, as applicable, the dollar price paid by the
related Borrower for such Eligible Asset divided by the outstanding
principal balance of such Eligible Asset or Eligible Bond, as
applicable, as of the cut-off date of acquisition.
"Regulations G, T, U and X" shall mean Regulations G, T, U and X of
the Board of Governors of the Federal Reserve System (or any
successor), as the same may be modified and supplemented and in effect
from time to time.
"Relevant System" shall mean (i) The Depository Trust Company in New
York, New York, or (ii) such other clearing organization or book-entry
system as is designated in writing by Lender.
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39
"Reportable Event" shall mean any of the events set forth in Section
4043(b) of ERISA, other than those events as to which the thirty day
notice period is waived under subsections .13, .14, .16, .18, .19 or
.20 of PBGC Reg. Section 2615.
"Requirement of Law" shall mean as to any Person, the certificate of
incorporation and by-laws or other organizational or governing
documents of such Person, and any law, treaty, rule or regulation or
determination of an arbitrator or a court or other Governmental
Authority, in each case applicable to or binding upon such Person or
any of its property or to which such Person or any of its property is
subject.
"Responsible Officer" shall mean, as to any Person, the chief
executive officer or, with respect to financial matters, the chief
financial officer of such Person; provided, that in the event any such
officer is unavailable at any time he or she is required to take any
action hereunder, Responsible Officer shall mean any officer
authorized to act on such officer's behalf as demonstrated to the
Lender to its reasonable satisfaction.
"Restricted Payments" shall mean with respect to any Person,
collectively, all dividends or other distributions of any nature
(cash, securities, assets or otherwise), and all payments, by virtue
of redemption or otherwise, on any class of equity securities
(including, without limitation, warrants, options or
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40
rights therefor) issued by such Person, whether such securities are
now or may hereafter be authorized or outstanding and any distribution
in respect of any of the foregoing, whether directly or indirectly.
"Scheduled Payment" shall mean, for any Eligible Asset, the scheduled
payment of principal and/or interest due thereunder.
"Scratch and Dent Mortgage Loan" shall mean a Mortgage Loan secured by
a first mortgage lien on a one to four family residential property
intended by the originator to conform with FNMA, FHLMC or other
conduit standards but which was subsequently discovered did not meet
the originally intended market parameters due to errors in relevant
documentation or credit deterioration of the obligor and as to which
the representations and warranties set forth on Schedule 1 hereof are
true and correct.
"Secured Obligations" shall mean the unpaid principal amount of, and
interest on the Advances, and all other obligations and liabilities of
the Borrowers to the Lender, whether direct or indirect, absolute or
contingent, due or to become due, or now existing or hereafter
incurred, which may arise under, out of or in connection with this
Loan Agreement, the Note, any other Loan Document and any other
document made, delivered or given in connection herewith or therewith,
whether on account of principal, interest, reimbursement obligations,
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41
fees, indemnities, costs, expenses (including, without limitation, all
fees and disbursements of counsel to the Lender that are required to
be paid by the Borrowers pursuant to the terms hereof or thereof) or
otherwise. For purposes hereof, "interest" shall include, without
limitation, interest accruing after the maturity of the Advances and
interest accruing after the filing of any petition in bankruptcy, or
the commencement of any insolvency, reorganization or like proceeding,
relating to the Borrower, whether or not a claim for post-filing or
post-petition interest is allowed in such proceeding.
"Servicing Agreement" shall have the meaning provided in Section
11.15(c) hereof.
"Servicing Records" shall have the meaning provided in Section
11.15(b) hereof.
"Side Letter" shall mean that certain letter agreement, dated as of
the date hereof, between the Lender and Hanover Capital Holdings.
"Single Employer Plan" shall mean any Plan which is covered by Title
IV of ERISA, but which is not a Multiemployer Plan.
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"Sixty-Day Delinquent Mortgage Loan" shall mean a Mortgage Loan or
Underlying Mortgage Loan as to which a Scheduled Payment is more than
59 days, but less than or equal to 89 days delinquent.
"Special Purpose Entity" shall mean a bankruptcy remote special
purpose entity (i) with respect to which a nationally recognized law
firm has delivered a substantive non-consolidation opinion, acceptable
to Lender in its reasonable discretion, to a rating agency in
connection with the issuance of the Underlying Eligible Bonds and (ii)
which has restrictions and limitations in its organizational documents
that are consistent with its bankruptcy remote special purpose entity
status and are reasonably acceptable to Lender.
"Subsidiary" shall mean, with respect to any Person, any other Person
of which at least a majority of the securities or other ownership
interests having by the terms thereof ordinary voting power to elect a
majority of the board of directors or other persons performing similar
functions of such corporation, partnership or other entity
(irrespective of whether or not at the time securities or other
ownership interests of any other class or classes of such corporation,
partnership or other entity shall have or might have voting power by
reason of the happening of any contingency) is at the time directly or
indirectly owned or controlled by such Person or one or more
Subsidiaries of such Person or by such Person and one or more
Subsidiaries of such Person.
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"Subservicer" shall have the meaning provided in Section 11.15(c)
hereof.
"Take-Out Commitments" shall be the collective reference to valid,
binding and enforceable commitments in form and substance acceptable
to the Lender to purchase one or more Eligible Assets, in each case as
amended, supplemented or otherwise modified in accordance with the
terms thereof and in effect from time to time.
"Tangible Net Worth" shall mean, with respect to any Person, as of any
date of determination, the consolidated Net Worth of such Person and
its Subsidiaries, less the consolidated net book value of all assets
of such Person and its Subsidiaries (to the extent reflected as an
asset in the balance sheet of such Person or any Subsidiary at such
date) which will be treated as intangibles under GAAP, including,
without limitation, such items as deferred financing expenses, net
leasehold improvements, good will, trademarks, trade names, service
marks, copyrights, patents, licenses and unamortized debt discount and
expense.
"Termination Date" shall mean March 28, 1999 or such earlier date on
which this Loan Agreement shall terminate in accordance with the
provisions hereof
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or by operation of law, as same may be extended in accordance with
Section 2.10 hereof.
"Thirty-Day Delinquent Mortgage Loan" shall mean a Mortgage Loan or
Underlying Mortgage Loan as to which a Scheduled Payment is more than
29 days, but less than or equal to 59 days delinquent.
"Tranche A Advances" shall mean Advances so long as, and to the extent
that, they are secured by Prime Mortgage Loans, Scratch and Dent Mortgage Loans,
or Participation Certificates.
"Tranche B Advances" shall mean Advances so long as, and to the extent
that, they are secured by (i) Eligible Bonds that are Investment-Grade Bonds; or
(ii) Pledged Stock to the extent the related Eligible Entity owns Underlying
Eligible Bonds that are Investment Grade Bonds.
"Tranche C Advances" shall mean Advances so long as, and to the extent
that, they are secured by (i) Eligible Bonds that are Non-Investment Grade Bonds
or (ii) Pledged Stock to the extent the related Eligible Entity owns Underlying
Eligible Bonds that are Non-Investment Grade Bonds.
"Transfer Documents" shall mean all documents required to re-register
the Eligible Bonds, Pledged Stock or Underlying Eligible Bonds in the
name of the Lender or the Bond/PC Custodian, or otherwise to effect a
delivery thereof in accordance with Section 5.02(g)(i) through (iii)
hereof, including without limitation, with respect to certificated
securities, the original certificate.
"Transmittal Letter" shall have the meaning assigned to such term in
the Mortgage Custodial Agreement.
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"Trustee" shall mean, with respect to Eligible Bonds, Underlying
Eligible Bonds and Participation Certificates, if applicable, the
person under the applicable Governing Agreement responsible for
administering such Eligible Bonds, Underlying Eligible Bonds or
Participation Certificates.
"Trust Receipt" shall have the meaning assigned to such term in the
Mortgage Custodial Agreement.
"Type I Document Deficient Asset" shall mean an Eligible Mortgage Loan
for which the Mortgage Custodian has received a Lost Note Affidavit in
lieu of the original Mortgage Note.
"Type II Document Deficient Asset" shall mean an Eligible Mortgage
Loan for which the Mortgage Custodian has failed to receive (i) any
intervening assignment, or (ii) the original title policy or a copy of
the same certified by the Borrower as a true, correct and complete
copy thereof.
"Type III Document Deficient Asset" shall mean a Participation
Certificate for which the Bond/PC Custodian has failed to receive an
original Participation Certificate but has received a Lost Instrument
Affidavit in lieu thereof.
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"Uncommitted Advance" shall have the meaning assigned thereto in
Section 2.01(b) hereof.
"Underlying Eligible Bond" shall mean either an Investment Grade Bond
or a Non-Investment Grade Bond for which (i) the Borrower or one of
its Affiliates was the issuer, (ii) an Eligible Entity is the current
owner and (iii) Greenwich Capital Markets, Inc. was the underwriter or
placement agent.
"Underlying Mortgage Loan" shall mean a Mortgage Loan for which the
Participation Certificate evidences the Lender's ownership interest
therein.
"Underlying Mortgagor" shall mean the obligor on an Underlying
Mortgage Note.
"Underlying Mortgage Note" shall mean the original executed promissory
note or other evidence of the indebtedness of a mortgagor/borrower
with respect to a Underlying Mortgage Loan.
"Underwriting Guidelines" shall mean Hanover Capital Mortgage
Holdings, Inc.'s Credit & Risk Management Policies and Procedures
Manual, attached as Exhibit E hereto, as amended from time to time in
accordance with Section 7.14.
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"Uniform Commercial Code" shall mean the Uniform Commercial Code as in
effect on the date hereof in the State of New York; provided that if
by reason of mandatory provisions of law, the perfection or the effect
of perfection or non-perfection of the security interest in any
Collateral is governed by the Uniform Commercial Code as in effect in
a jurisdiction other than New York, "Uniform Commercial Code" shall
mean the Uniform Commercial Code as in effect in such other
jurisdiction for purposes of the provisions hereof relating to such
perfection or effect of perfection or non-perfection.
1.2 Accounting Terms and Determinations. Except as otherwise expressly
provided herein, all accounting terms used herein shall be
interpreted, and all financial statements and certificates and reports
as to financial matters required to be delivered to the Lender
hereunder shall be prepared, in accordance with GAAP.
SECTION 2 Advances, Note and Prepayments.
2.1 Advances.
(1) Subject to fulfillment of the terms and conditions set forth in
this Loan Agreement, the Lender agrees to make loans (individually, a
"Committed
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Advance"; collectively, the "Committed Advances" to the Borrowers,
from time to time on any Business Day, from and including the
Effective Date to but excluding the Termination Date, in an aggregate
principal amount at any one time outstanding up to but not exceeding
the Maximum Committed Amount; provided, however, that the Lender shall
not be obligated to make any Committed Advance if the aggregate
outstanding principal amount of Advances plus the requested Advance
would exceed the Borrowing Base.
(2) In addition to the foregoing, the Lender may from time to time in
its sole discretion, on the terms and conditions set forth in this
Agreement, make loans (individually, an "Uncommitted Advance" to the
Borrowers, from time to time on any given Business Day from and
including the Effective Date to but excluding the Termination Date, in
an aggregate principal amount at any one time outstanding up to but
not exceeding the Maximum Uncommitted Amount; provided, however, that
the Lender shall not be obligated to make any Uncommitted Advance if
the aggregate outstanding principal amount of Advances plus the
requested Advance would exceed the Borrowing Base. Unless otherwise
agreed by the parties, in determining whether Advances outstanding
secured by Eligible Assets are Committed Advances or Uncommitted
Advances, such Advances shall first be deemed Committed Advances up to
the Maximum Committed Amount, and then the remainder shall be deemed
Uncommitted Advances.
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(3) Subject to the terms and conditions of this Loan Agreement, during
the term of the Loan Agreement, the Borrowers may borrow, repay and
reborrow hereunder.
(4) In no event shall an Advance be made when any Default or Event of
Default has occurred and is continuing.
2.2 Notes.
(1) The Advances made by the Lender shall be evidenced by a
single promissory note of the Borrowers substantially in the form
of Exhibit A hereto (the "Note"), dated the date hereof, payable
to the Lender in a principal amount equal to the amount of the
Maximum Credit and otherwise duly completed. The Lender shall
have the right to have its Note subdivided, by exchange for
promissory notes of lesser denominations or otherwise.
(2) The date, amount and interest rate of each Advance made
by the Lender to either Borrower, and each payment made on
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account of the principal and interest thereof, shall be recorded
by the Lender on its books and, prior to any transfer of the
Note, endorsed by the Lender on the schedule attached to the Note
or any continuation thereof; provided that the failure of the
Lender to make any such recordation or endorsement shall not
affect the obligations of the Borrowers to make a payment when
due of any amount owing hereunder or under the Note in respect of
the Advances.
2.3 Procedure for Borrowing.
(1) Either Borrower may request a borrowing hereunder, on
any Business Day during the period from and including the
Effective Date to and including the Termination Date, by
delivering to (i) the Lender, with a copy to the Mortgage
Custodian, a Mortgage Loan Tape and Mortgage Loan Schedule or
(ii) to the Bond/PC Custodian, a Participation Certificate Tape
and Participation Certificate Schedule, or a Pledged Stock
Summary and/or Bond Summary, as applicable, (the "Applicable
Notice Documents"), and an irrevocable written notice of
borrowing and pledge substantially in the form of Exhibit X-0,
Xxxxxxx X-0, Xxxxxxx X-0 or Exhibit D-4 attached hereto, as
applicable, (each a "Notice of Borrowing and Pledge"),
appropriately completed, which such Notice of Borrowing and
Pledge and the related Applicable Notice Documents must be
received by the Lender prior to 10:00 a.m., New York City time,
at least three (3) Business Days prior to the
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requested Funding Date; provided that the Lender shall be under
no obligation to make an Advance more than once daily. Such
Notice of Borrowing and Pledge shall (i) include the Applicable
Notice Documents in respect of the Eligible Assets that the
Borrower proposes to pledge to the Lender and be included in the
Borrowing Base in connection with such Advance, (ii) contain the
amount of the requested Advance, which shall in all events be at
least equal to $3,000,000 or such lesser amount as mutually
agreed upon by the Lender and the related Borrower, to be made on
such Funding Date (setting forth the amount of the Advance
allocable to each Eligible Asset or Underlying Eligible Bond, as
applicable, set forth on the attached Mortgage Loan Schedule,
Participation Certificate Schedule or the Bond Summary, as
applicable), (iii) specify the requested Funding Date, which
shall be not earlier than the third Business Day following the
date of such Notice of Borrowing and Pledge, (iv) contain (by
attachment) such other information reasonably requested by the
Lender from time to time and (v) the applicable agreement
evidencing the Purchase Price Percentage as reflected in the
Mortgage Loan Schedule, Participation Certificate Schedule or
Bond Summary, as applicable.
(2) (i) With respect to Mortgage Loans, the related Borrower
shall deliver (or cause to be delivered) and release to the
Mortgage Custodian, no later than 10:00 a.m. New York City time,
three (3) Business Days prior to the requested Funding Date, a
complete Mortgage File pertaining
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to each Mortgage Loan to be pledged to the Lender and included in
the Borrowing Base on such requested Funding Date, in accordance
with the terms and conditions of the Mortgage Custodial
Agreement, (ii) with respect to Participation Certificates, such
Borrower shall deliver (or cause to be delivered) and release to
the Lender, no later than 10:00 a.m. New York City time, three
(3) Business Days prior to the requested Funding Date, a complete
Participation Certificate File (with a copy of the Participation
Certificate in lieu of the original) pertaining to each
Participation Certificate to be pledged to the Lender and
included in the Borrowing Base on such requested Funding Date,
(iii) with respect to Eligible Bonds, such Borrower shall deliver
(or cause to be delivered) and release to the Lender, no later
than 10:00 a.m. three days prior to the requested Funding Date,
copies of all documents composing the Bond File pertaining to
each Eligible Bond to be pledged to the Lender and included in
the Borrowing Base on such requested Funding Date and (iv) with
respect to the Pledged Stock to be pledged to the Lender and
included in the Borrowing Base on such requested Funding Date,
such Borrower shall deliver (or cause to be delivered) and
release to the Lender, no later than 10:00 a.m. three days prior
to the requested Funding Date, (A) copies of all documents
composing the Bond File pertaining to each Underlying Eligible
Bond and (B) the documents to be delivered pursuant to Section
5.02(h).
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(3) In addition to the foregoing, the related Borrower shall
deliver (or cause to be delivered) and release to the Lender no
later than 10:00 a.m. New York City time, three (3) Business Days
prior to the requested Funding Date, a Due Diligence Package for
each Mortgage Loan and Underlying Mortgage Loan to be pledged to
the Lender and included in the Borrowing Base on such requested
Funding Date.
(4) (i) With respect to Eligible Mortgage Loans, pursuant to
the Mortgage Custodial Agreement, the Mortgage Custodian shall
deliver to the Lender and the related Borrower, no later than
11:00 a.m., New York City time, on a Funding Date, a Trust
Receipt in respect of all Eligible Mortgage Loans pledged to the
Lender on such Funding Date and an Exception Report in respect of
all Eligible Mortgage Loans so pledged to the Lender, (ii) with
respect to Eligible Bonds and Participation Certificates, the
Borrower shall deliver to the Bond/PC Custodian, with copies to
the Lender, the original Eligible Bonds and related Bond Files
and the original Participation Certificates and Participation
Certificate Files, (iii) with respect to Pledged Stock, the
Borrower shall deliver to the Bond/PC Custodian, with copies to
the Lender, the original Underlying Eligible Bonds and related
Bond Files and the original Pledged Stock. The Bond/PC Custodian
shall inform the Lender of its receipt of the documents
referenced in clause (iii) of this subsection (d) in a form and
manner acceptable to the Lender in its sole discretion. Subject
to
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Section 5 hereof, such Advance will then be made available to the
related Borrower by the Lender transferring, via wire transfer
(pursuant to wire transfer instructions provided by the related
Borrower on or prior to such Funding Date) the aggregate amount
of such Advance in immediately available funds; provided,
however, to the extent that any such requested borrowing shall
constitute an Uncommitted Advance, the Lender may, at its sole
option, elect not to make an Uncommitted Advance.
2.4 Repayment of Advances; Interest.
(1) The Borrowers hereby promise to repay in full on the
Termination Date the then aggregate outstanding principal amount
of the Advances.
(2) The Borrower hereby promise to pay to the Lender
interest on the unpaid principal amount of each Advance for the
period from and including the Funding Date of such Advance to but
excluding the date such Advance shall be paid in full, at a rate
per annum equal to LIBOR plus the Applicable Margin.
Notwithstanding the foregoing, the Borrowers hereby promise to
pay to the Lender interest at the applicable Post-Default Rate on
any principal of any Advance and on any other amount payable by
the Borrowers hereunder or under the Note that shall not be paid
in full when due
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(whether at stated maturity, by acceleration or by mandatory
prepayment or otherwise) for the period from and including the
due date thereof to but excluding the date the same is paid in
full. Accrued interest on each Advance shall be payable at the
end of each Interest Period unless the related Borrower has been
otherwise notified by the Lender. In the event the Lender
requests payment of accrued interest on a day other than on the
Payment Date immediately following the applicable Reset Date, the
Borrowers shall pay such accrued interest no later than one (1)
Business Day following receipt of such notice by the Lender;
provided, however, that each Borrower shall not be obligated to
pay accrued interest more frequently than once a month.
Notwithstanding the foregoing, interest accruing at the
Post-Default Rate shall be payable to the Lender on demand.
Promptly after the determination of any interest rate provided
for herein or any change therein, the Lender shall give notice
thereof to each Borrower.
(3) The Borrowers and the Lender acknowledge that the
Proceeds of Collateral may be held in the Collection Account
pursuant to the Blocked Account Agreement. The Lender agrees that
if no Default shall have occurred and be continuing, including
without limitation, any Default under Section 2.04 hereof, on
each Payment Date, the Collection Bank shall be permitted to
remit such amounts then held in such Collection Account at the
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direction of the Hanover Capital Holdings until notified to the
contrary by the Lender.
2.5 Limitation on Types of Advances; Illegality. Anything
herein to the contrary notwithstanding, if, on or prior to the
determination of any LIBOR:
(1) the Lender determines, which determination shall be
conclusive, that quotations of interest rates for the relevant
deposits referred to in the definition of "LIBOR" in Section 1.01
hereof are not being provided in the relevant amounts or for the
relevant maturities for purposes of determining rates of interest
for Advances as provided herein; or
(2) the Lender determines, which determination shall be
conclusive, that the relevant rate of interest referred to in the
definition of "LIBOR" in Section 1.01 hereof upon the basis of
which the rate of interest for Advances is to be determined is
not likely adequately to cover the cost to the Lender of making
or maintaining Advances; or
(3) it becomes unlawful for the Lender to honor its
obligation to make or maintain Advances hereunder using a LIBOR;
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then the Lender shall give the Borrowers prompt notice thereof
and, so long as such condition remains in effect, the Lender
shall be under no obligation to make additional Advances, and the
Borrowers shall, at their option, either prepay all such Advances
as may be outstanding or pay interest on such Advances at a rate
per annum equal to the Federal Funds Rate plus the Applicable
Margin.
2.6 Determination of Borrowing Base; Mandatory Prepayments
or Pledge.
(1) If at any time the aggregate outstanding principal
amount of all Advances exceeds the Borrowing Base of Eligible
Assets pledged to secure the Advances (a "Borrowing Base
Deficiency"), as determined by the Lender and notified to the
Borrowers on any Business Day, the Borrowers shall no later than
one (1) Business Day after receipt of such notice, at the option
of the Borrowers, either prepay the Advances in part or in whole
or pledge additional Eligible Assets to the Lender (which shall
be in all respects acceptable to the Lender), such that after
giving effect to such prepayment or pledge the aggregate
outstanding principal amount of the Advances does not exceed the
Borrowing Base.
(2) On the fifth day of each month (or if such day is not a
Business Day, the next succeeding Business Day), the Lender (or
the
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Borrowers if the Borrowers and the Lender shall mutually agree)
shall calculate and deliver a Borrowing Base Certificate in the
form attached hereto as Exhibit H, such certificate to be based
on the principal balance of the Eligible Assets as of the last
calendar day of the prior month or such other calendar day as
applicable for the related Subservicer or Trustee and acceptable
to the Lender. In the event that such Borrowing Base Certificate
indicates that a Borrowing Base Deficiency exists, the Borrowers
shall on the immediately following Payment Date either prepay the
Advances in part or in whole or pledge additional Eligible Assets
to the Lender (which shall be in all respects acceptable to the
Lender), such that after giving effect to such prepayment or
pledge the aggregate outstanding principal amount of the Advances
does not exceed the Borrowing Base.
2.7 Optional Prepayments. The Advances are prepayable
without premium or penalty, in whole or in part at any time. Any
amounts prepaid shall be applied to repay the outstanding
principal amount of any Advances (together with interest thereon)
until paid in full. Amounts repaid may be reborrowed in
accordance with the terms of this Loan Agreement. If a Borrower
intends to prepay an Advance in whole or in part from any source,
the Borrower shall give two (2) Business Days' prior written
notice thereof to the Lender. If such notice is given, the amount
specified in such notice shall be due and payable on the date
specified therein, together with
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accrued interest to such date on the amount prepaid. Partial
prepayments shall be in an aggregate principal amount of at least
$100,000.
2.8 Requirements of Law.
(1) If any Requirement of Law (other than with respect to
any amendment made to the Lender's certificate of incorporation
and by-laws or other organizational or governing documents) or
any change in the interpretation or application thereof or
compliance by the Lender with any request or directive (whether
or not having the force of law) from any central bank or other
Governmental Authority made subsequent to the date hereof:
(1) shall subject the Lender to any tax of any kind
whatsoever with respect to this Loan Agreement, the Note or
any Advance made by it (excluding net income taxes) or
change the basis of taxation of payments to the Lender in
respect thereof;
(2) shall impose, modify or hold applicable any
reserve, special deposit, compulsory Advance or similar
requirement against assets held by, deposits or other
liabilities in or for the account of, Advances or other
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extensions of credit by, or any other acquisition of funds
by, any office of the Lender which is not otherwise included
in the determination of the LIBOR hereunder;
(3) shall impose on the Lender any other condition;
and the result of any of the foregoing is to increase the cost to
the Lender, by an amount which the Lender deems to be material,
of making, continuing or maintaining any Advance or to reduce any
amount receivable hereunder in respect thereof, then, in any such
case, the Borrowers shall (i) promptly pay the Lender such
additional amount or amounts as will compensate the Lender for
such increased cost or reduced amount receivable; provided that,
notwithstanding the foregoing, within 30 days following receipt
of notice from the Lender that any amount or amounts are due
pursuant to this Section 2.08, the Borrowers shall have the
option to pay in full all Secured Obligations (including, without
limitation, any additional payments required pursuant to this
Section 2.08) and terminate this Loan Agreement.
(2) If the Lender shall have determined that the adoption of or
any change in any Requirement of Law (other than with respect to any
amendment made to the Lender's certificate of incorporation and
by-laws or other organizational or governing documents) regarding
capital
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adequacy or in the interpretation or application thereof or compliance
by the Lender or any corporation controlling the Lender with any
request or directive regarding capital adequacy (whether or not having
the force of law) from any Governmental Authority made subsequent to
the date hereof shall have the effect of reducing the rate of return
on the Lender's or such corporation's capital as a consequence of its
obligations hereunder to a level below that which the Lender or such
corporation (taking into consideration the Lender's or such
corporation's policies with respect to capital adequacy) by an amount
deemed by the Lender to be material, then from time to time, the
Borrower shall promptly pay to the Lender such additional amount or
amounts as will compensate the Lender for such reduction.
(3) If the Lender becomes entitled to claim any additional
amounts pursuant to this subsection, it shall promptly notify the
Borrower of the event by reason of which it has become so entitled. A
certificate as to any additional amounts payable pursuant to this
subsection submitted by the Lender to the Borrowers shall be
conclusive in the absence of manifest error.
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2.9 Purpose of Advances. Each Advance shall be used to finance
the acquisition of Eligible Assets identified to the Lender in writing
on each Mortgage Loan Schedule, Participation Certificate Schedule, or
Pledged Stock Summary and/or Bond Summary, as applicable, as such
Mortgage Loan Schedule, Participation Certificate Schedule, or Pledged
Stock Summary and/or Bond Summary, may be amended from time to time.
2.10 Extension of Termination Date. At the request of the
Borrowers, which request must be made at least thirty (30) days prior
to the then current Termination Date, the Lender may in its sole
discretion extend the Termination Date for a period of 364 days by
giving written notice of such extension to the Borrowers no later than
twenty (20) days, but in no event earlier than thirty (30) days, prior
to the then current Termination Date.
2.11 Extension of Maximum Pledge Period. At the request of the
Borrowers, which request must be made at least thirty (30) days prior
to the expiration of the Maximum Pledge Period, the Lender may in its
sole discretion extend such Maximum Pledge Period for any longer time
period as determined by the Lender in its sole discretion.
SECTION 3 Payments; Computations; Etc.; Commitment Fee.
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3.1 Payments.
(1) Except to the extent otherwise provided herein, all payments
of principal, interest and other amounts to be made by the Borrowers
under this Loan Agreement and the Note, shall be made in Dollars, in
immediately available funds, without deduction, set-off or
counterclaim, to the Lender at the following account maintained by the
Lender: Chase Manhattan Bank, N.A., Account # 140095961, ABA #
000000000, for the A/C of Greenwich Capital Financial Products, Inc.
(Hanover), Attn: Xxxxx Xxxxx, not later than 3:00 p.m., New York City
time, on the date on which such payment shall become due (and each
such payment made after such time on such due date shall be deemed to
have been made on the next succeeding Business Day). Each Borrower
acknowledges that it has no rights of withdrawal from the foregoing
account.
(2) Except to the extent otherwise expressly provided herein, if
the due date of any payment under this Loan Agreement or the Note
would otherwise fall on a day that is not a Business Day, such date
shall be extended to the next succeeding Business Day, and interest
shall be payable for any principal so extended for the period of such
extension.
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3.2 Computations. Interest on the Advances shall be computed on
the basis of a 360-day year for the actual days elapsed (including the
first day but excluding the last day) occurring in the period for
which payable.
3.3 Commitment Fee. The Borrowers agree to pay to the Lender, on
the Payment Dates in April, July, October and January and on the
Termination Date (each a "Commitment Fee Payment Date"), a commitment
fee equal to (a) 12.5 basis points (0.125%) multiplied by (b)(i) the
number of days from and including the date of the Loan Agreement or
the previous Commitment Fee Payment Date up to but not including the
related Commitment Fee Payment Date or the Termination Date, as
applicable, divided by (ii) 360 multiplied by (c) the Maximum
Committed Amount (the "Commitment Fee"), such payment to be made in
Dollars, in immediately available funds, without deduction, set-off or
counterclaim, to the Lender commencing on April 8, 1998. The Lender
may, in its sole discretion, net such Commitment Fee from the proceeds
of any Advance made to a Borrower.
3.4 Selection of Interest Period. The Borrowers' selection of the
duration of Interest Period shall be irrevocable and shall be
effective only if noted on the applicable Notice of Borrowing and
Pledge. Prior to the termination of the Interest Period selected
pursuant to this Section 3.04,
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the Borrowers may elect an Interest Period by delivering written
notice, substantially in the form of Annex L attached hereto, to the
Lender indicating the desired Interest Period, which such notice must
be received no later than two (2) Business Day(s) prior to the date on
which the then current Interest Period is scheduled to end. In the
event no such written notice is received by the Lender, the applicable
Interest Rate shall be one month.
SECTION 4 Collateral Security.
4.1 Collateral; Security Interest.
(1) With respect to Eligible Mortgage Loans, the Mortgage
Custodian shall, pursuant to the Mortgage Custodial Agreement: (i)
hold the related Mortgage Loan Documents as exclusive bailee and agent
for the Lender and (ii) deliver Trust Receipts to the Lender each to
the effect that it has reviewed the related Mortgage Loan Documents in
the manner and to the extent required by the Mortgage Custodial
Agreement and identifying any Exceptions in such Mortgage Loan
Documents as so reviewed in the Exception Reports. With respect to
Eligible Bonds or Pledged Stock, the Bond/PC Custodian shall, pursuant
to the Bond/PC Custodial Agreement, hold such Eligible Bonds or
Pledged Stock and the related Bond Files, either directly or through
the facilities of a Relevant System, as "securities intermediary" (as
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defined in Section 8-102(a)(14) of the UCC and 31 C.F.R. Section
357.2) and credit them to the "securities account" of the Lender. With
respect to Participation Certificates, the Bond/PC Custodian shall,
pursuant to the Bond/PC Custodial Agreement, hold such Participation
Certificates and the related Participation Certificate Files as
exclusive bailee and agent for the Lender and (ii) shall review such
Participation Certificate File in the manner and to the extent
required by the Bond/PC Custodial Agreement.
(2) Each of the following items of property is hereinafter
referred to as the "Collateral":
(1) all Mortgage Loans, Eligible Bonds, Pledged Stock, and
Participation Certificates (or the Underlying Mortgage Loans
related thereto) identified on a Notice of Borrowing and
Pledge delivered by the related Borrower to the Lender and
the Bond/PC Custodian or the Mortgage Custodian, as
applicable, from time to time (the "Assets");
(2) all Asset Documents, including without limitation all
promissory notes, and all Servicing Records, Servicing
Agreements, servicing rights, all Transfer
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Documents, all Governing Agreements and all original
certificates evidencing Assets, together with all files,
documents, instruments, surveys, certificates,
correspondence, appraisals, computer storage media,
accounting records and other books and records relating
thereto;
(3) all mortgage guaranties and insurance relating to Assets
(issued by governmental agencies or otherwise) and any
mortgage insurance certificate or other document evidencing
such mortgage guaranties or insurance relating to Assets and
all claims and payments thereunder;
(4) all other insurance policies and insurance proceeds
relating to any Assets;
(5) all purchase or Take-Out Commitments relating to or
constituting any or all of the foregoing;
(6) all of the related Borrower's rights in the Pledged
Stock of each Eligible Entity the Pledged Stock of which is
an Asset, and all of the related Borrower's
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rights as a shareholder in such Eligible Entity the Pledged
Stock of which is an Asset;
(7) all warrants, options and other rights to acquire stock
in each Eligible Entity and all of the related Borrower's
rights, if any, to participate in the management of such
Eligible Entity the Pledged Stock of which is an Asset;
(8) all rights, privileges, authority and powers of the
related Borrower as owner or holder of its equity interest
in each Eligible Entity the Pledged Stock of which is an
Asset, including, but not limited to, all general intangible
and contract rights related thereto;
(9) all documents and certificates representing or
evidencing the related Borrower's equity interest in each
Eligible Entity the Pledged Stock of which is an Asset;
(10) all of the related Borrower's right as shareholder of
each Eligible Entity the Pledged Stock of which is an Asset
to receive dividends and redemptions on account of
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the Pledged Stock or to receive distributions of each such
Eligible Entity's respective assets, upon complete or
partial liquidation or otherwise; (1)
(11) all distributions, cash, Property, and instruments from
time to time received, receivable or otherwise distributed
in respect of, or in exchange for the related Borrower's
interest in each Eligible Entity related to any Pledged
Stock which is an Asset and delivered or transferred to the
Lender or the related Borrower or in the case of securities
deposited in any securities account controlled by the Lender
or the related Borrower and not controlled by any other
party;
(12) any other rights, title, interest, privilege, authority
and power of the Borrower in or relating to each Eligible
Entity related to any Pledged Stock which is an Asset, all
whether now existing or hereafter arising, and whether
arising at law or in equity and any and all proceeds of and
distribution in any of the foregoing and all books and
records of the related Borrower pertaining to the foregoing;
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(13) all Hedging Agreements relating to such Assets;
(14) the Collection Account and the balance from time to
time standing to the credit of the Collection Account and
all rights with respect thereto;
(15) all purchase agreements relating to such Assets;
(16) all collateral, however defined, under any other
agreement between the Borrowers or any of their Affiliates
on the one hand and the Lender or any of its Affiliates on
the other hand;
(17) all "accounts", "chattel paper", "general intangibles"
and "securities accounts" as defined in the Uniform
Commercial Code constituting any and all of the foregoing;
and
(18) any and all replacements, substitutions, distributions
on or proceeds of any and all of the foregoing.
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(3) Each Borrower hereby pledges to the Lender, and grants a
security interest in favor of the Lender in, all of the Borrower's
right, title and interest in, to and under the Collateral, whether now
owned or hereafter acquired, now existing or hereafter created and
wherever located, to secure the Secured Obligations. Each Borrower
agrees to xxxx its computer records and tapes to evidence the interests
granted to the Lender hereunder.
(4) Re-Registration; Rights of Lender. The Lender shall have
the right to register or cause to be registered in the name of the
Lender or the Bond/PC Custodian or other designee, all Eligible Bonds,
Pledged Stock, Underlying Eligible Bonds or Participation Certificates
pledged to the Lender hereunder and the Lender or its other designee
shall have all rights of conversions, exchange, subscription and any
other rights, privileges and options pertaining to such Eligible Bonds,
Pledged Stock, Underlying Eligible Bonds or Participation Certificates
as if it were the owner thereof, and in connection therewith, the right
to deposit and deliver any and all of the Eligible Bonds, Pledged
Stock, Underlying Eligible Bonds or Participation Certificates with any
committee, depositary transfer, agent, register or other designated
agency upon such terms and conditions as the Lender may determine.
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(5) Cash Dividends. The Lender, as "entitlement holder" (as
defined in Section 8-102(a) of the UCC) with respect to the Eligible
Bonds, Underlying Eligible Bonds and Pledged Stock, shall be entitled
to receive all cash dividends and distributions paid in respect
thereof. Any such dividends or distributions received by either
Borrower shall be promptly remitted to the Collection Account.
(6) Stock Powers; Voting Rights. Concurrently with the
delivery to the Lender of each certificate representing one or more
shares of the Pledged Stock, the related Borrower shall deliver an
undated stock power covering such certificate, duly executed in blank
with, if the Lender so requests, signature guaranteed. With respect to
the Pledged Stock, the related Borrower shall be permitted to exercise
all voting and corporate rights with respect to the Pledged Stock
unless an Event of Default shall have occurred and be continuing;
provided, however, that no vote shall be cast or corporate right
exercised or other action taken which would impair the Collateral or
which would be inconsistent with or result in any violation of any
provision of the Note, this Loan Agreement or the other Loan Documents.
Without the prior written consent of the Lender, the related Borrower
will not (i) vote to enable, or take any other action to permit, (A)
the Eligible Entity to issue any stock or other equity
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securities of any nature or to issue any other securities convertible
into or granting the right to purchase or exchange for any stock or
other equity securities of any of the Eligible Entity, (B) the Eligible
Entity to sell, assign, transfer, exchange or otherwise dispose of, or
grant any option with respect to any Property owned by the Eligible
Entity or (C) the Eligible Entity to dividend or otherwise make any
distribution to its shareholders or (ii) sell, assign, transfer,
exchange or otherwise dispose of, or grant any option with respect to,
the Collateral, or (iii) create, incur or permit to exist any Lien or
option in favor of, or any claim of any Person with respect to, any of
the Collateral, or any interest therein, except for the Lien provided
for by this Pledge Agreement, or (iv) enter into any agreement or
undertaking restricting the right or ability of such Borrower or the
Lender to sell, assign or transfer any of the Collateral.
4.2 Further Documentation. At any time and from time to time,
upon the written request of the Lender, and at the sole expense of the
related Borrower, such Borrower will promptly and duly execute and
deliver, or will promptly cause to be executed and delivered, such
further instruments and documents and take such further action as the
Lender may reasonably request for the purpose of obtaining or
preserving the full benefits of this Loan Agreement and of the rights
and powers herein granted, including, without limitation, the filing of
any financing or continuation statements under the Uniform Commercial
Code in effect in any jurisdiction with respect to the Liens created
hereby. Each Borrower also hereby authorizes the Lender to file any
such financing or continuation statement without the signature of such
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Borrower to the extent permitted by applicable law. A carbon,
photographic or other reproduction of this Loan Agreement shall be
sufficient as a financing statement for filing in any jurisdiction.
4.3 Changes in Locations, Name, etc. Neither Borrower shall
(i) change the location of its chief executive office/chief place of
business from that specified in Section 6 hereof or (ii) change its
name, identity or corporate structure (or the equivalent) or change the
location where it maintains its records with respect to the Collateral
unless it shall have given the Lender at least 30 days prior written
notice thereof and shall have delivered to the Lender all Uniform
Commercial Code financing statements and amendments thereto as the
Lender shall request and taken all other actions deemed necessary by
the Lender to continue its perfected status in the Collateral with the
same or better priority.
4.4 Lender's Appointment as Attorney-in-Fact.
(1) Each Borrower hereby irrevocably constitutes and appoints
the Lender and any officer or agent thereof, with full power of
substitution, as its true and lawful attorney-in-fact with full
irrevocable power and authority in the place and stead of such Borrower
and in the name of such Borrower or in its own name, from time to time
in the Lender's discretion, for
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the purpose of carrying out the terms of this Loan Agreement, to take
any and all appropriate action and to execute any and all documents and
instruments which may be necessary or desirable to accomplish the
purposes of this Loan Agreement, and, without limiting the generality
of the foregoing, each Borrower hereby gives the Lender the power and
right, on behalf of the Borrower, without assent by, but with notice
to, the Borrower, if an Event of Default shall have occurred and be
continuing, to do the following:
(1) in the name of the Borrower or its own name, or otherwise,
to take possession of and endorse and collect any checks,
drafts, notes, acceptances or other instruments for the
payment of moneys due under any mortgage insurance or with
respect to any other Collateral and to file any claim or to
take any other action or proceeding in any court of law or
equity or otherwise deemed appropriate by the Lender for the
purpose of collecting any and all such monies due under any
such mortgage insurance or with respect to any other
Collateral whenever payable;
(2) to pay or discharge taxes and Liens levied or placed on or
threatened against the Collateral; and
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(3) (A) to direct any party liable for any payment under any
Collateral to make payment of any and all moneys due or to
become due thereunder directly to the Lender or as the Lender
shall direct; (B) to ask or demand for, collect, receive
payment of and receipt for, any and all moneys, claims and
other amounts due or to become due at any time in respect of
or arising out of any Collateral; (C) to sign and endorse any
invoices, assignments, verifications, notices and other
documents in connection with any of the Collateral; (D) to
commence and prosecute any suits, actions or proceedings at
law or in equity in any court of competent jurisdiction to
collect the Collateral or any thereof and to enforce any other
right in respect of any Collateral; (E) to defend any suit,
action or proceeding brought against the Borrower with respect
to any Collateral; (F) to settle, compromise or adjust any
suit, action or proceeding described in clause (E) above and,
in connection therewith, to give such discharges or releases
as the Lender may deem appropriate; and (G) generally, to
sell, transfer, pledge and make any agreement with respect to
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or otherwise deal with any of the Collateral as fully and
completely as though the Lender were the absolute owner
thereof for all purposes, and to do, at the Lender's option
and the Borrower's expense, at any time, and from time to
time, all acts and things which the Lender deems necessary to
protect, preserve or realize upon the Collateral and the
Lender's Liens thereon and to effect the intent of this Loan
Agreement, all as fully and effectively as the Borrower might
do.
Each Borrower hereby ratifies all that said attorneys shall lawfully do or
cause to be done by virtue hereof. This power of attorney is a power
coupled with an interest and shall be irrevocable.
(2) Each Borrower also authorizes the Lender, at any time and
from time to time, to execute, in connection with any sale provided for
in Section 4.07 hereof, any endorsements, assignments or other
instruments of conveyance or transfer with respect to the Collateral.
(3) The powers conferred on the Lender are solely to protect
the Lender's interests in the Collateral and shall not impose any duty
upon the Lender to exercise any such powers. The Lender shall be
accountable
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only for amounts that it actually receives as a result of the exercise
of such powers, and neither the Lender nor any of its officers,
directors, or employees shall be responsible to the Borrowers for any
act or failure to act hereunder, except for its own gross negligence or
willful misconduct.
4.5 Performance by Lender of Borrower's Obligations. If a
Borrower fails to perform or comply with any of agreements contained in
the Loan Documents and the Lender itself performs or complies, or
otherwise causes performance or compliance, with such agreement, the
expenses of the Lender incurred in connection with such performance or
compliance, together with interest thereon at a rate per annum equal to
the Post-Default Rate, shall be payable by such Borrower to the Lender
on demand and shall constitute Secured Obligations.
4.6 Proceeds. If an Event of Default shall occur and be
continuing, (a) all proceeds of Collateral received by a Borrower
consisting of cash, checks and other near-cash items shall be held by
the Borrower in trust for the Lender, segregated from other funds of
the Borrower, and shall forthwith upon receipt by the Borrower be
turned over to the Lender in the exact form received by the Borrower
(duly endorsed by the Borrower to the Lender, if required) and (b) any
and all such proceeds received by the Lender (whether from the Borrower
or otherwise) may, in the sole discretion of the
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Lender, be held by the Lender as collateral security for, and/or then
or at any time thereafter may be applied by the Lender against, the
Secured Obligations (whether matured or unmatured), such application to
be in such order as the Lender shall elect. Any balance of such
proceeds remaining after the Secured Obligations shall have been paid
in full and this Loan Agreement shall have been terminated shall be
paid over to the related Borrower or to whomsoever may be lawfully
entitled to receive the same. For purposes hereof, proceeds shall
include, but not be limited to, all principal and interest payments,
all prepayments and payoffs, insurance claims, condemnation awards,
sale proceeds, real estate owned rents and any other income and all
other amounts received with respect to the Collateral.
4.7 Remedies. If an Event of Default shall occur and be
continuing, the Lender may exercise, in addition to all other rights
and remedies granted to it in this Loan Agreement and in any other
instrument or agreement securing, evidencing or relating to the Secured
Obligations, all rights and remedies of a secured party under the
Uniform Commercial Code. Without limiting the generality of the
foregoing, the Lender without demand of performance or other demand,
presentment, protest, advertisement or notice of any kind (except any
notice required by law referred to below) to or upon the Borrowers or
any other Person (each and all of which demands, presentments,
protests, advertisements and notices are hereby waived), may in such
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circumstances forthwith collect, receive, appropriate and realize upon
the Collateral, or any part thereof, and/or may forthwith sell (on a
servicing released basis with respect to Collateral serviced by either
Borrower or an Affiliate of either Borrower, at the Lender's option),
lease, assign, give option or options to purchase, or otherwise dispose
of and deliver the Collateral or any part thereof (or contract to do
any of the foregoing), in one or more parcels or as an entirety at
public or private sale or sales, at any exchange, broker's board or
office of the Lender or elsewhere upon such terms and conditions as it
may deem advisable and at such prices as it may deem best, for cash or
on credit or for future delivery without assumption of any credit risk.
The Lender shall have the right upon any such public sale or sales,
and, to the extent permitted by law, upon any such private sale or
sales, to purchase the whole or any part of the Collateral so sold,
free of any right or equity of redemption in either Borrower, which
right or equity is hereby waived or released. Each Borrower further
agrees, at the Lender's request, to assemble the Collateral and make it
available to the Lender at places which the Lender shall reasonably
select, whether at the Borrower's premises or elsewhere. The Lender
shall apply the net proceeds of any such collection, recovery, receipt,
appropriation, realization or sale, after deducting all reasonable
costs and expenses of every kind incurred therein or incidental to the
care or safekeeping of any of the Collateral or in any way relating to
the Collateral or the rights of the Lender hereunder, including without
limitation reasonable attorneys' fees and disbursements, to the payment
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in whole or in part of the Secured Obligations, in such order as the
Lender may elect, and only after such application and after the payment
by the Lender of any other amount required or permitted by any
provision of law, including without limitation Section 9-504(1)(c) of
the Uniform Commercial Code, need the Lender account for the surplus,
if any, to the related Borrower. To the extent permitted by applicable
law, each Borrower waives all claims, damages and demands it may
acquire against the Lender arising out of the exercise by the Lender of
any of its rights hereunder, other than those claims, damages and
demands arising from the gross negligence or willful misconduct of the
Lender. If any notice of a proposed sale or other disposition of
Collateral shall be required by law, such notice shall be deemed
reasonable and proper if given at least 10 days before such sale or
other disposition. The Borrowers shall remain liable for any deficiency
(plus accrued interest thereon as contemplated pursuant to Section
2.04(b) hereof) if the proceeds of any sale or other disposition of the
Collateral are insufficient to pay the Secured Obligations and the fees
and disbursements of any attorneys employed by the Lender to collect
such deficiency. Because the Borrowers recognize that it may not be
possible to purchase or sell all of the Collateral on a particular
Business Day, or in a transaction with the same purchaser, or in the
same manner because the market for such Collateral may not be liquid,
the Borrowers agree that liquidation of the Collateral does not require
a public purchase or sale and that a good faith private purchase or
sale shall be deemed to have been made in a commercially
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reasonable manner. Accordingly, the Lender may elect, in its sole
discretion, the time and manner of liquidating any Collateral and
nothing contained herein shall (A) obligate the Lender to liquidate any
Collateral on the occurrence of an Event of Default or to liquidate all
Collateral in the same manner or on the same Business Day or (B)
constitute a waiver of any of the Lender's rights or remedies. With
respect to any Pledged Stock, prior to the Lender taking title to any
Pledged Stock or as a condition to the sale of any Pledged Stock as
permitted hereunder, the Lender shall obtain (i) an opinion of counsel
acceptable to the rating agencies which rated the Underlying Eligible
Bonds held by the related Eligible Entity (or, if such Underlying
Eligible Bonds are unrated, acceptable to the rating agencies which
rated any rated Underlying Eligible Bonds issued in conjunction with
such unrated Underlying Eligible Bonds) that such Eligible Entity will
not be consolidated into any bankruptcy of the purchaser of such
Pledged Stock (including the Lender if the Lender shall acquire the
Pledged Stock hereunder) and (ii) a written covenant from such
purchaser (including the Lender if the Lender shall acquire the Pledged
Stock hereunder) that it agrees not to (x) file or consent to the
filing of any bankruptcy, insolvency or reorganization case or
proceeding with respect to the related Special Purpose Entity;
institute any proceedings under any applicable insolvency law or under
any laws relating to the relief from debts or the protection of debtors
generally with respect to the related Special Purpose Entity; (y) seek
or consent to the appointment of a receiver, liquidator,
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assignee, trustee, sequestrator, custodian or any similar official for
the related Special Purchase Entity or a substantial portion of the
related Special Purpose Entity's Properties; or (z) make any assignment
for the benefit of the related Special Purpose Entity's creditors.
4.8 Limitation on Duties Regarding Presentation of Collateral.
The Lender's duty with respect to the custody, safekeeping and physical
preservation of the Collateral in its possession, under Section 9-207
of the Uniform Commercial Code or otherwise, shall be to deal with it
in the same manner as the Lender deals with similar property for its
own account. Neither the Lender nor any of its directors, officers or
employees shall be liable for failure to demand, collect or realize
upon all or any part of the Collateral or for any delay in doing so or
shall be under any obligation to sell or otherwise dispose of any
Collateral upon the request of the Borrowers or otherwise.
4.9 Powers Coupled with an Interest. All authorizations and
agencies herein contained with respect to the Collateral are
irrevocable and powers coupled with an interest.
4.10 Release of Security Interest. Upon termination of this
Loan Agreement and repayment to the Lender of all Secured Obligations
and the performance of all obligations under the Loan Documents,
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the Lender shall release its security interest in any remaining
Collateral; provided that, if any payment, or any part thereof, of any
of the Secured Obligations is rescinded or must otherwise be restored
or returned by the Lender upon the insolvency, bankruptcy, dissolution,
liquidation or reorganization of a Borrower, or upon or as a result of
the appointment of a receiver, intervenor or conservator of, or a
trustee or similar officer for, a Borrower or any substantial part of
its Property, or otherwise, this Loan Agreement, all rights hereunder
and the Liens created hereby shall continue to be effective, or be
reinstated, as though such payments had not been made.
4.11 Establishment of the Collection Account.
(1) The Borrowers shall establish and maintain the Collection
Account at Fleet Bank Providence, Rhode Island, which shall be entitled
"Greenwich Capital Financial Products, Inc." The Borrowers shall not
change the name of the account without the prior written consent of the
Lender. Such Collection Account shall be subject to a Blocked Account
Agreement.
(2) The Borrower shall cause each Subservicer and Trustee to
deposit all Collections in the Collection Account in accordance with
the applicable Servicing Agreement or Governing Agreement.
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SECTION 5 Conditions Precedent.
5.1 Initial Advance. The agreement of the Lender to make the
initial Advance requested to be made by it hereunder is subject to the
satisfaction, immediately prior to or concurrently with the making of
such Advance, of the following conditions precedent:
(1) Loan Agreement. The Lender shall have received this Loan
Agreement, executed and delivered by a duly authorized officer of each
Borrower.
(2) Note. The Lender shall have received the Note, conforming
to the requirements hereof and executed by a duly authorized officer of
each Borrower.
(3) Mortgage Custodial Agreement. The Lender shall have
received the Mortgage Custodial Agreement, conforming to the
requirements hereof and executed by a duly authorized officer of each
Borrower and the Mortgage Custodian.
(4) Blocked Account Agreement. The Lender shall have received
a Blocked Account Agreement substantially in the form of
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Exhibit F hereof executed by duly authorized officers of each Borrower
and the Collection Bank.
(5) Establishment of Collection Account. The Borrowers shall
have established the Collection Account as defined herein.
(6) Filings, Registrations, Recordings. Any documents
(including, without limitation, financing statements) required to be
filed, registered or recorded in order to create, in favor of the
Lender, a perfected, first-priority security interest in the
Collateral, subject to no Liens other than those created hereunder,
shall have been properly prepared and executed for filing (including
the applicable county(ies) if the Lender determines such filings are
necessary in its sole discretion), registration or recording in each
office in each jurisdiction in which such filings, registrations and
recordations are required to perfect such first-priority security
interest.
(7) Corporate Proceedings. The Lender shall have received a
certificate of the Secretary or Assistant Secretary of each Borrower,
dated as of the date hereof, and certifying (A) that attached thereto
is a true, complete and correct copy of (i) the articles of
incorporation of such Borrower, (ii) the by-laws of such Borrower, and
(iii) resolutions duly adopted by the Board of Directors of such
Borrower authorizing the execution, delivery and
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performance of this Loan Agreement, the Notes and the other Loan
Documents to which it is a party, and the borrowings contemplated
hereunder, and that such resolutions have not been amended, modified,
revoked or rescinded, and (B) as to the incumbency and specimen
signature of each officer executing any Loan Documents on behalf of
such Borrower and authorized to execute any Notice of Borrowing, and
such certificate and the resolutions attached thereto shall be in form
and substance satisfactory to the Lender.
(8) Good Standing Certificates. The Lender shall have received
copies of certificates evidencing the good standing of each Borrower,
dated as of a recent date, from the Secretary of State (or other
appropriate authority) of the State of Maryland or the State of New
York, as the case may be, and of each other jurisdiction where the
ownership, lease or operation of property, or the conduct of business,
requires such Borrower to qualify as a foreign corporation, except
where the failure to qualify would not have a Material Adverse Effect.
(9) Legal Opinions. The Lender shall have received the
executed legal opinions of Piper & Marbury and Sidley & Austin, special
counsel to Hanover Capital Holdings, addressing the matters set forth
in items 1 through 6 in the form attached hereto as Exhibit C, dated
the initial Funding Date and otherwise in form and substance acceptable
to the Lender and
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covering such other matters incident to the transactions contemplated
by this Loan Agreement as the Lender shall reasonably request.
(10) Fees and Expenses. The Lender shall have received all
fees and expenses required to be paid by the Borrower on or prior to
the initial Funding Date pursuant to Section 11.03(b) or the Lender may
net such payments out of any Advance hereunder.
(11) Financial Statements. The Lender shall have received the
financial statements referenced in Section 6.01(a).
(12) Underwriting Guidelines. The Lender and the Borrowers
shall have agreed upon the Borrowers' current Underwriting Guidelines
for Mortgage Loans and the Lender shall have received a certified copy
thereof.
(13) Consents, Licenses, Approvals, etc. The Lender shall have
received copies certified by the Borrowers of all consents, licenses
and approvals, if any, required in connection with the execution,
delivery and performance by the Borrowers of, and the validity and
enforceability of, the Loan Documents, which consents, licenses and
approvals shall be in full force and effect.
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(14) Insurance. The Lender shall have received evidence in
form and substance satisfactory to the Lender showing compliance by the
Borrowers as of such initial Funding Date with Section 7.03 hereof.
(15) Side Letter. The Lender shall have received the Side
Letter, duly executed and delivered by Hanover Capital Holdings.
(16) Guaranty. The Lender shall have received a Guaranty, duly
executed and delivered by Hanover Capital Mortgage Holdings, Inc.; and
(17) Other Documents. The Lender shall have received such
other documents as the Lender or its counsel may reasonably request.
5.2 Initial and Subsequent Advances. The making of each
Advance to a Borrower (including the initial Advance) on any Business
Day is subject to the satisfaction of the following further conditions
precedent, both immediately prior to the making of such Advance and
also after giving effect thereto and to the intended use thereof:
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(1) No Default. No Default or Event of Default shall have
occurred and be continuing.
(2) Representations and Warranties. Each representation and
warranty made by a Borrower in Section 6 hereof and elsewhere in each
of the Loan Documents, shall be true and correct on and as of the date
of the making of such Advance (in the case of the representations and
warranties in Schedule 1, solely with respect to Eligible Assets,
included in the Borrowing Base on such date) with the same force and
effect as if made on and as of such date (or, if any such
representation or warranty is expressly stated to have been made as of
a specific date, as of such specific date). Each Borrower shall also be
in compliance with all governmental licenses and authorizations and
qualified to do business and in good standing in all required
jurisdictions where the failure to be so qualified should reasonably be
expected to have a Material Adverse Effect.
(3) Borrowing Base. The aggregate outstanding principal amount
of the Advances shall not exceed the Borrowing Base.
(4) Notice of Borrowing and Pledge. The Lender shall have
received a Notice of Borrowing and Pledge and the related
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Applicable Notice Documents (with any certificates attached thereto),
in accordance with Section 2.03(a) hereof, appropriately completed.
(5) Trust Receipt; Exception Report. The Lender shall have
received (i) from the Mortgage Custodian, with respect to Eligible
Mortgage Loans, a Trust Receipt in respect of all Mortgage Loans to be
pledged hereunder on such Business Day and a corresponding Exception
Report, with Exceptions (as defined in the Mortgage Custodial
Agreement) in respect of such Mortgage Loans and (ii) from the Bond/PC
Custodian, with respect to Participation Certificates, Eligible Bonds
and Underlying Eligible Bonds, the appropriate documentation as
required pursuant to Section 5.02(f) or (g), as applicable; provided,
that in all cases the documentation required pursuant to clauses (i)
and (ii) above shall be acceptable to the Lender in its sole
discretion.
(6) Delivery of Participation Certificates. With respect to
each Participation Certificate being pledged to the Lender: (i) such
Participation Certificate shall have been delivered to the Lender or
its designee, shall be in suitable form for registration in the name of
the Lender, shall conform to the requirements hereof and shall
otherwise be in form and substance satisfactory to the Lender, (ii) the
related Borrower shall have executed and delivered an Instruction
Letter as defined herein and (iii) the
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Participation Custodian shall have acknowledged the Lender's interest
in the Underlying Mortgage Loans.
(7) Delivery of Eligible Bonds or Underlying Eligible Bonds.
(1) With respect to Eligible Bonds or Underlying Eligible
Bonds that shall be delivered or held in definitive,
certificated form, the related Borrower shall deliver to the
Bond/PC Custodian the original of the relevant certificate in
form suitable for transfer, with accompanying, duly executed
instruments of transfer or appropriate instruments of
assignment executed in blank or in the name of the Lender or,
the Bond/PC Custodian, transfer tax stamps, and any other
documents or instruments necessary in the reasonable opinion
of the Lender to effect and perfect a legally valid delivery
of such security or other item of investment property to the
Lender, the Bond/PC Custodian. Unless otherwise instructed by
Lender, any delivery of a security or other item of investment
property in definitive, certificated form shall be made to The
Chase Manhattan Bank, 4 New
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Xxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Outsourcing
Department, Xxxxxxxx Xxxx.
(2) With respect to Eligible Bonds or Underlying Eligible
Bonds that shall be delivered or held in uncertificated form
and the ownership of which is registered on books maintained
by the issuer thereof or its transfer agent, the related
Borrower shall cause the registration of such security or
other item of investment property in the name of Lender, the
Bond/PC Custodian and at the request of the Lender, shall take
such other and further steps, and shall execute and deliver
such documents or instruments necessary in the opinion of the
Lender, to effect and perfect a legally valid delivery of the
relevant interest granted therein to Lender hereunder.
(3) With respect to Eligible Bonds or Underlying Eligible
Bonds that shall be delivered through a Relevant System in
book-entry form and credited to or otherwise held in an
account, the related Borrower shall cause the giving of
written instructions to the relevant financial institution or
other entity, and shall provide a copy thereof
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to the Lender, sufficient if complied with to effect and
perfect a legally valid delivery of the relevant interest
granted therein to Lender hereunder. In connection with any
account to which the Eligible Bonds or Underlying Eligible
Bonds are credited or otherwise held, the related Borrower
shall execute and deliver such other and further documents or
instruments necessary, in the reasonable opinion of the
Lender, to effect and perfect a legally valid delivery of the
relevant interest granted therein to Lender hereunder. Any
account to which the Eligible Bonds or Underlying Eligible
Bonds are credited or otherwise shall be designated "Greenwich
Capital Financial Products, Inc. Account" or such variation
thereon as the Lender may direct.
(4) Any delivery of an Eligible Bond in accordance with
clauses (i) through (iii) above, or any other method
acceptable to the Lender, shall be sufficient to cause the
Lender to have a perfected, first priority security interest
in, and to be the "entitlement holder" (as defined in Section
8-102(a)(7) of the Uniform Commercial Code of
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the State of the New York (the "UCC")) with respect to the
Eligible Bonds.
(5) No Eligible Bonds or Underlying Eligible Bonds, whether
certificated or uncertificated, shall remain in the possession
of, or (a) with respect to Eligible Bonds, at the Lender's
discretion, in the name of, the related Borrower or any of its
agents, or in any account in the name of the related Borrower
or any of its agents, or (b) with respect to Underlying
Eligible Bonds at the Lender's discretion following an Event
of Default, in the name of, the related Borrower or any of its
agents, or in any account in the name of the related Borrower
or any of its agents.
(6) In addition to the foregoing, and as a condition to the
Lender's performance on each Funding Date, the related
Borrower shall (a) deliver to the Lender no later than 10:00
a.m. three (3) days prior to the requested Funding Date,
copies of the documents listed below, and (b) deliver the
originals (unless copies are specified) of such documents no
later than 11:00 a.m. on such Funding
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Date. The documents to be delivered as a condition to the
Lender's performance include without limitation (collectively,
the "Bond File"): (A) a copy of the executed Governing
Agreements governing the Eligible Bonds and/or Underlying
Eligible Bonds and/or any supplements thereto, and the
offering documents related to the Eligible Bonds and/or
Underlying Eligible Bonds, each certified by the Borrower or
the Bond/PC Custodian as a true, correct and complete copy of
the original, and all ancillary documents required to be
delivered to the certificateholders under the Governing
Agreements, (B) an officer's certificate as may be requested
by Lender, (C) opinions of counsel in form and substance
satisfactory to the Lender, (D) the Eligible Bonds and/or
Underlying Eligible Bonds in accordance with this Section
5.02(g), (E) an Instruction Letter executed by the related
Borrower, (F) for all Eligible Bonds and/or Underlying
Eligible Bonds in uncertificated form, evidence that such
Eligible Bonds and/or Underlying Eligible Bonds have been
registered in the name of the Bond/PC Custodian or the Lender
on the books of the issuer itself or its transfer agent, (G)
all Transfer Documents, (H) copies of
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distribution statements delivered to the Bond/PC Custodian for
two months prior to the month in which the related Funding
Date occurs, if any, certified by the applicable Trustee as
true and correct, (I) any other documents or instruments
necessary in the reasonable opinion of the Lender to effect
and perfect a legally valid transfer of the relevant interest
granted therein to the Lender under the Loan Documents, (J)
any other documents required under this Section 5.02(g).
Nothing set forth herein shall be deemed a waiver of any of
either Borrower's obligations hereunder.
(7) With respect to any Underlying Eligible Bonds delivered
hereunder, the Lender shall take possession of such Underlying
Eligible Bonds solely to prevent misappropriation of the
Underlying Eligible Bonds and the consequent diminution in
value of the Pledged Stock, and the Lender affirmatively
disclaims any security interest in the Underlying Eligible
Bonds.
(8) Delivery of Pledged Stock. With respect to the Pledged
Stock that shall be delivered or held in definitive, certificated form,
the
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related Borrower shall deliver to the Bond/PC Custodian the original of
the relevant certificate in form suitable for transfer, with
accompanying, duly executed instruments of transfer or appropriate
instruments of assignment executed in blank or in the name of the
Lender or the Bond/PC Custodian, transfer tax stamps, and any other
documents or instruments necessary in the reasonable opinion of the
Lender to effect and perfect a legally valid delivery of such security
or other item of investment property to the Lender or the Bond/PC
Custodian. Unless otherwise instructed by Lender, any delivery of a
security or other item of investment property in definitive,
certificated form shall be made to The Chase Manhattan Bank, 0 Xxx Xxxx
Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Outsourcing Department,
Xxxxxxxx Xxxx.
(9) Additional Matters. All corporate and other proceedings,
and all documents, instruments and other legal matters in connection
with the transactions contemplated by this Loan Agreement and the other
Loan Documents shall be reasonably satisfactory in form and substance
to the Lender, and the Lender shall have received such other documents
and legal opinions in respect of any aspect or consequence of the
transactions contemplated hereby or thereby as it shall reasonably
request.
(10) No Material Adverse Effect. There shall not have occurred
one or more events that, in the reasonable judgment of the
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Lender, constitutes or should reasonably be expected to constitute a
Material Adverse Effect.
(11) Due Diligence Package. The Lender shall have received a
Due Diligence Package with respect to each Mortgage Loan or Underlying
Mortgage Loan at least three (3) Business Days prior to the related
Funding Date.
(12) Due Diligence Review. Subject to the Lender's right to
perform one or more Due Diligence Reviews pursuant to Section 11.16
hereof, the Lender shall have completed its due diligence review of the
Asset Documents and Bond File, and the Due Diligence Package for each
Advance and such other documents, records, agreements, instruments,
mortgaged properties or information relating to such Advances as the
Lender in its sole discretion deems appropriate to review and such
review shall be satisfactory to the Lender in its sole discretion.
(13) Servicing Agreement(s); Instruction Letters. With respect
to Eligible Assets pledged to the Lender and Underlying Eligible Bonds,
the Lender shall have received, no later than 10:00 a.m. three (3) days
prior to the requested Funding Date, an Instruction Letter executed by
the related Borrower, with the related Servicing Agreement or Governing
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Agreement attached thereto, which such Servicing Agreement or Governing
Agreement shall be in form and substance acceptable to Lender. With
respect to the Master Servicer or a Subservicer of a Borrower which is
an Affiliate of a Borrower and which is servicing Mortgage Loans or
Participation Certificates, such Subservicer or Master Servicer
consents to terminate the related Servicing Agreement upon notification
by the Lender of an occurrence of an Event of Default.
SECTION 6 Representations and Warranties. As of the Effective
Date and each Funding Date, each Borrower represents and warrants to
the Lender that:
6.1 Financial Condition.
(1) The unaudited consolidated balance sheet of Hanover
Capital Holdings and its consolidated Subsidiaries as of December 31,
1997, reported thereon by Deloitte & Touche, a copy of which has
heretofore been furnished to the Lender, is complete and correct and
presents fairly the consolidated financial condition of Hanover Capital
Holdings and its consolidated Subsidiaries as at such dates and the
consolidated results of their operations and their consolidated cash
flows for the fiscal year then ended.
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(2) Such financial statement, including the related schedules
and notes thereto, has been prepared in accordance with GAAP applied
consistently throughout the periods involved (except as approved by
such accountants or Responsible Officer, as the case may be, and as
disclosed therein).
(3) Neither of the Borrowers nor any of their consolidated
Subsidiaries had, at the date of the financial statement referred to
above, any material Guarantee Obligation, contingent liability or
liability for taxes, or any long-term lease or unusual forward or
long-term commitment, including, without limitation, any interest rate
or foreign currency swap or exchange transaction, or other financial
derivative, which is not reflected in the foregoing statements or in
the notes thereto.
6.2 No Change. Since September 31, 1997, there has been no
development or event nor any prospective development or event which has
had or should reasonably be expected to have a Material Adverse Effect.
6.3 Corporate Existence; Compliance with Law. Each Borrower
(a) is (i) in the case of Hanover Capital Holdings, a corporation duly
organized, validly existing and in good standing under the laws of the
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State of Maryland and (ii) in the case of Hanover Capital Partners, a
corporation duly organized, validly existing and in good standing under
the laws of the State of New York, (b) has the corporate power and
authority, and has all governmental licenses, authorizations, consents
and approvals necessary, to own and operate its property, to lease the
property it operates as lessee and to carry on its business as now
being or as proposed to be conducted, (c) is duly qualified to do
business and is in good standing under the laws of each jurisdiction in
which the nature of the business conducted by it makes such
qualification necessary and where failure so to qualify should be
reasonably expected (either individually or in the aggregate) to have a
Material Adverse Effect, and (d) is in compliance in all material
respects with all Requirements of Law.
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6.4 Corporate Power; Authorization; Enforceable Obligations.
(1) Each Borrower has the corporate power and authority, and
the legal right, to make, deliver and perform this Loan Agreement, the
Note, and each other Loan Document, and to borrow and to grant Liens
hereunder, and has taken all necessary corporate action to authorize
the borrowings and the granting of Liens on the terms and conditions of
this Loan Agreement, the Note, and each other Loan Document to which it
is a party, and the execution, delivery and performance of this Loan
Agreement, the Note, and each other Loan Document.
(2) No consent or authorization of, approval by, notice to,
filing with or other act by or in respect of, any Governmental
Authority or any other Person is required or necessary in connection
with the borrowings hereunder or with the execution, delivery,
performance, validity or enforceability of this Loan Agreement or the
Note or any other Loan Document, except (i) for filings and recordings
in respect of the Liens created pursuant to this Loan Agreement, and
(ii) as previously obtained and currently in full force and effect.
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(3) Each Loan Document has been duly and validly executed and
delivered by the Borrowers and constitutes, a legal, valid and binding
obligation of each Borrower, enforceable against such Borrower in
accordance with their terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights generally
and by general equitable principles (whether enforcement is sought by
proceedings in equity or at law).
6.5 No Legal Bar. The execution, delivery and performance of
this Loan Agreement and the Note, the borrowings hereunder and the use
of the proceeds thereof will not violate any Requirement of Law or
Contractual Obligation of either Borrower or of any of their
Subsidiaries and will not result in, or require, the creation or
imposition of any Lien (other than the Liens created hereunder) on any
of its or their respective properties or revenues pursuant to any such
Requirement of Law or Contractual Obligation.
6.6 No Material Litigation. There are no actions, suits,
arbitrations, investigations or proceedings of or before any arbitrator
or Governmental Authority pending or, to the knowledge of either
Borrower, threatened against such Borrower or any of its Subsidiaries
or against any of its or their respective properties or revenues, other
than those actions, suits,
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arbitrations, investigations or proceedings described on Schedule 4
hereto, none of which should reasonably be expected to have a Material
Adverse Effect.
6.7 No Default. Neither Borrower nor any of their Subsidiaries
is in default under or with respect to any of its Contractual
Obligations in any respect which should reasonably be expected to have
a Material Adverse Effect. No Default or Event of Default has occurred
and is continuing.
6.8 Collateral; Collateral Security.
(1) No Borrower has assigned, pledged, or otherwise conveyed
or encumbered any of the Collateral to any Person other than the
Lender, and immediately prior to the pledge of such Collateral, the
applicable Borrower was the sole owner of the Collateral and had good
and marketable title thereto, free and clear of all Liens, in each case
except for Liens that have been released or are to be released
simultaneously with the Liens granted in favor of the Lender hereunder.
No Eligible Asset was acquired by the applicable Borrower from an
Affiliate of such Borrower.
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(2) The provisions of this Loan Agreement are effective to
create in favor of the Lender a valid security interest in all right,
title and interest of the related Borrower in, to and under the
Collateral.
(3) Upon (i) receipt by the Mortgage Custodian of each
Mortgage Note, (ii) the delivery to the Bond/PC Custodian of (a) the
Eligible Bonds in accordance with Section 5.02 hereof together with the
Transfer Documents and (b) the Pledged Stock, (iii) receipt by the
Bond/PC Custodian of the Participation Certificates and (iv) the filing
(to the extent such interest can be perfected by filing under the
Uniform Commercial Code) of financing statements on Form UCC-1 naming
the Lender as "Secured Party" and the Borrower as a "Debtor", and
describing the Collateral, in the jurisdictions and recording offices
listed on Schedule 2 attached hereto, in both instances, the security
interests granted hereunder in the Collateral will constitute fully
perfected first-priority security interests under the Uniform
Commercial Code in all right, title and interest of the related
Borrower in, to and under such Collateral, and without limitation on
the foregoing, the Lender, as entitlement holder, shall have a
"security entitlement" to the Eligible Bonds.
6.9 Chief Executive Office. Each Borrower's chief executive
office on the Effective Date is located at 00 Xxxx Xxxxxx, Xxxxx 0000,
Xxx Xxxx, Xxx Xxxx 00000.
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6.10 Location of Books and Records. The location where each
Borrower keeps its books and records, including all computer tapes and
records relating to the Collateral is its chief operating office,
which, on the effective date, is located at 000 Xxxxxxxxx Xxxxx, Xxxxx
000, Xxxxxx, Xxx Xxxxxx 00000.
6.11 No Burdensome Restrictions. No Requirement of Law or
Contractual Obligation of either Borrower or any of its Subsidiaries
has a Material Adverse Effect.
6.12 Taxes. Each Borrower and its Subsidiaries have filed all
Federal and state income tax returns and all other material tax returns
that are required to be filed by them and have paid all taxes due
pursuant to such returns or pursuant to any assessment received by any
of them, except for any such taxes or assessments, if any, that are
being appropriately contested in good faith by appropriate proceedings
diligently conducted and with respect to which adequate reserves in
conformity with GAAP have been provided. No tax Lien has been filed,
and, to the knowledge of the Borrowers, no claim is being asserted,
with respect to any such tax or assessment.
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6.13 Margin Regulations. No part of the proceeds of any
Advances will be used for "purchasing" or "carrying" any "margin stock"
within the respective meanings of each of the quoted terms under, or
for any other purpose which violates or would be inconsistent with the
provisions of, Regulation G, T, U or X.
6.14 Investment Company Act; Other Regulations. Neither
Borrower is an "investment company", or a company "controlled" by an
"investment company", within the meaning of the Investment Company Act
of 1940, as amended. Neither Borrower is subject to regulation under
any Federal or state statute or regulation which limits its ability to
incur Indebtedness.
6.15 Subsidiaries. All of the Subsidiaries of the Borrowers at
the date hereof are listed on Schedule 3 to this Loan Agreement.
6.16 Acquisition of Mortgage Loans. The Mortgage Loans were
acquired by the related Borrower, and the origination and collection
practices used by the originator of the Mortgage Loans have been, in
all respects legal, proper, prudent and customary in the residential
mortgage loan servicing business, and in accordance with the
Underwriting Guidelines. All such Mortgage Loans are in conformity with
the Underwriting Guidelines.
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6.17 No Adverse Selection. The Borrowers have used no
selection procedures that identified the Eligible Assets as being less
desirable or valuable than other comparable Eligible Assets owned by
the Borrowers.
6.18 Borrowers Solvent; Fraudulent Conveyance. As of the date
hereof and immediately after giving effect to each Advance, the fair
value of the assets of each Borrower is greater than the fair value of
the liabilities (including, without limitation, contingent liabilities
if and to the extent required to be recorded as a liability on the
financial statements of such Borrower in accordance with GAAP) of such
Borrower and each Borrower is and will be solvent, is and will be able
to pay its debts as they mature and does not and will not have an
unreasonably small capital to engage in the business in which it is
engaged and proposes to engage. Neither Borrower intends to incur, nor
believes that it has incurred, debts beyond its ability to pay such
debts as they mature. Neither Borrower is contemplating the
commencement of insolvency, bankruptcy, liquidation or consolidation
proceedings or the appointment of a receiver, liquidator, conservator,
trustee or similar official in respect of such Borrower or any of its
assets. Neither Borrower is transferring any Eligible Assets with any
intent to hinder, delay or defraud any of its creditors.
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6.19 ERISA. Each Plan to which either Borrower or its
Subsidiaries make direct contributions, and, to the knowledge of the
Borrowers, each other Plan and each Multiemployer Plan, is in
compliance in all material respects with, and has been administered in
all material respects in compliance with, the applicable provisions of
ERISA, the Code and any other Federal or state law.
6.20 True and Complete Disclosure. The information, reports,
financial statements, exhibits and schedules furnished in writing by or
on behalf of the Borrowers to the Lender in connection with the
negotiation, preparation or delivery of this Loan Agreement and the
other Loan Documents or included herein or therein or delivered
pursuant hereto or thereto, do not contain any untrue statement of
material fact or omit to state any material fact necessary to make the
statements herein or therein not misleading. All written information
furnished after the date hereof by or on behalf of the Borrowers to the
Lender in connection with this Loan Agreement and the other Loan
Documents and the transactions contemplated hereby and thereby will be
true, correct and accurate in every material respect, or (in the case
of projections) based on reasonable estimates, on the date as of which
such information is stated or certified. There is no fact known to a
Responsible Officer of the Borrowers that, after due inquiry, should
reasonably be expected
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to have a Material Adverse Effect that has not been disclosed herein,
in the other Loan Documents or in a report, financial statement,
exhibit, schedule, disclosure letter or other writing furnished to the
Lender for use in connection with the transactions contemplated hereby
or thereby.
6.21 True Sales. Any Eligible Asset acquired by an Affiliate
of either Borrower has been conveyed to the related Borrower pursuant
to a legal sale, and if so requested by the Lender, is covered by an
opinion of counsel to that effect in form and substance acceptable to
the Lender.
6.22 Participation Certificates. The Borrowers represent and
warrant to the Lender with respect to each Participation Certificate
that the representations and warranties set forth on Schedule 1, Part
III hereof are true and correct and that (a) such Participation
Certificate is owned by the related Borrower free from all Liens, (b)
such Participation Certificate shall have been delivered to the Lender
or its designee in a form suitable for registration in the name of the
Lender, (c) such Participation Certificate represents an Ownership
Percentage in the Underlying Mortgage Loans referenced therein, (d) the
Eligible Assets referenced in such Participation Certificate are being
held by a Participation Custodian for the benefit of the holder of such
Participation Certificate, and (e) the Participation
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Custodian is not an Affiliate of either Borrower under the Governing
Agreement for the related Participation Certificate.
6.23 Year 2000 Compliance. The Borrower has made a full and
complete assessment of all issues which may be related to the
occurrence of the year 2000, including all issues related to its
computer program and software and the computer program and software of
the Subservicer (the "Year 2000 Issues"), and both the Borrower and the
Subservicer have realistic and achievable programs for remediating the
Year 2000 Issues on a timely basis (the "Year 2000 Program"). Based on
such assessment and on the Year 2000 Program, the Borrower does not
reasonably anticipate that Year 2000 Issues will have a material
adverse affect on the Borrower's or the Subservicer's operations or
financial condition.
SECTION 7 Covenants of the Borrower. Each of the Borrowers
covenants and agrees with the Lender that, so long as any Advance is
outstanding and until the later to occur of the payment in full of all
Secured Obligations and the termination of this Loan Agreement:
7.1 Financial Statements. Hanover Capital Holdings shall
deliver to the Lender:
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(1) if available, as soon as available and in any event within
forty-five (45) days after the end of each of the first three quarterly
fiscal periods of each fiscal year of Hanover Capital Holdings, the
consolidated and consolidating balance sheets of Hanover Capital
Holdings and its consolidated Subsidiaries as at the end of such period
and the related unaudited consolidated and consolidating statements of
income and of cash flows for Hanover Capital Holdings and its
consolidated Subsidiaries for such period and the portion of the fiscal
year through the end of such period, setting forth in each case in
comparative form the figures for the previous year, accompanied by a
certificate of a Responsible Officer of Hanover Capital Holdings, which
certificate shall state that said consolidated financial statements
fairly present the consolidated and consolidating financial condition
and results of operations of Hanover Capital Holdings and its
Subsidiaries in accordance with GAAP, consistently applied, as at the
end of, and for, such period (subject to normal year-end audit
adjustments);
(2) as soon as available and in any event within ninety (90)
days after the end of each fiscal year of Hanover Capital Holdings, the
audited consolidated and consolidating balance sheets of Hanover
Capital Holdings and its consolidated Subsidiaries as at the end of
such fiscal year and the related consolidated and consolidating
statements of income and retained earnings and of cash flows for
Hanover Capital Holdings and its consolidated
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Subsidiaries for such year, setting forth in each case in comparative
form the figures for the previous year, accompanied by an opinion
thereon of independent certified public accountants of recognized
national standing, which opinion shall not be qualified as to scope of
audit or going concern and shall state that said consolidated and
consolidating financial statements fairly present the consolidated and
consolidating financial condition and results of operations of Hanover
Capital Holdings and its consolidated Subsidiaries as at the end of,
and for, such fiscal year in accordance with GAAP; and
(3) from time to time such other information regarding the
financial condition, operations, or business of the Borrowers and their
Subsidiaries as the Lender may reasonably request.
7.2 Existence, Etc. Each Borrower and its Subsidiaries will:
(1) preserve and maintain its legal existence;
(2) preserve and maintain all of its material rights,
privileges, licenses and franchises;
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(3) comply with the requirements of all applicable
Requirements of Law (including, without limitation, the Truth in
Lending Act, the Real Estate Settlement Procedures Act and all
environmental laws) if failure to comply with such requirements should
reasonably be expected (either individually or in the aggregate) to
have a Material Adverse Effect; and
(4) keep adequate records and books of account, in which
complete entries will be made in accordance with GAAP consistently
applied.
7.3 Maintenance of Property; Insurance. Each Borrower shall
keep all property useful and necessary in its business in good working
order and condition. Each Borrower shall maintain errors and omissions
insurance and/or mortgage impairment insurance and blanket bond
coverage in such amounts as are in effect on the Effective Date (as
disclosed to Lender in writing) and shall not reduce such coverage
without the written consent of the Lender, and shall also maintain such
other insurance with financially sound and reputable insurance
companies, and with respect to property and risks of a character
usually maintained by entities engaged in the same or similar business
similarly situated, against loss, damage and liability of the kinds and
in the amounts customarily maintained by such entities.
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7.4 Notices.
(1) Each Borrower shall give notice to the Lender promptly:
(1) upon such Borrower becoming aware of, and in any event
within one (1) Business Day after, the occurrence of any
Default or Event of Default or any Event of Default or Default
under any other material agreement of such Borrower;
(2) upon, and in any event within three (3) Business Days
after, service of process on such Borrower or any of its
Subsidiaries, or any agent thereof for service of process, in
respect of any legal or arbitrable proceedings affecting such
Borrower, or any of its Subsidiaries (a) that questions or
challenges the validity or enforceability of any of the Loan
Documents or (b) in which the amount in controversy exceeds
$300,000;
(3) upon such Borrower becoming aware of any default related
to any Collateral, any Material Adverse
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Effect and any event or change in circumstances which should
reasonably be expected to have a Material Adverse Effect;
(4) upon such Borrower becoming aware that the Mortgaged
Property in respect of any Mortgage Loan has been damaged by
waste, fire, earthquake or earth movement, windstorm, flood,
tornado or other casualty, or otherwise damaged so as to
materially and adversely affect the Collateral Value of such
Mortgage Loan;
(5) upon entry of a judgment or decree in an amount in excess
of $200,000.
Each notice pursuant to this Section 7.04(a) (other than 7.04(a)(v)) shall
be accompanied by a statement of a Responsible Officer of the related
Borrower setting forth details of the occurrence referred to therein
and stating what action the related Borrower has taken or proposes to
take with respect thereto.
7.5 Other Information. Each Borrower shall furnish to the
Lender, as soon as available, copies of any and all proxy statements,
financial statements and reports which such Borrower sends to its
stockholders,
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and copies of all regular, periodic and special reports, and all
registration statements filed with the Securities and Exchange
Commission, any Governmental Authority which supervises the issuance of
securities by such Borrower.
7.6 Further Identification of Collateral. Each Borrower will
furnish to the Lender from time to time statements and schedules
further identifying and describing the Collateral and such other
reports in connection with the Collateral as the Lender or any Lender
may reasonably request, all in reasonable detail.
7.7 Eligible Asset Determined to be Defective. Upon discovery
by the Borrower or the Lender of any breach of any representation or
warranty listed on Schedule 1 hereto applicable to any Eligible Asset,
the party discovering such breach shall promptly give notice of such
discovery to the other.
7.8 Monthly Reporting. The Borrowers shall deliver or cause to
be delivered to the Lender, no later than five (5) days after the last
day of each calendar month, the following documents, as applicable: (a)
with respect to Eligible Mortgage Loans, a monthly servicing report and
a Mortgage Loan Schedule and a Mortgage Loan Tape in a
computer-readable
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format reasonably acceptable to the Lender which shall list and set
forth such information as the Lender may reasonably request, including,
without limitation, (i) the outstanding principal balance and
delinquency status of each such Mortgage Loan as of the last day of the
prior calendar month (reported as current, 30-59, 60-89, 90+, etc., in
each case as of a date specified therein), (ii) any Mortgagor that is
in bankruptcy, and (iii) a servicer exception report as defined in the
Underwriting Guidelines, (b) with respect to Eligible Bonds and
Underlying Eligible Bonds, a Bond Summary which shall list and set
forth such information as the Lender may reasonably request, and (c)
with respect to Participation Certificates, a Participation Certificate
Schedule and Participation Certificate Tape in a computer-readable
format reasonably acceptable to the Lender which shall list and set
forth such information as the Lender may reasonably request, and (d)
with respect to all Eligible Assets, (i) a Remittance Report in the
form attached hereto as Exhibit I together with a statement of
reconciliation with respect to the Collection Account, (ii) if the
Borrowers and the Lender shall mutually agree (in accordance with
Section 2.06 (b) hereof), a Borrowing Base Certificate in the form
attached hereto as Exhibit H, and (iii) any other information as the
Lender shall reasonably request. Each monthly servicing report
described above shall separately identify each pool of Eligible Assets
pledged to the Lender to secure the related Advance.
7.9 Financial Condition Covenants.
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(1) Maintenance of Tangible Net Worth. Hanover Capital
Holdings shall at all times maintain Tangible Net Worth of not less
than $65,000,000.
(2) Maintenance of Ratio of Indebtedness to Tangible Net
Worth. With respect to Hanover Capital Holdings or its Subsidiaries,
the ratio of Indebtedness to Tangible Net Worth shall not at any time
be greater than 10:1.
(3) Maintenance of Liquidity. Hanover Capital Holdings shall
ensure that, as of the end of each calendar month, it has Cash
Equivalents in an amount of not less than $2,500,000.
7.10 Borrowing Base Deficiency. If at any time there exists a
Borrowing Base Deficiency the Borrowers shall cure same in accordance
with Section 2.06 hereof.
7.11 Prohibition of Fundamental Changes. Neither Borrower nor
any of its Subsidiaries shall enter into any transaction of merger or
consolidation or amalgamation, or liquidate, wind up or dissolve itself
(or
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suffer any liquidation, winding up or dissolution) or sell all or
substantially all of its assets, without the prior written consent of
the Lender.
7.12 Limitation on Liens on Collateral. Each Borrower will
defend the Collateral against, and will take such other action as is
necessary to remove, any Lien, security interest or claim on or to the
Collateral, other than the security interests created under this Loan
Agreement, and each Borrower will defend the right, title and interest
of the Lender in and to any of the Collateral against the claims and
demands of all persons whomsoever.
7.13 Limitation on Transactions with Affiliates. Neither
Borrower nor any of its Subsidiaries shall enter into any transaction,
including, without limitation, any purchase, sale, lease or exchange of
property or the rendering of any service, with any Affiliate unless
such transaction is (a) not otherwise prohibited under this Loan
Agreement, (b) in the ordinary course of such Borrower's business and
(c) upon fair and reasonable terms no less favorable to such Borrower,
as the case may be, than it would obtain in a comparable arm's length
transaction with a Person which is not an Affiliate.
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7.14 Underwriting Guidelines. Without prior written consent of
the Lender, the Borrowers shall not amend or otherwise modify the
Underwriting Guidelines.
7.15 Limitations on Modifications, Waivers and Extensions of
Eligible Assets. The Borrowers will not, nor will they permit or allow
others to, amend, modify, terminate or waive any provision of any
Eligible Asset to which either Borrower is a party in any manner which
should reasonably be expected to materially and adversely affect the
value of such Eligible Asset as Collateral.
7.16 Servicing. The Borrowers shall not permit any Person
other than the Master Servicer to service Eligible Assets without the
prior written consent of the Lender.
7.17 Limitation on Distributions. After the occurrence and
during the continuation of any Event of Default, the Borrowers shall
not make any payment on account of, or set apart assets for, a sinking
or other analogous fund for the purchase, redemption, defeasance,
retirement or other acquisition of any equity or partnership interest
of either Borrower, whether now or hereafter outstanding, or make any
other distribution in respect
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thereof, either directly or indirectly, whether in cash or property or
in obligations of either Borrower.
7.18 Use of Proceeds. The Borrowers will use the proceeds of
the Advances solely to acquire, fund, manage and service the Eligible
Assets.
7.19 Restricted Payments. The Borrowers shall not make any
Restricted Payments.
7.20 Reports. With respect to Eligible Bonds, Underlying
Eligible Bonds or Participation Certificates, the Borrowers shall
promptly deliver to the Lender (i) any report received by or required
to be delivered (a) by any Person pursuant to the Governing Agreements
at the same time as required thereunder, or (b) to any holder of any
securities issued pursuant to the Governing Agreements; (ii) any notice
of transfer of servicing; and (iii) any other such document or
information as the Lender may reasonably request from time to time.
7.21 Inspection. The Borrowers shall permit the Lender, during
normal business hours and upon reasonable prior notice but in any event
within two (2) Business Days, to inspect their books and records
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relating to the Collateral and other matters relating to the
transactions contemplated hereby; provided, however, that in the event
a Default shall have occurred the Lender shall not be required to give
any prior notice.
7.22 Further Proceeds. If either Borrower shall become
entitled to receive or shall receive any rights, whether in addition
to, in substitution of, as a conversion of, or in exchange for the
Eligible Bonds or Pledged Stock, or otherwise in respect thereof, such
Borrower shall accept the same as the Lender's agent, hold the same in
trust for the Lender and deliver the same forthwith to the Lender in
the exact form received, duly endorsed by such Borrower to the Lender,
if required, together with an undated bond power covering such
certificate duly executed in blank and with, if the Lender so requests,
signature guaranteed, to be held by the Lender hereunder as additional
collateral security for the Secured Obligations. If any sums of money
or property so paid or distributed in respect of the Eligible Bonds or
Pledged Stock shall be received by a Borrower, such Borrower shall,
until such money or property is paid or delivered to the Lender as
required hereunder, hold such money or property in trust for the
Lender, segregated from other Advances of such Borrower, as additional
collateral security for the Secured Obligations.
7.23 Further Documentation. At any time and from time to time,
upon the written request of the Lender, and at the sole expense of
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the Borrowers, the Borrowers will promptly and duly execute and deliver
such further instruments and documents and take such further actions as
the Lender may reasonably request for the purposes of obtaining or
preserving the full benefits of this Loan Agreement and of the rights
and powers herein granted. If any amount payable under or in connection
with any of the Collateral shall be or become evidenced by any
instrument (including any certificated security or promissory note) or
chattel paper (in each case as defined in the UCC), such instrument or
chattel paper shall be immediately delivered to the Mortgage Custodian
or the Bond/PC Custodian, as applicable, on behalf of Lender, duly
endorsed in a manner satisfactory to Lender, to be held as Collateral
pursuant to this Loan Agreement. Prior to such delivery, the Borrowers
shall hold all such instruments or chattel paper in trust of the
Lender, and shall not commingle any of the foregoing with any assets of
the Borrowers.
7.24 Taxes. Each Borrower shall pay, and hold the Lender
harmless from, any and all liabilities with respect to, or resulting
from and delay in paying, any and all stamp, excise, sales or other
similar taxes which may be payable or determined to be payable with
except to any of the Collateral or in connection with any of the
transactions contemplated by this Loan Agreement.
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7.25 Lost Note Affidavits; Lost Instrument Affidavits . Each
Lost Note Affidavit or Lost Instrument Affidavit, as applicable,
delivered to the Lender hereunder shall (i) attach a copy of the
original Mortgage Note or, if available, a copy of the original
Participation Certificate, as applicable, certified by applicable
Borrower as a true, correct, and complete copy thereof, (ii) indemnify
the Lender, and (iii) remain effective for all the Borrowers' and
Lenders' successors and assigns.
7.26 Underlying Eligible Bonds . Each Borrower covenants and
agrees that: (i) it will not sell, transfer or otherwise dispose, or
permit any Eligible Entity to sell, assign or transfer or otherwise
dispose of any Underlying Eligible Bonds, without the written consent
of the Lender and (ii) it will not create or suffer to exist, or permit
any Eligible Entity to create or suffer to exist, any Lien upon the
Underlying Eligible Bonds, or pledge, option or otherwise encumber, or
permit any Eligible Entity to pledge, option or otherwise encumber the
Underlying Eligible Bonds, whether now owned or hereafter acquired.
7.27 Year 2000 Compliance. The Borrower shall take and shall
cause each of its Affiliates and any Subservicer to take all such
actions as are reasonably necessary to successfully implement the Year
2000 Program and to assure that the Year 2000 Issues will not have a
material
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adverse effect on the Borrower's or any Subservicer's operations or
financial condition. At the request of the Lender, the Borrower will
provide a description of the Year 2000 Program, together with any
updates or progress reports with respect thereto. The Borrower shall
provide the Lender with immediate notice in writing in the event that
the Borrower has reason to believe that the occurrence of the year 2000
will adversely affect the Borrower's or any Subservicer's business or
any Advances executed in connection herewith.
SECTION 8 Events of Default. Each of the following events
shall constitute an event of default (an "Event of Default") hereunder:
(1) Borrower Default in the Payment of any Advance. Either
Borrower shall default in the payment of any principal of or interest
on any Advance when due (whether at stated maturity, upon acceleration
or at mandatory payment); or
(2) Borrower Default in the Payment of Other Amount. Either
Borrower shall default in the payment of any other amount payable by it
hereunder or under any other Loan Document, and such default shall have
continued unremedied for three (3) Business Days; or
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(3) Failure of Representation or Warranty. Any representation,
warranty or certification made or deemed made by either Borrower herein
(other than those in Schedule 1 hereto) or by either Borrower in any
other Loan Document or any certificate furnished to the Lender pursuant
to the provisions thereof, shall prove to have been false or misleading
in any material respect as of the time made or furnished; or
(4) Default of Covenant. Either Borrower shall:
(1) fail to comply with the requirements of Section 7 hereof
(other than Sections 7.01 (to the extent applicable to such
Borrower), 7.02(b), 7.02(d), 7.03, or 7.08),
(2) fail to comply with the requirements of Sections 7.01(to
the extent applicable to such Borrower), 7.02(b), 7.02(d),
7.03, or 7.08 and such default shall continue unremedied for a
period of five (5) Business Days, or
(3) fail to observe or perform any other covenant, condition
or agreement contained in this Loan Agreement or any other
Loan Document and such failure to observe
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or perform shall continue unremedied for a period of seven (7)
Business Days; or
(5) Cross Default. Either Borrower or any of its Subsidiaries
shall:
(1) default in any payment of principal of or interest on any
Indebtedness (other than the Advances) or in the payment of
any Guarantee Obligation, beyond the period of grace (not to
exceed 30 days), if any, provided in the instrument or
agreement under which such Indebtedness or Guarantee
Obligation was created, if the aggregate amount of the
Indebtedness and/or Guarantee Obligations in respect of which
such default or defaults shall have occurred is $250,000 or
more; or
(2) default in the observance or performance of any other
agreement or condition relating to any Indebtedness (other
than the Advances) or Guarantee Obligation or contained in any
instrument or agreement evidencing, securing or relating
thereto, in each case beyond the period of grace (not to
exceed 30 days), if any, provided
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in the instrument or agreement under which such Indebtedness
or Guarantee Obligation was created; or
(3) permit any other event to occur or condition exist; or
(4) default with respect to any other agreement between such
Borrower, on the one hand, and Lender or any of its Affiliates
on the other hand, which has not been waived by the Lender,
the effect of which default or other event or condition is to cause, or give the
holder or holders of such Indebtedness or the beneficiary or beneficiaries of
such Guarantee Obligation (or a trustee or agent on behalf of such holder or
holders or beneficiary or beneficiaries) the immediate right to cause, with the
giving of notice if required, such Indebtedness to become due prior to its
stated maturity or such Guarantee Obligation to become payable; or
(6) Unsatisfied Judgment. One or more judgments or decrees shall be
entered against either Borrower or against either Borrower in the aggregate or
any of its Subsidiaries involving in the aggregate a liability (not paid or
fully covered by insurance) of $1,000,000 or more, and all such judgments or
decrees shall not have been vacated, discharged, stayed or bonded pending appeal
within 60 days from the entry thereof; or
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(7) Inability to Pay Debts. Either Borrower shall admit in writing its
inability to pay its debts as such debts become due; or
(8) Voluntary Bankruptcy Event. Either Borrower or any of its
Subsidiaries shall (i) apply for or consent to the appointment of, or the taking
of possession by, a receiver, custodian, trustee, examiner or liquidator of
itself or of all or a substantial part of its property, (ii) make a general
assignment for the benefit of its creditors, (iii) commence a voluntary case
under the Bankruptcy Code, (iv) file a petition seeking to take advantage of any
other law relating to bankruptcy, insolvency, reorganization, liquidation,
dissolution, arrangement or winding-up, or composition or readjustment of debts,
(v) fail to controvert in a timely and appropriate manner, or acquiesce in
writing to, any petition filed against it in an involuntary case under the
Bankruptcy Code or (vi) take any corporate or other action for the purpose of
effecting any of the foregoing; or
(9) Involuntary Bankruptcy Event. A proceeding or case shall be
commenced, without the application or consent of the related Borrower or any of
its Subsidiaries, in any court of competent jurisdiction, seeking (i) its
reorganization, liquidation, dissolution, arrangement or winding-up, or the
composition or readjustment of its debts, (ii) the appointment of a receiver,
custodian, trustee, examiner, liquidator or the like of the related Borrower or
any such Subsidiary or of all or any substantial part of its property, or (iii)
similar relief in respect of the related Borrower or any such Subsidiary under
any law relating to bankruptcy, insolvency,
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reorganization, winding-up, or composition or adjustment of debts, and such
proceeding or case shall continue undismissed, or an order, judgment or decree
approving or ordering any of the foregoing shall be entered and continue
unstayed and in effect, for a period of 60 or more days; or an order for relief
against the related Borrower or any such Subsidiary shall be entered in an
involuntary case under the Bankruptcy Code; or
(10) Termination of Loan Documents. The Mortgage Custodial Agreement,
the Bond/PC Custodial Agreement, or any other Loan Document, shall for whatever
reason be terminated or cease to be in full force and effect, or the
enforceability thereof shall be contested by any party thereto; or
(11) ERISA Default. (i) any Person shall engage in any "prohibited
transaction" (as defined in Section 406 of ERISA or Section 4975 of the Code)
involving any Plan, (ii) any "accumulated funding deficiency" (as defined in
Section 302 of ERISA), whether or not waived, shall exist with respect to any
Plan or any Lien in favor of the PBGC or a Plan shall arise on the assets of a
Borrower or any Commonly Controlled Entity, (iii) a Reportable Event shall occur
with respect to, or proceedings shall commence to have a trustee appointed, or a
trustee shall be appointed, to administer or to terminate, any Single Employer
Plan, which Reportable Event or commencement of proceedings or appointment of a
trustee is, in the reasonable opinion of the Lender, likely to result in the
termination of such Plan for purposes of Title IV of ERISA, (iv) any Single
Employer Plan shall terminate for purposes of Title IV of ERISA, (v) either
Borrower or any Commonly Controlled Entity shall, or in the reasonable opinion
of the Lenders is likely
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to, incur any liability in connection with a withdrawal from, or the insolvency
or reorganization of, a Multiemployer Plan or (vi) any other event or condition
shall occur or exist with respect to a Plan; and in each case in clauses (i)
through (vi) above, such event or condition, together with all other such events
or conditions, if any, could reasonably be expected to have a Material Adverse
Effect; or
(12) Material Adverse Effect. Any other event shall occur which, in the
sole good faith discretion of the Lender, may have a Material Adverse Effect; or
(13) Change of Control. Any Change of Control of either Borrower shall
have occurred; or
(14) Pre-Existing Condition. The discovery by the Lender during its
continuing due diligence of the Borrowers of a condition or event and which the
Lender, in its sole reasonable discretion, determines materially and adversely
affects: (i) the condition (financial or otherwise) of either Borrower, its
Subsidiaries or Affiliates; or (ii) the ability of the Borrower or the Lender to
fulfill their respective obligations under this Agreement; or
(15) Other Liens. Either Borrower shall grant, or suffer to exist, any
Lien on any Collateral except the Liens contemplated hereby; or the Liens
contemplated hereby shall cease to be first priority perfected Liens on the
Collateral in favor of the Lender or shall be Liens in favor of any Person other
than the Lender; or
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(16) Failure to Answer. The Lender shall reasonably request, specifying
the reasons for such request, information, and/or written responses to such
requests, regarding the financial well-being of either Borrower and such
information and/or responses shall not have been provided within three Business
Days of such request.
SECTION 9 Remedies Upon Default.
(1) Upon the occurrence of one or more Events of Default other than
those referred to in Sections 8(h) or (i), and in addition to the remedies
provided in Section 4.07 hereof and otherwise provided in this Loan Agreement,
the Lender may immediately declare the principal amount of the Advances then
outstanding under the Note to be immediately due and payable, together with all
interest thereon and fees and expenses accruing under this Loan Agreement. Upon
the occurrence of an Event of Default referred to in Sections 8(h) or (i), and
in addition to the remedies provided in Section 4.07 hereof and otherwise
provided in this Loan Agreement, such amounts shall immediately and
automatically become due and payable without any further action by any Person.
Upon such declaration or such automatic acceleration, the balance then
outstanding on the Note shall become immediately due and payable, without
presentment, demand, protest or other formalities of any kind, all of which are
hereby expressly waived by the Borrowers and the Lender may thereupon exercise
any remedies available to it at law and pursuant to the Loan Agreement.
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(2) Upon the occurrence of one or more Events of Default, and in
addition to the remedies provided in Section 4.07 hereof and otherwise provided
in this Loan Agreement, the Lender shall have the right to obtain physical
possession of the Servicing Records and all other files of the Borrowers
relating to the Collateral and all documents relating to the Collateral which
are then or may thereafter come in to the possession of the Borrowers or any
third party acting for a Borrower and the Borrowers shall deliver to the Lender
such assignments as the Lender shall request. The Borrowers shall be responsible
for paying any fees of any Subservicer resulting from the termination of a
Subservicer which is an Affiliate of a Borrower due to an Event of Default. The
Lender shall be entitled to specific performance of all agreements of the
Borrowers contained in this Loan Agreement.
SECTION 10 No Duty of Lender. The powers conferred on the Lender
hereunder are solely to protect the Lender's interests in the Collateral and
shall not impose any duty upon it to exercise any such powers. The Lender shall
be accountable only for amounts that it actually receives as a result of the
exercise of such powers, and neither it nor any of its officers, directors,
employees or agents shall be responsible to the Borrowers for any act or failure
to act hereunder, except for its or their own gross negligence or willful
misconduct.
SECTION 11 Miscellaneous.
11.1 Waiver. No failure on the part of the Lender to exercise and no
delay in exercising, and no course of dealing with respect to, any right, power
or privilege under any Loan
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Document shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, power or privilege under any Loan Document preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. The remedies provided herein are cumulative and not exclusive of any
remedies provided by law.
11.2 Notices. Except as otherwise expressly permitted by this Loan
Agreement, all notices, requests and other communications provided for herein
and under the Mortgage Custodial Agreement (including without limitation any
modifications of, or waivers, requests or consents under, this Loan Agreement)
shall be given or made in writing (including without limitation by telex or
telecopy) delivered to the intended recipient at the "Address for Notices"
specified below its name on the signature pages hereof or thereof); or, as to
any party, at such other address as shall be designated by such party in a
written notice to each other party. Except as otherwise provided in this Loan
Agreement and except for notices given under Section 2 (which shall be effective
only on receipt), all such communications shall be deemed to have been duly
given when transmitted by telex or telecopy or personally delivered or, in the
case of a mailed notice, upon receipt, in each case given or addressed as
aforesaid.
11.3 Indemnification and Expenses.
(1) The Borrowers agrees to hold the Lender and each of its officers,
directors, agents and employees (each, an "Indemnified Party") harmless from and
indemnify each Indemnified Party against all liabilities, losses, damages,
judgments, costs and expenses of any kind which
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may be imposed on, incurred by or asserted against such Indemnified Party in any
suit, action, claim or proceeding relating to or arising out of this Loan
Agreement, the Note, any other Loan Document or any transaction contemplated
hereby or thereby, or any amendment, supplement or modification of, or any
waiver or consent under or in respect of, this Loan Agreement, the Note, any
other Loan Document or any transaction contemplated hereby or thereby, except,
in each case, to the extent arising from such Indemnified Party's gross
negligence or willful misconduct. In any suit, proceeding or action brought by
the Lender in connection with any Eligible Asset for any sum owing thereunder,
or to enforce any provisions of any such Eligible Asset, the Borrowers will
save, indemnify and hold the Lender harmless from and against all expense, loss
or damage suffered by reason of any defense, set-off, counterclaim, recoupment
or reduction or liability whatsoever of the account debtor or obligor
thereunder, arising out of a breach by a Borrower of any obligation thereunder
or arising out of any other agreement, indebtedness or liability at any time
owing to or in favor of such account debtor or obligor or its successors from a
Borrower. The Borrowers also agree to reimburse the Lender as and when billed by
the Lender for all the Lender's costs and expenses incurred in connection with
the enforcement or the preservation of the Lender's rights under this Loan
Agreement, the Note, any other Loan Document or any transaction contemplated
hereby or thereby, including without limitation the fees and disbursements of
its counsel (including all fees and disbursements incurred in any action or
proceeding between a Borrower and an Indemnified Party or between an Indemnified
Party and any third party relating hereto). The Borrowers hereby acknowledges
that, notwithstanding the fact that the Note is secured by the Collateral, the
obligations of the Borrowers under the Note are recourse obligations of the
Borrowers.
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(2) The Borrowers agree to pay as and when billed by the Lender all of
the out-of-pocket costs and expenses incurred by the Lender in connection with
the development, preparation and execution of, and any amendment, supplement or
modification to, this Loan Agreement, the Note, any other Loan Document or any
other documents prepared in connection herewith or therewith, and the
consummation and administration of the transactions contemplated hereby and
thereby, including without limitation (i) all the reasonable fees, disbursements
and expenses of counsel to the Lender not to exceed $30,000 (provided that such
cap shall not include amendments to the initial Master Loan and Security
Agreement dated as of March 30, 1998 between the Lender and Hanover Capital
Holdings or any amended and restated version of such agreement) which amounts
shall be paid promptly by the Borrowers or may be netted out of any Advances
made by Lender, and (ii) all the due diligence, inspection, testing and review
costs and expenses incurred by the Lender with respect to Collateral under this
Loan Agreement as set forth in Section 11.16 hereof.
11.4 Amendments. Except as otherwise expressly provided in this Loan
Agreement, any provision of this Loan Agreement may be modified or supplemented
only by an instrument in writing signed by the Borrowers and the Lender and any
provision of this Loan Agreement may be waived by the Lender.
11.5 Successors and Assigns. This Loan Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and permitted assigns.
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11.6 Survival. The obligations of the Borrowers under Section 11.03
hereof shall survive the repayment of the Advances and the termination of this
Loan Agreement. In addition, each representation and warranty made or deemed to
be made by a request for a borrowing herein or pursuant hereto shall survive the
making of such representation and warranty, and the Lender shall not be deemed
to have waived, by reason of making any Advance, any Default that may arise
because any such representation or warranty shall have proved to be false or
misleading, notwithstanding that the Lender may have had notice or knowledge or
reason to believe that such representation or warranty was false or misleading
at the time such Advance was made.
11.7 Captions. The table of contents and captions and section headings
appearing herein are included solely for convenience of reference and are not
intended to affect the interpretation of any provision of this Loan Agreement.
11.8 Counterparts. This Loan Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and any of the parties hereto may execute this Loan Agreement by
signing any such counterpart.
11.9 GOVERNING LAW; ETC. THIS LOAN AGREEMENT SHALL BE GOVERNED BY THE
LAW OF THE STATE OF NEW YORK WITHOUT REFERENCE TO CHOICE OF LAW DOCTRINE (BUT
WITH REFERENCE TO SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW, WHICH
BY ITS TERMS APPLIES TO THIS
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LOAN AGREEMENT), AND SHALL CONSTITUTE A SECURITY AGREEMENT WITHIN THE MEANING OF
THE UNIFORM COMMERCIAL CODE.
11.10 SUBMISSION TO JURISDICTION; WAIVERS. EACH BORROWER HEREBY
IRREVOCABLY AND UNCONDITIONALLY:
(1) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS LOAN AGREEMENT, THE NOTE AND THE OTHER LOAN
DOCUMENTS, OR FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN
RESPECT THEREOF, TO THE NON-EXCLUSIVE GENERAL JURISDICTION OF THE
COURTS OF THE STATE OF NEW YORK, THE FEDERAL COURTS OF THE UNITED
STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND APPELLATE
COURTS FROM ANY THEREOF;
(2) CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT
IN SUCH COURTS AND, TO THE EXTENT PERMITTED BY LAW, WAIVES ANY
OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH
ACTION OR PROCEEDING IN ANY SUCH COURT OR THAT SUCH ACTION OR
PROCEEDING WAS BROUGHT IN AN INCONVENIENT COURT AND AGREES NOT TO PLEAD
OR CLAIM THE SAME;
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(3) AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR
PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR
CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE
PREPAID, TO ITS ADDRESS SET FORTH UNDER ITS SIGNATURE BELOW OR AT SUCH
OTHER ADDRESS OF WHICH THE LENDER SHALL HAVE BEEN NOTIFIED; AND
(4) AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO
EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL
LIMIT THE RIGHT TO XXX IN ANY OTHER JURISDICTION.
11.11 WAIVER OF JURY TRIAL. EACH OF THE BORROWERS AND THE LENDER HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND
ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO
THIS LOAN AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY.
11.12 Acknowledgments. Each Borrower hereby acknowledges that:
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(1) it has been advised by counsel in the negotiation, execution and
delivery of this Loan Agreement, the Note and the other Loan Documents;
(2) the Lender has no fiduciary relationship to the Borrower, and the
relationship between the Borrower and the Lender is solely that of debtor and
creditor; and
(3) no joint venture exists between the Lender and the Borrower.
11.13 Hypothecation and Pledge of Collateral. The Lender shall have
free and unrestricted use of all Collateral and nothing in this Loan Agreement
or in Section 9-207(2)(e) of the UCC shall preclude the Lender from engaging in
repurchase transactions with the Collateral or otherwise pledging, repledging,
transferring, hypothecating, or rehypothecating the Collateral, provided that,
the Lender shall return the Collateral in accordance with this Agreement if the
Borrowers comply with the terms of this Agreement. Nothing contained in this
Loan Agreement shall obligate the Lender to segregate, or cause the Mortgage
Custodian or the Bond/PC Custodian to segregate, any Collateral delivered to the
Lender, the Bond/PC Custodian, or the Mortgage Custodian by the Borrowers.
11.14 Assignments; Participations.
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(1) The Borrowers may assign any of its rights or obligations hereunder
or under the Note with the prior written consent of the Lender. The Lender may
assign or transfer to any bank or other financial institution that makes or
invests in loans or any Affiliate of the Lender all or any of its rights or
obligations under this Loan Agreement and the other Loan Documents.
(2) The Lender may, in accordance with applicable law, at any time sell
to one or more lenders or other entities ("Participants") participating
interests in any Advance, the Note, its commitment to make Advances, or any
other interest of the Lender hereunder and under the other Loan Documents. In
the event of any such sale by the Lender of participating interests to a
Participant, the Lender's obligations under this Loan Agreement to the Borrowers
shall remain unchanged, the Lender shall remain solely responsible for the
performance thereof, the Lender shall remain the holder of the Note for all
purposes under this Loan Agreement and the other Loan Documents, and the
Borrowers and the Lender shall continue to deal solely and directly with the
Lender in connection with the Lender's rights and obligations under this Loan
Agreement and the other Loan Documents. The Borrowers agree that if amounts
outstanding under this Loan Agreement and the Note are due or unpaid, or shall
have been declared or shall have become due and payable upon the occurrence of
an Event of Default, each Participant shall be deemed to have the right of
set-off in respect of its participating interest in amounts owing under this
Loan Agreement and the Note to the same extent as if the amount of its
participating interest were owing directly to it as a Lender under this Loan
Agreement or the Note; provided, that such Participant shall only be entitled to
such right of set-off if it shall have agreed in the agreement pursuant to which
it shall have acquired its participating interest to share with the
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Lender the proceeds thereof. The Lender also agrees that each Participant shall
be entitled to the benefits of Sections 2.08 and 11.03 with respect to its
participation in the Advances outstanding from time to time; provided, that the
Lender and all Participants shall be entitled to receive no greater amount in
the aggregate pursuant to such Sections than the Lender would have been entitled
to receive had no such transfer occurred.
(3) The Lender may furnish any information concerning the Borrowers or
any of their Subsidiaries in the possession of such Lender from time to time to
assignees and participants (including prospective assignees and participants).
(4) Each Borrower agrees to cooperate with the Lender in connection
with any such assignment and/or participation, to execute and deliver such
replacement notes, and to enter into such restatements of, and amendments,
supplements and other modifications to, this Loan Agreement and the other Loan
Documents in order to give effect to such assignment and/or participation.
11.15 Servicing. With respect to Eligible Assets which are Mortgage
Loans:
(1) Each Borrower covenants to maintain or cause the servicing of the
Mortgage Loans to be maintained in conformity with accepted customary and
prudent servicing practices in the industry for the same type of mortgage loans
as the Mortgage Loans and in a manner at least equal in quality to the servicing
the Borrowers or the Borrowers' designee provides for Mortgage
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Loans which they own ("Accepted Servicing Practices"). In the event that the
preceding language is interpreted as constituting one or more servicing
contracts, each such servicing contract shall terminate automatically upon the
earlier of (i) an Event of Default, or (ii) the Termination Date.
(2) If the Mortgage Loans are serviced by either Borrower, such
Borrower agrees that the Lender is the collateral assignee of all servicing
records, including but not limited to any and all servicing agreements, files,
documents, records, data bases, computer tapes, copies of computer tapes, proof
of insurance coverage, insurance policies, appraisals, other closing
documentation, payment history records, and any other records relating to or
evidencing the servicing of Mortgage Loans (the "Servicing Records"), and (ii)
such Borrower grants the Lender a security interest in all of such Borrower's
rights relating to the Mortgage Loans and all Servicing Records to secure the
obligation of such Borrower or its designee to service in conformity with this
Section and any other obligation of such Borrower to the Lender. The Borrowers
covenant to safeguard such Servicing Records and to deliver them promptly to the
Lender or its designee (including the Mortgage Custodian) at the Lender's
request.
(3) If the Mortgage Loans or Underlying Mortgage Loans are serviced by
a third party servicer, (such third party servicer, the "Subservicer"), the
Borrowers shall provide a copy of the servicing agreement to the Lender at least
three (3) Business Days prior to the applicable Funding Date, which shall be in
form and substance acceptable to the Lender (the "Servicing Agreement").
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(4) Each Borrower shall provide to the Lender a letter from such
Borrower or any Subservicer which is an Affiliate of such Borrower (which may be
part of the Instruction Letter), as the case may be, to the effect that upon the
occurrence of an Event of Default, the Lender may terminate any Servicing
Agreement and transfer servicing to its designee, at no cost or expense to the
Lender, it being agreed that the Borrowers will pay any and all fees required to
terminate the Servicing Agreement and to effectuate the transfer of servicing to
the designee of the Lender.
(5) After the Funding Date, until the pledge of any Mortgage Loan is
relinquished by the Mortgage Custodian, the Borrowers will have no right to
modify or alter the terms of such Mortgage Loan except with the prior written
consent of the Lender, and the Borrowers will have no obligation or right to
repossess such Mortgage Loan or substitute another Mortgage Loan, except as
provided in the Mortgage Custodial Agreement; provided, that the Borrowers may
enter into forbearance agreements or plans with Mortgagors consistent with its
collection activities as servicer of the Mortgage Loans and in conformity with
Accepted Servicing Practices.
(6) The Borrowers shall permit the Lender to inspect the servicing
facilities of the Borrowers, their Affiliates, or any Subservicer which is its
Affiliate of a Borrower as the case may be, for the purpose of satisfying the
Lender that the Borrowers, an Affiliate, or such Subservicer, as the case may
be, has the ability to service the Mortgage Loans as provided in this
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Loan Agreement. With respect to any Subservicer which is not an Affiliate, the
Borrowers shall use their best efforts to enable the Lender to inspect the
servicing facilities of such Subservicer.
11.16 Periodic Due Diligence Review. Each Borrower acknowledges that
the Lender has the right to perform continuing due diligence reviews with
respect to the Eligible Assets, for purposes of verifying compliance with the
representations, warranties and specifications made hereunder, or otherwise, and
each Borrower agrees that upon reasonable (but no less than one (1) Business
Day's) prior notice to such Borrower (which prior notice shall not be required
after the occurrence and during the continuation of a Default), the Lender or
its authorized representatives will be permitted during normal business hours to
examine, inspect, and make copies and extracts of, the Asset Files and any and
all documents, records, agreements, instruments or information relating to such
Eligible Assets in the possession or under the control of such Borrower, the
Master Servicer, any Subservicer, and/or the Mortgage Custodian. Each Borrower
also shall make available to the Lender a knowledgeable financial or accounting
officer for the purpose of answering questions respecting the Asset Files and
the Eligible Assets. Without limiting the generality of the foregoing, each
Borrower acknowledges that the Lender may make Advances to the Borrower based
solely upon the information provided by such Borrower to the Lender and the
representations, warranties and covenants contained herein, and that the Lender,
at its option, has the right at any time to conduct a partial or complete due
diligence review on some or all of the Eligible Assets securing such Advance,
including without limitation ordering new credit reports and, with respect to
Eligible Assets which are Mortgage Loans, new appraisals on the related
Mortgaged Properties and otherwise re-generating the information used to
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originate such Mortgage Loan. The Lender may underwrite such Eligible Assets
itself or engage a mutually agreed upon third party underwriter to perform such
underwriting. Each Borrower agrees to cooperate with the Lender and any third
party underwriter in connection with such underwriting, including, but not
limited to, providing the Lender and any third party underwriter with access to
any and all documents, records, agreements, instruments or information relating
to such Eligible Assets in the possession, or under the control, of such
Borrower, the Master Servicer, any Subservicer. In addition, the Lender has the
right to perform continuing Due Diligence Reviews of the Borrowers, the Master
Servicer, any Subservicer, and their Affiliates, directors, officers, employees
and significant shareholders. The Borrowers and Lender further agree that all
out-of-pocket costs and expenses incurred by the Lender in connection with the
Lender's activities pursuant to this Section 11.16 shall be paid for by the
Borrowers.
11.17 Set-Off. In addition to any rights and remedies of the Lender
provided by this Loan Agreement and by law, the Lender shall have the right,
without prior notice to the Borrowers, any such notice being expressly waived by
the Borrowers to the extent permitted by applicable law, upon any amount
becoming due and payable by the Borrowers hereunder (whether at the stated
maturity, by acceleration or otherwise) to set-off and appropriate and apply
against such amount any and all property and deposits (general or special, time
or demand, provisional or final), in any currency, and any other credits,
indebtedness or claims, in any currency, in each case whether direct or
indirect, absolute or contingent, matured or unmatured, at any time held or
owing by the Lender or any Affiliate thereof to or for the credit or the account
of either Borrower. The Lender agrees promptly to notify the related Borrower
after any such
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set-off and application made by the Lender; provided that the failure to give
such notice shall not affect the validity of such set-off and application.
11.18 Joint and Several Liability. The Borrowers hereby acknowledge and
agree that they will be jointly and severally liable to the Lender for all
representations, warranties, covenants, obligations and liabilities of the
Borrowers hereunder.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have caused this Loan Agreement
to be duly executed and delivered as of the day and year first above written.
BORROWER
HANOVER CAPITAL MORTGAGE
HOLDINGS, INC.
By:
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Title:
Address for Notices:
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Attention:
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Telecopier No.:
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Telephone No.:
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BORROWER
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HANOVER CAPITAL PARTNERS, LTD.
By:
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Title:
Address for Notices:
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Attention:
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Telecopier No.:
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Telephone No.:
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LENDER
GREENWICH CAPITAL FINANCIAL
PRODUCTS, INC.
By:
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Title: Vice President
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Address for Notices:
000 Xxxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxx Xxxxxxxx
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
With a copy to:
Attention: General Counsel
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
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Exhibit 10.31
SCHEDULE 1
REPRESENTATIONS AND WARRANTIES RE: ELIGIBLE ASSETS
Part I. Eligible Mortgage Loans and Underlying Mortgage Loans
As to each Mortgage Loan included in the Borrowing Base on a
Funding Date (and the related Mortgaged Property) and the
Underlying Mortgage Loan represented by each Participation
Certificate included in the Borrowing Base on a Funding Date,
the Borrowers shall be deemed to make the following
representations and warranties to the Lender on and as of such
Funding Date and at all times thereafter while such Mortgage
Loan or Underlying Mortgage Loan is included in the Borrowing
Base (with respect to any representations and warranties made
to the best of the Borrower's knowledge, in the event that it
is discovered that the circumstances with respect to the
related Mortgage Loan are not accurately reflected in such
representation and warranty notwithstanding the knowledge or
lack of knowledge of the Borrowers, then, notwithstanding that
such representation and warranty is made to the best of the
Borrowers' knowledge, such Mortgage Loan shall be assigned a
Collateral Value in accordance with the definition thereof in
the Loan Agreement). For purposes of this Part I of Schedule 1
only, all references to Mortgage Loan, Mortgage Note,
Mortgagor, Mortgaged Property, or other similar terms shall be
deemed to include the Underlying Mortgage Loan, Underlying
Mortgage
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Note, Underlying Mortgagor, the property securing the
Underlying Mortgage Loan, or other related terms.
(a) Mortgage Loans as Described. The information set
forth in the Mortgage Loan Schedule accompanying the related
Notice of Borrowing and Pledge is true and correct;
(b) Payments Current. On the applicable Funding Date, and all
other times:
(i) such Mortgage Loan is not thirty (30) days or more
past due in respect of the first Scheduled Payment;
(ii) other than Delinquent Mortgage Loans subject to
subsections (i) and (ii) of the definition of Collateral Value
herein, such Mortgage Loan is not thirty (30) days or more
past due in respect of any Scheduled Payment;
(iii) no Delinquent Mortgage Loan is ninety (90) days or
more past due in respect of any Scheduled Payment.
(c) No Outstanding Charges. There are no defaults in complying
with the terms of the Mortgage, and all taxes, governmental
assessments, insurance premiums, water, sewer and municipal
charges, leasehold payments or ground rents which previously
became due and owing have been paid, or an escrow of funds has
been established in an amount sufficient to pay for every such
item
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which remains unpaid and which has been assessed but is not
yet due and payable. The Borrower has not advanced funds, or
induced, solicited or knowingly received any advance of funds
by a party other than the Mortgagor, directly or indirectly,
for the payment of any amount required under the Mortgage
Loan, except for interest accruing from the date of the
Mortgage Note or date of disbursement of the Mortgage Loan
proceeds, whichever is more recent, to the day which precedes
by one month the Due Date of the first installment of
principal and interest;
(d) Original Terms Unmodified. The terms of the Mortgage Note
and Mortgage have not been impaired, waived, altered or
modified in any respect, except by a written instrument which
has been recorded, if necessary to protect the interests of the
Lender and which has been delivered to the Mortgage Custodian.
The substance of any such waiver, alteration or modification
has been approved by the title insurer, to the extent required
by the policy. No Mortgagor has been released, in whole or in
part, except in connection with an assumption agreement
approved by the title insurer, to the extent required by the
policy, and which assumption agreement is part of the Asset
File delivered to the Mortgage Custodian and the terms of which
are reflected in the Mortgage Loan Schedule;
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(e) No Defenses. The Mortgage Loan is not subject to any right
of rescission, set-off, counterclaim or defense, including
without limitation the defense of usury, nor will the operation
of any of the terms of the Mortgage Note or the Mortgage, or
the exercise of any right thereunder, render either the
Mortgage Note or the Mortgage unenforceable, in whole or in
part, and no such right of rescission, set-off, counterclaim or
defense has been asserted with respect thereto; and no
Mortgagor was a debtor in any state or federal bankruptcy or
insolvency proceeding at the time the Mortgage Loan was
originated;
(f) Hazard Insurance. Pursuant to the terms of the Mortgage,
all buildings or other improvements upon the Mortgaged Property
are insured by an insurer who meets Xxxxxx Xxx and/or Xxxxxxx
Mac guidelines against loss by fire, hazards of extended
coverage and such other hazards as are customary in the area
where the Mortgaged Property is located pursuant to insurance
policies conforming to the requirements of the Underwriting
Guidelines. If upon origination of the Mortgage Loan, the
Mortgaged Property was in an area identified in the Federal
Register by the Federal Emergency Management Agency as having
special flood hazards (and such flood insurance was required by
federal regulation and such flood insurance has been made
available) a flood insurance policy meeting the requirements of
the current guidelines of the Federal Insurance Administration
is in effect. All individual insurance policies
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contain a standard mortgagee clause naming the loan originator
or the Borrower and its respective successors and assigns as
mortgagee, and all premiums thereon have been paid. The
Mortgage obligates the Mortgagor thereunder to maintain the
hazard insurance policy at the Mortgagor's cost and expense,
and on the Mortgagor's failure to do so, authorizes the holder
of the Mortgage to obtain and maintain such insurance at such
Mortgagor's cost and expense, and to seek reimbursement
therefor from the Mortgagor. Where required by state law or
regulation, the Mortgagor has been given an opportunity to
choose the carrier of the required hazard insurance, provided
the policy is not a "master" or "blanket" hazard insurance
policy covering a condominium, or any hazard insurance policy
covering the common facilities of a planned unit development.
The hazard insurance policy is the valid and binding
obligation of the insurer, is in full force and effect, and
will be in full force and effect and inure to the benefit of
the Lender upon the consummation of the transactions
contemplated by this Loan Agreement. The Borrower has not
engaged in, and has no knowledge of the Mortgagor's having
engaged in, any act or omission which would impair the
coverage of any such policy, the benefits of the endorsement
provided for herein, or the validity and binding effect of
either including, without limitation, no unlawful fee,
commission, kickback or other unlawful compensation or value
of any kind has been or will be received, retained or realized
by an attorney, firm or other person or entity
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and no such unlawful items have been received, retained or
realized by the related Borrower;
(g) Compliance with Applicable Laws. Any and all requirements
of any federal, state or local law including, without
limitation, usury, truth-in-lending, real estate settlement
procedures, consumer credit protection, equal credit
opportunity or disclosure laws applicable to the Mortgage Loan
have been complied with in all material respects, the
consummation by the related Borrower of the transactions
contemplated hereby will not involve the violation of any such
laws or regulations, and the Borrowers shall maintain in its
possession, available for the Lender's inspection, to the
extent required by law, and shall deliver to the Lender upon
demand, evidence of compliance with all such requirements;
(h) No Satisfaction of Mortgage. The Mortgage has not been
satisfied, canceled, subordinated or rescinded, in whole or in
part, and the Mortgaged Property has not been released from the
lien of the Mortgage, in whole or in part, nor has any
instrument been executed that would effect any such release,
cancellation, subordination or rescission. The Borrowers have
not waived the performance by the Mortgagor of any action, if
the Mortgagor's failure to perform such action would cause the
Mortgage Loan to be in default, nor have
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the Borrowers waived any default resulting from any acting or
inaction by the Mortgagor;
(i) Location and Type of Mortgaged Property. The Mortgaged
Property is located in the state identified in the Mortgage
Loan Schedule and consists of a parcel of real property with a
detached single family residence erected thereon, or a two- to
four-family dwelling, or an individual condominium unit in a
low-rise condominium project, or an individual unit in a
planned unit development or a de minimis planned unit
development, provided, however, that no residence or dwelling
is a mobile home or a manufactured dwelling. No portion of the
Mortgaged Property is used for commercial purposes;
(j) Valid First Lien. The Mortgage is a valid, subsisting,
enforceable, and perfected first lien on the Mortgaged
Property, including all buildings on the Mortgaged Property and
all installations and mechanical, electrical, plumbing, heating
and air conditioning systems located in or annexed to such
buildings, and all additions, alterations and replacements made
at any time with respect to the foregoing. The lien of the
Mortgage is subject only to: (i) the lien of current real
property taxes and assessments not yet due and payable; (ii)
covenants, conditions and restrictions, rights of way,
easements and other matters of the public record as of the date
of recording acceptable to mortgage lending institutions
generally and specifically referred to in the lender's title
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insurance policy delivered to the originator of the Mortgage
Loan and (A) referred to or to otherwise considered in the
appraisal (if any) made for the originator of the Mortgage Loan
or (B) which do not adversely affect the appraised value of the
Mortgaged Property set forth in such appraisal; and (iii) other
matters to which like properties are commonly subject which do
not materially interfere with the benefits of the security
intended to be provided by the Mortgage or the use, enjoyment,
value or marketability of the related Mortgaged Property. Any
security agreement, chattel mortgage or equivalent document
related to and delivered in connection with the Mortgage Loan
establishes and creates a valid, subsisting and enforceable
first lien and first priority security interest on the property
described therein and the related Borrower has full right to
sell and assign the same to the Lender. The Mortgaged Property
was not, as of the date of origination of the Mortgage Loan,
subject to a mortgage, deed of trust, deed to secure debt or
other security instrument creating a lien subordinate to the
lien of the Mortgage;
(k) Validity of Mortgage Documents. The Mortgage Note, the
Mortgage and any other agreement executed and delivered by a
Mortgagor in connection with a Mortgage Loan are genuine, and
each is the legal, valid and binding obligation of the maker
thereof enforceable in accordance with its terms. All parties
to the Mortgage Note, the Mortgage and any other related
agreement had legal capacity to enter into the Mortgage Loan
and to execute and deliver
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the Mortgage Note, the Mortgage and any such agreement, and
the Mortgage Note, the Mortgage, and any other such related
agreement have been duly and properly executed by such
parties. The Borrower has reviewed all of the documents
constituting the Asset File and have made such inquiries as
they deem necessary to make and confirm the accuracy of the
representations set forth herein;
(l) Full Disbursement of Proceeds. The proceeds of the
Mortgage Loan have been fully disbursed and there is no
requirement for future advances thereunder (except in the case
of a Mortgage Loan a portion of the proceeds of which has been
disbursed to an escrow account in connection with improvements
to be made to the related Mortgaged Property where (i) the
Mortgage Loan bears interest on the entire principal amount
thereof as if it had been fully disbursed, (ii) any proceeds of
such Mortgage Loan have not been held in such an escrow account
for more than sixty (60) days, and (iii) the deposit of funds
into such an escrow account has been effected in accordance
with the Underwriting Guidelines) and any and all requirements
as to completion of any on-site or off-site improvement and as
to disbursements of any escrow funds therefor have been
complied with. All costs, fees and expenses incurred in making
or closing the Mortgage Loan and the recording of the Mortgage
were paid, and the Mortgagor is not entitled to any refund of
any amounts paid or due under the Mortgage Note or Mortgage;
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(m) Ownership. The related Borrower is the sole owner of
record and holder of the Mortgage Loan; the Mortgage Loan is
not assigned or pledged (other than as contemplated under the
Loan Agreement), and the related Borrower has good indefeasible
and marketable title thereto, and has full right to transfer
and pledge the Mortgage Loan therein to the Lender free and
clear of any encumbrance, equity, participation interest, lien,
pledge, charge, claim or security interest, and has full right
and authority subject to no interest or participation of, or
agreement with, any other party, to pledge and assign each
Mortgage Loan pursuant to this Loan Agreement;
(n) Doing Business. All parties which have had any interest in
the Mortgage Loan, whether as mortgagee, assignee, pledgee or
otherwise, are (or, during the period in which they held and
disposed of such interest, were) (i) in compliance with any and
all applicable licensing requirements of the laws of the state
wherein the Mortgaged Property is located, and (ii) (A)
organized under the laws of such state, or (B) qualified to do
business in such state, or (C) a federal savings and loan
association, savings bank or a national bank having its
principal office in such state, or (D) not doing business in
such state;
(o) LTV. As of the date of origination of the Mortgage Loan,
the LTV is as identified in the applicable Mortgage Loan
Schedule, and the Borrowers have no actual knowledge that such
LTV has increased to higher than the level
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permitted under the Underwriting Guidelines. All provisions of
such primary mortgage insurance policy have been and are being
complied with, such policy is in full force and effect, and
all premiums due thereunder have been paid. Any Mortgage
subject to any such primary mortgage insurance policy
obligates the Mortgagor thereunder to maintain such insurance
and to pay all premiums and charges in connection therewith;
(p) Title Insurance. The Mortgage Loan is covered by a limited
liability lender's title insurance policy or such other form of
policy of insurance acceptable to Xxxxxx Xxx or Xxxxxxx Mac for
loans similar to the Mortgage Loans issued by a title insurer
qualified to do business in the jurisdiction where the
Mortgaged Property is located, insuring the related Borrower,
its successors and assigns, as to the priority of its lien of
the Mortgage in the original principal amount of the Mortgage
Loan, and subject only to the exceptions contained in clauses
(1), (2), and (3) of paragraph (j) above. Where required by
state law or regulation, the Mortgagor has been given the
opportunity to choose the carrier of the required mortgage
title insurance. Immediately prior to the sale of the Mortgage
Loan to the Lender under the terms of this Loan Agreement, the
related Borrower, its successors and assigns were the sole
insureds of such lender's title insurance policy. Such lender's
title insurance policy is in full force and effect and will be
in force and effect upon the consummation of the transactions
contemplated by this Loan Agreement. No
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claims have been made under such lender's title insurance
policy, and no prior holder of the Mortgage, including the
related Borrower, has done, by act or omission, anything which
should reasonably be expected to impair the coverage of such
lender's title insurance policy. In connection with the
issuance of such lender's title insurance policy, no unlawful
fee, commission, kickback or other unlawful compensation or
value of any kind has been or will be received, retained or
realized by any attorney, firm or other persons or entity, and
no such unlawful items have been received, retained or
realized by the Company;
(q) No Defaults; Right to Cure; No Failure to Cure. Other than
Delinquent Mortgage Loans, there is no default, breach,
violation or event of acceleration existing under the Mortgage
or the Mortgage Note and no event which, with the passage of
time or with notice and the expiration of any grace or cure
period, would constitute a default, breach, violation or event
of acceleration (other than those payment delinquencies
permitted by paragraph (a) of this Schedule 1), and neither the
related Borrower nor its predecessors have waived any default,
breach, violation or event of acceleration;
(r) No Mechanics' Liens There are no mechanics' or similar
liens or claims which have been filed for work, labor or
material (and no rights are outstanding that under the law
could give rise to such liens) affecting the
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related Mortgaged Property which are or may be liens prior to,
or equal or coordinate with, the lien of the related Mortgage;
(s) Location of Improvements; No Encroachments. All
improvements which were considered in determining the Appraised
Value of the Mortgaged Property lay wholly within the
boundaries and building restriction lines of the Mortgaged
Property and no improvements on adjoining properties encroach
upon the Mortgaged Property. No improvement located on or being
part of the Mortgaged Property is in violation of any
applicable zoning law or regulation;
(t) Origination: Payment Terms. The Mortgage Loan was
originated by or in conjunction with a mortgagee approved by
the Secretary of Housing and Urban Development pursuant to
Section 203 and 211 of the National Housing Act or a savings
and loan association, a savings bank, a commercial bank credit
union, insurance company or similar banking institution which
is supervised and examined by a federal or state authority.
Principal payments on the Mortgage Loan commenced no more than
sixty (60) days after funds were disbursed in connection with
the Mortgage Loan. The documents, instruments and agreements
submitted for loan underwriting were not falsified and contain
no untrue statement of material fact or omit to state a
material fact required to be stated therein. The Mortgage Note
has the terms identified in the applicable Mortgage Loan
Schedule;
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(u) Customary Provisions. The Mortgage Note has a stated
maturity. The Mortgage contains customary and enforceable
provisions such as to render the rights and remedies of the
holder thereof adequate for the realization against the
Mortgaged Property of the benefits of the security provided
thereby, including, (i) in the case of a Mortgage designated as
a deed of trust, by trustee's sale, and (ii) otherwise by
judicial foreclosure. Upon default by a Mortgagor on a Mortgage
Loan and foreclosure on, or trustee's sale of, the Mortgaged
Property pursuant to the proper procedures, the holder of the
Mortgage Loan will be able to deliver good and marketable title
to the Mortgaged Property. There is no homestead or other
exemption available to a Mortgagor which would interfere with
the right to sell the Mortgaged Property at a trustee's sale or
the right to foreclose the Mortgage;
(v) Conformance with Underwriting Guidelines and Agency
Standards. The Mortgage Loan was underwritten in accordance
with, and the Mortgage Loan and Mortgaged Property conform to,
the Borrowers' applicable Underwriting Guidelines. The Mortgage
Note and Mortgage are on forms acceptable to FHLMC or FNMA;
(w) Occupancy of the Mortgaged Property. The Mortgaged
Property is lawfully occupied under applicable law. All
inspections, licenses and certificates required to be made or
issued with respect to all occupied portions
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of the Mortgaged Property and, with respect to the use and
occupancy of the same, including but not limited to
certificates of occupancy and fire underwriting certificates,
have been made or obtained from the appropriate authorities.
The Mortgaged Property is owner occupied except as set forth
on the Mortgage Loan Tape;
(x) No Additional Collateral. The Mortgage Note is not and has
not been secured by any collateral except the lien of the
corresponding Mortgage and the security interest of any
applicable security agreement or chattel mortgage referred to
in (j) above;
(y) Deeds of Trust. In the event the Mortgage constitutes a
deed of trust, a trustee, duly qualified under applicable law
to serve as such, has been properly designated and currently so
serves and is named in the Mortgage, and no fees or expenses
are or will become payable by the Lender to the trustee under
the deed of trust, except in connection with a trustee's sale
after default by the Mortgagor;
(z) Take-Out Commitments. To the extent that a Mortgage Loan
is covered by a Take-Out Commitment, such Take-Out Commitment
is a valid, binding and subsisting obligation enforceable in
accordance with its terms.
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(aa) Acceptable Investment. No specific circumstances or
conditions exist with respect to the Mortgage, the Mortgaged
Property, the Mortgagor or the Mortgagor's credit standing that
should reasonably be expected to (i) cause private
institutional investors which invest in Mortgage Loans similar
to the Mortgage Loan to regard the Mortgage Loan as an
unacceptable investment, (ii) cause the Mortgage Loan to be
more likely to become past due in comparison to similar
Mortgage Loans, or (iii) adversely affect the value or
marketability of the Mortgage Loan in comparison to similar
Mortgage Loans;
(bb) Delivery of Mortgage Documents. The Mortgage Note, the
Mortgage, the Assignment of Mortgage and any other documents
required to be delivered for the Mortgage Loan by the Borrower
under the Mortgage Custodial Agreement have been delivered to
the Mortgage Custodian at or prior to the time specified for
delivery in the Mortgage Custodial Agreement.
(cc) Assignment of Mortgage. The Assignment of Mortgage
is in recordable form and is acceptable for recording under
the laws of the jurisdiction in which the Mortgaged Property
is located;
(dd) Due on Sale. The Mortgage contains an enforceable
provision for the acceleration of the payment of the unpaid
principal balance of the Mortgage
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Loan in the event that the Mortgaged Property is sold or
transferred without the prior written consent of the mortgagee
thereunder;
(ee) No Buydown Provisions: No Graduated Payments or
Contingent Interests. Except as noted in the Mortgage Loan Tape
and Mortgage Loan Schedule or the Participation Certificate
Schedule and Participation Certificate Tape, the Mortgage Loan
does not contain provisions pursuant to which Scheduled
Payments are paid or partially paid with funds deposited in any
separate account established by a Borrower, the Mortgagor or
anyone on behalf of the Mortgagor, or paid by any source other
than the Mortgagor nor does it contain any other similar
provisions currently in effect which may constitute a "buydown"
provision. Except as noted in the Mortgage Loan Tape and
Mortgage Loan Schedule or the Participation Certificate
Schedule and Participation Certificate Tape, the Mortgage Loan
is not a graduated payment Mortgage Loan and the Mortgage Loan
does not have a shared appreciation or other contingent
interest feature;
(ff) Consolidation of Future Advances. Any future advances
made after origination of the Mortgage Loan have been
consolidated with the outstanding principal amount secured by
the Mortgage, and the secured principal amount, as
consolidated, bears a single interest rate and single repayment
term. The lien of the Mortgage securing the consolidated
principal amount is expressly
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insured as having a first lien priority by a title insurance
policy, an endorsement to the policy insuring the mortgagee's
consolidated interest or by other title evidence satisfying
paragraph (p) above. The consolidated principal amount does
not exceed the original principal amount of the Mortgage Loan;
(gg) Mortgaged Property Undamaged: Condemnation. The Mortgaged
Property is undamaged by waste, fire, earthquake or earth
movement, windstorm, flood, tornado or other casualty so as to
adversely affect the value of the Mortgaged Property as
security for the Mortgage Loan or the use for which the
premises were intended and each Mortgaged Property is in good
repair. There have not been any condemnation proceedings with
respect to the Mortgaged Property and the Borrower has no
knowledge of any such proceedings in the future;
(hh) Collection Practices; Escrow Deposits. The origination
and collection practices used with respect to the Mortgage Loan
have been in all respects in compliance with Accepted Servicing
Practices, applicable laws and regulations, and have been in
all respects legal, proper, and consistent with industry
standards for mortgage loans of the same type as the Mortgage
Loan. With respect to escrow deposits and Escrow Payments, if
any, all such payments are in the possession of, or under
control of, a Borrower and there exist no deficiencies in
connection therewith for which customary arrangements for
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repayment thereof have not been made. All Escrow Payments, if
any, have been collected in full compliance with state and
federal law. An escrow of funds is not prohibited by applicable
law and any escrow that has been established is in an amount
sufficient to pay for every item that remains unpaid and has
been assessed but is not yet due and payable. No escrow
deposits or Escrow Payments or other charges or payments due
the Borrower has been capitalized under the Mortgage or the
Mortgage Note. Any interest required to be paid pursuant to
state and local law has been properly paid and credited;
(ii) Appraisal. The file held by the Master Servicer or the
Subservicer contains an appraisal of the related Mortgaged
Property signed prior to the approval of the Mortgage Loan
application by a qualified appraiser, duly appointed by the
related Borrower, who had no interest, direct or indirect in
the Mortgaged Property or in any loan made on the security
thereof, and whose compensation is not affected by the approval
or disapproval of the Mortgage Loan, and the appraisal and
appraiser both satisfy the requirements of Title XI of the
Federal Institutions Reform, Recovery and Enforcement Act of
1989, as amended, and the regulations promulgated thereunder,
as such statute and regulations were in effect on the date the
Mortgage Loan was originated;
(jj) Soldiers' and Sailors' Relief Act. The Mortgagor has
not notified the Borrower, and the Borrower has no knowledge
of any relief requested or
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allowed to the Mortgagor under the Soldiers' and Sailors'
Civil Relief Act of 1940;
(kk) Environmental Matters. To the Borrowers' actual
knowledge, the Mortgaged Property is free from any and all
toxic or hazardous substances and there exists no violation
of any local, state or federal environmental law, rule or
regulation;
(ll) Construction or Rehabilitation of Mortgaged
Property. No Mortgage Loan was made in connection with the
construction or rehabilitation of a Mortgaged Property or
facilitating the trade-in or exchange of a Mortgaged
Property;
(mm) Ground Leases. With respect to each ground lease to which
the Mortgaged Property is subject (a "Ground Lease"): (i) the
Mortgagor is the owner of a valid and subsisting interest as
tenant under the Ground Lease; (ii) the Ground Lease is in full
force and effect, unmodified and not supplemented by any
writing or otherwise; (iii) all rent, additional rent and other
charges reserved therein have been paid to the extent they are
payable to the date hereof; (iv) the Mortgagor enjoys the quiet
and peaceful possession of the estate demised thereby, subject
to any sublease; (v) the Mortgagor is not in default under any
of the terms thereof and there are no circumstances which,
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with the passage of time or the giving of notice or both,
would constitute an event of default thereunder; (vii) the
lessor under the Ground Lease is not in default under any of
the terms or provisions thereof on the part of the lessor to
be observed or performed; (vii) the lessor under the Ground
Lease has satisfied all of its repair or construction
obligations, if any, to date pursuant to the terms of the
Ground Lease; and (ix) the execution, delivery and performance
of the Mortgage do not require the consent (other than those
consents which have been obtained and are in full force and
effect) under, and will not contravene any provision of or
cause a default under, the Ground Lease.
(nn) No Defense to Insurance Coverage. No action has been
taken or failed to be taken, no event has occurred and no state
of facts exists or has existed (whether or not known to the
Borrowers on or prior to such date) which has resulted or will
result in an exclusion from, denial of, or defense to coverage
under any applicable pool policy, special hazard insurance
policy, or bankruptcy bond (including, without limitation, any
exclusions, denials or defenses which would limit or reduce the
availability of the timely payment of the full amount of the
loss otherwise due thereunder to the insured), whether arising
out of actions, representations, errors, omissions, negligence,
or fraud of the Borrower, the related Mortgagor or any party
involved in the application for such insurance or coverage,
including the appraisal, plans and specifications and other
exhibits or documents submitted therewith to the insurer or
under any
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such insurance policy, or for any other xxxxx under such
coverage, but not including the failure of the insurer to pay
by reason of the insurer's breach of the insurance policy or
the insurer's financial inability to pay. In connection with
the placement of any insurance or coverage, no commission, fee
or other compensation has been or will be received by any
Borrower or by any officer, director, or employee of such
Borrower or any designee of such Borrower or any corporation
in which such Borrower or any officer, director or employee
had a financial interest at the time of placement of such
insurance;
(oo) Value of Mortgage Property. The Borrowers have no
knowledge of any circumstances existing that should reasonably
be expected to adversely affect the value or the marketability
of the Mortgaged Property or the Mortgage Loan or to cause the
Mortgage Loan to prepay during any period materially faster or
slower than the Mortgage Loans acquired by the Borrowers
generally; and
(pp) Section 32 Mortgages; Overages. The related Borrower has
provided the related Mortgagor with all disclosure materials
required by Section 226.32 of the Federal Reserve Board
Regulation Z with respect to any Mortgage Loans subject to such
Section of the Federal Reserve Board Regulation Z. The related
Borrower has not made or caused to be made any payment in the
nature of an
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"overage" or "yield spread premium" to a mortgage broker or
like Person which has not been fully disclosed to the
Mortgagor.
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Part II. Eligible Bonds; Underlying Eligible Bonds
(I) As to each Eligible Bond included in the Borrowing Base on
a Funding Date or each Underlying Eligible Bond, the Borrowers
shall be deemed to make the following representations and
warranties to the Lender on and as of such Funding Date and at
all times thereafter while such Eligible Bond or the Pledged
Stock of the Eligible Entity which owns such Underlying
Eligible Bonds is included in the Borrowing Base:
(a) Compliance with Applicable Laws. All of
the Eligible Bonds or Underlying Eligible Bonds have been
validly issued, and are fully paid and non-assessable, and the
Eligible Bonds or Underlying Eligible Bonds have been offered,
issued and sold in compliance with all applicable laws;
(b) No Encumbrances. There are (i) no
outstanding rights, options, warrants or agreements for a
purchase, sale or issuance, in connection with the Eligible
Bonds or Underlying Eligible Bonds, (ii) no agreements on the
part of the Borrower to issue, sell or distribute the Eligible
Bonds or Underlying Eligible Bonds, and (iii) no obligations on
the part of the Borrowers (contingent or otherwise) to
purchase, redeem or otherwise acquire
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any securities or any interest therein or to pay any dividend
or make any distribution in respect of the Eligible Bonds or
Underlying Eligible Bonds;
(c) Ownership. A Borrower is, or will be upon
issuance of the Eligible Bonds or Underlying Eligible Bonds,
the record and beneficial owner of, and has, or will have upon
issuance, good title to, the Eligible Bonds or Underlying
Eligible Bonds, free of any and all liens or options in favor
of, or claims of, any other Person, except the security
interest created by this Loan Agreement;
(d) Unencumbered Assets. The Eligible
Bonds or Underlying Eligible Bonds shall be unencumbered;
(e) Proper Form. The Eligible Bonds or
Underlying Eligible Bonds are certificated securities in
registered form, or are in uncertificated form and (i) held
through the facilities of a Relevant System, or (ii) registered
on the books of the issuer thereof;
(f) Chief Executive Office. The chief
executive office of each Borrower is, and for the four months
immediately preceding the date of this Loan Agreement has been,
located at the address set forth for it on the signature page
hereof; and
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(g) Take-Out Commitments. To the extent that
an Eligible Bond or Underlying Eligible Bond is covered by a
Take-Out Commitment, such Take-Out Commitment is a valid,
binding and subsisting obligation enforceable in accordance
with its terms.
(II) As to each Eligible Bond included in the Borrowing Base
on a Funding Date, the Borrowers shall be deemed to make the
following representations and warranties to the Lender on and
as of such Funding Date and at all times thereafter while such
Eligible Bond is included in the Borrowing Base:
(a) First Priority Security Interest; Security Entitlement.
The Eligible Bonds, when pledged as Collateral hereunder, shall
be unencumbered, and this Loan Agreement, together with
delivery to the Lender or the Bond/PC Custodian of the Eligible
Bonds and the filing of a financing statement naming the
related Borrower as "debtor" and the Lender as "secured party"
and describing such Collateral as the "collateral", will create
a valid first priority perfected security interest in such
Collateral in favor of the Lender in accordance with its terms
against all credits of such Borrower and any Persons purporting
to purchase such Collateral from such Borrower, and without
limitation the Lender shall have a "security entitlement"
thereto. The related Borrower has obtained from any and all
concerned creditors, any waivers,
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amendments, releases or acknowledgments necessary to create
and perfect in favor of the Lender the first priority security
interests provided herein.
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Part III. Participation Certificates
As to each Participation Certificate and the related Governing
Agreement, the following eligibility criteria shall be met as of the applicable
Funding Date and as of each date Collateral Value is determined:
(a) Validity of Governing Agreement. The Governing
Agreement and any other agreement executed and
delivered in connection with Participation
Certificate are genuine, and each is the legal,
valid and binding obligation of the maker
thereof enforceable in accordance with its
terms. The related Borrower and the Trustee
had legal capacity to enter into the Governing
Agreement and the Trustee had the legal
capacity to execute and deliver the Governing
Agreement and any such agreement, and the
Governing Agreement and any such other related
agreement to which the related Borrower or the
Trustee are parties have been duly and
properly executed by the related Borrower and
the Trustee, as applicable. The Governing
Agreement to which the Trustee is a party
constitutes a legal, valid, binding and
enforceable obligation of the Trustee. The
Governing Agreement is in full force and
effect, and the enforceability of the Governing
Agreement has not been contested by the Trustee.
(b) Original Terms Unmodified. The terms of the
Governing Agreement and the related Participation
Certificate have not been impaired, altered or
modified in any respect.
(c) No Waiver. The related Borrower has not waived the performance
by the Trustee of any action, if the Trustee's failure to
perform such action would cause the Governing Agreement to be
in default, nor has the related Borrower waived any default
resulting from any action or inaction by the Trustee.
(d) No Defaults. There is no default, breach, violation or
event of acceleration existing under the Governing
Agreement and no event has occurred which, with the passage
of time or giving of notice or both and the expiration of
any grace or cure period, would constitute a default,
breach, violation or event of acceleration thereunder, and
neither the related Borrower nor its predecessors in
interest have waived any such default, breach, violation or
event of acceleration.
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(e) Delivery of Governing Agreement. The Governing Agreements for
the related Participation Certificate has been or shall be
delivered three (3) days prior to each Funding Date.
(f) Participation Certificate Assignable. Each
Participation Certificate is assignable to the
Lender. The Governing Agreement permits the
related Borrower to sell, assign, pledge, transfer
or rehypothecate the Eligible Mortgage Loan
related to such Participation Certificate.
(g) Take-Out Commitments. To the extent that a
Participation Certificate is covered by a Take-Out
Commitment, such Take-Out Commitment is a valid,
binding and subsisting obligation enforceable in
accordance with its terms.
(h) Underlying Mortgage Loans. With respect to each
Underlying Mortgage Loan, the representations and
warranties set forth in Part I of this Schedule 1
are true and correct.
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Part IV. Pledged Stock
As to the Pledged Stock, the Borrowers shall be deemed to make
the following representations and warranties to the Lender on
and as of such Funding Date and at all times thereafter while
the Pledged Stock is included in the Borrowing Base:
(a) The shares of Pledged Stock listed on the Pledged Stock
Summary constitute all the issued and outstanding shares of all
classes of the Capital Stock of the Eligible Entity and are
represented by the certificates listed thereon.
(b) All the shares of the Pledged Stock have been duly and
validly issued and are fully paid and nonassessable.
(c) The related Borrower is the record and beneficial owner
of, and has title to, the Pledged Stock, free of any and all
Liens or options in favor of, or claims of, any other Person,
except the Lien created by this Loan Agreement.
(d) Upon delivery to the Lender of the stock certificates
evidencing the Pledged Stock (and assuming the continuing
possession by the Lender of such stock certificate in
accordance with the requirements of applicable law), the Lien
granted pursuant to this Loan Agreement will constitute a
valid, perfected
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first priority Lien on the Pledged Stock in favor of the
Lender enforceable as such against all creditors of the
related Borrower and any Persons purporting to purchase any
Pledged Stock from the related Borrower.
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Part V. Defined Terms
In addition to terms defined elsewhere in the Loan Agreement,
the following terms shall have the following meanings when used
in this Schedule 1:
"Appraised Value" shall mean the value set forth in an
appraisal made in connection with the origination of the
related Mortgage Loan as the value of the Mortgaged Property.
"Assignment of Mortgage" shall mean an assignment of the
Mortgage, notice of transfer or equivalent instrument in
recordable form, sufficient under the laws of the jurisdiction
wherein the related Mortgaged Property is located to reflect
the transfer of the Mortgage.
"Due Date" means the day of the month on which the Scheduled
Payment is due on a Mortgage Loan, exclusive of any days of
grace.
"Escrow Payments" shall mean with respect to any Mortgage
Loan, the amounts constituting ground rents, taxes,
assessments, water rates, sewer rents, municipal charges, fire
and hazard insurance premiums, condominium charges, and any
other payments required to be escrowed by the Mortgagor with
the mortgagee pursuant to the Mortgage or any other related
document.
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"Loan-to-Value Ratio" or "LTV" shall mean with respect to any
Mortgage Loan, the ratio of (a) the Par Amount of the Mortgage
Loan as of the date of origination (unless otherwise indicated)
to (b) the Appraised Value of the Mortgaged Property or if the
Mortgage Loan was made in connection with the purchase of the
related Mortgaged Property, the lesser of the Appraised Value
and the sales price of such property.
"Stated Principal Balance" shall mean as to each Mortgage
Loan, the principal balance of the Mortgage Loan at the date of
determination.
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SCHEDULE 2
FILING JURISDICTIONS AND OFFICES
Secretary of State of the State of New York
Secretary of County of New York County
Secretary of State of the State of New Jersey
Secretary of State of the State of Maryland
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SCHEDULE 3
SUBSIDIARIES
[TO BE PROVIDED BY COUNSEL TO BORROWERS]
188
SCHEDULE 4
LITIGATION
[TO BE PROVIDED BY COUNSEL TO BORROWERS]
189
EXHIBIT A
[FORM OF PROMISSORY NOTE]
$[__________] Dated November __, 0000
Xxx Xxxx, Xxx Xxxx
FOR VALUE RECEIVED, HANOVER CAPITAL MORTGAGE HOLDINGS,
INC., a Maryland corporation and HANOVER CAPITAL PARTNERS,
LTD., a New York corporation (the "Borrowers"), hereby promise
to pay to the order of GREENWICH CAPITAL FINANCIAL PRODUCTS,
INC. a Delaware corporation (the "Lender"), at the principal
office of the Lender at 000 Xxxxxxxxx Xxxx, Xxxxxxxxx,
Xxxxxxxxxxx 00000, in lawful money of the United States, and in
immediately available funds, the principal sum of [________
DOLLARS] ($[_________]) (or such lesser amount as shall equal
the aggregate unpaid principal amount of the Advances made by
the Lender to the Borrowers under the Loan Agreement as defined
below), on the dates and in the principal amounts provided in
the Loan Agreement, and to pay interest on the unpaid principal
amount of each such Advance, at such office, in like money and
funds, for the period commencing on the date of such Advance
until such Advance shall be paid in full, at the rates per
annum and on the dates provided in the Loan Agreement.
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The date, amount and interest rate of each Advance made
by the Lender to the Borrowers, and each payment made on
account of the principal and interest thereof, shall be
recorded by the Lender on its books and, prior to any transfer
of this Note, endorsed by the Lender on the schedule attached
hereto or any continuation thereof; provided, that the failure
of the Lender to make any such recordation or endorsement shall
not affect the obligations of the Borrowers to make a payment
when due of any amount owing under the Loan Agreement or
hereunder in respect of the Advances made by the Lender.
This Note is the Note referred to in the Amended and
Restated Master Loan and Security Agreement dated as of
November 23, 1998 (as amended, supplemented or otherwise
modified and in effect from time to time, the "Loan Agreement")
between the Borrowers and the Lender, and evidences Advances
made by the Lender thereunder. Terms used but not defined in
this Note have the respective meanings assigned to them in the
Loan Agreement.
The Borrowers agree to pay all the Lender's costs of
collection and enforcement (including attorneys' fees and
disbursements of Lender's counsel) in respect of this Note when
incurred, including, without limitation, attorneys' fees
through appellate proceedings.
Notwithstanding the pledge of the Collateral, the
Borrowers hereby acknowledge, admit and agree that the
Borrowers' obligations under this Note
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are recourse obligations of the Borrowers to which the
Borrowers pledge their full faith and credit.
The Borrowers, and any indorsers hereof, (a) severally
waive diligence, presentment, protest and demand and also
notice of protest, demand, dishonor and nonpayments of this
Note, (b) expressly agree that this Note, or any payment
hereunder, may be extended from time to time, and consent to
the acceptance of further Collateral, the release of any
Collateral for this Note, the release of any party primarily or
secondarily liable hereon, and (c) expressly agree that it will
not be necessary for the Lender, in order to enforce payment of
this Note, to first institute or exhaust the Lender's remedies
against the Borrowers or any other party liable hereon or
against any Collateral for this Note. No extension of time for
the payment of this Note, or any installment hereof, made by
agreement by the Lender with any person now or hereafter liable
for the payment of this Note, shall affect the liability under
this Note of the Borrowers, even if the Borrowers are not a
party to such agreement; provided, however, that the Lender and
the Borrowers, by written agreement between them, may affect
the liability of the Borrowers.
Any reference herein to the Lender shall be deemed to
include and apply to every subsequent holder of this Note.
Reference is made to the Loan Agreement for provisions
concerning optional and mandatory prepayments, Collateral,
acceleration and other material terms affecting this Note.
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The Borrowers hereby acknowledge and agree that they will each
be jointly and severally liable to the Lender for all
representations, warranties, covenants and liabilities of the
Borrowers hereunder.
Any enforcement action relating to this Note may be brought by
motion for summary judgment in lieu of a complaint pursuant to
Section 3213 of the New York Civil Practice Law and Rules.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED UNDER THE LAWS OF
THE STATE OF NEW YORK (WITHOUT REFERENCE TO CHOICE OF LAW
DOCTRINE BUT WITH REFERENCE TO SECTION 5-1401 OF THE NEW YORK
GENERAL OBLIGATIONS LAW, WHICH BY ITS TERMS APPLIES TO THIS
NOTE) WHOSE LAWS THE BORROWERS EXPRESSLY ELECT TO APPLY TO THIS
NOTE. THE BORROWERS AGREE THAT ANY ACTION OR PROCEEDING BROUGHT
TO ENFORCE OR ARISING OUT OF THIS NOTE MAY BE COMMENCED IN THE
SUPREME COURT OF THE STATE OF NEW YORK, BOROUGH OF MANHATTAN,
OR IN XXX XXXXXXXX XXXXX XX XXX XXXXXX XXXXXX FOR THE SOUTHERN
DISTRICT OF NEW YORK. THE BORROWERS HEREBY SUBMIT TO NEW YORK
JURISDICTION WITH RESPECT TO ANY ACTION BROUGHT WITH RESPECT TO
THIS NOTE AND WAIVES ANY RIGHT WITH RESPECT TO THE DOCTRINE OF
FORUM NON CONVENIENS WITH RESPECT TO SUCH TRANSACTIONS.
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HANOVER CAPITAL MORTGAGE HOLDINGS,
INC.
By:
Name:
Title:
HANOVER CAPITAL PARTNERS, LTD.
By:
Name:
Title:
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SCHEDULE OF ADVANCES
This Note evidences Advances made under the within-described
Loan Agreement to the Borrowers, on the dates, in the principal
amounts and bearing interest at the rates set forth below, and
subject to the payments and prepayments of principal set forth
below:
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PRINCIPAL INTEREST AMOUNT PAID UNPAID NOTATION
DATE MADE AMOUNT OF RATE OR PREPAID PRINCIPAL MADE BY
ADVANCE AMOUNT
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EXHIBIT B
[FORM OF MORTGAGE CUSTODIAL AGREEMENT]
[STORED AS A SEPARATE DOCUMENT]
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EXHIBIT C
[FORM OF OPINION OF COUNSEL TO BORROWER]
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EXHIBIT D-1
FORM OF NOTICE OF BORROWING AND PLEDGE-ELIGIBLE MORTGAGE LOANS
[insert date]
Greenwich Capital Financial Products, Inc.
000 Xxxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxx Xxxxx
Notice of Borrowing and Pledge No.: _____________________
Name of Subservicer: _____________________
Interest Period: _____________________
Ladies/Gentlemen:
Reference is made to the Amended and Restated Master Loan
and Security Agreement, dated as of November 23, 1998 (the
"Loan Agreement"; capitalized terms used but not otherwise
defined herein shall have the meaning given them in the Loan
Agreement), between Hanover Capital Mortgage Holdings, Inc.
and Hanover Capital Partners, Ltd. (the "Borrowers") and
Greenwich Capital Financial Products, Inc. (the "Lender").
In accordance with Section 2.03(a) of the Loan Agreement, the
undersigned Borrower hereby requests that you, the Lender, make
Advances to us in an aggregate principal amount of
$_________________ [insert requested Advance amount] (such
amount representing [insert number of Mortgage Loans] loans on
____________________ [insert requested Funding Date, which must
be at least three (3) Business Days following the date of the
request], in connection with which we shall pledge to you as
Collateral the Mortgage Loans set forth on the Mortgage Loan
Schedule attached hereto.
The Borrower hereby certifies, as of such Funding Date, that:
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(a) no Default or Event of Default has occurred and is
continuing on the date hereof nor will occur after giving
effect to such Advance as a result of such Advance;
(b) each of the representations and warranties made by
the Borrower in or pursuant to the Loan Documents is true and
correct in all material respects on and as of such date (in
the case of the representations and warranties in respect of
Eligible Mortgage Loans, solely with respect to Eligible
Mortgage Loans being included the Borrowing Base on the
Funding Date) as if made on and as of the date hereof (or, if
any such representation or warranty is expressly stated to
have been made as of a specific date, as of such specific
date); and
(c) the Borrower is in compliance with all governmental
licenses and authorizations and is qualified to do business
and is in good standing in all required jurisdictions.
Very truly yours,
[BORROWER]
By:
Name:
Title:
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200
Schedule I
to Notice of Borrowing and Pledge
ELIGIBLE MORTGAGE LOANS PROPOSED TO BE PLEDGED
TO LENDER ON FUNDING DATE
[ATTACH MORTGAGE LOAN SCHEDULE]
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EXHIBIT D-2
FORM OF NOTICE OF BORROWING AND PLEDGE - PLEDGED STOCK
[INSERT DATE]
Greenwich Capital Financial Products, Inc.
000 Xxxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxx Xxxxx
Notice of Borrowing and Pledge No.: _____________________
Name of Trustee :_____________________
Interest Period :_____________________
Ladies/Gentlemen:
Reference is made to the Amended and Restated Master Loan and Security
Agreement, dated as of November 23, 1998 (the "Loan Agreement"; capitalized
terms used but not otherwise defined herein shall have the meaning given them
in the Loan Agreement), between Hanover Capital Mortgage Holdings, Inc. and
Hanover Capital Partners, Ltd. (the "Borrowers") and Greenwich Capital
Financial Products, Inc. (the "Lender").
In accordance with Section 2.03(a) of the Loan Agreement, the undersigned
Borrower hereby requests that you, the Lender, make Advances to us in an
aggregate principal amount of $_________________ [insert requested Advance
amount] (such amount representing [insert number of Underlying Eligible Bonds]
bonds on ____________________ [insert requested Funding Date,
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which must be at least three (3) Business Days following the date of the
request], in connection with which we shall pledge to you as Collateral the
Pledged Stock set forth on Schedule I attached hereto.
The Borrower hereby certifies, as of such Funding Date, that:
(a) no Default or Event of Default has occurred and is
continuing on the date hereof nor will occur after giving
effect to such Advance as a result of such Advance;
(b) each of the representations and warranties made by
the Borrower in or pursuant to the Loan Documents is true and
correct in all material respects on and as of such date (in
the case of the representations and warranties in respect of
the Pledged Securities, solely with respect to the Pledged
Securities being included the Borrowing Base on the Funding
Date) as if made on and as of the date hereof (or, if any such
representation or warranty is expressly stated to have been
made as of a specific date, as of such specific date); and
(c) the Borrower is in compliance with all governmental
licenses and authorizations and is qualified to do business
and is in good standing in all required jurisdictions.
Very truly yours,
[BORROWER]
By:
Name:
Title:
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203
Schedule I
to Notice of Borrowing and Pledge
[PLEDGED STOCK PROPOSED TO BE PLEDGED
TO LENDER ON FUNDING DATE]
[ATTACH PLEDGED STOCK SUMMARY AND
BOND SUMMARY WITH RESPECT TO THE UNDERLYING ELIGIBLE BONDS]
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EXHIBIT D-3
FORM OF NOTICE OF BORROWING AND PLEDGE - PARTICIPATION CERTIFICATES
[INSERT DATE]
Greenwich Capital Financial Products, Inc.
000 Xxxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxx Xxxxx
Notice of Borrowing and Pledge No.: _____________________
Name of Trustee :_____________________
Interest Period :_____________________
Ownership Percentage :_____________________
Ladies/Gentlemen:
Reference is made to the Amended and Restated Master Loan and Security
Agreement, dated as of November 23, 1998 (the "Loan Agreement"; capitalized
terms used but not otherwise defined herein shall have the meaning given them
in the Loan Agreement), between Hanover Capital Mortgage Holdings, Inc. and
Hanover Capital Partners, Ltd. (the "Borrowers") and Greenwich Capital
Financial Products, Inc. (the "Lender").
In accordance with Section 2.03(a) of the Loan Agreement, the undersigned
Borrower hereby requests that you, the Lender, make Advances to us in an
aggregate principal amount of $_________________ [insert requested Advance
amount] (such amount representing [insert number
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of Participation Certificates] on ____________________ [insert requested Funding
Date, which must be at least three (3) Business Days following the date of the
request], in connection with which we shall pledge to you as Collateral the
Participation Certificates set forth in the Participation Certificate Summary
attached hereto.
The Borrower hereby certifies, as of such Funding Date, that:
(a) no Default or Event of Default has occurred and is
continuing on the date hereof nor will occur after giving
effect to such Advance as a result of such Advance;
(b) each of the representations and warranties made by
the Borrower in or pursuant to the Loan Documents is true and
correct in all material respects on and as of such date (in
the case of the representations and warranties in respect of
Participation Certificates, solely with respect to
Participation Certificates being included the Borrowing Base
on the Funding Date) as if made on and as of the date hereof
(or, if any such representation or warranty is expressly
stated to have been made as of a specific date, as of such
specific date); and
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(c) the Borrower is in compliance with all governmental
licenses and authorizations and is qualified to do business
and is in good standing in all required jurisdictions.
Very truly yours,
[BORROWER]
By:
Name:
Title:
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207
Schedule I
to Notice of Borrowing and Pledge
[ELIGIBLE PARTICIPATION CERTIFICATES PROPOSED TO BE PLEDGED
TO LENDER ON FUNDING DATE]
[ATTACH PARTICIPATION CERTIFICATE TAPE]
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EXHIBIT D-4
FORM OF NOTICE OF BORROWING AND PLEDGE - ELIGIBLE BONDS
[INSERT DATE]
Greenwich Capital Financial Products, Inc.
000 Xxxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxx Xxxxx
Notice of Borrowing and Pledge No. : _____________________
Name of Trustee :_____________________
Interest Period :_____________________
Ladies/Gentlemen:
Reference is made to the Master Loan and Security Agreement, dated as of
November 23, 1998 (the "Loan Agreement"; capitalized terms used but not
otherwise defined herein shall have the meaning given them in the Loan
Agreement), between Hanover Capital Mortgage Holdings, Inc. and Hanover
Capital Partners, Ltd. (the "Borrowers") and Greenwich Capital Financial
Products, Inc. (the "Lender").
In accordance with Section 2.03(a) of the Loan Agreement, the undersigned
Borrower hereby requests that you, the Lender, make Advances to us in an
aggregate principal amount of $_________________ [insert requested Advance
amount] (such amount representing [insert number of Eligible Bonds] bonds on
____________________ [insert requested Funding Date, which must
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be at least three (3) Business Days following the date of the request], in
connection with which we shall pledge to you as Collateral the Eligible Bonds
set forth in the Bond Summary attached hereto.
The Borrower hereby certifies, as of such Funding Date, that:
(a) no Default or Event of Default has occurred and is
continuing on the date hereof nor will occur after giving
effect to such Advance as a result of such Advance;
(b) each of the representations and warranties made by
the Borrower in or pursuant to the Loan Documents is true and
correct in all material respects on and as of such date (in
the case of the representations and warranties in respect of
Eligible Bonds, solely with respect to Eligible Bonds being
included the Borrowing Base on the Funding Date) as if made on
and as of the date hereof (or, if any such representation or
warranty is expressly stated to have been made as of a
specific date, as of such specific date); and
(c) the Borrower is in compliance with all governmental
licenses and authorizations and is qualified to do business
and is in good standing in all required jurisdictions.
Very truly yours,
[BORROWER]
By:
Name:
Title:
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210
Schedule I
to Notice of Borrowing and Pledge
[ELIGIBLE BONDS PROPOSED TO BE PLEDGED
TO LENDER ON FUNDING DATE]
[ATTACH BOND SUMMARY WITH RESPECT TO THE ELIGIBLE BONDS]
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EXHIBIT E
UNDERWRITING GUIDELINES
[TO BE PROVIDED BY BORROWERS]
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EXHIBIT F
FORM OF BLOCKED ACCOUNT AGREEMENT
_______________, 199_
Fleet Bank
Attn:
Re: Account Established by Greenwich Capital Financial
Products, Inc. ("Lender"), pursuant to that certain
Amended and Restated Master Loan and Security
Agreement (as amended, supplemented or otherwise
modified from time to time, the "Loan Agreement"),
dated as of November 23, 1998, by and among the
Lender, Fleet Bank (the "Collection Bank"), Hanover
Capital Mortgage Holdings, Inc. and Hanover Capital
Partners Inc. ("Borrower")
Ladies and Gentlemen:
We refer to the collection account established by the
Borrowers pursuant to the Loan Agreement, at the Collection
Bank, Providence, Rhode Island, Account No. [ACCOUNT #], ABA#
[ABA #], [sub]account identified with
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respect to Eligible Assets pledged to the Lender (the
"Collection Account"), which the Borrowers maintain in
accordance with the Loan Agreement.
From time to time,
certain third-party servicers (each a "Subservicer") and trustees (each a
"Trustee") will deposit funds received in accordance with a related servicing
agreement or governing agreement into the Collection Account. Greenwich Capital
Financial Products, Inc. (the "Lender") has established a secured loan
arrangement with the Borrowers. By its execution of this letter, the Collection
Bank and the undersigned Borrower acknowledges that the Borrowers have granted a
security interest in all of the Borrowers' right, title and interest in and to
the Collection Account and any funds from time to time on deposit therein with
respect to such Eligible Assets, that such funds are received by the Collection
Bank in trust for the benefit of Lender and, except as provided below, are for
application against the Borrower's liabilities to Lender.
By the Collection
Bank's and the undersigned Borrower's execution of this letter, each party
agrees: (a) that all funds from time to time hereafter in the Collection Account
are the property of the Borrower held in trust for the benefit of, and subject
to a security interest in favor of, the Lender; (b) that neither the Collection
Bank nor the Borrowers will exercise any right of set-off, banker's lien or any
similar right in connection with such funds provided, that in the event any
check is returned to the Collection Bank or the Borrowers because of
insufficient funds (or is otherwise unpaid) such party shall be entitled to set
off the amount of any such returned check; (c) that following such time as the
Lender shall provide notice to the Collection Bank in writing, in its sole
discretion, revoking Borrowers' ability to make withdrawals from the Collection
Account, the Borrower will not withdraw, nor shall the Collection Bank permit
the Borrowers or any other person or entity to withdraw or transfer funds from
the Collection Account; and (d) that if the Lender shall notify the Collection
Bank that an event of default has occurred and is continuing under the Lender's
secured lending arrangement with the Borrower, the Collection Bank shall cause
or permit withdrawals from the Collection Account in any other manner as the
Lender may instruct.
All bank statements
in respect to the Blocked Account shall be sent to the Borrower with copies
to:
Greenwich
Capital
Financial
Products,
Inc.
000
Xxxxxxxxx
Xxxx
-0-
000
Xxxxxxxxx,
Xxxxxxxxxxx
00000
Attention:
Xxxxx
Xxxxx
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Kindly acknowledge your agreement with the terms of this
agreement by signing the enclosed copy of this letter and
returning it to the undersigned.
Very truly yours,
GREENWICH CAPITAL FINANCIAL
PRODUCTS, INC.
By:
Name:
Title:
Agreed and acknowledged:
HANOVER CAPITAL MORTGAGE HOLDINGS, INC.
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216
By:
Name:
Title:
Agreed and acknowledged:
HANOVER CAPITAL PARTNERS, LTD.
By:
Name:
Agreed and acknowledged:
FLEET BANK
By:
Name:
Title:
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EXHIBIT G
FORM OF MORTGAGE LOAN TAPE
[TO BE PROVIDED BY LENDER]
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EXHIBIT H
FORM OF BORROWING BASE CERTIFICATE
[TO BE PROVIDED BY LENDER ]
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EXHIBIT I
FORM OF REMITTANCE REPORT
______, 19__
Greenwich Capital Financial Products, Inc.
000 Xxxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxx Xxxxx
Ladies and Gentlemen:
The undersigned, [HANOVER CAPITAL MORTGAGE HOLDINGS, INC.], refers to the
Amended and Restated Master Loan and Security Agreement, dated as of November
23, 1998 (as amended, supplemented or otherwise modified from time to time, the
"Loan Agreement") between Hanover Capital Mortgage Holdings, Inc., Hanover
Capital Partners, Ltd. and Greenwich Capital Financial Products, Inc.
Capitalized terms used herein but not defined herein shall have the meaning
assigned to such terms in the Loan Agreement.
The undersigned hereby delivers this Remittance Report to you pursuant
to Section 7.08 of the Loan Agreement and hereby certifies to you as follows as
of _______, 1998.(1)
I. Summary of Collection Account Cash Flow
(a) Total Collections remitted for the calendar month:
$_______.
(b) Borrowing Base Deficiency due to you on Remittance
Date: $_______.
(c) Interest due and payable to you on the Remittance Date
(for the period from and including the previous
Remittance Date to and including the day preceding the
current Remittance Date): $_______.
(d) Commitment Fee due and owing (payable on Payment Dates
occurring in [April, July, October, January], and on
the Termination Date.)
(e) Total cash due to you on the Remittance Date: $_______.
(f) Cash flow in connection with any other act which during
the month:
--------
(1) Date should be the last day of the immediately preceding calendar month.
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(i) Principal received: $_______.
(ii) Accrued interest received: $________.
(iii) Amounts swept from the Lender's Collection
Account to the securitization or whole loan
buyer: $________.
(g) Balance to the undersigned $________.
LIBOR reset for the following month as of ________, 1998 ______%.
II. Breakout of Daily Remittances to the Collection Account
Collection Dates Wire Date Cash Amount Total Amount
Totals [attach Bank Statement]
[HANOVER CAPITAL MORTGAGE HOLDINGS, INC.,]
By:
Name:
Title:
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EXHIBIT J
FORM OF INSTRUCTION LETTER
__________ __, 1998
____________________, as [Trustee] [Subservicer]
___________________
___________________
Attention:_______________
Re: Loan and Security Agreement, dated as of November 23, 1998, by
and between Greenwich Capital Financial Products, Inc.,
("Lender"), and Hanover Capital Mortgage Holdings, Inc., and
Hanover Capital Partners, Ltd. ("Borrowers")
Ladies and Gentlemen:
Pursuant to the Amended and Restated Master Loan and Security
Agreement, dated as of November 23, 1998 (the "Loan and Security Agreement"),
between the Lender and the Borrowers, you are hereby notified that: (i) the
undersigned Borrower has pledged to the Lender the assets described on Schedule
1 hereto (the "Eligible Assets"), (ii) each of the Eligible Assets is subject to
a security interest in favor of the Lender, (iii) the Eligible Assets include
all of the capital stock of a special purpose entity which owns the bonds listed
on Schedule 2 hereto (the "Underlying Eligible Bonds"), (iv) the [Trustee]
[Servicer] [Certificate Registrar] shall promptly send to the Lender a copy of
the [Governing Agreement] [Servicing Agreement] related to the Eligible Assets
or Underlying Eligible Bonds, (v) unless otherwise notified by the Lender in
writing, any payments or distributions made with respect to such Eligible Assets
or Underlying Eligible Bonds should be remitted immediately by the [Trustee]
[Servicer] [Certificate Registrar] directly to the Collection Account
established at Fleet Bank (the "Collection Bank"), in accordance with the
following wire instructions and (vi) if notified by the Lender in writing, the
[Servicer] [Trustee] [Certificate Registrar] shall send such payments or
distributions in accordance with the Lender's written instructions:
Account No.: [____________________]
ABA No.: [____________________]
[____________________]
Reference: [____________________]
The Subservicer also acknowledges its consent to terminate such
Servicing Agreement upon notification by the Lender of an occurrence of an Event
of Default.
Please acknowledge receipt of this instruction letter by signing in the
signature block below and forwarding an executed copy to the Lender promptly
upon receipt. Any notices to the Lender should be delivered to the following
address: 000 Xxxxxxxxx Xxxx, Xxxxxxxxx, Xxxxxxxxxxx 00000, Attention: Xxx
Xxxxxxxxxx, Telephone: (000) 000-0000, Facsimile: (000) 000-0000.
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Very truly yours,
[BORROWER]
By:
Name:
Title:
ACKNOWLEDGED:
___________________________________, as [Trustee] [Servicer] [Certificate
Registrar]
By:___________________________________
Name:
Title:
Telephone:
Facsimile:
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223
EXHIBIT K-1
FORM OF LOST INSTRUMENT AFFIDAVIT
I, as ___________________________ (title) (hereinafter called
"Deponent") of _______________________ (the "Bond/PC Custodian"), am authorized
to make this Lost Instrument Affidavit (this "Affidavit") on behalf of the
Bond/PC Custodian. In connection with the administration of the Participation
Certificates held by the Bond/PC Custodian on behalf of Greenwich Capital
Financial Products, Inc. (the "Lender"), Deponent being duly sworn, deposes and
says that:
1. Bond/PC Custodian's address is:
[BOND/PC CUSTODIAN'S Address]
2. Bond/PC Custodian previously delivered to the Lender a
Participation Certificate Schedule with respect to that certain Participation
Certificate made by ___ in an original principal balance of $___, which did not
indicate such Participation Certificate is missing;
3. Such Participation Certificate was assigned or sold to the
Lender by ___________ pursuant to the terms and provisions of an Amended and
Restated Master Loan and Security Agreement dated and effective as of November
23, 1998;
5. Aforesaid Participation Certificate (hereinafter called the
"Original") has been lost;
6. Deponent has made or has caused to be made diligent search
for the Original and has been unable to find or recover same;
7. The Bond/PC Custodian was the Bond/PC Custodian of the
Original at the time of loss; and
8. Deponent agrees that, if said Original should ever come
into Bond/PC Custodian's possession, custody or power, Bond/PC Custodian will
immediately and without consideration surrender the Original to the Lender.
9. Attached hereto is a true and correct copy of the
Participation Certificate.
10. Deponent hereby agrees that the Bond/PC Custodian (a)
shall indemnify and hold harmless the Lender, its successors, and assigns,
against any loss, liability or damage, including reasonable attorney's fees,
resulting from the unavailability of any Originals, including but not limited to
any loss, liability or damage arising from (i) any false statement contained in
this Affidavit, (ii) any claim of any party that it has already purchased a
participation certificate evidenced by the Originals or any interest in such
participation certificate, (iii) the issuance of new instrument in lieu thereof
and (iv) any claim whether or not based upon or arising from honoring or
refusing to honor the Original when presented by anyone (items (i) through (iv)
above are hereinafter referred to as the "Losses").
11. This Affidavit is intended to be relied on by the Lender,
its successors, and assigns and Greenwich Capital Financial Products, Inc.
represents and warrants that it has the authority to perform its obligations
under this Affidavit.
EXECUTED THIS ____ day of _______, 199_, on
behalf of the Bond/PC Custodian by:
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Signature
Typed Name
On this _________ day of _______________________, 199_, before
me appeared ____________________________________________, to me personally know,
who being duly sworn did say that she/he is the ______________________________
of ______________________, and that said Lost Instrument Affidavit was signed
and sealed on behalf of such corporation and said _____________________________
acknowledged this instrument to be the free act and deed of said corporation.
Notary Public in and for the
State of .
My Commission expires: .
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225
EXHIBIT K-2
FORM OF LOST NOTE AFFIDAVIT
I, as ___________________________ (title) (hereinafter called
"Deponent") of _______________________ (the "Mortgage Custodian"), am authorized
to make this Lost Note Affidavit (this "Affidavit") on behalf of the Mortgage
Custodian. In connection with the administration of the Mortgage Loans held by
the Mortgage Custodian on behalf of Greenwich Capital Financial Products, Inc.
(the "Lender"), Deponent being duly sworn, deposes and says that:
1. Mortgage Custodian's address is:
[MORTGAGE CUSTODIAN'S Address]
2. Mortgage Custodian previously delivered to the Lender a
Mortgage Loan Schedule and an Exception Report with respect to that certain
Mortgage Note made by ___ in an original principal balance of $___, secured by a
Mortgage on a property located at ____, which did not indicate such Mortgage
Note is missing;
3. Such Mortgage Note was assigned or sold to the Lender by
___________ pursuant to the terms and provisions of an Amended and Restated
Master Loan and Security Agreement dated and effective as of November 23, 1998;
4. Such Mortgage Note is not outstanding pursuant to a Request
for Release of Documents;
5. Aforesaid Mortgage Note (hereinafter called the "Original")
has been lost;
6. Deponent has made or has caused to be made diligent search
for the Original and has been unable to find or recover same;
7. The Mortgage Custodian was the Mortgage Custodian of the
Original at the time of loss; and
8. Deponent agrees that, if said Original should ever come
into Mortgage Custodian's possession, custody or power, Mortgage Custodian will
immediately and without consideration surrender the Original to the Lender.
9. Attached hereto is a true and correct copy of (i) the
Mortgage Note, endorsed in blank by the Mortgagee, as provided by [Hanover
Capital Mortgage Holdings, Inc.] [Hanover Capital Partners, Ltd.] or its
designee and (ii) the Mortgage which secures the Mortgage Note, which Mortgage
is recorded at ___________________.
10. Deponent hereby agrees that the Mortgage Custodian (a)
shall indemnify and hold harmless the Lender, its successors, and assigns,
against any loss, liability or damage, including reasonable attorney's fees,
resulting from the unavailability of any Originals, including but not limited to
any loss, liability or damage arising from (i) any false statement contained in
this Affidavit, (ii) any claim of any party
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226
that it has already purchased a mortgage loan evidenced by the Originals or any
interest in such mortgage loan, (iii) any claim of any borrower with respect to
the existence of terms of a Mortgage Loan evidenced by the Originals, (iv) the
issuance of new instrument in lieu thereof and (v) any claim whether or not
based upon or arising from honoring or refusing to honor the Original when
presented by anyone (items (i) through (iv) above are hereinafter referred to as
the "Losses").
11. This Affidavit is intended to be relied on by the Lender,
its successors, and assigns and Greenwich Capital Financial Products, Inc.
represents and warrants that it has the authority to perform its obligations
under this Affidavit.
EXECUTED THIS ____ day of _______, 199_, on
behalf of the Mortgage Custodian by:
Signature
Typed Name
On this _________ day of _______________________, 199_, before
me appeared ____________________________________________, to me personally know,
who being duly sworn did say that she/he is the ______________________________
of ______________________, and that said Lost Note Affidavit was signed and
sealed on behalf of such corporation and said _____________________________
acknowledged this instrument to be the free act and deed of said corporation.
Notary Public in and for the
State of .
My Commission expires: .
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227
EXHIBIT L
FORM OF NOTICE OF EXTENSION OF INTEREST PERIOD
[insert date]
Greenwich Capital Financial Products, Inc.
000 Xxxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxx Xxxxx
Notice of Borrowing and Pledge No. : _____________________
Current Interest Period : [One Month][Two Month]
[Three Month][Six Month]
Termination Date of Current
Interest Period : _____________________
Ladies/Gentlemen:
Reference is made to the Amended and Restated Master Loan and Security
Agreement, dated as of November 23, 1998 (the "Loan Agreement"; capitalized
terms used but not otherwise defined herein shall have the meaning given them in
the Loan Agreement), between Hanover Capital Mortgage Holdings, Inc. and Hanover
Capital Partners, Ltd. (the "Borrowers") and Greenwich Capital Financial
Products, Inc. (the "Lender").
In accordance with Section 3.04 of the Loan Agreement, the undersigned Borrower
hereby requests that the Lender extend the current Interest Period of [One
Month] [Two Month][Three Month][Six Month] beginning immediately following the
termination of the existing Interest Period which is scheduled to terminate on
[INSERT LAST DAY OF EXISTING INTEREST PERIOD].
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228
Very truly yours,
[BORROWER]
By:
Name:
Title:
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229
AMENDMENT NUMBER ONE
to the
Amended and Restated Master Loan and Security Agreement
dated as of November 23, 1998
by and among
HANOVER CAPITAL MORTGAGE HOLDINGS, INC.,
HANOVER CAPITAL PARTNERS, LTD.
and
GREENWICH CAPITAL FINANCIAL PRODUCTS, INC.
This AMENDMENT is made this 28th day of March, 1999, by and
among HANOVER CAPITAL MORTGAGE HOLDINGS, INC., HANOVER CAPITAL PARTNERS, LTD.,
each having an address at 00 Xxxx Xxxxxx, Xxxxx 0000, Xxx Xxxx, Xxx Xxxx 00000
(each, a "Borrower" and collectively, the "Borrowers") and GREENWICH CAPITAL
FINANCIAL PRODUCTS, INC., having an address at 000 Xxxxxxxxx Xxxx, Xxxxxxxxx,
Xxxxxxxxxxx 00000 (the "Lender"), to the Amended and Restated Master Loan and
Security Agreement, dated as of November 23, 1998, by and among the Borrowers
and the Lender (the "Agreement"). Capitalized terms used but not otherwise
defined herein shall have the meanings assigned to such terms in the Agreement.
1. Effective as of March 28, 1999, Section 1 of the Agreement is hereby
amended as follows:
(a) The definition of Applicable Collateral Percentage is
hereby deleted in its entirety and replaced with the following:
"Applicable Collateral Percentage" shall mean, either (i) for
the first 180 days following the date such Eligible Asset
first becomes subject to the terms of this Agreement, with
respect to all Eligible Mortgage Loans (other than Delinquent
Mortgage Loans), 95%, with respect to Eligible Bonds that are
Investment Grade Bonds which are rated AA- or better by S&P
and Aa3 or better by Xxxxx'x, 75%, with respect to Eligible
Bonds that are Investment Grade Bonds which are rated A- or
better by S&P and A3 or better by Xxxxx'x, 70%, with respect
to Eligible Bonds that are Investment Grade Bonds which are
rated BBB- or better by S&P and Baa3 or better by Xxxxx'x,
60%, with respect to Eligible Bonds that are Non-Investment
Grade Bonds, 60%, with respect to Thirty Day Delinquent
Mortgage Loans, 90%, with respect to Sixty Day Delinquent
Mortgage Loans 85%, with respect to Pledged Stock, the
percentage applicable to the Underlying Eligible Bonds owned
by the applicable Eligible Entity, and with respect to
Participation Certificates, 95% multiplied by the Ownership
Percentage or (ii) thereafter, 0%."
(b) The definition of Applicable Margin is hereby amended by
substituting "1.25%" for ".70%" after the term "Tranche A Advances",
"1.55%" for "1.00%" after the term "Tranche B Advances" and "1.80%" for
"1.25%" after the term "Tranche C Advances".
(c) The definition of Collateral Value is hereby amended as
follows:
230
(i) Subclause (iii) thereof is hereby amended by
substituting "$10,000,000" for "$2,000,000" in the
fifth line thereof and by substituting "5%" for "1%" in
the sixth line thereof.
(ii) Subclause (iv)(J) thereof is hereby amended to read in
its entirety as follows:
"(J) which has a Material Exception with respect
thereto which was not otherwise waived by
Lender:"
(iii) The following subclause (v) is hereby added to the end
thereof:
"(v) the aggregate Collateral Value of all
Non-Investment Grade Bonds shall not at any time exceed
$15,000,000."
(d) The definition of Interest Period is hereby deleted in its
entirety and replaced with the following:
"Interest Period" shall mean, with respect to any Advance, (i)
initially, the period commencing on the Funding Date with
respect to such Advance and ending on the calendar day prior
to the Payment Date of the next succeeding month, and (ii)
thereafter, each period commencing on the Payment Date of a
month and ending on the calendar day prior to the Payment Date
of the next succeeding month. Notwithstanding the foregoing,
no Interest Period may end after the Termination Date."
(e) The definition of Investment Grade is hereby amended by
substituting "Baa3" for "Baa2" in the second line thereof.
(f) The definition of Market Value is hereby amended as
follows:
(i) by adding the following sentence before the last
sentence thereof:
"The Lender shall have the right to xxxx to market the
Eligible Assets on a daily basis.";
(ii) by adding the following to the end thereof:
"The Borrowers acknowledges that the Lender's
determination of Market Value is for the limited
purpose of determining Collateral Value for lending
purposes hereunder without the ability to perform
customary purchaser's due diligence and is not
necessarily equivalent to a determination of the fair
market value of the Eligible Assets achieved by
obtaining competing bids in an orderly market in which
the Borrowers are not in default and the bidders have
adequate opportunity to perform customary loan and
servicing due diligence."
2
231
(g) The definition of Termination Date is hereby amended by
substituting "March 27, 2000" for "March 28, 1999" in the first line
thereof.
2. Effective as of March 28, 1999, Section 2.04(b) of the Agreement is
hereby amended by deleting the penultimate sentence of such section and the
immediate preceding sentence and inserting in their place the following:
Accrued interest on each Advance as calculated in this Section
2.05(b) shall be payable monthly on each Payment Date and on
the Termination Date, except that interest payable at the
Post-Default Rate shall accrue daily and shall be payable
promptly upon receipt of invoice.
3. Effective as of March 28, 1999, Section 2.07 of the Agreement is
hereby deleted in its entirety and replaced with the following:
"2.07 Optional Prepayments.
(a) The Advances are prepayable without premium or penalty, in
whole or in part on each Payment Date or after providing not
less than two (2) Business Days prior notice. The Advances are
prepayable at any other time, in whole or in part, in
accordance herewith and subject to clause (b) below. Any
amounts prepaid shall be applied to repay the outstanding
principal amount of any Advances (together with interest
thereon) until paid in full. Amounts repaid may be reborrowed
in accordance with the terms of this Loan Agreement. If the
Borrowers intend to prepay an Advance in whole or in part from
any source, the Borrowers shall give two (2) Business Days'
prior written notice thereof to the Lender. If such notice is
given, the amount specified in such notice shall be due and
payable on the date specified therein, together with accrued
interest to such date on the amount prepaid. Partial
prepayments shall be in an aggregate principal amount of at
least $100,000.
(b) If the Borrowers make a prepayment of the Advances other
than as provided in Section 2.07(a) above, the Borrowers shall
indemnify the Lender and hold the Lender harmless from any
actual loss or expense which the Lender may sustain or incur
arising from (a) the deployment of funds obtained by the
Lender to maintain the Advances hereunder or from (b) fees
payable to terminate the deposits from which such funds were
obtained, in either case, which actual loss or expense shall
be equal to an amount equal to the excess, as reasonably
determined by the Lender, of (i) its cost of obtaining funds
for such Advances for the period from the date of such payment
through the earlier of (x) the second Business Day following
receipt of such payment or (y) the following Payment Date over
(ii) the amount of interest likely to be realized by such
Lender in redeploying the funds not utilized by reason of such
payment for such period. This Section 2.07 shall survive
termination of this Agreement and payment of the Note."
4. Effective as of March 28, 1999, Section 3 of the Agreement is hereby
amended by adding the following Subsections to the end thereof:
3
232
"3.05 Non-usage Fee. The Borrowers agree to pay to the Lender,
on each Commitment Fee Payment Date, in addition to any
Commitment Fee then payable, a non-usage fee equal to (a) 12.5
basis points (0.125%) multiplied by (b)(i) the number of days
from and including March 27, 1999 or the previous Commitment
Fee Payment Date up to but not including the related
Commitment Fee Payment Date or the Termination Date, as
applicable, during which the unused portion of the Maximum
Committed Amount exceeded $50,000,000, divided by (ii) 360,
multiplied by (c) the average daily amount of the entire
unused portion of the Maximum Committed Amount for the
applicable days on which the unused portion of the Maximum
Committed Amount exceeded $50,000,000, such payment to be made
in Dollars, in immediately available funds, without deduction,
set-off, or counterclaim. The Lender may, in its sole
discretion, net such non-usage fee from the proceeds of any
Advance made to a Borrower hereunder.
3.06 Facility Fee. On the Termination Date, the Borrowers
shall pay to the Lender a facility fee equal to the excess, if
any, of (i) $500,000 over (ii) the total amount of any
underwriting fees earned by the Lender during the period from
March 28, 1999 through March 27, 2000, in connection with the
securitization of any Eligible Assets (excluding for purposes
of this clause (ii) any underwriting fees earned pursuant to
the letter agreement among the Borrowers and the Lender dated
as of February 23, 1999 (the "Letter Agreement"). In addition,
the Lender shall be paid a fee equal to 12/32 times the
principal amount of the Eligible Assets which are securitized
as described in the Letter Agreement upon the earlier to occur
of (i) the closing date for such securitization or (ii) July
31, 1999 (if such securitization has not occurred on or before
such date with the Lender acting as co-lead manager)."
5. Effective as of March 28, 1999, Section 5.01 of the Agreement is
hereby amended by adding the following subclause (r) to the end thereof:
"(r) Year 2000 Compliance. The Lender shall have
satisfactorily completed its due diligence of the Year 2000
Program of each Borrower and shall have determined that the
Year 2000 Issues will not have a material adverse effect on
the Borrowers' or the Subservicer's operations or financial
condition."
6. Effective as of March 28, 1999, Section 6.01(a) of the Agreement is
hereby amended to read in its entirety as follows:
(a) The unaudited consolidated balance sheet of Hanover
Capital Holdings and its consolidated Subsidiaries as of
December 31, 1998, reported thereon by Deloitte & Touche, a
copy of which has heretofore been furnished to the Lender, is
complete and correct and presents fairly the consolidated
financial condition of Hanover Capital Holdings and its
consolidated Subsidiaries as at such dates and the
consolidated results of their operations and their
consolidated cash flows for the fiscal year then ended.
4
233
7. Effective as of March 28, 1999, Section 6.02 of the Agreement is
hereby amended to read in its entirety as follows:
"6.02 No Change. Since December 31, 1998, there has been no
development or event nor any prospective development or event
which has had or should reasonably be expected to have a
Material Adverse Effect."
8. Effective as of March 28, 1999, Section 7.09 of the Agreement is
hereby amended to read in its entirety as follows:
7.09 Financial Condition Covenants.
(a) Maintenance of Tangible Net Worth. Hanover Capital
Holdings shall at all times maintain Tangible Net Worth of not
less than $60,000,000.
(b) Maintenance of Ratio of Indebtedness to Tangible Net
Worth. With respect to Hanover Capital Holdings or its
Subsidiaries, the ratio of Indebtedness to Tangible Net Worth
shall not at any time be greater than 10:1.
(c) Maintenance of Liquidity. Hanover Capital Holdings shall
ensure that, as of the end of each calendar month, it has Cash
Equivalents in an amount of not less than $2,500,000.
9. Effective as of March 28, 1999, Subsection 7.16 of the Agreement is
hereby amended by inserting "and shall not liquidate the Collateral on a
servicing released basis" after the word "Assets" in the second line thereof.
10. Effective as of March 28, 1999, Subsection 7.27 of the Agreement is
hereby amended by inserting "(a)" before the word "The" in the first line
thereof and by adding the following clause (b) to the end thereof:
"(b) By September 1, 1999, each Borrower shall be required to
provide written assurance to the Lender that it is year 2000
compliant. If satisfactory assurance can not be made on such
date, the Lender shall have no obligation to make any
additional Advances under this Agreement. In addition, the
failure of any Borrower to provide satisfactory assurance of
year 2000 compliance by September 30, 1999 shall constitute an
Event of Default under this Agreement."
11. Effective as of March 28, 1999, Section 8(a) of the Agreement is
hereby amended to read in its entirety as follows:
(a) Borrower Default in the Payment of any Advance or Fee.
Either Borrower shall default in the payment of any principal
of or interest on any Advance when due (whether at stated
maturity, upon acceleration or at mandatory payment) or in the
payment of any fee due under Section 3.03, 3.05 or 3.06; or
5
234
12. Effective as of March 28, 1999, Section 8(d)(ii) of the Agreement
is hereby amended by deleting the word "or" before "7.08" and inserting "or
7.16" after "7.08" in the second line thereof.
13. Effective as of March 28, 1999, Section 11.03(b) of the Agreement
is hereby amended as follows:
(a) by deleting the words "which amounts shall be paid
promptly by the Borrowers or may be netted out of any
Advances made by Lender" in the ninth line thereof.
(b) by inserting "and (iii) initial and ongoing fees and
expenses incurred by the custodian and any trustee with
respect to the Collateral under this Agreement" after
the word "hereof" in the last line thereof.
(c) by inserting "All of the foregoing amounts shall be
paid promptly by the Borrowers or may be netted out of
any Advances made by Lender hereunder." at the end
thereof.
14. Effective as of March 28, 1999, the telecopier number for notices
to the Lender as listed on the signature page of the Agreement is hereby amended
to read "(000) 000-0000."
15. This amendment shall be construed in accordance with the laws of
the State of New York and the obligations, rights, and remedies of the parties
hereunder shall be determined in accordance with such laws without regard to
conflict of laws doctrine applied in such state.
16. This amendment may be executed in any number of counterparts, each
of which shall constitute an original and all of which, taken together, shall
constitute one instrument.
17. Except as amended above, the Agreement shall continue in full force
and effect in accordance with its terms.
6
235
IN WITNESS WHEREOF, the Borrowers and the Lender have caused this
amendment to be executed and delivered by their duly authorized officers as of
the day and year first above written.
HANOVER CAPITAL MORTGAGE HOLDINGS, INC.
(Borrower)
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
HANOVER CAPITAL PARTNERS, LTD.
(Borrower)
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
GREENWICH CAPITAL FINANCIAL PRODUCTS,
INC.
(Lender)
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
236
AMENDMENT NUMBER TWO
to the
Amended and Restated Master Loan and Security Agreement
dated as of November 23, 1998, as amended by
Amendment Number One, dated March 28, 1999,
by and among
HANOVER CAPITAL MORTGAGE HOLDINGS, INC.,
HANOVER CAPITAL PARTNERS, LTD.
and
GREENWICH CAPITAL FINANCIAL PRODUCTS, INC.
This AMENDMENT is made this 12th day of August, 1999, by and
among HANOVER CAPITAL MORTGAGE HOLDINGS, INC., HANOVER CAPITAL PARTNERS, LTD.,
each having an address at 00 Xxxx Xxxxxx, Xxxxx 0000, Xxx Xxxx, Xxx Xxxx 00000
(each, a "Borrower" and collectively, the "Borrowers") and GREENWICH CAPITAL
FINANCIAL PRODUCTS, INC., having an address at 000 Xxxxxxxxx Xxxx, Xxxxxxxxx,
Xxxxxxxxxxx 00000 (the "Lender"), to the Amended and Restated Master Loan and
Security Agreement, dated as of November 23, 1998, as amended by Amendment
Number One, dated March 28, 1999, by and among the Borrowers and the Lender (the
"Agreement"). Capitalized terms used but not otherwise defined herein shall have
the meanings assigned to such terms in the Agreement.
1. Effective as of August 12, 1999, Section 1 of the Agreement is
hereby amended as follows:
(a) The definition of Applicable Collateral Percentage is
hereby amended by inserting in the tenth line thereof immediately after
"Non-Investment Grade Bonds, 60%," and immediately before "with respect
to Thirty Day Delinquent Mortgage Loans", the following: "with respect
to Equity Certificates, 50%,".
(b) The definition of Applicable Margin is hereby amended by
inserting immediately after "Tranche C Advances," and immediately
before "respectively, the applicable rate per annum", the following :
"and Tranche D Advances" and by inserting the following to the end
thereof "Tranche D Advances......................2.50%".
(c) The definition of Bond File is hereby deleted in its
entirety and replaced with the following:
"Bond File" shall have the meaning provided in Section
5.02(g)(vi) hereof."
(d) The definition of Eligible Bond is hereby amended by
adding the following additional sentence to the end thereof:
"For purposes of this Agreement, an Eligible Bond shall also
include any Equity Certificate which is acceptable to the
Lender in its sole discretion."
237
(e) The following definition shall be added immediately after
the definition of Eligible Mortgage Loan and immediately prior to the
definition of ERISA:
"Equity Certificate shall mean any subordinate interest in a
transaction involving the issuance of indebtedness, which
subordinate interest represents an equity interest in the
related issuer of such indebtedness and which is acceptable to
the Lender in its sole discretion."
(f) The definition of Maximum Pledge Period is hereby amended
by adding the following additional sentence to the end thereof:
"With respect to an Equity Certificate, the earlier of (i)
March 27, 2000, or (ii) the date of acceleration, if any, of
the Borrowers' obligations hereunder."
(g) The following definition shall be added immediately after
the definition of Tranche C Advances and immediately prior to the
definition of Transfer Documents:
"Tranche D Advances shall mean Advances, so long as, and to
the extent that, they are secured by Equity Certificates."
2. Effective as of August 12, 1999, Section 2.01 of the Agreement is
hereby amended by adding the following Section to the end thereof:
"(e) Notwithstanding any provision of this Agreement to the
contrary, the Borrower acknowledges that the Lender shall have
no obligation to make an Advance secured by an Equity
Certificate and that any such Advance shall be made at the
sole discretion of the Lender; provided, however, the Lender
shall make an Advance pursuant to the terms of this Agreement
with respect to the Equity Certificates issued pursuant to
Hanover Capital Trust, Series 1999-B."
3. Effective as of August 12, 1999, Section 4.02(e) of the Agreement is
hereby amended by adding the following to the end thereof:
"The Borrower shall direct that all payments and distributions
with respect to the Equity Certificates shall be paid directly
to the Lender."
4. This amendment shall be construed in accordance with the laws of the
State of New York and the obligations, rights, and remedies of the parties
hereunder shall be determined in accordance with such laws without regard to
conflict of laws doctrine applied in such state.
5. This amendment may be executed in any number of counterparts, each
of which shall constitute an original and all of which, taken together, shall
constitute one instrument.
6. Except as amended above, the Agreement shall continue in full force
and effect in accordance with its terms.
2
238
IN WITNESS WHEREOF, the Borrowers and the Lender have caused this
amendment to be executed and delivered by their duly authorized officers as of
the day and year first above written.
HANOVER CAPITAL MORTGAGE HOLDINGS, INC.
(Borrower)
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
HANOVER CAPITAL PARTNERS, LTD.
(Borrower)
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
GREENWICH CAPITAL FINANCIAL PRODUCTS,
INC.
(Lender)
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
239
AMENDMENT NUMBER THREE
to the
Amended and Restated Master Loan and Security Agreement
dated as of November 23, 1998, as amended by
Amendment Number One, dated March 28, 1999 and
Amendment Number Two, dated August 12, 1999,
by and among
HANOVER CAPITAL MORTGAGE HOLDINGS, INC.,
HANOVER CAPITAL PARTNERS, LTD.
and
GREENWICH CAPITAL FINANCIAL PRODUCTS, INC.
This AMENDMENT is made this __ day of October, 1999, by and
among HANOVER CAPITAL MORTGAGE HOLDINGS, INC., HANOVER CAPITAL PARTNERS, LTD.,
each having an address at 00 Xxxx Xxxxxx, Xxxxx 0000, Xxx Xxxx, Xxx Xxxx 00000
(each, a "Borrower" and collectively, the "Borrowers") and GREENWICH CAPITAL
FINANCIAL PRODUCTS, INC., having an address at 000 Xxxxxxxxx Xxxx, Xxxxxxxxx,
Xxxxxxxxxxx 00000 (the "Lender"), to the Amended and Restated Master Loan and
Security Agreement, dated as of November 23, 1998, as amended by Amendment
Number One, dated March 28, 1999 and Amendment Number Two, dated August 12,
1999, by and among the Borrowers and the Lender (the "Agreement"). Capitalized
terms used but not otherwise defined herein shall have the meanings assigned to
such terms in the Agreement.
1. Section 7.09(a) of the Agreement is hereby amended by substituting
"$45,000,000" for "$60,000,000"at the end thereof.
2. This amendment shall be construed in accordance with the laws of the
State of New York and the obligations, rights, and remedies of the parties
hereunder shall be determined in accordance with such laws without regard to
conflict of laws doctrine applied in such state.
3. This amendment may be executed in any number of counterparts, each
of which shall constitute an original and all of which, taken together, shall
constitute one instrument.
4. Except as amended above, the Agreement shall continue in full force
and effect in accordance with its terms.
240
IN WITNESS WHEREOF, the Borrowers and the Lender have caused this
amendment to be executed and delivered by their duly authorized officers as of
the day and year first above written.
HANOVER CAPITAL MORTGAGE HOLDINGS, INC.
(Borrower)
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
HANOVER CAPITAL PARTNERS, LTD.
(Borrower)
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
GREENWICH CAPITAL FINANCIAL PRODUCTS,
INC.
(Lender)
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
